EXHIBIT 10


 


EXECUTION VERSION


 


SECOND AMENDED AND RESTATED

LOAN AND SECURITY AGREEMENT


 


 


BANK OF AMERICA, N.A.

AGENT FOR

THE LENDERS REFERENCED HEREIN


 


 


GANDER MOUNTAIN COMPANY
BORROWER


 


 


THE CIT GROUP/BUSINESS CREDIT, INC.

COLLATERAL AGENT


 


GENERAL ELECTRIC CAPITAL CORPORATION

DOCUMENTATION AGENT


 


BANC OF AMERICA SECURITIES, LLC

LEAD ARRANGER


 


FOOTHILL CAPITAL CORPORATION

SYNDICATION
AGENT


 


 


Dated as of March 3, 2006


 

















 


TABLE OF CONTENTS


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I.

  	
  DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II.

  	
  THE REVOLVING
  CREDIT

  	
  25

  
	
  2.1.

  	
  Establishment
  of Revolving Credit

  	
  25

  
	
  2.2.

  	
  Advances in
  Excess of Borrowing Base (OverAdvances)

  	
  25

  
	
  2.3.

  	
  Risks of
  Value of Collateral

  	
  26

  
	
  2.4.

  	
  Commitment
  to Make Revolving Credit Loans and Support Letters of Credit

  	
  26

  
	
  2.5.

  	
  Revolving
  Credit Loan Requests

  	
  26

  
	
  2.6.

  	
  Making of
  Revolving Credit Loans

  	
  28

  
	
  2.7.

  	
  SwingLine
  Loans

  	
  28

  
	
  2.8.

  	
  The Loan
  Account

  	
  29

  
	
  2.9.

  	
  The
  Revolving Credit Notes

  	
  30

  
	
  2.10.

  	
  Payment of
  The Loan Account

  	
  30

  
	
  2.11.

  	
  Interest on
  Revolving Credit Loans

  	
  31

  
	
  2.12.

  	
  Upfront Fee

  	
  31

  
	
  2.13.

  	
  Agent’s Fee

  	
  32

  
	
  2.14.

  	
  Unused Line
  Fee

  	
  32

  
	
  2.15.

  	
  Early
  Termination Fee

  	
  32

  
	
  2.16.

  	
  Concerning
  Fees

  	
  32

  
	
  2.17.

  	
  Agent’s and
  Revolving Credit Lenders’ Discretion

  	
  33

  
	
  2.18.

  	
  Procedures
  For Issuance of L/Cs

  	
  34

  
	
  2.19.

  	
  Fees For
  L/Cs

  	
  37

  
	
  2.20.

  	
  Concerning
  L/Cs

  	
  38

  
	
  2.21.

  	
  Changed
  Circumstances

  	
  42

  
	
  2.22.

  	
  Lenders’
  Commitments

  	
  42

  
	
  2.23.

  	
  Revolving
  Credit Funding Procedures

  	
  44

  
	
  2.24.

  	
  Swingline
  Loans

  	
  45

  
	
  2.25.

  	
  Agent’s
  Covering of Funding

  	
  46

  
	
  2.26.

  	
  Ordinary
  Course Distributions

  	
  47

  



 


i

















 


	
  ARTICLE III.

  	
  TERM LOAN
  FACILITY

  	
  48

  
	
  3.1.

  	
  Commitment
  to Lend

  	
  48

  
	
  3.2.

  	
  Term Notes

  	
  48

  
	
  3.3.

  	
  Payments of
  Principal of Term Loan

  	
  49

  
	
  3.4.

  	
  Interest on
  Term Loans

  	
  49

  
	
  3.5.

  	
  Payments on
  Account of Term Loan

  	
  50

  
	
  ARTICLE IV.

  	
  CONDITIONS
  PRECEDENT

  	
  51

  
	
  4.1.

  	
  Corporate
  Due Diligence

  	
  51

  
	
  4.2.

  	
  Opinions

  	
  51

  
	
  4.3.

  	
  Additional
  Documents

  	
  51

  
	
  4.4.

  	
  Officers’
  Certificates

  	
  51

  
	
  4.5.

  	
  Representations
  and Warranties

  	
  52

  
	
  4.6.

  	
  Minimum Day
  One Availability

  	
  52

  
	
  4.7.

  	
  Capital
  Structure

  	
  52

  
	
  4.8.

  	
  All Fees and
  Expenses Paid

  	
  52

  
	
  4.9.

  	
  Borrower Not
  In Default

  	
  52

  
	
  4.10.

  	
  No Adverse
  Change

  	
  52

  
	
  4.11.

  	
  Perfection
  Certificate and UCC Search Results

  	
  52

  
	
  4.12.

  	
  Certificates
  of Insurance

  	
  53

  
	
  4.13.

  	
  Blocked
  Account Agreements and Notifications

  	
  53

  
	
  4.14.

  	
  Borrowing
  Base Certificate

  	
  53

  
	
  4.15.

  	
  Benefit of
  Conditions Precedent

  	
  53

  
	
  ARTICLE V.

  	
  GENERAL
  REPRESENTATIONS, COVENANTS AND WARRANTIES

  	
  53

  
	
  5.1.

  	
  Payment and
  Performance of Liabilities

  	
  53

  
	
  5.2.

  	
  Due
  Organization, Authorization, No Conflicts

  	
  54

  
	
  5.3.

  	
  Trade Names

  	
  54

  
	
  5.4.

  	
  Infrastructure

  	
  55

  
	
  5.5.

  	
  Locations

  	
  55

  
				



 


ii

















 


	
  5.6.

  	
  Title to
  Assets

  	
  56

  
	
  5.7.

  	
  Indebtedness

  	
  56

  
	
  5.8.

  	
  Insurance

  	
  57

  
	
  5.9.

  	
  Licenses

  	
  58

  
	
  5.10.

  	
  Leases

  	
  58

  
	
  5.11.

  	
  Requirements
  of Law

  	
  58

  
	
  5.12.

  	
  Labor
  Relations

  	
  58

  
	
  5.13.

  	
  Maintain
  Properties

  	
  59

  
	
  5.14.

  	
  Taxes

  	
  60

  
	
  5.15.

  	
  No Margin
  Stock

  	
  60

  
	
  5.16.

  	
  ERISA

  	
  60

  
	
  5.17.

  	
  Hazardous
  Materials

  	
  61

  
	
  5.18.

  	
  Litigation

  	
  61

  
	
  5.19.

  	
  Business
  Plan

  	
  62

  
	
  5.20.

  	
  Dividends.
  Investments. Corporate Action

  	
  62

  
	
  5.21.

  	
  Loans

  	
  62

  
	
  5.22.

  	
  Protection
  of Assets

  	
  63

  
	
  5.23.

  	
  Line of
  Business

  	
  63

  
	
  5.24.

  	
  Affiliate
  Transactions

  	
  63

  
	
  5.25.

  	
  Collateral

  	
  63

  
	
  5.26.

  	
  Adequacy of
  Disclosure

  	
  63

  
	
  5.27.

  	
  No
  Restrictions on Liabilities

  	
  64

  
	
  5.28.

  	
  Other
  Covenants

  	
  64

  
	
  5.29.

  	
  Status of
  Loans as Senior Debt

  	
  65

  
	
  5.30.

  	
  Further
  Assurances

  	
  65

  
	
  ARTICLE VI.

  	
  FINANCIAL
  REPORTING AND PERFORMANCE COVENANTS

  	
  66

  
	
  6.1.

  	
  Maintain
  Records

  	
  66

  
	
  6.2.

  	
  Access to
  Records

  	
  67

  
				



 


iii

















 


	
  6.3.

  	
  Notice to
  Agent

  	
  67

  
	
  6.4.

  	
  Borrowing
  Base Certificate

  	
  68

  
	
  6.5.

  	
  Monthly
  Reports

  	
  68

  
	
  6.6.

  	
  Quarterly
  Reports

  	
  68

  
	
  6.7.

  	
  Annual
  Reports

  	
  69

  
	
  6.8.

  	
  Officers’
  Certificates

  	
  69

  
	
  6.9.

  	
  Inventories,
  Appraisals, and Audits

  	
  70

  
	
  6.10.

  	
  Additional
  Financial Information

  	
  70

  
	
  6.11.

  	
  Minimum
  Operating Cash Flow and Minimum EBITDA

  	
  71

  
	
  ARTICLE VII.

  	
  USE OF
  COLLATERAL

  	
  71

  
	
  7.1.

  	
  Use of
  Inventory Collateral

  	
  71

  
	
  7.2.

  	
  Inventory
  Quality

  	
  72

  
	
  7.3.

  	
  Adjustments
  and Allowances

  	
  72

  
	
  7.4.

  	
  Validity of
  Accounts

  	
  72

  
	
  7.5.

  	
  Notification
  to Account Debtors

  	
  72

  
	
  ARTICLE
  VIII.

  	
  CASH
  MANAGEMENT. PAYMENT OF LIABILITIES

  	
  72

  
	
  8.1.

  	
  Depository
  Accounts

  	
  72

  
	
  8.2.

  	
  Credit Card
  Receipts

  	
  73

  
	
  8.3.

  	
  Cash Management

  	
  73

  
	
  8.4.

  	
  Proceeds and
  Collections

  	
  74

  
	
  8.5.

  	
  Payment of
  Liabilities

  	
  74

  
	
  8.6.

  	
  The
  Operating Account

  	
  75

  
	
  ARTICLE IX.

  	
  GRANT OF
  SECURITY INTEREST

  	
  75

  
	
  9.1.

  	
  Grant of
  Security Interest

  	
  75

  
	
  9.2.

  	
  Extent and
  Duration of Security Interest

  	
  76

  
	
  9.3.

  	
  Authorization
  to File Financing Statements

  	
  76

  
	
  9.4.

  	
  Authorization
  to File Financing Statements

  	
  76

  
	
  ARTICLE X.

  	
  AGENT AS
  BORROWER’S ATTORNEY-IN-FACT

  	
  77

  
				



 


iv

















 


	
  10.1.

  	
  Appointment
  as Attorney-In-Fact

  	
  77

  
	
  10.2.

  	
  No
  Obligation to Act

  	
  78

  
	
  ARTICLE XI.

  	
  EVENTS OF
  DEFAULT

  	
  78

  
	
  11.1.

  	
  Failure to
  Pay the Revolving Credit

  	
  78

  
	
  11.2.

  	
  Failure To
  Make Other Payments

  	
  78

  
	
  11.3.

  	
  Failure to
  Perform Covenant or Liability (No Grace Period)

  	
  78

  
	
  11.4.

  	
  Failure to
  Perform Covenant or Liability (Grace Period)

  	
  79

  
	
  11.5.

  	
  Misrepresentation

  	
  79

  
	
  11.6.

  	
  Acceleration
  of Other Debt. Breach of Lease

  	
  79

  
	
  11.7.

  	
  Default
  Under Other Agreements

  	
  79

  
	
  11.8.

  	
  Uninsured
  Casualty Loss

  	
  79

  
	
  11.9.

  	
  Attachment.
  Judgment. Restraint of Business

  	
  79

  
	
  11.10.

  	
  Business
  Failure

  	
  80

  
	
  11.11.

  	
  Bankruptcy

  	
  80

  
	
  11.12.

  	
  Indictment -
  Forfeiture

  	
  80

  
	
  11.13.

  	
  Challenge to
  Loan Documents

  	
  80

  
	
  11.14.

  	
  Change in
  Control

  	
  80

  
	
  ARTICLE XII.

  	
  RIGHTS AND
  REMEDIES UPON DEFAULT

  	
  81

  
	
  12.1.

  	
  Acceleration

  	
  81

  
	
  12.2.

  	
  Rights of
  Enforcement

  	
  81

  
	
  12.3.

  	
  Sale of
  Collateral

  	
  81

  
	
  12.4.

  	
  Occupation
  of Business Location

  	
  82

  
	
  12.5.

  	
  Grant of
  Nonexclusive License

  	
  82

  
	
  12.6.

  	
  Assembly of
  Collateral

  	
  82

  
	
  12.7.

  	
  Rights and
  Remedies

  	
  83

  
	
  ARTICLE
  XIII.

  	
  ACCELERATION
  AND LIQUIDATION

  	
  83

  
	
  13.1.

  	
  Acceleration
  Notices

  	
  83

  
	
  13.2.

  	
  Acceleration

  	
  83

  
				



 


v

















 


	
  13.3.

  	
  Initiation
  of Liquidation

  	
  83

  
	
  13.4.

  	
  Actions At
  and Following Initiation of Liquidation

  	
  83

  
	
  13.5.

  	
  Agent’s
  Conduct of Liquidation

  	
  84

  
	
  13.6.

  	
  Distribution
  of Liquidation Proceeds

  	
  84

  
	
  13.7.

  	
  Relative
  Priorities To Proceeds of Liquidation

  	
  85

  
	
  ARTICLE XIV.

  	
  THE AGENT

  	
  86

  
	
  14.1.

  	
  Appointment
  of The Agent

  	
  86

  
	
  14.2.

  	
  Responsibilities
  of Agent

  	
  86

  
	
  14.3.

  	
  Concerning
  Distributions By the Agent

  	
  88

  
	
  14.4.

  	
  Dispute
  Resolution

  	
  89

  
	
  14.5.

  	
  Distributions
  of Notices and of Documents

  	
  89

  
	
  14.6.

  	
  Confidential
  Information

  	
  89

  
	
  14.7.

  	
  Reliance by
  Agent

  	
  90

  
	
  14.8.

  	
  Non Reliance
  on Agent and Other Revolving Credit Lenders

  	
  90

  
	
  14.9.

  	
  Indemnification

  	
  91

  
	
  14.10.

  	
  Resignation
  of Agent

  	
  91

  
	
  14.11.

  	
  Delegation
  of Duties

  	
  92

  
	
  14.12.

  	
  Agent May
  File Proofs of Claim

  	
  92

  
	
  14.13.

  	
  Collateral
  Matters

  	
  93

  
	
  ARTICLE XV.

  	
  ACTION BY
  AGENTS - CONSENTS - AMENDMENTS - WAIVERS

  	
  94

  
	
  15.1.

  	
  Administration
  of Credit Facilities

  	
  94

  
	
  15.2.

  	
  Actions
  Requiring or On Direction of Majority Lenders

  	
  94

  
	
  15.3.

  	
  Actions
  Requiring or On Direction of SuperMajority Lenders

  	
  94

  
	
  15.4.

  	
  Action
  Requiring Certain Consent

  	
  95

  
	
  15.5.

  	
  Actions
  Requiring or Directed By Unanimous Consent

  	
  95

  
	
  15.6.

  	
  Actions
  Requiring SwingLine Lender Consent

  	
  97

  
	
  15.7.

  	
  Actions
  Requiring Agent’s Consent

  	
  97

  
	
  15.8.

  	
  Miscellaneous
  Actions

  	
  97

  
				



 


vi

















 


	
  15.9.

  	
  Actions
  Requiring Borrower’s Consent

  	
  97

  
	
  15.10.

  	
  NonConsenting
  Lender

  	
  98

  
	
  ARTICLE XVI.

  	
  SUCCESSORS
  AND ASSIGNS

  	
  99

  
	
  16.1.

  	
  Assignments
  and Assumptions

  	
  99

  
	
  16.2.

  	
  Effect of
  Assignment

  	
  100

  
	
  16.3.

  	
  Participations

  	
  101

  
	
  16.4.

  	
  Limitations
  upon Participant Rights

  	
  101

  
	
  16.5.

  	
  Certain
  Pledges

  	
  101

  
	
  16.6.

  	
  Electronic
  Execution of Assignments

  	
  101

  
	
  16.7.

  	
  Special
  Purpose Funding Vehicles

  	
  102

  
	
  16.8.

  	
  Resignation
  After Assignment

  	
  102

  
	
  16.9.

  	
  Accession

  	
  103

  
	
  16.10.

  	
  Optional
  Increase of Maximum Revolving Credit Ceiling

  	
  103

  
	
  ARTICLE
  XVII.

  	
  NOTICES

  	
  104

  
	
  17.1.

  	
  Notice
  Addresses

  	
  104

  
	
  17.2.

  	
  Notice Given

  	
  105

  
	
  17.3.

  	
  Wire
  Instructions Notice Given

  	
  106

  
	
  ARTICLE
  XVIII.

  	
  TERM

  	
  106

  
	
  18.1.

  	
  Termination
  of Revolving Credit

  	
  106

  
	
  18.2.

  	
  Actions On
  Termination

  	
  106

  
	
  ARTICLE XIX.

  	
  GENERAL

  	
  107

  
	
  19.1.

  	
  Protection
  of Collateral

  	
  107

  
	
  19.2.

  	
  Publicity

  	
  107

  
	
  19.3.

  	
  Severability

  	
  107

  
	
  19.4.

  	
  The Platform

  	
  107

  
	
  19.5.

  	
  Amendments

  	
  107

  
	
  19.6.

  	
  Power of
  Attorney

  	
  108

  
	
  19.7.

  	
  Application
  of Proceeds

  	
  108

  
				



 


vii

















 


	
  19.8.

  	
  Increased
  Costs

  	
  109

  
	
  19.9.

  	
  Expenses;
  Indemnity; Damage Waiver

  	
  109

  
	
  19.10.

  	
  Copies and
  Facsimiles

  	
  111

  
	
  19.11.

  	
  Massachusetts
  Law

  	
  111

  
	
  19.12.

  	
  Consent to
  Jurisdiction

  	
  111

  
	
  19.13.

  	
  Confidentiality

  	
  112

  
	
  19.14.

  	
  Survival of
  Representations and Warranties

  	
  112

  
	
  19.15.

  	
  Rules of
  Construction

  	
  113

  
	
  19.16.

  	
  Intent

  	
  114

  
	
  19.17.

  	
  Right of Set
  Off

  	
  114

  
	
  19.18.

  	
  Maximum
  Interest Rate

  	
  115

  
	
  19.19.

  	
  Waivers

  	
  115

  
	
  19.20.

  	
  US Patriot
  Act Notice

  	
  116

  
	
  19.21.

  	
  Transitional
  Arrangements

  	
  116

  



 


viii

















 


EXHIBITS AND SCHEDULES


 


Exhibits


 


	
  Exhibit A

  	
   

  	
  :

  	
   

  	
  SwingLine
  Note

  
	
  Exhibit B

  	
   

  	
  :

  	
   

  	
  Revolving
  Credit Note

  
	
  Exhibit C

  	
   

  	
  :

  	
   

  	
  Borrowing
  Base Certificate

  
	
  Exhibit D

  	
   

  	
  :

  	
   

  	
  Assignment
  and Assumption

  
	
  Exhibit E

  	
   

  	
  :

  	
   

  	
  Customs
  Agent Agreement

  
	
  Exhibit F

  	
   

  	
  :

  	
   

  	
  Instrument
  of Accession

  
	
  Exhibit G

  	
   

  	
  :

  	
   

  	
  Term Note

  
	
  Exhibit H

  	
   

  	
  :

  	
   

  	
  Form of Loan
  Request

  



 


Schedules


 


	
  2.22

  	
   

  	
  :

  	
   

  	
  Revolving
  Credit Lenders’ and Term Loan Lenders’ Commitments

  
	
  6.5

  	
   

  	
  :

  	
   

  	
  Required
  Reporting Checklist

  
	
  6.11

  	
   

  	
  :

  	
   

  	
  Minimum
  Operating Cash Flow and EBITDA

  
	
  16.1

  	
   

  	
  :

  	
   

  	
  Processing
  and Recordation Fees

  



 

















 


SECOND AMENDED AND RESTATED LOAN
AND SECURITY AGREEMENT


 


Bank  of  America,  N.A.,  as
Agent


 


Dated as of March 3, 2006


 


THIS AGREEMENT is
made among (a) Bank of America, N.A. (in such capacity, herein the “Agent”), a national banking association
with offices at 40 Broad Street, Boston, Massachusetts 02109, as agent for the
ratable benefit of the “Lenders”,
who are, at present, those financial institutions identified on the signature
pages of this Agreement and who in the future are those Persons (if any) who
become “Lenders” in accordance with the provisions of Section 2.22, below; (b)
The Lenders; and (c) Gander Mountain Company (the “Borrower”), a Minnesota corporation with its principal
executive offices at 180 East 5th Street 13th Floor, St.
Paul, Minnesota 55101, in consideration of the mutual covenants contained
herein and benefits to be derived herefrom:


 


WHEREAS, pursuant to
that certain Amended and Restated Loan and Security Agreement dated as of
February 23, 2005, among Fleet Retail Group, LLC (f/k/a Fleet Retail Group,
Inc., f/k/a Fleet Retail Finance, Inc.), certain Revolving Credit Lenders and
the Borrower as amended and in effect immediately prior to the effectiveness of
this Agreement (the “Existing Loan Agreement”),
certain Revolving Credit Lenders named therein have made loans to the Borrower
for the purposes described therein;  and


 


WHEREAS, the
Borrower has requested that the Lenders and the Agent amend and restate the
Existing Loan Agreement in its entirety, in order to, among other things:


 


(a)           add
a Term Loan facility;


 


(b)           convert
the loans and the Existing Letters of Credit under the Existing Loan Agreement
into Loans and L/Cs hereunder; and


 


(c)           make
certain other changes to the terms and provisions of the Existing Loan
Agreement.


 


NOW THEREFORE, the
Borrower, the Lenders and the Agent hereby agree that, subject to Section 19.21
hereof, the Existing Loan Agreement (including all the schedules and exhibits
thereto) is hereby amended and restated in its entirety as set forth herein:


 


WITNESSETH:


 


ARTICLE I.                    DEFINITIONS


 


As used herein, the following terms have the
following meanings or are defined in the section of this Agreement so
indicated:


 


“Acceding
Lender”:  Is defined in Section 16.9.


 

















 


“Acceleration”:  The
making of demand or declaration that any indebtedness, not otherwise due and
payable,  is due and payable. Derivations
of the word “Acceleration” (such as “Accelerate”) are used with like meaning in
this Agreement.


 


“Acceleration
Notice”:  Written notice as follows:


 


(a)           From
the Agent to the Lenders, as provided in Section 13.1(a).


 


(b)           From
the SuperMajority Lenders to the Agent, as provided in Section 13.1(b).


 


“Account
Debtor”:  Has the meaning given that term in the UCC.


 


“Accounts”
and “Accounts Receivable”:  Include, without limitation, “accounts” as
defined in the UCC, and also all: accounts, accounts receivable, receivables,
and rights to payment (whether or not earned by performance) for: property that
has been or is to be sold, leased, licensed, assigned, or otherwise disposed
of; services rendered or to be rendered; a policy of insurance issued or to be
issued; a secondary obligation incurred or to be incurred; energy provided or
to be provided; for the use or hire of a vessel; arising out of the use of a
credit or charge card or information contained on or used with that card;
winnings in a lottery or other game of chance.


 


“ACH”:  Automated
clearing house.


 


“Adjustment
Date”: February 1, May 1, August 1 and November 1 of each calendar
year.


 


“Administrative
Questionnaire”:  An Administrative Questionnaire in a form
supplied by the Agent.


 


“Affiliate”:  With
respect to any Person, another Person that directly, or indirectly through one
or more intermediaries, Controls or is Controlled by or is under common Control
with the Person specified.


 


“Agent”:  Is
defined in the Preamble.


 


“Agent’s
Cover”:  Is defined in Section 2.25(c)(i).


 


“Agent’s
Fee”:  Is defined in Section 2.13.


 


“Agent’s
Rights and Remedies”:  Is
defined in Section 12.7.


 


“Aggregate
Loan Commitment”:  As of
the date of determination thereof, the sum of (a) the aggregate Revolving
Credit Dollar Commitment of all Lenders at such date and (b) the aggregate
outstanding principal amount of the Term Loan at such date, after giving effect
to any prepayments or repayments of the Term Loan occurring on such date.


 


 “Agreement”: 
This Second Amended and Restated Loan and Security Agreement, as further
amended, restated, modified and in effect from time to time.


 


“Applicable
Law”:  As to any Person: 
(i) All statutes, rules, regulations, orders, or other requirements
having the force of law and (ii) all court orders and injunctions, arbitrator’s


 


2

















 


decisions, and/or similar rulings, in each
instance ((i) and (ii)) of or by any federal, state, municipal, and other
governmental authority, or court, tribunal, panel, or other body which has or
claims jurisdiction over such Person, or any property of such Person, or of any
other Person for whose conduct such Person would be responsible.


 


“Applicable
Margin”:  For
the period from the Restatement Effective Date to the first Adjustment Date
thereafter, the Applicable Margin shall be the applicable margin corresponding
to Level V below, and thereafter, for each period commencing on an
Adjustment Date through the date immediately preceding the next Adjustment Date
(each a “Rate Adjustment Period”),
the Applicable Margin shall be the applicable margin per annum set forth in the
table below opposite to the Borrower’s applicable EBITDA as determined for the
applicable period consisting of the twelve (12) consecutive months ending on or
about the calendar quarter ending immediately prior to the applicable Rate
Adjustment Period pertaining to such Adjustment Date:


 


	
  LEVEL

  	
   

  	
  GAAP EBITDA

  	
   

  	
  LIBOR RATE

  APPLICABLE

  MARGIN

  	
   

  	
  BASE RATE

  APPLICABLE

  MARGIN

  	
   

  
	
  I

  	
   

  	
  Greater than
  $70,000,000

  	
   

  	
  1.25

  	
  %

  	
  0.00

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  II

  	
   

  	
  Greater than
  $50,000,000 and less than or equal to $70,000,000

  	
   

  	
  1.50

  	
  %

  	
  0.00

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  III

  	
   

  	
  Greater than
  $42,500,000 and less than or equal to $50,000,000

  	
   

  	
  1.75

  	
  %

  	
  0.00

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  IV

  	
   

  	
  Greater than
  $30,000,000 and less than or equal to $42,500,000

  	
   

  	
  2.00

  	
  %

  	
  0.25

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  V

  	
   

  	
  Less than or
  equal to $30,000,000

  	
   

  	
  2.25

  	
  %

  	
  0.50

  	
  %

  



 


Any delay by the Borrower in delivering the
financial statements and reports required to be delivered by the Borrower
pursuant to Section 6.5 shall, at the Agent’s option, result in the Applicable
Margin being set at the amount set forth opposite Level V above or such other
Level as determined by the Agent until the next Adjustment Date.


 


“Appraised
Inventory Liquidation Value”:  The product of (a) the Cost
of Eligible Inventory (net of Inventory Reserves) multiplied by (b) that percentage, determined from the then
most recent appraisal of the Borrower’s Inventory undertaken at the request of
the Agent, to reflect the appraiser’s estimate of the net recovery on the
Borrower’s Inventory in the event of an in-store liquidation of that Inventory.


 


“Appraised
Inventory Percentage”:  Eighty-Five Percent (85%).


 


“Approved
Customs Broker”:  A customs broker satisfactory to the
Agent which has entered into a Customs Agent Agreement with the Agent and the
Borrower.


 


3

















 


“Approved
Fund”: Any Fund that is administered or managed 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.


 


“Assignee
Group”:  Two or more Eligible
Assignees that are Affiliates of one another or two or more Approved Funds
managed by the same investment advisor.


 


“Assignee
Lender”:  Is defined in
Section 16.1(a).


 


“Assigning
Lender”:  Is defined in Section 16.1(b).


 


“Assignment
and Assumption”:  Is defined in Section 16.1.


 


“Auto-Extension
Letter of Credit”:  Is defined in Section 2.18(d).


 


“Availability”:  The
lesser of (a) or (b), where:


 


(a)           is
the result of


 


(i)            The Maximum Revolving
Credit Ceiling


 


Minus


 


(ii)           The aggregate unpaid
balance of the Loan Account (other than the outstanding principal balance of
the Term Loan)


 


Minus


 


(iii)          The aggregate undrawn
Stated Amount of all then outstanding L/Cs.


 


(b)           is
the result of


 


(i)            The Borrowing Base


 


Minus


 


(ii)           The aggregate unpaid
balance of the Loan Account (other than the outstanding principal balance of
the Term Loan)


 


Minus


 


(iii)          The aggregate undrawn
Stated Amount of all then outstanding L/Cs.


 


Minus


 


(iv)          The aggregate of the
Availability Reserves.


 


4

















 


“Availability
Reserves”:  Such reserves as the Agent from time to time
determines in the Agent’s discretion as being appropriate to reflect the
impediments to the Agent’s ability to realize upon the Collateral.  Without limiting the generality of the
foregoing, Availability Reserves may include (but are not limited to) reserves
based on the following:


 


(i)            Rent for up to three
(3) months for any store located in Pennsylvania, Virginia or Washington (but
only if a landlord’s waiver, acceptable to the Agent, has not been received by
the Agent).


 


(ii)           Customer Credit
Liabilities.


 


(iii)          Taxes and other
governmental charges, including, ad valorem, personal property, and other taxes
which might have priority over the Collateral Interests of the Agent in the
Collateral.


 


(iv)          L/C Landing Costs.


 


“Bank of
America”:  Bank
of America, N.A., and its successors.


 


“Bankruptcy
Code”:  Title 11, U.S.C., as amended from time to time.


 


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


 


“Base
Margin Loan”:  Each Revolving Credit Loan or relevant
portion of the Term Loan while bearing interest determined by reference to
Base.


 


“Base
Margin Rate”:  The aggregate of Base plus the Base Rate Applicable Margin per
annum.


 


“Base Rate
Applicable Margin”.  See definition of Applicable Margin.


 


“Blocked
Account”:  Any DDA into which the contents of any other
DDA is transferred.


 


“Blocked
Account Agreement”:  An Agreement, in form satisfactory to
the Agent, which Agreement recognizes the Agent’s Collateral Interest in the
contents of the DDA which is the subject of such Agreement and agrees that such
contents shall be transferred only to the Concentration Account or as otherwise
instructed by the Agent.


 


“Borrower”:  Is
defined in the Preamble.


 


“Borrower
Materials”:  Is defined in Section 6.1.


 


“Borrowing
Base”:  The aggregate of the following:


 


5

















 


(a)           The
face amount of Eligible Credit Card Receivables multiplied by the Credit Card Advance Rate.


 


Plus


 


(b)           The
lesser of (a) the Cost of Eligible Inventory (net of Inventory Reserves) multiplied by the Inventory Advance Rate
or (b) the Appraised Inventory Percentage of the Appraised Inventory
Liquidation Value.


 


                Minus


 


                (c)           The
Term Loan to Value Reserve.


 


“Borrowing
Base Certificate”:  Is defined in Section 6.4.


 


“Business
Day”:  Any day other than (a) a Saturday or Sunday; or (b)
any day on which commercial banks in Boston, Massachusetts or in Minneapolis,
Minnesota, are authorized to close under law, or are in fact closed.


 


“Business
Plan”:  The Borrower’s business plan delivered pursuant to
Section 5.19, and any revision, amendment, or update of such business plan to
which the Agent has provided its written sign-off.


 


“Capital
Expenditures”:  The expenditure of funds or the incurrence
of liabilities which may be capitalized in accordance with GAAP.


 


“Capital
Lease”:  Any lease which may be capitalized in accordance
with GAAP.


 


“Change in
Control”:  The occurrence of any of the following:


 


(a)           Any
“person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, but excluding any employee benefit plan of
such person or its subsidiaries, and any person or entity acting in its
capacity as trustee, agent or other fiduciary or administrator of any such
plan) other than members of the Erickson Family, the Holiday Companies or
Affiliates of Holiday Companies becomes the “beneficial owner” (as defined in
Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a
person or group shall be deemed to have “beneficial ownership” of all
securities that such person or group has the right to acquire (such right, an “option
right”), whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of Forty Percent (40%) or more of the
equity securities of the Borrower entitled to vote for members of the board of
directors or equivalent governing body of the Borrower on a fully-diluted basis
(and taking into account all such securities that such person or group has the
right to acquire pursuant to any option right).


 


(b)           During
any period of twelve (12) consecutive months, a majority of the members of the
board of directors or other equivalent governing body of the Borrower cease to
be composed of individuals (i) who were members of that board or equivalent
governing body on the first day of such period, (ii) whose election or
nomination to that board or equivalent governing body was approved by
individuals referred to in clause (i) above constituting at the time of such
election or nomination at least a majority of that board or equivalent
governing


 


6

















 


body or (iii) whose election or
nomination to that board or other equivalent governing body was approved by
individuals referred to in clauses (i) and (ii) above constituting at the time
of such election or nomination at least a majority of that board or equivalent
governing body (excluding, in the case of both clause (ii) and clause (iii),
any individual whose initial nomination for, or assumption of office as, a
member of that board or equivalent governing body occurs as a result of an
actual or threatened solicitation of proxies or consents for the election or
removal of one or more directors by any person or group other than a
solicitation for the election of one or more directors by or on behalf of the
board of directors).


 


“Chattel
Paper”:  Has the meaning given that term in the UCC.


 


“Closing
Certificate”:  The Closing
Certificate delivered by the Borrower pursuant to Section 4.3, dated the
Restatement Effective Date, and in form and substance acceptable to the Agent.


 


“Code”:  Internal
Revenue Code of 1986.


 


“Collateral”:  Is
defined in Section 9.1.


 


“Collateral
Interest”:  Any interest in property to secure an
obligation, including, without limitation, a security interest, mortgage, and
deed of trust.


 


“Concentration
Account”:  Is defined in Section 8.3.


 


“Consent”:  Actual
consent given by the Lender from whom such consent is sought.


 


“Control”:  The
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ability to exercise voting power, by contract or otherwise.  “Controlling” and “Controlled” have meanings
correlative thereto.


 


“Cost”:  The
calculated cost of purchases, based upon the Borrower’s accounting practices,
known to the Agent, which practices are in effect on the date on which this
Agreement was executed as such calculated cost is determined from: invoices
received by the Borrower; the Borrower’s purchase journal; or the Borrower’s
stock ledger.


 


“Costs of
Collection”:  Includes, without limitation, all attorneys’
reasonable fees and reasonable out-of-pocket expenses incurred by the Agent’s
attorneys, and all reasonable out-of-pocket costs incurred by the Agent in the
administration of the Liabilities and/or the Loan Documents, including, without
limitation, reasonable costs and expenses associated with travel on behalf of
the Agent, where such costs and expenses are directly or indirectly related to
or in respect of the Agent’s: administration and management of the Liabilities;
negotiation, documentation, and amendment of any Loan Document; or efforts to
preserve, protect, collect, or enforce the Collateral, the Liabilities, and/or
the Agent’s Rights and Remedies and/or any of the rights and remedies of the
Agent against or in respect of any guarantor or other person liable in respect
of the Liabilities (whether or not suit is instituted in connection with such
efforts).  “Costs of Collection” also
includes the reasonable fees and expenses of the Lenders’ Special Counsel and
reasonable consulting, accounting, appraisal, investment banking and similar
professional fees and charges.  The Costs
of Collection are Liabilities, and at the Agent’s option may bear interest at
the then effective Base Margin Rate.


 


7

















 


“Credit
Card Advance Rate”:  Eighty-Five Percent (85%).


 


“Customer Credit
Liability”:  Gift certificates, customer deposits,
offsets, merchandise credits, layaway obligations, frequent shopping programs,
and similar liabilities of the Borrower to its retail customers and prospective
customers.


 


“Customs
Agent Agreement”:  A Customs Agent Agreement,
substantially in the form of EXHIBIT E
hereto, entered into among the Agent, the Borrower, and an Approved Customs
Broker.


 


“DDA”:  Any
checking or other demand daily depository account maintained by the Borrower.


 


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


 


“Delinquent
Revolving Credit Lender”:  Is defined in Section 2.25(c).


 


“Documents”:  Has
the meaning given that term in the UCC.


 


“Documents
of Title”:  Has the meaning given that term in the UCC.


 


“Drawdown
Date”:  As applicable, the date on which (a) the
Restatement Effective Date occurs and the Term Loan is made, (b) any Revolving
Credit Loan is made or is to be made or (c) any Revolving Credit Loan is
converted or continued in accordance with Section 2.5 or all or any portion of
the Term Loan is converted or continued in accordance with Section 3.5.


 


“EBITDA”: With respect to any fiscal period, an
amount equal to the sum of (a) Net Income of the Borrower for such fiscal
period, plus (b) in each case to
the extent deducted in the calculation of Net Income and without duplication,
(i) depreciation and amortization for such fiscal period, plus (ii) income tax expense for such
fiscal period, plus (iii)
Interest Expense paid or accrued during such fiscal period, plus (iv) other noncash charges for such
fiscal period (excluding LIFO reserves), all as determined in accordance with
GAAP, after eliminating therefrom all extraordinary nonrecurring items of
income or expense, minus (c) to
the extent not subtracted from Net Income during such period, without
duplication, the amount of any judgments rendered or paid, or settlements
agreed to or paid, during such period relating to any matter described on Schedule 5.18 to
the Closing Certificate; provided, however,
to the extent that EBITDA is being recalculated in accordance with Section
6.11(b)(ii), the amount of any such judgment or settlement shall also be
subtracted from EBITDA for the Reference Period ended immediately prior to the
rendering of such judgment or the entering into of such settlement (and in the
case that the financial statements and officer’s certificates to be delivered
pursuant to Article 6 for such Reference Period have not yet been delivered,
for the two Reference Periods most recently ended prior to the rendering of
such judgment or entering into of such settlement).


 


“Eligible
Assignee”:  Any of (a) a
Lender; (b) an Affiliate of a Lender; (c) an Approved Fund; and (d) any other
Person (other than a natural person) approved by (i) the Agent, the


 


8

















 


Issuer and the SwingLine Lender, and (ii)
unless an Event of Default has occurred and is continuing, the Borrower (each
such approval not to be unreasonably withheld or delayed); provided  that
notwithstanding the foregoing, “Eligible Assignee” shall not include the
Borrower or any of the Borrower’s Affiliates or Subsidiaries.


 


“Eligible
Credit Card Receivables”:  Under Four (4) Business Day
accounts due on a non-recourse basis from major credit card processors.


 


“Eligible
In-Transit Inventory”:  Inventory (without duplication as
to Eligible Inventory), title to which has passed to the Borrower and which has
then been shipped for receipt, within Forty-Five (45) days, at a warehouse of
the Borrower located in a jurisdiction in the United States in which the Agent
will have a first and only perfected security interest in such Inventory, provided that:


 


(a)           Such
Inventory is of such types, character, qualities and quantities (net of
Inventory Reserves) as the Agent in its discretion from time to time determines
to be eligible for borrowing;


 


(b)           The
documents which relate to such shipment either name the Agent as consignee of
the subject Inventory or the Agent has control over the documents which
evidence ownership of the subject Inventory (such as by providing to the Agent
a Customs Agent Agreement); and


 


(c)           The
Agent is named as loss payee on any special policies of insurance taken out by
the Borrower for the period during which such Inventory is in transit.


 


“Eligible
Inventory”:  All of the following: (a) Such of the
Borrower’s Inventory, (not duplicative of Eligible In-Transit Inventory or
Eligible L/C Inventory) at such locations, and of such types, character,
qualities and quantities, as the Agent in its discretion from time to time
determines to be acceptable for borrowing, as to which Inventory, the Agent has
a perfected security interest which is prior and superior to all security interests,
claims, and Encumbrances (other than Permitted Encumbrances), (b) Eligible In-Transit
Inventory, and (c) Eligible L/C Inventory.


 


“Eligible
L/C Inventory”:  Inventory (without duplication as to
Eligible Inventory), which is to be manufactured or has then been shipped for
receipt, within Forty-Five (45) days, at a warehouse of the Borrower located in
a jurisdiction in the United States in which the Agent will have a first and
only perfected security interest in such Inventory and payment for the underlying
Inventory is to be made by an L/C, provided
that:


 


(a)           Such
Inventory is of such types, character, qualities and quantities (net of
Inventory Reserves) as the Agent in its discretion from time to time determines
to be eligible for borrowing; and


 


(b)           The
documents which relate to such shipment either name the Agent as consignee of
the subject Inventory or the Agent has control over the documents which
evidence ownership of the subject Inventory (such as by providing to the Agent
a Customs Agent Agreement);


 


9

















 


(c)           Inventory
to be manufactured shall only constitute Eligible L/C Inventory to the extent
the L/C issued in connection therewith remains undrawn; and


 


(d)           The
Agent is named as loss payee on any special policies of insurance taken out by
the Borrower for the period during which such Inventory is in transit.


 


“Employee
Benefit Plan”:  As defined in ERISA.


 


“Encumbrance”:  Each
of the following:


 


(a)           A
Collateral Interest or agreement to create or grant a Collateral Interest; the
interest of a lessor under a Capital Lease; conditional sale or other title
retention agreement; sale of accounts receivable or chattel paper; or other
arrangement pursuant to which any Person is entitled to any preference or priority
with respect to the property or assets of another Person or the income or
profits of such other Person; each of the foregoing whether consensual or non-consensual
and whether arising by way of agreement, operation of law, legal process or
otherwise.


 


(b)           The
filing authorized by the Borrower of any financing statement under the UCC or
comparable law of any jurisdiction.


 


“End Date”:  The
date upon which both (a) all Liabilities have been paid in full and (b) all
obligations of each of the Lenders to make loans and advances and to provide
other financial accommodations to the Borrower hereunder shall have been
irrevocably terminated.


 


“Environmental
Laws”:  All of the following:


 


(a)           Applicable
Law which regulates or relates to, or imposes any standard of conduct or
liability on account of or in respect to environmental protection matters,
including, without limitation, Hazardous Materials, as are now or hereafter in
effect.


 


(b)           The
common law relating to damage to Persons or property from Hazardous Materials.


 


“Equipment”:  Includes,
without limitation, “equipment” as defined in the UCC, and also all furniture,
store fixtures, motor vehicles, rolling stock, machinery, office equipment,
plant equipment, tools, dies, molds, and other goods, property, and assets
which are used and/or were purchased for use in the operation or furtherance of
the Borrower’s business, and any and all accessions or additions thereto, and
substitutions therefor.


 


“Erickson
Family”:  The descendants of Arthur T. and Elsie P. Erickson
and Alfred W. and Rose E. Erickson, or trusts established primarily for the
benefit of such descendants and/or their spouses or relatives.


 


“ERISA”:  The
Employee Retirement Income Security Act of 1974, as amended.


 


“ERISA
Affiliate”:  Any Person (whether or not incorporated),
which is under common control with the Borrower within the meaning of Section
414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes
of provisions relating to Section 412 of the Code).


 


10

















 


“Events of
Default”:  Is defined in Article 11.  An “Event of Default” shall be deemed to have
occurred and to be continuing unless and until that Event of Default has been
duly waived by the requisite Lenders or by the Agent as applicable.


 


“Exempt DDA”:  A
depository account maintained by the Borrower, the only contents of which may
be transfers from the Operating
Account and actually used solely (i) for petty cash purposes; or (ii) for
payroll.


 


“Existing
Letters of Credit”:  Those
letters of credit issued by the Agent for the account of the Borrower prior to
the Restatement Effective Date and listed on Schedule 2.18 to the Closing
Certificate.


 


“Existing
Loan Agreement”:  Is defined
in the preamble to this Agreement.


 


 “Farm Products”:  Has the meaning
given that term in the UCC.


 


“Federal
Funds Rate”:  For any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day; provided
that (a) if such day is not a Business Day, the Federal Funds Rate for such day
shall be such rate on such transactions on the next preceding Business Day as
so published on the next succeeding Business Day, and (b) if no such rate is so
published on such next succeeding Business Day, the Federal Funds Rate for such
day shall be the average rate (rounded upward, if necessary, to a whole
multiple of 1/100 of 1%) charged to Bank of America on such day on such
transactions as determined by the Agent.


 


“Fee Letter”:  The
Fee Letter, dated on or about the date of this Agreement among the Borrower and
the Agent.


 


“Fiscal”:  When
followed by “month” or “quarter”, the relevant fiscal period based on the
Borrower’s fiscal year and accounting conventions.  When followed by reference to a specific
year, Fiscal means the fiscal year which ends in a month of the year to which
reference is being made (e.g. if the Borrower’s fiscal year ends in January
2001 reference to that year would be to the Borrower’s “Fiscal 2001”).


 


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


 


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


 


“GAAP”:  Principles
which are consistent with those promulgated or adopted by the Financial Accounting
Standards Board and its predecessors (or successors) in effect and applicable
to that accounting period in respect of which reference to GAAP is being made.


 


11

















 


“GAAP
EBITDA”:  With respect to any fiscal period, an amount
equal to the sum of (a) Net Income of the Borrower for such fiscal period, plus (b) in each case to the extent
deducted in the calculation of Net Income and without duplication, (i)
depreciation and amortization for such fiscal period, plus (ii) income tax expense for such
fiscal period, plus (iii)
Interest Expense paid or accrued during such fiscal period, plus (iv) other noncash charges for such
fiscal period (excluding LIFO reserves), all as determined in accordance with
GAAP, after eliminating therefrom all extraordinary nonrecurring items of
income or expense.


 


“General
Intangibles”:  Includes, without limitation, “general
intangibles” as defined in the UCC; and also all: rights to payment for credit
extended; deposits; amounts due to the Borrower; credit memoranda in favor of
the Borrower; warranty claims; tax refunds and abatements; insurance refunds
and premium rebates; all means and vehicles of investment or hedging,
including, without limitation, options, warrants, and futures contracts;
records; customer lists; telephone numbers; goodwill; causes of action;
judgments; payments under any settlement or other agreement; literary rights;
rights to performance; royalties; license and/or franchise fees; rights of
admission; licenses; franchises; license agreements, including all rights of
the Borrower to enforce same; permits, certificates of convenience and
necessity, and similar rights granted by any governmental authority; patents,
patent applications, patents pending, and other intellectual property; internet
addresses and domain names; developmental ideas and concepts; proprietary
processes; blueprints, drawings, designs, diagrams, plans, reports, and charts;
catalogs; manuals; technical data; computer software programs (including the
source and object codes therefor), computer records, computer software, rights
of access to computer record service bureaus, service bureau computer
contracts, and computer data; tapes, disks, semi-conductors chips and
printouts; trade secrets rights, copyrights, copyright applications, mask work
rights and interests, and derivative works and interests; user, technical
reference, and other manuals and materials; trade names, trademarks, trademark
applications, service marks, and all goodwill relating thereto; applications
for registration of the foregoing; and all other general intangible property of
the Borrower in the nature of intellectual property; proposals; cost estimates,
and reproductions on paper, or otherwise, of any and all concepts or ideas, and
any matter related to, or connected with, the design, development, manufacture,
sale, marketing, leasing, or use of any or all property produced, sold, or
leased by the Borrower or credit extended or services performed, by the
Borrower, whether intended for an individual customer or the general business
of the Borrower, or used or useful in connection with research by the Borrower.


 


“Goods”:  Has
the meaning given that term in the UCC, and also includes all things movable
when a security interest therein attaches and also all computer programs
embedded in goods and any supporting information provided in connection with a
transaction relating to the program if (i) the program is associated with the
goods in such manner that it customarily is considered part of the goods or
(ii) by becoming the owner of the goods, a Person acquires a right to use the
program in connection with the goods.


 


“Granting
Lender”:  Is defined in Section 16.7.


 


“Hazardous
Materials”:  Any (a) substance which is defined or regulated
as a hazardous material in or under any Environmental Law, and (b) oil in any
physical state.


 


“Holiday
Companies”:  Holiday
Companies, a Minnesota corporation.


 


12

















 


“In Default”:  Any
occurrence, circumstance, or state of facts with respect to the Borrower which
(a) is an Event of Default; or (b) would become an Event of Default if any
requisite notice were given and/or any requisite period of time were to run and
such occurrence, circumstance, or state of facts were not absolutely cured
within any applicable grace period.


 


“Indebtedness”:  As to any Person and whether recourse is
secured by or is otherwise available against all or only a portion of the
assets of such Person and whether or not contingent, but without duplication:


 


(a)           every
obligation of such Person for money borrowed.


 


(b)           every
obligation of such Person evidenced by bonds, debentures, notes, loan
agreements or other similar instruments, including obligations incurred in
connection with the acquisition of property, assets or businesses.


 


(c)           every
reimbursement obligation of such Person with respect to letters of credit,
bankers’ acceptances or similar facilities issued for the account of such
Person.


 


(d)           every
obligation of such Person issued or assumed as the deferred purchase price of
property or services (including securities repurchase agreements but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business which are not overdue by more than Forty-Five (45) days or which are
being contested in good faith).


 


(e)           every
obligation of such Person under any Capital Lease.


 


(f)            every
obligation of such Person under any lease of goods or other property, whether
real or personal, which is treated as an operating lease under GAAP and as a
loan or financing for U.S. income tax purposes (a “Synthetic Lease”).


 


(g)           all
sales by such Person of (i) accounts or general intangibles for money due or to
become due, (ii) chattel paper, instruments or documents creating or evidencing
a right to payment of money or (iii) other receivables (collectively “receivables”),
whether pursuant to a purchase facility or otherwise, other than in connection
with the disposition of the business operations of such Person relating thereto
or a disposition of defaulted receivables for collection and not as a financing
arrangement, and together with any obligation of such Person to pay any
discount, interest, fees, indemnities, penalties, recourse, expenses or other
amounts in connection therewith.


 


(h)           every
obligation of such Person (an “equity  related  purchase  obligation”)
to purchase, redeem, retire or otherwise acquire for value any shares of
capital stock issued by such Person or any rights measured by the value of such
capital stock.


 


(i)            every
obligation of such Person under any forward contract, futures contract, swap,
option or other financing agreement or arrangement (including, without
limitation, caps, floors, collars and similar agreements), the value of which
is dependent upon interest rates, currency exchange rates, commodities or other
indices (a “derivative  contract”).


 


(j)            every
obligation in respect of Indebtedness of any other entity (including any
partnership in which such Person is a general partner) to the extent that such
Person is liable therefor as a result of such Person’s ownership interest in or
other relationship with such entity,


 


13

















 


except to the extent that the
terms of such Indebtedness provide that such Person is not liable therefor and
such terms are enforceable under applicable law.


 


(k)           every
obligation, contingent or otherwise, of such Person guaranteeing, or having the
economic effect of guarantying or otherwise acting as surety for, any
obligation of a type described in any of clauses (a) through (j) (the “primary
obligation”) of another Person (the “primary  obligor”), in
any manner, whether directly or indirectly, and including, without limitation,
any obligation of such Person (i) to purchase or pay (or advance or supply
funds for the purchase of) any security for the payment of such primary
obligation, (ii) to purchase property, securities or services for the purpose
of assuring the payment of such primary obligation, or (iii) to maintain
working capital, equity capital or other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay
such primary obligation.


 


The “amount” or “principal  amount”
of any Indebtedness at any time of determination represented by (t) any
Indebtedness, issued at a price that is less than the principal amount at
maturity thereof, shall be the amount of the liability in respect thereof
determined in accordance with GAAP, (u) any Capital Lease shall be the
principal component of the aggregate of the rentals obligation under such
Capital Lease payable over the term thereof that is not subject to termination
by the lessee, (v) any sale of receivables shall be the amount of unrecovered
capital or principal investment of the purchaser (other than the Borrower or
any of its wholly-owned subsidiaries) thereof, excluding amounts representative
of yield or interest earned on such investment, (w) any Synthetic Lease shall
be the stipulated loss value, termination value or other equivalent amount, (x)
any derivative contract shall be the maximum amount of any termination or loss
payment required to be paid by such Person if such derivative contract were, at
the time of determination, to be terminated by reason of any event of default
or early termination event thereunder, whether or not such event of default or
early termination event has in fact occurred, (y) any equity related purchase
obligation shall be the maximum fixed redemption or purchase price thereof
inclusive of any accrued and unpaid dividends to be comprised in such
redemption or purchase price and (z) any guaranty or other contingent liability
referred to in clause (k) shall be an amount equal to the stated or
determinable amount of the primary obligation in respect of which such guaranty
or other contingent obligation is made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof (assuming such
Person is required to perform thereunder) as determined by such Person in good
faith.


 


“Indemnified
Person”:  Is defined in Section 19.9(b).


 


“Information”:  Is defined in Section 19.13.


 


“Instrument
of Accession”: Is defined in Section 16.9.


 


“Instruments”:  Has
the meaning given that term in the UCC.


 


“Interest
Expense”:  For any period, the
aggregate amount of interest required to be paid or accrued by the Borrower
during such period on all Indebtedness of the Borrower outstanding during all
or any part of such period, whether such interest was or is required to be
reflected as an item of expense or capitalized, including payments consisting
of interest in respect of any Capital Lease, and including commitment fees,
agency fees, facility fees, balance deficiency fees and similar fees or
expenses in connection with the borrowing of money.


 


14

















 


“Interest
Payment Date”:  With reference to:


 


Each LIBOR Loan:  The last day of the Interest Period relating
thereto (and on the last day of month three for any such loan which has a six
month Interest Period); the Termination Date; and the End Date.


 


Each Base Margin Loan:  The first day of each month; the Termination
Date; and the End Date.


 


“Interest
Period”:  The following:


 


(a)           With
respect to each LIBOR Loan: Subject to Subsection (c), below, the period commencing
on the date of the making or continuation of, or conversion to, the subject
LIBOR Loan and ending one, two, three, or six months thereafter, as the
Borrower may elect by notice (pursuant to Section 2.5) to the Agent.


 


(b)           With
respect to each Base Margin Loan: Subject to Subsection (c), below, the period
commencing on the date of the making or continuation of or conversion to, the
subject Base Margin Loan and ending on that date (i) as of which the subject
Base Margin Loan is converted to a LIBOR Loan, as the Borrower may elect by
notice (pursuant to Section 2.5) to the Agent, or (ii) on which the subject
Base Margin Loan is paid by the Borrower.


 


(c)           The
setting of Interest Periods is in all instances subject to the following:


 


(i)            Any Interest Period
for a Base Margin Loan which would otherwise end on a day which is not a
Business Day shall be extended to the next succeeding Business Day.


 


(ii)           Any Interest Period for
a LIBOR Loan which would otherwise end on a day that is not a Business Day shall
be extended to the next succeeding Business Day, unless that succeeding
Business Day is in the next calendar month, in which event such Interest Period
shall end on the last Business Day of the month during which the Interest
Period ends.


 


(iii)          Subject to Subsection
(iv), below, any Interest Period applicable to a LIBOR Loan, which Interest
Period begins on a day for which there is no numerically corresponding day in
the calendar month during which such Interest Period ends, shall end on the
last Business Day of the month during which that Interest Period ends.


 


(iv)          Any Interest Period
which would otherwise end after the Termination Date shall end on the
Termination Date.


 


(v)           The number of Interest
Periods in effect at any one time is subject to Section 2.11(d) hereof.


 


“Internal
Control Event”:  A material
weakness in, or fraud that involves management or other employees who have a
significant role in, the Borrower’s internal controls over financial reporting,
in each case as described in the Securities Laws.


 


“Inventory”:  Includes,
without limitation, “inventory” as defined in the UCC and also all: (a) Goods
which are leased by a Person as lessor; are held by a Person for sale or lease
or to


 


15

















 


be furnished under a contract of service; are
to be furnished by a Person under a contract of service; or consist of raw
materials, work in process, or materials used or consumed in a business; (b)
Goods of said description in transit; (c) Goods of said description which are
returned, repossessed and rejected; (d) packaging, advertising, and shipping
materials related to any of the foregoing; (e) all names, marks, and General
Intangibles affixed or to be affixed or associated thereto; and (f) Documents and
Documents of Title which represent any of the foregoing.


 


“Inventory
Advance Rate”:  The following percentages  (in each case subject to upward adjustment by
up to One Percent (1.00%) in the Agent’s discretion so long as the Borrower is
in compliance with the Appraised Inventory Percentage) during the periods
indicated:


 


	
  Period

  	
   

  	
  Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  January 1 through March 31 of any year

  	
   

  	
  68.25

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  April 1 through August 31 of any year

  	
   

  	
  71.0

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  September 1 through December 31 of any year

  	
   

  	
  75.5

  	
  %

  



 


“Inventory
Reserves”:  Such Reserves as may be established from time
to time by the Agent in the Agent’s discretion with respect to Eligible
Inventory.  Inventory Reserves shall be
such reserves established by the Agent in connection with the Restatement Effective
Date.  Thereafter, the Agent may make
adjustments from time to time relating to, among other things, determinations
by the Agent that: (i) the number of days of the turnover of the inventory of
the Borrower for any period has changed in any material respect, (ii) the
liquidation value of the Eligible Inventory, or any category thereof, has
changed in any material respect, or (iii) the nature and quality of the
inventory of the Borrower has changed in any material respect or the mix of
such inventory has changed materially. 
In determining whether to establish Reserves, the Agent may consider
events, conditions, contingencies or risks which are also considered in
determining Eligible Inventory or in establishing the Availability Reserves.


 


“Investment
Property”:  Has the meaning given that term in the UCC.


 


“ISP”:  With
respect to any Letter of Credit, the “International Standby Practices 1998”
published by the Institute of International Banking Law & Practice (or such
later version thereof as may be in effect at the time of issuance).


 


“Issuer”:  The
issuer of any L/C.


 


“Issuer
Documents”:  With respect to any L/C, the Letter of Credit
Application, and any other document, agreement, and instrument entered into by
the Issuer and the Borrower (or any Subsidiary) or in favor of the Issuer and
relating to any such L/C.


 


“L/C”:  Any
letter of credit, the issuance of which is procured by the Agent for the
account of the Borrower and any acceptance made on account of such letter of
credit.


 


“L/C
Landing Costs”:  To the extent not included in the Stated
Amount of an L/C, customs, duty, freight, and other out-of-pocket costs and
expenses which will be expended to “land” the Inventory, the purchase of which
is supported by such L/C.


 


16

















 


“Lead
Arranger”:  Banc of America
Securities, LLC.


 


“Lease”:  Any
lease or other agreement, no matter how styled or structured, pursuant to which
the Borrower is entitled to the use or occupancy of any space.


 


“Leasehold
Interest”:  Any interest of the Borrower as lessee under
any Lease.


 


“Lenders”:  Collectively, the Revolving Credit Lenders
and the Term Loan Lenders, and each individually a “Lender”.


 


“Lenders’
Special Counsel”:  A single counsel, selected by the
Majority Lenders following the occurrence of an Event of Default, to represent
the interests of the Lenders in connection with the enforcement, attempted
enforcement, or preservation of any rights and remedies under this, or any
other Loan Document, as well as in connection with any “workout”, forbearance,
or restructuring of the credit facility contemplated hereby.


 


“Letter of
Credit Application”:  Is defined in Section 2.18.


 


“Letter of
Credit Expiration”:  The day that is Seven (7) days prior
to the Maturity Date then in effect (or, if such day is not a Business Day, the
next preceding Business Day).


 


“Letter-of-Credit
Right”:  Has the meaning given that term in the UCC and
also refers to any right to payment or performance under an L/C, whether or not
the beneficiary has demanded or is at the time entitled to demand payment or
performance.


 


“Liabilities”:  Includes,
without limitation, the following:


 


(a)           All
and each of the following, whether now existing or hereafter arising under this
Agreement or under any of the other Loan Documents:


 


(i)            Any and all direct and
indirect liabilities, debts, and obligations of the Borrower to the Agent or
any Revolving Credit Lender or Term Loan Lender, each of every kind, nature,
and description.


 


(ii)           Each obligation to
repay any loan, advance, indebtedness, note, obligation, overdraft, or amount
now or hereafter owing by the Borrower to the Agent or any Revolving Credit
Lender (including all future advances whether or not made pursuant to a
commitment by the Agent or any Revolving Credit Lender) or Term Loan Lender,
whether or not any of such are liquidated, unliquidated, primary, secondary,
secured, unsecured, direct, indirect, absolute, contingent, or of any other
type, nature, or description, or by reason of any cause of action which the
Agent or any Revolving Credit Lender or any Term Loan Lender may hold against
the Borrower.


 


(iii)          All notes and other
obligations of the Borrower now or hereafter assigned to or held by the Agent
or any Revolving Credit Lender or any Term Loan Lender, each of every kind,
nature, and description.


 


(iv)          All interest (including
post-petition interest, whether or not permitted in a bankruptcy proceeding),
fees, and charges and other amounts which may be charged by the Agent or any
Revolving Credit Lender or any Term Loan Lender to the Borrower


 


17

















 


and/or which
may be due from the Borrower to the Agent or any Revolving Credit Lender or any
Term Loan Lender from time to time.


 


(v)           All costs and expenses
incurred or paid by the Agent or any Revolving Credit Lender or any Term Loan
Lender in respect of any agreement between the Borrower and the Agent or any
Revolving Credit Lender or any Term Loan Lender or instrument furnished by the
Borrower to the Agent or any Revolving Credit Lender or any Term Loan Lender
(including, without limitation, Costs of Collection, attorneys’ reasonable
fees, and all court and litigation costs and expenses).


 


(vi)          Any and all covenants of
the Borrower to or with the Agent or any Revolving Credit Lender or any Term
Loan Lender and any and all obligations of the Borrower to act or to refrain
from acting in accordance with any agreement between the Borrower and the Agent
or any Revolving Credit Lender or any Term Loan Lender or instrument furnished
by the Borrower to the Agent or any Revolving Credit Lender or any Term Loan
Lender.


 


(vii)         Any forward contract,
futures contract, swap, option or other financing agreement (including, without
limitation, caps, floors, collars and similar agreements), the value of which
is dependent upon interest rates, currency exchange rates, commodities or other
indices, entered into between the Borrower and Bank of America.


 


(viii)        Each of the foregoing as
if each reference to the “the Agent or any Revolving Credit Lender or any Term
Loan Lender” were to each Affiliate of the Agent.


 


(b)           Any
and all direct or indirect liabilities, debts, and obligations of the Borrower
to the Agent or any Affiliate of the Agent, each of every kind, nature, and
description owing on account of any service or accommodation provided to, or
for the account of the Borrower pursuant to this or any other Loan Document,
including cash management services and the issuances of L/Cs.


 


“LIBOR”:  That per annum rate
equal to the LIBOR Offer Rate except that,
in the event that the Agent determines that any Lender may be subject to the
Reserve Percentage, “LIBOR” shall mean, with respect to any LIBOR Loans then
outstanding (from the date on which that Reserve Percentage first became
applicable to such loans), and with respect to all LIBOR Loans thereafter made,
an interest rate per annum equal to the decimal equivalent of the following
fraction:


 


LIBOR Offer Rate

1 minus Reserve Percentage.


 


“LIBOR
Business Day”:  Any day which is both a Business Day and a
day on which the principal market in LIBOR in which Bank of America
participates is open for dealings in United States Dollar deposits.


 


“LIBOR Loan”:  Any
Revolving Credit Loan or relevant portion of the Term Loan which bears interest
determined by reference to LIBOR.


 


“LIBOR
Offer Rate”:  (a) That rate of interest (rounded upwards,
if necessary, to the next 1/100 of 1%) determined by the Agent at which
deposits on U.S. Dollars for such Interest


 


18

















 


Period are offered based on information
presented on Telerate Page 3750 at or about 10:00AM Two (2) LIBOR Business Days
before the first day of the Interest Period for the subject LIBOR Loan for a
deposit approximately in the amount of the subject loan, for a period of time
approximately equal to such Interest Period, or (b) if such information on such
Telerate Page is not available, the rate at which deposits on U.S. Dollars are
offered to Bank of America, by first-class banks in the LIBOR market in which
Bank of America participates at 10:00AM Two (2) LIBOR Business Days before the
first day of the Interest Period for the subject LIBOR Loan for a deposit
approximately in the amount of the subject loan, for a period of time
approximately equal to such Interest Period.


 


“LIBOR Rate”:  That per annum rate equal to the sum of (a)
LIBOR plus (b) the LIBOR Rate
Applicable Margin.


 


“LIBOR Rate
Applicable Margin”:  See definition of Applicable Margin.


 


“Lien”:  Any
mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance,
lien (statutory or other), charge, or preference, priority or other security
interest or preferential arrangement in the nature of a security interest of
any kind or nature whatsoever (including any conditional sale or other title
retention agreement, any easement, right of way or other encumbrance on title
to real property, and any financing lease having substantially the same
economic effect as any of the foregoing).


 


“Liquidation”:  The
exercise, by the Agent, of those rights accorded to the Agent under the Loan
Documents as a creditor of the Borrower following and on account of the
occurrence of an Event of Default looking towards the realization on the
Collateral.  Derivations of the word “Liquidation”
(such as “Liquidate”) are used with like meaning in this Agreement.


 


“Loan
Account”:  Is defined in Section 2.8.


 


“Loan
Commitment”:  With respect to
each Revolving Credit Lender, that respective Revolving Credit Lender’s
Revolving Credit Dollar Commitment, and with respect to each Term Loan Lender,
that respective Term Loan Lender’s Term Loan Commitment.


 


“Loan
Documents”:  This Agreement and each other instrument or
document from time to time executed and/or delivered in connection with the
arrangements contemplated hereby or in connection with any transaction with the
Agent or any Affiliate of the Agent, including, without limitation, any
transaction which arises out of any cash management, depository, investment,
letter of credit, interest rate protection, or equipment leasing services
provided by the Agent or any Affiliate of the Agent, as each may be amended
from time to time.


 


“Loan
Request”:  Is defined in Section 2.5.


 


“Loans”:  Collectively, the Revolving Credit Loans and
the Term Loan.


 


“Local
Account”:  Is defined in Section 8.3.


 


“Majority
Lenders”:  Lenders (other than Delinquent Revolving Credit
Lenders) holding 51% or more of the Aggregate Loan Commitments (other than any
Loan Commitments held by Delinquent Revolving Credit Lenders), or if the
Revolving Credit Dollar Commitment has been terminated, Lenders (other than
Delinquent Revolving Credit Lenders) holding 51% of the sum


 


19

















 


of the total outstanding principal amount of
all Loans, the undrawn Stated Amount of L/Cs outstanding and unpaid
Reimbursement Obligations.


 


“Material
Accounting Change”:  Any change in GAAP applicable to
accounting periods subsequent to the Borrower’s fiscal year most recently
completed prior to the execution of this Agreement, which change has a material
effect on the Borrower’s financial condition or operating results, as reflected
on financial statements and reports prepared by or for the Borrower, when
compared with such condition or results as if such change had not taken place
or where preparation of the Borrower’s statements and reports in compliance
with such change results in the breach of a financial performance covenant
imposed pursuant to Section 6.11 where such a breach would not have occurred if
such change had not taken place or visa
versa.


 


“Maturity
Date”:  June 30, 2009.


 


“Maximum
Revolving Credit Ceiling”:  $275,000,000, as the same may
be increased or decreased from time to time in accordance with the provisions
of Sections 2.15, 16.9 and 16.10 hereof up to an aggregate amount not to exceed
$300,000,000.


 


“Maximum
Revolving Credit Dollar Commitment”:  As set forth on Schedule 2.22,
annexed hereto (as such amounts may change in accordance with the provisions of
this Agreement).


 


“Net Income”:  The
net income (or deficit) of the Borrower, after deduction of all expenses,
taxes, and other proper charges, determined in accordance with GAAP, after
eliminating therefrom all extraordinary nonrecurring items of income.


 


“Nominee”:  A
business entity (such as a corporation or limited partnership) formed by the
Agent to own or manage any Post Foreclosure Asset.


 


“Non-Extension
Notice Date”:  Is defined in Section 2.18(d).


 


“Note”:
Any Revolving Credit Note or Term Note, as the case may be.


 


“Obligations”: 
Collectively, the Revolving Credit Obligations and the Term Loan
Obligations.


 


“Operating
Cash Flow”:  With respect to
any fiscal period, an amount equal to EBITDA for such fiscal period less Capital Expenditures for such period
in excess of the amount financed by indebtedness permitted by Section 5.7.


 


“OverAdvance”:  A
loan, advance, or providing of credit support (such as the issuance of any L/C)
to the extent that, immediately after its having been made, Availability is
less than zero.


 


“Participant”:  Is
defined in Section 16.3.


 


“Payment
Intangible”:  Has the meaning given that term in the UCC
and also refers to any general intangible under which the Account Debtor’s
primary obligation is a monetary obligation.


 


20

















 


“Perfection
Certificate”:  The
Perfection Certificate dated as of the Restatement Effective Date and delivered
by the Borrower to the Agent.


 


“Permitted
Encumbrances”:  Is defined in Section 5.6(a).


 


“Permitted
Investments”:  Is defined in Section 5.20.


 


“Person”:  Any
natural person, and any corporation, limited liability company, trust,
partnership, joint venture, or other enterprise or entity.


 


“Platform”:  Is defined in Section 6.1.


 


“Post
Foreclosure Asset”:  All or any part of the Collateral,
ownership of which is acquired by the Agent or a Nominee on account of the “bidding
in” at a disposition as part of a Liquidation or by reason of a “deed in lieu”
type of transaction.


 


“Proceeds”:  Includes,
without limitation, “Proceeds” as defined in the UCC and each type of property
described in Section 9.1.


 


“Protective
OverAdvances”:  Revolving Credit Loans which are
OverAdvances, but as to which each of the following conditions is satisfied:
(a) the Maximum Revolving Credit Ceiling is not exceeded; and (b) when
aggregated with all other Protective OverAdvances, such Revolving Credit Loans
do not aggregate more than five percent (5%) of the lesser of (i) the
then-current Borrowing Base and (ii) the Maximum Revolving Credit Ceiling; and
(c) such Revolving Credit Loans are made or undertaken in the Agent’s
discretion to protect and preserve the interests of the Lenders.


 


“Rate
Adjustment Period”: Is defined in the definition of Applicable
Margin.


 


“Real
Estate”:  All real property at any time owned or leased
(as lessee or sublessee) by the Borrower.


 


“Receipts”:  All
cash, cash equivalents, money, checks, credit card slips, receipts and other
Proceeds from any sale of the Collateral.


 


“Receivables
Collateral”:  That portion of the Collateral which
consists of Accounts, Accounts Receivable, General Intangibles, Chattel Paper,
Instruments, Documents of Title, Documents, Investment Property, Payment
Intangibles, Letter-of-Credit Rights, bankers’ acceptances, and all other
rights to payment.


 


“Reference
Period”: For any date, the period of twelve (12) consecutive fiscal
months of the Borrower ending on such date.


 


“Register”:  Is
defined in Section 16.1(d).


 


“Registered
Public Accounting Firm”:  Has
the meaning specified in the Securities Laws and shall be independent of the
Borrower as prescribed by the Securities Laws.


 


“Reimbursement
Obligation”:  The Borrower’s obligation to reimburse the
Agent and the Revolving Credit Lenders on account of any drawing under any L/C
as provided in Section 2.20.


 


21

















 


“Related
Parties”: With respect to any Person, such Person’s Affiliates
and the partners, directors, officers, employees, agents, and advisors of such
Person and of such Person’s Affiliates.


 


“Requirements
of Law”:  As to any Person:


 


(a)           Applicable
Law.


 


(b)           That
Person’s organizational documents.


 


(c)           That
Person’s by-laws and/or other instruments which deal with corporate or similar
governance, as applicable.


 


“Reserve
Percentage”:  The decimal equivalent of that rate
applicable to a Lender under regulations issued from time to time by the Board
of Governors of the Federal Reserve System for determining the maximum reserve
requirement of that Lender with respect to “Eurocurrency liabilities” as
defined in such regulations.  The Reserve
Percentage applicable to a particular LIBOR Loan shall be based upon that in
effect during the subject Interest Period, with changes in the Reserve
Percentage which take effect during such Interest Period to take effect (and to
consequently change any interest rate determined with reference to the Reserve
Percentage) if and when such change is applicable to such loans.


 


“Reserves”:  The
following: Availability Reserves and Inventory Reserves.


 


“Restatement
Effective Date”:  The date on
which the conditions set forth in Section 4 have been satisfied and this
Agreement first became effective.


 


“Revolving
Credit”:  Revolving credit loans made or to be made by the
Revolving Credit Lenders pursuant to Section 2.1 and SwingLine Loans.


 


“Revolving
Credit Dollar Commitment”:  With respect to each Revolving
Credit Lender, such Revolving Credit Lender’s Revolving Credit Percentage
Commitment multiplied by the
Maximum Revolving Credit Ceiling.


 


“Revolving
Credit Early Termination Fee”:  Is defined in Section
2.15.


 


“Revolving
Credit Lenders”:  A Lender identified on Schedule 2.22
which holds a Revolving Credit Dollar Commitment or who becomes a Revolving
Credit Lender in accordance with Section 16.1.


 


“Revolving
Credit Loans”:  Loans made under the Revolving Credit,
except that where the term “Revolving Credit Loan” is used with reference to
available interest rates applicable to the loans under the Revolving Credit, it
refers to so much of the unpaid principal balance of the Loan Account as bears
the same rate of interest for the same Interest Period. (See Section 2.11, 2.11(c)).


 


“Revolving
Credit Note”:  Is defined in Section 2.9.


 


“Revolving
Credit Obligations”:  The aggregate of the Borrower’s
liabilities, obligations, and indebtedness of any character on account of or in
respect to the Revolving Credit.


 


22

















 


“Revolving
Credit Percentage Commitment”:  As set forth on Schedule 2.22,
annexed hereto (as such amounts may change in accordance with the provisions of
this Agreement).


 


“Sarbanes-Oxley”:  The Sarbanes-Oxley Act of 2002.


 


“Securities
Laws”:  The Securities Act of
1933, the Securities Exchange Act of 1934, Sarbanes-Oxley and the applicable
accounting and auditing principles, rules, standards and practices promulgated,
approved or incorporated by the SEC or the Public Company Accounting Oversight
Board, as each of the foregoing may be amended and in effect on any applicable
date hereunder.


 


“Stated
Amount”:  The maximum amount for which an L/C may be
honored.


 


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


 


“SuperMajority
Lenders”:  Lenders (other than Delinquent Revolving Credit
Lenders) holding 66-2/3% or more of the Aggregate Loan Commitments (other than
Loan Commitments held by a Delinquent Revolving Credit Lender), or if the
Revolving Credit Dollar Commitment has been terminated, Lenders (other than
Delinquent Revolving Credit Lenders) holding 66-2/3% of the sum of the total
outstanding principal amount of all Loans, the undrawn Stated Amount of L/Cs
outstanding and unpaid Reimbursement Obligations.


 


“SwingLine”:         The
facility pursuant to which the SwingLine Lender may advance Revolving Credit
Loans aggregating up to the SwingLine Loan Ceiling.


 


“SwingLine
Lender”:  Bank of America, in its capacity as provider of
SwingLine Loans, or any successor SwingLine Lender hereunder.


 


“SwingLine
Loan Ceiling”:  Ten percent (10%) of the Maximum Revolving
Credit Ceiling in effect from time to time (subject to increase as provided in
Section 16.9 and 16.10).


 


“SwingLine
Loans”:  Is defined in Section 2.7.


 


“SwingLine
Note”:  Is defined in Section 2.7.


 


“Syndication
Agent”:  Foothill Capital Corporation.


 


“Term Loan”:  The term loan to be made to the Borrower by
the Term Loan Lenders pursuant to Section 3.1.


 


“Term Loan
Commitment”:  With respect to
each Term Loan Lender, the amount set forth on Schedule 2.22 hereto as the amount of such
Term Loan Lender’s commitment to make a portion of the Term Loan to the
Borrower on the Restatement Effective Date.


 


23

















 


“Term Loan
Lender”:  A Lender identified
on Schedule 2.22
which holds a Term Loan Commitment or who becomes a Term Loan Lender in
accordance with Section 16.1.


 


“Term Loan
Obligations”:  The aggregate
of the Borrower’s liabilities, obligations, and indebtedness of any character
on account of or in respect to the Term Loan.


 


“Term Loan
Percentage”:  With respect to
each Term Loan Lender, the percentage set forth on Schedule 2.22 hereto as such Lender’s
percentage of the aggregate Term Loan Commitments of all the Term Loan Lenders.


 


“Term Loan
to Value Reserve”:  At any
time of determination by the Agent, from time to time an amount equal to the
greater of,


 


(a)           $0;
or


 


(b)           the
principal amount of the Term Loan minus
the sum of (i) the face amount of Eligible Credit Card Receivables multiplied  by 5.0%, and (ii) the Appraised Inventory Liquidation Value multiplied by 5.0%.


 


“Term Note”:  Is defined in Section 3.2.


 


“Termination
Date”:  The earliest of (a) the Maturity Date; or (b) the
occurrence of any event described in Section 11.11, below; or (c) the Agent’s
notice to the Borrower setting the Termination Date on account of the
occurrence of any Event of Default other than as described in Section 11.11,
below; or (d) that date, Ninety (90) days following irrevocable written notice
of which is provided by the Borrower to the Agent.


 


“Trademark
Pledge Agreement”: The Amended and Restated Trademark Collateral
Security and Pledge Agreement, dated on or about the date of this Agreement
among the Borrower and the Agent, for the benefit of the Lenders, such
Trademark Pledge Agreement to be on terms and conditions acceptable to the
Agent, as further amended, restated, modified or supplemented and in effect
from time to time.


 


“Transfer”:  Wire
transfer pursuant to the wire transfer system maintained by the Board of
Governors of the Federal Reserve Board, or as otherwise may be agreed to from
time to time by the Agent making such Transfer and the subject Lender.  Wire instructions may be changed in the same
manner that Notice Addresses may be changed (Section 17.1), except that no
change of the wire instructions for Transfers to any Lender shall be effective
without the consent of the Agent.


 


“UCC”:  The
Uniform Commercial Code as in effect from time to time in Massachusetts.


 


“Unanimous
Consent”:  Consent of Lenders (other than Delinquent
Revolving Credit Lenders) holding 100% of the Aggregate Loan Commitments (other
than any Loan Commitments held by Delinquent Revolving Credit Lenders), or if
the Revolving Credit Dollar Commitment has been terminated, Lenders (other than
Delinquent Revolving Credit Lenders) holding 100% of the sum of the total
outstanding principal amount of all Loans, the undrawn Stated Amount of L/Cs
outstanding and unpaid Reimbursement Obligations.


 


24

















 


“Unpaid
Reimbursement Obligation”:  Any Reimbursement Obligation
for which the Borrower does not reimburse the Agent and the Revolving Credit
Lenders on the date specified in, and in accordance with Section 2.20.


 


“Upfront
Fee”:  Is defined in Section 2.12.


 


“Unused
Line Fee”:  Is defined in Section 2.14.


 


ARTICLE II.                   THE REVOLVING CREDIT AND CERTAIN TERMS OF GENERAL
APPLICATION


 


2.1.         Establishment of
Revolving Credit.


 


(a)           The
Revolving Credit Lenders hereby establish a revolving line of credit in the
Borrower’s favor pursuant to which each Revolving Credit Lender, subject to,
and in accordance with, this Agreement, acting through the Agent, shall make
loans and advances and otherwise provide financial accommodations to and for
the account of the Borrower as provided herein.


 


(b)           Loans,
advances, and financial accommodations under the Revolving Credit shall be made
with reference to the Borrowing Base and shall be subject to Availability.  The Borrowing Base and Availability shall be
determined by the Agent by reference to Borrowing Base Certificates furnished
as provided in Section 6.4, below, and shall be subject to the following:


 


(i)            Such determination
shall take into account such Reserves as the Agent may reasonably determine as
being applicable thereto.


 


(ii)           The Cost of Eligible
Inventory will be determined in a manner consistent with current tracking
practices, based on the Borrower’s stock ledger inventory.


 


(c)           The
commitment of each Revolving Credit Lender to provide such loans, advances, and
financial accommodations is subject to Section 2.22.


 


(d)           The
proceeds of borrowings under the Revolving Credit shall be used to refinance
existing Indebtedness and for working capital purposes, including, without
limitation, inventory purchases.  No
proceeds of a borrowing under the Revolving Credit may be used, nor shall any
be requested, with a view towards the accumulation of any general fund or
funded reserve of the Borrower other than in the ordinary course of the
Borrower’s business and consistent with the provisions of this Agreement.


 


2.2.         Advances in Excess
of Borrowing Base (OverAdvances).


 


(a)           No
Revolving Credit Lender has any obligation to make any loan or advance, or
otherwise to provide any credit to or for the benefit of the Borrower where the
result of such loan, advance, or credit is an OverAdvance.


 


(b)           The
Revolving Credit Lenders’ obligations, among themselves, are subject to Section
2.25(a) (which relates to each Revolving Credit Lender’s making amounts
available to the Agent) and to Section 15.3(a) (which relates to Protective
OverAdvances).


 


25

















 


(c)           The
Revolving Credit Lenders’ providing of an OverAdvance on any one occasion does
not affect the obligations of the Borrower hereunder (including the Borrower’s
obligation to immediately repay any amount which otherwise constitutes an
OverAdvance) nor obligate the Revolving Credit Lenders to do so on any other
occasion.


 


2.3.         Risks of Value of Collateral.  The Agent’s reference to a given asset in
connection with the making of loans, credits, and advances and the providing of
financial accommodations under the Revolving Credit or the Term Loan and/or the
monitoring of compliance with the provisions hereof shall not be deemed a
determination by the Agent or any Revolving Credit Lender or any Term Loan
Lender relative to the actual value of the asset in question.  All risks concerning the value of the
Collateral are and remain upon the Borrower. 
All Collateral secures the prompt, punctual, and faithful performance of
the Liabilities whether or not relied upon by the Agent in connection with the
making of loans, credits, and advances and the providing of financial
accommodations under the Revolving Credit and the Term Loan.


 


2.4.         Commitment to Make
Revolving Credit Loans and Support Letters of Credit.  Subject to the provisions of this Agreement,
the Revolving Credit Lenders shall make a loan or advance under the Revolving
Credit and the Agent shall issue an L/C for the account of, or shall have an
L/C issued for the account of, the Borrower, in each instance if duly and
timely requested by the Borrower as provided herein provided that:


 


(i)            No OverAdvance is then
outstanding and none will result therefrom.


 


(ii)           The Revolving Credit
has not been suspended (as to which, see
Section 2.5(g)).


 


2.5.         Revolving Credit
Loan Requests.


 


(a)           Requests
for loans and advances under the Revolving Credit or for the continuance or
conversion of an interest rate applicable to a Revolving Credit Loan may be
requested by the Borrower in the form attached as EXHIBIT C or in such other manner as may from time to
time be acceptable to the Agent (each a “Loan
Request”).


 


(b)           Subject
to the provisions of this Agreement, the Borrower may request a Revolving
Credit Loan and elect an interest rate and Interest Period to be applicable to
that Revolving Credit Loan by giving notice to the Agent by no later than the
following:


 


(i)            If such Revolving
Credit Loan is to be or is to be converted to a Base Margin Loan: By 1:00PM on
the Business Day on which the subject Revolving Credit Loan is to be made or is
to be so converted.  Base Margin Loans
requested by the Borrower, other than those resulting from the conversion of a
LIBOR Loan, shall not be less than $10,000.


 


(ii)           If such Revolving
Credit Loan is to be, or is to be continued as, or converted to, a LIBOR Loan:
By 10:30AM Two (2) LIBOR Business Days before the commencement of any new
Interest Period or the end of the then applicable Interest Period.  LIBOR Loans and conversions to LIBOR Loans
shall each be not less than $1,000,000 and in increments of $100,000 in excess
of such minimum.


 


26

















 


(iii)          Any LIBOR Loan which
matures while the Borrower is In Default shall be converted, at the option of
the Agent, to a Base Margin Loan notwithstanding any notice from the Borrower
that such Loan is to be continued as a LIBOR Loan.


 


(c)           Any
request for a Revolving Credit Loan or for the continuance or conversion of an
interest rate applicable to a Revolving Credit Loan which is made after the
applicable deadline therefor, as set forth above, shall be deemed to have been
made at the opening of business on the then next Business Day or LIBOR Business
Day, as applicable.


 


(d)           The
Borrower may request that the Agent cause the issuance by the Issuer of L/Cs
for the account of the Borrower as provided in Section 2.18.


 


(e)           The
Agent may rely on any request for a loan or advance, or other financial
accommodation under the Revolving Credit which the Agent, in good faith,
believes to have been made by a Person duly authorized to act on behalf of the
Borrower and may decline to make any such requested loan or advance, or
issuance, or to provide any such financial accommodation pending the Agent’s
being furnished with such documentation concerning that Person’s authority to
act as may be satisfactory to the Agent.


 


(f)            A
request by the Borrower for a loan or advance, or other financial accommodation
under the Revolving Credit shall be irrevocable and shall constitute
certification by the Borrower that as of the date of such request, each of the
following is true and correct:


 


(i)            There has been no
material adverse change in the Borrower’s financial condition from the most
recent financial information furnished Agent or any Revolving Credit Lender
pursuant to this Agreement.


 


(ii)           To the extent
necessary, all or a portion of any loan or advance so requested will be set
aside by the Borrower to cover the Borrower’s obligations for sales tax on
account of sales since the then most recent borrowing pursuant to the Revolving
Credit.


 


(iii)          Each representation
which is made herein or in any of the Loan Documents was true in all material
respects as of the date as of which they were made and each of the
representations and warranties contained in this Agreement are true in all
material respects, with the same effect as if made at and as of the date of
such request (except to the extent of changes resulting from transactions
contemplated or permitted by this Agreement and the other Loan Documents and
changes occurring in the ordinary course of business that singly or in the
aggregate are not materially adverse, and to the extent that such
representations and warranties relate expressly to an earlier date).


 


(iv)          Unless accompanied by a
written Certificate of the Borrower’s President or its Chief Financial Officer
describing (in reasonable detail) the facts and circumstances thereof and the
steps (if any) being taken to remedy such condition, that the Borrower is not
In Default.


 


27

















 


(g)           If,
at any time or from time to time, the Borrower is In Default:


 


(i)            The Agent may suspend
the Revolving Credit immediately, in which event, neither the Agent nor any
Lender shall be obligated, during such suspension, to make any loan or advance,
or to provide any financial accommodation hereunder or to seek the issuance of
any L/C.


 


(ii)           The Agent may suspend
the right of the Borrower to request any LIBOR Loan or to convert any Base
Margin Loan to a LIBOR Loan.


 


2.6.         Making of Revolving
Credit Loans.


 


(a)           A
loan or advance under the Revolving Credit shall be made by the transfer of the
proceeds of such loan or advance to the Operating Account or as otherwise
instructed by the Borrower.


 


(b)           A
loan or advance shall be deemed to have been made under the Revolving Credit
(and the Borrower shall be indebted to the Agent and the Revolving Credit
Lenders for the amount thereof immediately) at the following:


 


(i)            The Agent’s initiation
of the transfer of the proceeds of such loan or advance in accordance with the
Borrower’s instructions (if such loan or advance is of funds requested by the
Borrower).


 


(ii)           The charging of the
amount of such loan to the Loan Account (in all other circumstances).


 


(c)           Except
where there has been gross negligence or willful misconduct on the part of the
Agent or any Revolving Credit Lender, there shall not be any recourse to or
liability of the Agent or any Revolving Credit Lender, on account of:


 


(i)            Any delay in the
making of any loan or advance requested under the Revolving Credit.


 


(ii)           Any delay by any bank
or other depository institution in treating the proceeds of any such loan or
advance as collected funds.


 


(iii)          Any delay in the
receipt, and/or any loss, of funds which constitute a loan or advance under the
Revolving Credit, the wire transfer of which was properly initiated by the
Agent in accordance with wire instructions provided to the Agent by the
Borrower.


 


2.7.         SwingLine Loans.


 


(a)           Subject
to the terms and conditions set forth herein, the SwingLine Lender agrees, in
reliance upon the agreements of the other Revolving Credit Lenders set forth in
this Section 2.7, to make loans (in the aggregate, the “SwingLine Loans”) in accordance with the
procedures set forth in this Agreement for the making of loans and advances
under the Revolving Credit.


 


(b)           The
aggregate unpaid principal balance of the SwingLine Loans shall not at any one
time be in excess of the SwingLine Loan Ceiling.


 


28

















 


(c)           The
aggregate unpaid principal balance of SwingLine Loans shall bear interest at
the rate applicable to Base Margin Loans and shall be repayable as a loan under
the Revolving Credit.


 


(d)           The
Borrower’s obligation to repay SwingLine Loans shall be evidenced by a Note
(the “SwingLine Note”), in the
form of EXHIBIT A, annexed
hereto, executed by the Borrower, and payable to the SwingLine Lender.  Neither the original nor a copy of that Note
shall be required, however, to
establish or prove any Liability.  The
Borrower shall execute a replacement of any SwingLine Note which has been lost,
mutilated, or destroyed thereof and deliver such replacement to the SwingLine
Lender.


 


(e)           For
all purposes of this Loan Agreement, the SwingLine Loans and the Borrower’s
obligations to the SwingLine Lender constitute Revolving Credit Loans and are
secured as “Liabilities”.


 


(f)            SwingLine
Loans may be subject to periodic settlement with the Revolving Credit Lenders
as provided in this Agreement.


 


2.8.         The Loan Account.


 


(a)           An
account (“Loan Account”) shall be
opened on the books of the Agent in which a record shall be kept of all loans,
advances and payments made under the Revolving Credit and the Term Loan.


 


(b)           The
Agent shall also keep a record (either in the Loan Account or elsewhere, as the
Agent may from time to time elect) of all interest, fees, service charges,
costs, expenses, and other debits owed to the Agent and each Revolving Credit
Lender or Term Loan Lender, as applicable, on account of the Liabilities and of
all credits against such amounts so owed.


 


(c)           All
credits against the Liabilities shall be conditional upon final payment to the
Agent for the account of each Revolving Credit Lender or Term Loan Lender, as
applicable, of the items giving rise to such credits.  The amount of any item credited against the
Liabilities which is charged back against the Agent or any Revolving Credit
Lender or any Term Loan Lender, as applicable, for any reason or is not so paid
shall be a Liability and shall be added to the Loan Account, whether or not the
item so charged back or not so paid is returned.


 


(d)           Except
as otherwise provided herein, all fees, service charges, costs, and expenses
for which the Borrower is obligated hereunder are payable on demand.  In the determination of Availability, the
Agent may deem fees, service charges, accrued interest, and other payments
which will be due and payable between the date of such determination and the
first day of the then next succeeding month as having been advanced under the
Revolving Credit whether or not such amounts are then due and payable.


 


(e)           The
Agent, without the request of the Borrower, may advance under the Revolving
Credit any interest, fee, service charge, or other payment to which the Agent
or any Revolving Credit Lender or any Term Loan Lender, as applicable, is
entitled from the Borrower pursuant hereto and may charge the same to the Loan
Account notwithstanding that an OverAdvance may result thereby.  Such action on the part of the Agent shall not
constitute a waiver of the Agent’s rights and the Borrower’s obligations under
Section 2.10(b). Any amount


 


29

















 


which is added to the principal
balance of the Loan Account as provided in this Section 2.8(e) shall bear
interest at the interest rate then and thereafter applicable to Base Margin
Loans.


 


(f)            Any
statement rendered by the Agent or any Revolving Credit Lender or any Term Loan
Lender, as applicable, to the Borrower concerning the Liabilities shall be
considered correct and accepted by the Borrower and shall be conclusively
binding upon the Borrower unless the Borrower provides the Agent with written
objection thereto within Thirty (30) days from the mailing of such statement,
which written objection shall indicate, with particularity, the reason for such
objection.  The Loan Account and the
Agent’s books and records concerning the loan arrangement contemplated herein
and the Liabilities shall be prima facie evidence and proof of the items
described therein.


 


2.9.         The Revolving Credit Notes.  The Borrower’s obligation to repay loans and
advances under the Revolving Credit, with interest as provided herein, shall be
evidenced by Notes (each, a “Revolving Credit
Note”) in the form of EXHIBIT B,
annexed hereto, executed by the Borrower, one payable to each Revolving Credit
Lender.  Neither the original nor a copy
of any Revolving Credit Note shall be required, however, to establish or prove any Liability.  In the event that any Revolving Credit Note
is ever lost, mutilated, or destroyed, the Borrower shall execute a replacement
thereof and deliver such replacement to the Agent.


 


2.10.       Payment of The Loan
Account.


 


(a)           The
Borrower may repay all or any
portion of the principal balance of the Loan Account from time to time until
the Termination Date.


 


(b)           The
Borrower, without notice or demand from the Agent or any Revolving Credit
Lender, shall pay the Agent that
amount, from time to time, which is necessary so that there is no OverAdvance
outstanding.


 


(c)           The
Borrower shall repay the then
entire unpaid balance of the Loan Account and all other Liabilities on the
Termination Date.


 


(d)           The
Agent shall endeavor to cause the application of payments (if any), pursuant to
Sections 2.10(a) and 2.10(b) against LIBOR Loans then outstanding in such
manner as results in the least cost to the Borrower, but shall not have any
affirmative obligation to do so nor liability on account of the Agent’s failure
to have done so.  In no event shall
action or inaction taken by the Agent excuse the Borrower from any indemnification
obligation under Section 2.10(e).


 


(e)           The
Borrower shall indemnify the Agent, each Revolving Credit Lender and each Term
Loan Lender and hold the Agent, each Revolving Credit Lender and each Term Loan
Lender harmless from and against any loss, cost or expense (including loss of
anticipated profits and amounts payable by the Agent or such Revolving Credit
Lender or Term Loan Lender on account of “breakage fees” (so-called)) which the
Agent or such Revolving Credit Lender or Term Loan Lender may sustain or incur
(including, without limitation, by virtue of acceleration after the occurrence
of any Event of Default) as a consequence of the following:


 


(i)            Default by the
Borrower in payment of the principal amount of or any interest on any LIBOR Loan
as and when due and payable, including any such loss or


 


30

















 


expense
arising from interest or fees payable by such Revolving Credit Lender or Term
Loan Lender in order to maintain its LIBOR Loans.


 


(ii)           Default by the Borrower
in making a borrowing or conversion after the Borrower has given (or is deemed
to have given) a request for a Revolving Credit Loan or a request to convert a
Loan from one applicable interest rate to another.


 


(iii)          The making of any payment
on a LIBOR Loan or the making of any conversion of any such Loan to a Base
Margin Loan on a day that is not the last day of the applicable Interest Period
with respect thereto.


 


(f)            All
payments to be made by the Borrower shall be made without condition or
deduction for any counterclaim, defense, recoupment, or setoff.


 


2.11.       Interest on
Revolving Credit Loans.


 


(a)           Each
Revolving Credit Loan shall bear interest at the Base Margin Rate unless timely
notice is given (as provided in Section 2.5) that the subject Revolving Credit
Loan (or a portion thereof) is, or is to be converted to, a LIBOR Loan.


 


(b)           Each
Revolving Credit Loan which consists of a LIBOR Loan shall bear interest at the
applicable LIBOR Rate.


 


(c)           Subject
to, and in accordance with, the provisions of this Agreement, the Borrower may
cause all or a part of the unpaid principal balance of the Loan Account to bear
interest at the Base Margin Rate or the LIBOR Rate as specified from time to
time by the Borrower.


 


(d)           The
Borrower shall not select, renew, or convert any interest rate for a Revolving
Credit Loan such that, in addition to interest at the Base Margin Rate, there
are more than Six (6) LIBOR Rates applicable to the Revolving Credit Loans at
any one time.


 


(e)           The
Borrower shall pay accrued and unpaid interest on each Revolving Credit Loan in
arrears as follows:


 


(i)            On the applicable
Interest Payment Date for that Revolving Credit Loan.


 


(ii)           On the Termination Date
and on the End Date.


 


(iii)          Following the occurrence
of any Event of Default, with such frequency as may be determined by the Agent.


 


(f)            Following
the occurrence and during the continuance of any Event of Default (and whether
or not the Agent exercises the Agent’s rights on account thereof), all
Revolving Credit Loans shall bear interest, at the option of the Agent or at
the instruction of the SuperMajority Lenders at a rate which is the aggregate
of the rate applicable to Base Margin Loans plus
Three Percent (3%) per annum.


 


2.12.       Upfront Fee.  In consideration of the commitment to make
loans and advances to the Borrower under the Revolving Credit and the Term
Loan, as applicable, and to maintain


 


31

















 


sufficient funds available for
such purposes, there has been earned and the Borrower shall pay to the Agent a
fee (the “Upfront Fee”) as set forth in the Fee Letter.


 


2.13.       Agent’s Fee.  In addition to any other fee or expense to be
paid by the Borrower on account of the Revolving Credit or the Term Loan, the
Borrower shall pay the Agent the “Agent’s Fee” as set forth in the Fee Letter.


 


2.14.       Unused Line Fee.  In addition to any other fee to be paid by
the Borrower on account of the Revolving Credit or the Term Loan, the Borrower
shall pay the Agent a fee (the “Unused Line
Fee”) of 0.25% per annum of the average difference, during the month
just ended (or relevant period with respect to the payment being made on the
Termination Date) between the Maximum Revolving Credit Ceiling and the
aggregate of the unpaid principal balance of the Loan Account (other than the
outstanding principal balance of the Term Loan) and the undrawn Stated Amount
of L/Cs outstanding during the relevant period. 
The Unused Line Fee shall be paid in arrears, on the first day of each
month after the Restatement Effective Date and on the Termination Date.


 


2.15.       Early Termination
Fee.


 


(a)             Subject
to the provisions of Section 2.15(b), in the event that the Termination Date
occurs, on or prior to the second anniversary of the Restatement Effective
Date, the Borrower shall pay to the Agent, for the benefit of the Revolving
Credit Lenders, a fee (the “Revolving Credit
Early Termination Fee”) determined and payable as follows:


 


(i)            0.75% of the highest
Maximum Revolving Credit Ceiling if the Termination Date occurs on or before
January 1, 2007.


 


(ii)           0.50% of the highest
Maximum Revolving Credit Ceiling if the Termination Date occurs after January
1, 2007, but on or before January 1, 2008.


 


(b)           No
Revolving Credit Early Termination Fee shall be payable (i) after January 1,
2008 or (ii) if the Termination Date occurs as a result of funds borrowed from
Bank of America or any of its Affiliates.


 


(c)           The
Revolving Credit Early Termination Fee shall be allocated to the Revolving
Credit Lenders pro rata based upon their Revolving Credit Dollar Commitment.


 


(d)           The
Borrower shall have no right to reduce the Maximum Revolving Credit Ceiling, provided, however, that in connection with
the sale or issuance of any of its equity interests to any Person, in terms
satisfactory to the Agent, the Borrower shall, with at least three (3)
Business Days prior written notice to the Agent, have the right to reduce the
Maximum Revolving Credit Ceiling by $5,000,000 or an integral multiple thereof, provided, however, that no such
reduction in the Maximum Revolving Credit Ceiling shall be greater than
$75,000,000 in the aggregate and that no reduction in the Maximum Revolving
Credit Ceiling may be reinstated.


 


2.16.       Concerning Fees.


 


(a)           In
addition to any other right to which the Agent is then entitled on account
thereof, the Agent may assess an additional fee payable by the Borrower on
account of the


 


32

















 


accommodation by the Agent,
from time to time, of the Borrower’s request that the Agent depart or dispense
with one or more of the administrative provisions of this Agreement and/or the
Borrower’s failure to comply with any of such provisions.


 


(i)            By
way of non-exclusive example, the Agent may assess a fee on account of any of
the following:


 


(A)          The Borrower’s failure
to pay that amount which is necessary so that no OverAdvance is outstanding (as
required under Section 2.10(b) hereof).


 


(B)           The providing of a loan
or advance under the Revolving Credit or charging of the Loan Account such that
an OverAdvance is made.


 


(C)           The foreshortening of
any of the time frames with respect to the making of Revolving Credit Loans as
set forth in Section 2.5.


 


(D)          The Borrower’s failure
to provide a financial statement or report within the applicable time frame
provided for such report under Article 6.


 


(ii)           The inclusion of the
foregoing right on the part of the Agent to assess a fee does not constitute an
obligation, on the part of the Agent, to waive any provision of this Agreement
under any circumstances.  The assessment
of any such fee in any particular circumstance shall not constitute the Agent’s
waiver of any breach of this Agreement on account of which such fee was
assessed nor a course of action on which the Borrower may rely.


 


(b)           The
Borrower shall not be entitled to any credit, rebate or repayment of any fee
earned by the Agent or any Revolving Credit Lender or any Term Loan Lender
pursuant to this Agreement or any Loan Document notwithstanding any termination
of this Agreement or suspension or termination of the Agent’s and any Revolving
Credit Lender’s or Term Loan Lender’s respective obligation to make loans and
advances hereunder.


 


2.17.       Agent’s and Lenders’
Discretion.


 


(a)           Each
reference in the Loan Documents to the exercise of discretion or the like by
the Agent or any Revolving Credit Lender or any Term Loan Lender shall be to
such Person’s reasonable exercise of its judgment, in good faith, based upon
such Person’s consideration of any such factors as the Agent or that Revolving
Credit Lender or Term Loan Lender believes, taking into account information of
which that Person then has actual knowledge:


 


(i)            Will or reasonably
would be expected to affect the value of the Collateral, the enforceability of
the Agent’s Collateral Interests therein, or the amount which the Agent would
likely realize therefrom (taking into account delays which may possibly be
encountered in the Agent’s realizing upon the Collateral and likely Costs of
Collection).


 


(ii)           That any report or
financial information delivered to the Agent or any Revolving Credit Lender or
any Term Loan Lender by or on behalf of the Borrower is incomplete, inaccurate,
or misleading in any material manner or was not prepared in accordance with the
requirements of this Agreement.


 


33

















 


(iii)          An increase in the
likelihood that the Borrower will become the subject of a bankruptcy or
insolvency proceeding.


 


(iv)          That the Borrower is In
Default.


 


(b)           In
the exercise of such judgment, the Agent and each Revolving Credit Lender and
Term Loan Lender also may take into account any of the following factors:


 


(i)            Those included in, or
tested by, the definitions of “Eligible Inventory” and “Cost”.


 


(ii)           Changes in the current
financial and business climate of the industry in which the Borrower competes
(having regard for the Borrower’s position in that industry).


 


(iii)          Changes in general
macroeconomic conditions which have a material effect on the Borrower’s cost
structure.


 


(iv)          Material changes in or
to the mix of the Borrower’s Inventory.


 


(v)           Changes in seasonality
with respect to the Borrower’s Inventory and patterns of retail sales.


 


(vi)          Changes in such other
factors as the Agent and each Revolving Credit Lender and Term Loan Lender
reasonably determines as having a material bearing on credit risks associated
with the providing of loans and financial accommodations to the Borrower.


 


(c)           The
burden of establishing the failure of the Agent or any Revolving Credit Lender
or any Term Loan Lender to have acted in a reasonable manner in such Person’s
exercise of such discretion shall be the Borrower’s.


 


2.18.       Procedures For
Issuance of L/Cs.


 


(a)           Subject
to the terms and conditions hereof and the execution and delivery by the
Borrower of a letter of credit application on the Agent’s customary form (a “Letter of Credit Application”), the Agent
on behalf of the Revolving Credit Lenders and in reliance upon the agreements
of the Revolving Credit Lenders set forth in this Section 2 and upon the
representations and warranties of the Borrower contained herein, agrees, in its
individual capacity, to issue, extend, and renew for the account of the
Borrower one or more L/Cs, in such form as may be requested from time to time
by the Borrower and agreed to by the Agent. 
Such Letter of Credit Application must be received by the Agent not
later than 11:00AM, at least two (2) Business Days, or such later date and
time as the Agent may agree in a particular instance in its sole discretion,
prior to the proposed issuance date or date of amendment, as the case may be,
of any L/C.  In the case of a request for
an initial issuance of an L/C, such Letter of Credit Application shall specify
in form and detail satisfactory to the Agent: (A) the proposed issuance date of
the requested L/C (which shall be a Business Day); (B) the amount thereof; (C)
the expiry date thereof; (D) the name and address of the beneficiary thereof;
(E) the documents to be presented by such beneficiary in case of any drawing
thereunder; (F) the full text of any certificate to be presented by such
beneficiary in case of any drawing thereunder; and (G) such other matters as
the Agent may require.  In the case of a
request for an amendment of any


 


34

















 


outstanding L/C, such Letter of
Credit Application shall specify in form and detail satisfactory to the Agent:
(A) the L/C to be amended; (B) the proposed date of amendment thereof (which
shall be a Business Day); (C) the nature of the proposed amendment; and (D)
such other matters as the Agent may require. 
Additionally, the Borrower shall furnish to the Agent such other
documents and information pertaining to such requested L/C issuance or
amendment, including any Issuer Documents, as the Agent may require.


 


Unless the Agent has received written notice
from any Revolving Credit Lender or the Borrower, at least one (1) Business Day
prior to the requested date of issuance or amendment of the applicable L/C,
that one or more applicable conditions contained in Article 4 shall not then be satisfied, then, subject
to the terms and conditions hereof, the Agent shall, on the requested date,
issue an L/C for the account of the Borrower or enter into the applicable
amendment, as the case may be, in each case in accordance with the Agent’s
usual and customary business practices.


 


Promptly after its delivery of any L/C or any
amendment to an L/C to an advising bank with respect thereto or to the
beneficiary thereof, the Agent will also deliver to the Borrower a true and
complete copy of such L/C or amendment.


 


(b)           The
Agent will cause the issuance of any L/C so requested by the Borrower, provided that, at the time that the
request is made, the Revolving Credit has not been suspended as provided in
Section 2.5(g) and if so issued:


 


(i)            The aggregate Stated
Amount of all L/Cs then outstanding, does not exceed Fifty Million Dollars  ($50,000,000).


 


(ii)           The
expiry of the L/C is not later than the earlier of Thirty (30) days prior to
the Maturity Date or the following:


 


(A)          Standby: One (1) year
from initial issuance.


 


(B)           Documentary: Two
Hundred Seventy (270) days from issuance.


 


(iii)          If the expiry of an L/C
is later than the Maturity Date, the Agent may require such L/C to be 105% cash
collateralized at its issuance.


 


(iv)          An OverAdvance will not
result from the issuance of the subject L/C.


 


(c)           Unless
otherwise specified herein, the amount of an L/C at any time shall be deemed to
be the Stated Amount of such L/C in effect at such time; provided, however,
that with respect to any L/C that, by its terms or the terms of any Issuer
Document related thereto, provides for one or more automatic increase in the
stated amount thereof, the amount of such L/C shall be deemed to be the maximum
Stated Amount of such L/C after giving effect to all such increases, whether or
not such maximum Stated Amount is in effect at such time.


 


(d)           If
the Borrower so requests in any applicable Letter of Credit Application, the
Agent may, in its sole and absolute discretion, agree to issue an L/C that has
automatic extension provisions (each, an “Auto-Extension
Letter of Credit”); provided
that any such Auto-Extension Letter of Credit must permit the Agent to prevent
any such extension at least once in each 12-month period (commencing with the
date of issuance of such L/C) by giving


 


35

















 


prior notice to the beneficiary
thereof not later than a day (the “Non-Extension
Notice Date”) in each such 12-month period to be agreed upon at the
time such L/C is issued.  Unless
otherwise directed by the Agent, the Borrower shall not be required to make a
specific request for any such extension. 
Once an Auto-Extension Letter of Credit has been issued, the Revolving
Credit Lenders shall be deemed to have authorized (but may not require) the
Agent to permit the extension of such L/C at any time to an expiry date not
later than the Letter of Credit Expiration; provided,
however, that the Agent shall not
permit any such extension if (A) it has determined that it would not be
permitted, or would have no obligation, at such time to issue such L/C in its
revised form (as extended) under the terms hereof (by reason of the provisions
of Subsection 2.18(f) or otherwise), or (B) it has received notice (which may
be by telephone or in writing) on or before the day that is five (5) Business
Days before the Non-Extension Notice Date (1) that the Majority Lenders have
elected not to permit such extension or (2) from any Revolving Credit Lender or
the Borrower that one or more of the applicable conditions specified in Article
4 is not then satisfied, and in each such case directing the Agent not to
permit such extension.


 


(e)           Except
where there has been gross negligence or willful misconduct on the part of the
Agent or any Revolving Credit Lender, there shall not be any recourse to, nor
liability of, the Agent or any Revolving Credit Lender on account of


 


(i)            Any delay by an Issuer
to issue an L/C;


 


(ii)           Any action or inaction
of an Issuer on account of or in respect to, any L/C.


 


(f)            Notwithstanding
anything to the contrary contained in this Section 2, the Agent shall not be
under any obligation to cause the Issuer to issue any L/C if:


 


(i)            any order, judgment or
decree of any Governmental Authority or arbitrator shall by its terms purport
to enjoin or restrain the Agent from issuing such L/C, or any laws applicable
to the Agent or any request or directive (whether or not having the force of
law) from any Governmental Authority with jurisdiction over the Agent shall
prohibit, or request that the Agent refrain from, the issuance of letters of
credit generally or such L/C in particular or shall impose upon the Agent with
respect to such L/C any restriction, reserve or capital requirement (for which
the Agent is not otherwise compensated hereunder) not in effect on the
Restatement Effective Date, or shall impose upon the Agent any unreimbursed
loss, cost or expense that was not applicable on the Restatement Effective Date
and that the Agent in good faith deems material to it;


 


(ii)           the issuance of such
L/C would violate one or more policies of the Agent;


 


(iii)          except as otherwise
agreed by the Agent, such L/C is to be denominated in a currency other than
United States Dollars;


 


(iv)          a default of any
Revolving Credit Lender’s obligations to fund under this Section 2 exists or
any Revolving Credit Lender is at such time a Delinquent Revolving Credit
Lender hereunder, unless the Agent has entered into satisfactory arrangements
with the Borrower or such Revolving Credit Lender to eliminate the Agent’s risk
with respect to such Revolving Credit Lender;


 


(v)           the Agent shall not
amend any L/C if the Agent would not be permitted at such time to issue such
L/C in its amended form under the terms hereof; or


 


36

















 


(vi)          the Agent shall be under
no obligation to amend any L/C if the Agent would have no obligation at such
time to issue such L/C in its amended form under the terms hereof, or the
beneficiary of such L/C does not accept the proposed amendment to the L/C.


 


2.19.       Fees For L/Cs.


 


(a)           The
Borrower shall pay to the Agent a fee, on account of L/Cs, the issuance of
which had been procured by the Agent, quarterly in arrears, and on the
Termination Date and on the End Date, equal to:


 


(i)            The LIBOR Applicable
Margin on account of standby letters of credit.


 


(ii)           The LIBOR Applicable
Margin minus 50 basis points on
account of documentary letters of credit.


 


(iii)          Following the occurrence
and during the continuance of any Event of Default, such fee shall be increased
by Three Percent (3%) per annum.


 


(b)           In
addition to the fee to be paid as provided in Subsection 2.19(a), above, the
Borrower shall pay to the Agent (or to the Issuer, if so requested by Agent),
on demand, all issuance, processing, negotiation, amendment, and administrative
fees and other amounts charged by the Issuer on account of, or in respect to,
any L/C.


 


(c)           If
any change in Applicable Law shall either:


 


(i)            impose, modify or deem
applicable any reserve, special deposit or similar requirements against letters
of credit heretofore or hereafter issued by any Issuer or with respect to which
any Revolving Credit Lender or any Issuer has an obligation to lend to fund
drawings under any L/C; or


 


(ii)           impose on any Issuer
any other condition or requirements relating to any such letters of credit;


 


and the result of any event referred to in Section 2.19(c)(i) or
2.19(c)(ii), above, shall be to increase the cost to any Revolving Credit
Lender or to any Issuer of issuing or maintaining any L/C (which increase in
cost shall be the result of such Issuer’s reasonable allocation among that
Revolving Credit Lender’s or Issuer’s letter of credit customers of the
aggregate of such cost increases resulting from such events), then, upon demand
by the Agent and delivery by the Agent to the Borrower of a certificate of an
officer of the subject Revolving Credit Lender or the subject Issuer describing
such change in law, executive order, regulation, directive, or interpretation
thereof, its effect on such Revolving Credit Lender or such Issuer, and the
basis for determining such increased costs and their allocation, the Borrower
shall immediately pay to the Agent, from time to time as specified by the
Agent, such amounts as shall be sufficient to compensate the subject Revolving
Credit Lender or the subject Issuer for such increased cost.  Absent manifest error, any Revolving Credit
Lender’s or any Issuer’s determination of costs incurred under Section
2.19(c)(i) or 2.19(c)(ii), above, and the allocation, if any, of such costs
among the Borrower and other letter of credit customers of such Revolving
Credit Lender or such Issuer, if done in good faith and made on an equitable
basis and in accordance with such officer’s certificate, shall be conclusive
and binding on the Borrower.


 


37

















 


2.20.       Concerning L/Cs.


 


(a)           None
of the Issuer, the Issuer’s correspondents, any Revolving Credit Lender, the
Agent, or any advising, negotiating, or paying bank with respect to any L/C
shall be responsible in any way for:


 


(i)            The performance by any
beneficiary under any L/C of that beneficiary’s obligations to the Borrower.


 


(ii)           The form, sufficiency,
correctness, genuineness, authority of any person signing; falsification; or
the legal effect of; any documents called for under any L/C if (with respect to
the foregoing) such documents on their face appear to be in order.


 


(b)           The
Issuer may honor, as complying with the terms of any L/C and of any drawing
thereunder, any drafts or other documents otherwise in order, but signed or
issued by an administrator, executor, conservator, trustee in bankruptcy,
debtor in possession, assignee for the benefit of creditors, liquidator,
receiver, or other legal representative of the party authorized under such L/C
to draw or issue such drafts or other documents.


 


(c)           Unless
otherwise agreed to, in the particular instance, the Borrower hereby authorizes
any Issuer to:


 


(i)            Select an advising
bank, if any.


 


(ii)           Select a paying bank,
if any.


 


(iii)          Select a negotiating
bank.


 


(d)           All
directions, correspondence, and funds transfers relating to any L/C are at the
risk of the Borrower. The Issuer shall have discharged the Issuer’s obligations
under any L/C which, or the drawing under which, includes payment instructions,
by the initiation of the method of payment called for in, and in accordance
with, such instructions (or by any other commercially reasonable and comparable
method). None of the Agent, any Revolving Credit Lender, or the Issuer shall
have any responsibility for any inaccuracy, interruption, error, or delay in
transmission or delivery by post, telegraph or cable, or for any inaccuracy of
translation.


 


(e)           The
Agent’s, each Revolving Credit Lender’s, each Term Loan Lender’s and the Issuer’s
rights, powers, privileges and immunities specified in or arising under this
Agreement are in addition to any heretofore or at any time hereafter otherwise
created or arising, whether by statute or rule of law or contract.


 


(f)            Except
to the extent otherwise expressly provided hereunder or agreed to in writing by
the Issuer and the Borrower, (i) documentary L/Cs will be governed by the rules
of the Uniform Customs and Practice for Documentary Credits, as most recently
published by the International Chamber of Commerce at the time of issuance shall
apply to each commercial L/C, and (ii) the rules of the ISP shall apply to each
standby L/C.


 


38

















 


(g)           The
obligations of the Borrower under this Agreement with respect to L/Cs are
absolute, unconditional, and irrevocable and shall be performed strictly in
accordance with the terms hereof under all circumstances, whatsoever including,
without limitation, the following:


 


(i)            Any lack of validity
or enforceability or restriction, restraint, or stay in the enforcement of this
Agreement, any L/C, or any other agreement or instrument relating thereto.


 


(ii)           The Borrower’s consent
to any amendment or waiver of, or consent to the departure from, any L/C.


 


(iii)          The existence of any
claim, counterclaim, set-off, defense, or other right which the Borrower or any
Affiliate may have at any time against the beneficiary or any transferee of
such L/C (or any Person for whom any such beneficiary or any such transferee
may be acting), the Issuer or any other Person, whether in connection with this
Agreement the transactions contemplated hereby or by such L/C or any agreement
or instrument relating thereto, or any unrelated transaction.


 


(iv)          Any good faith honoring
of a drawing under any L/C, which drawing possibly could have been dishonored
based upon a strict construction of the terms of the L/C.


 


(v)           Any draft, demand,
certificate or other document presented under such L/C proving to be forged,
fraudulent, invalid, or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect; or any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under such L/C.


 


(vi)          Any payment by the
Issuer under such L/C against presentation of a draft or certificate that does
not strictly comply with the terms of such L/C; or any payment made by the
Issuer under such L/C to any Person purporting to be a trustee in bankruptcy,
debtor-in-possession, assignee for the benefit of creditors, liquidator,
receiver or other representative of or successor to any beneficiary or any
transferee of such L/C, including any arising in connection with any proceeding
under any Debtor Relief Law.


 


(vii)         Any other circumstance or
happening whatsoever, whether or not similar to any of the foregoing, including
any circumstance that might otherwise constitute a defense available to, or a
discharge of, the Borrower or any Affiliate.


 


(h)           The
Borrower shall promptly examine a copy of each L/C and each amendment thereto
that is delivered to the Borrower and, in the event of any claim of
noncompliance with the Borrower’s instructions or other irregularity, the
Borrower will immediately notify the Issuer. 
The Borrower shall be conclusively deemed to have waived any such claim
against the Issuer and its correspondents unless such notice is given as
aforesaid.


 


(i)            Upon
receipt from the beneficiary of any L/C of any notice of a drawing under such
L/C, the Issuer shall notify the Borrower and the Agent thereof.  Not later than 11:00AM on the date of any
payment by the Issuer under a L/C, the Borrower shall reimburse the Issuer
through the Agent in an amount equal to the amount of such drawing.  If the Borrower fails to so


 


39

















 


reimburse the Issuer by such time,
the Agent shall promptly notify each Revolving Credit Lender of the payment
date and of the amount of the Unpaid Reimbursement Obligation.  In such event, the Borrower shall be deemed
to have requested a Revolving Credit Loan in all respects bearing interest at
the Base Margin Rate with a Drawdown Date as of the date on which the Agent
paid the draft presented for honor or otherwise made such payment, in an amount
equal to the amount of, such draft or other payment, and the notice from the
Agent to the Revolving Credit Lenders shall be deemed to be a notice of a Loan
Request made by the Agent (without regard to the minimum and multiples
specified in Section 2 for the principal amount of Base Margin Loans, but
subject to the amount of the unutilized portion of the Maximum Revolving Credit
Dollar Commitment and the conditions set forth in Article 4).


 


(j)            No later than 1:00PM (Boston time) on the Business
Day next following the receipt of such notice, each Revolving Credit Lender
shall make available to the Agent, at the Agent’s Office, in immediately
available funds, such Revolving Credit Lender’s Revolving Credit Percentage
Commitment of such Unpaid Reimbursement Obligation, and to the extent not
otherwise reimbursed by the Borrower pursuant to Clause (k) below, together
with an amount equal to the product of (a) the average, computed for the period
referred to in clause (c) below, of the weighted average interest rate paid by
the Agent for federal funds acquired by the Agent during each day included in such
period, times (b) the amount equal to such Revolving Credit Lender’s Revolving
Credit Percentage Commitment of such Unpaid Reimbursement Obligation, times (c)
a fraction, the numerator of which is the number of days that elapse from and
including the date the Agent paid the draft presented for honor or otherwise
made payment to the date on which such Revolving Credit Lender’s Revolving
Credit Percentage Commitment of such Unpaid Reimbursement Obligation shall
become immediately available to the Agent, and the denominator of which is
360.  Any notice given by the Agent
pursuant to this Section 2.20(j) may be given by telephone if immediately
confirmed in writing; provided
that the lack of such an immediate confirmation shall not affect the
conclusiveness or binding effect of such notice.


 


(k)           With respect to any Unpaid Reimbursement Obligation
that is not fully refinanced by a Revolving Credit Loan in all respects bearing
interest at the Base Margin Rate because a Default or Event of Default is then
continuing, the conditions set forth in Article 4 cannot be satisfied or for
any other reason, the Borrower shall be deemed to have incurred from the Agent
an extension of credit resulting from and in the amount of the Unpaid
Reimbursement Obligation that is not so refinanced, which extension of credit
shall be due and payable on demand (together with interest) and shall bear
interest at the default rate of interest for Revolving Credit Loans bearing
interest at the Base Margin Rate.  In
such event, each Revolving Credit Lender’s payment to the Agent pursuant to
this Section 2.20 shall be deemed payment in respect of its participation in
such extension of credit and shall constitute a funding of such Revolving
Credit Lender’s participation in such extension of credit in satisfaction of
its participation obligation under this Section 2.20.


 


(l)            Until each Revolving Credit Lender funds its
Revolving Credit Percentage Commitment of the Revolving Credit Loans or
participations as set forth in this Section 2.20 to reimburse the Agent for any
amount drawn under any L/C, interest in respect of such Revolving Credit Lender’s
Revolving Credit Percentage Commitment of such amount shall be solely for the
account of the Agent.


 


(m)          If any Revolving Credit Lender fails to make available
to the Agent any amount required to be paid by such Revolving Credit Lender
pursuant to the foregoing provisions of this Section 2.20 by the time specified
in this Section 2.20, the Agent shall be entitled to recover


 


40

















 


from such
Revolving Credit Lender (acting through the Agent), on demand, such amount with
interest thereon for the period from the date such payment is required to the
date on which such payment is immediately available to the Agent at a rate per
annum equal to the weighted average interest rate paid by the Agent for federal
funds acquired by the Agent during each day included in such period.  A certificate of the applicable Issuing Bank
submitted to any Revolving Credit Lender (through the Agent) with respect to
any amounts owing under this clause (m) shall be conclusive absent manifest
error.


 


(n)           At any time after the Agent has made a payment under
any L/C and has received from any Revolving Credit Lender such Revolving Credit
Lender’s participation in respect of such payment in accordance with this
Section 2.20, if the Agent receives any payment in respect of the related
Unpaid Reimbursement Obligation or interest thereon (whether directly from the
applicable Borrower(s) or otherwise, including proceeds of cash collateral
applied thereto by the Agent), the Agent will distribute to such Revolving
Credit Lender its Revolving Credit Percentage Commitment thereof (appropriately
adjusted, in the case of interest payments, to reflect the period of time
during which such Revolving Credit Lender’s participation was outstanding) in
United States Dollars and in the same funds as those received by the
Agent.  If any payment received by the
Agent pursuant to this Section 2.20(n) is required to be returned in connection
with any bankruptcy or insolvency proceeding or otherwise (including pursuant
to any settlement entered into by the applicable Issuer in its discretion),
each Revolving Credit Lender shall pay to the Agent its Revolving Credit
Percentage Commitment thereof on demand of the Agent, plus interest thereon
from the date of such demand to the date such amount is returned by such
Revolving Credit Lender, at a rate per annum equal to the weighted average
interest rate paid by the Agent for federal funds acquired by the Agent during
each day included in such period.  The
obligations of the Revolving Credit Lenders under the immediately preceding
sentence shall survive the payment in full of the Liabilities and the
termination of this Agreement.


 


(o)           Each
Revolving Credit Lender and the Borrower agrees that, in paying any drawing
under an L/C, the Agent shall not have any responsibility to obtain any
document (other than any sight draft, certificates, and documents expressly
required by the L/C) or to ascertain or inquire as to the validity or accuracy
of any such document or the authority of the Person executing or delivering any
such document.  The Borrower hereby
assumes all risks of the acts or omissions of any beneficiary or transferee
with respect to its use of any L/C; provided,
however, that this assumption is not intended to, and shall not,
preclude Borrower’s pursuing such rights and remedies as it may have against
the beneficiary or transferee at law or under any other agreement.  In furtherance and not in limitation of the
foregoing, the Agent may accept documents that appear on their face to be in
order, without responsibility for further investigation, regardless of any
notice or information to the contrary, and the Agent shall not be responsible
for the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign an L/C of the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason.


 


(p)           Upon the request of the Agent, (A) if the Agent has
honored any full or partial drawing request under any L/C and such drawing has
resulted in an extension of credit resulting from and in the amount of the
Unpaid Reimbursement Obligation pursuant to Section 2.20(k), or (B) if, as of
the Letter of Credit Expiration Date, any L/C or Unpaid Reimbursement
Obligation for any reason remains outstanding, the Borrower shall, in each
case, immediately Cash Collateralize the then outstanding amount of all such
L/C or Unpaid Reimbursement Obligations. For purposes of this Section 2.20(p), “Cash
Collateralize” means to pledge and


 


41

















 


deposit with
or deliver to the Agent, for the benefit of the Revolving Credit Lenders, as
collateral, cash or deposit account balances pursuant to documentation in form
and substance satisfactory to the Agent (which documents are hereby consented
to by the Revolving Credit Lenders). 
Derivatives of such term have corresponding meanings.  The Borrower hereby grants to the Agent, for
benefit of the Revolving Credit Lenders, a security interest in all such cash,
deposit accounts and all balances therein and all proceeds of the foregoing.


 


2.21.       Changed
Circumstances.


 


(a)           The
Agent may advise the Borrower that the Agent has made the good faith
determination (which determination shall be final and conclusive) of any of the
following:


 


(i)            Adequate and fair
means do not exist for ascertaining the rate for LIBOR Loans.


 


(ii)           The continuation of or conversion
of any Loan to a LIBOR Loan has been made impracticable or unlawful by the
occurrence of a contingency that materially and adversely affects the
applicable market or the compliance by the Agent or any Lender in good faith
with any Applicable Law.


 


(iii)          The indices on which the
interest rates for LIBOR Loans are based shall no longer represent the
effective cost to the Agent or any Lender for U.S. dollar deposits in the
interbank market for deposits in which it regularly participates.


 


(b)           In
the event that the Agent advises the Borrower of an occurrence described in
Section 2.21(a), then, until the Agent notifies the Borrower that the
circumstances giving rise to such notice no longer apply:


 


(i)            The obligation of the
Agent or each Revolving Credit Lender or Term Loan Lender, as applicable to
make loans of the type affected by such changed circumstances or to permit the
Borrower to select the affected interest rate as otherwise applicable to any
Revolving Credit Loans or all or any portion of the Term Loan shall be
suspended.


 


(ii)           Any notice which the
Borrower had given the Agent with respect to any LIBOR Loan, the time for
action with respect to which has not occurred prior to the Agent’s having given
notice pursuant to Section 2.21(a), shall be deemed at the option of the Agent
to not having been given.


 


2.22.       Lenders’ Commitments.


 


(a)           Subject
to Sections 16.1 and 16.2 (which provide for assignments and assumptions of
commitments), each Revolving Credit Lender’s “Revolving
Credit Percentage Commitment”, and 
“Maximum Revolving Credit Dollar
Commitment” (respectively so referred to herein) is set forth on Schedule 2.22,
annexed hereto.


 


(b)           The
obligations of the Revolving Credit Lenders hereunder are several and not
joint.  The failure of any Revolving
Credit Lender to make any loan or advance under the Revolving Credit, to fund
any participation in L/Cs and SwingLine Loans, or to make any payment pursuant
to Section 19.9(c) on any date required hereunder shall not relieve any other


 


42

















 


Revolving Credit Lender of its
corresponding obligation to do so on such date, and no Revolving Credit Lender
shall be responsible for the failure of any other Revolving Credit Lender to so
make its Revolving Credit Percentage Commitment, to purchase its participation,
or to make its payment under Section 19.9(c). 
No Revolving Credit Lender shall have any obligation to make any loan or
advance under the Revolving Credit in excess of the lesser of the following:


 


(i)            That Revolving Credit
Lender’s Revolving Credit Percentage Commitment of the subject loan or advance
or of Availability.


 


(ii)           That Revolving Credit
Lender’s Maximum Revolving Credit Dollar Commitment.


 


Further, no Revolving Credit Lender shall have any obligation to make
any loan or advance under the Revolving Credit if the aggregate loans and
advances outstanding under the Revolving Credit attributable to such Revolving
Credit Lender, after giving effect to the subject loan or advance, would exceed
the Maximum Revolving Credit Dollar Commitment of such Revolving Credit Lender.


 


(c)           No
Revolving Credit Lender shall have any liability to the Borrower on account of
the failure of any other Revolving Credit Lender to provide any loan or advance
under the Revolving Credit nor any obligation to make up any shortfall which
may be created by such failure.


 


(d)           The
Revolving Credit Dollar Commitments, Revolving Credit Commitment Percentages,
and identities of the Revolving Credit Lenders may be changed, from time to time
by the reallocation or assignment of Revolving Credit Dollar Commitments and
Revolving Credit Commitment Percentages amongst the Revolving Credit Lenders or
with other Persons who determine to become “Revolving Credit Lenders”, provided, however unless an Event of
Default has occurred (in which event, no consent of the Borrower is required)
any assignment to a Person not then a Revolving Credit Lender shall be subject
to the prior consent of the Borrower (not to be unreasonably withheld), which
consent will be deemed given unless the Borrower provides the Agent with
written objection, not more than Five (5) Business Days after the Agent shall
have given the Borrower written notice of a proposed assignment).


 


(e)           Upon
written notice given the Borrower from time to time by the Agent, of any
assignment or allocation referenced in Section 2.22(d):


 


(i)            The Borrower shall
execute one or more replacement Revolving Credit Notes to reflect such changed
Maximum Revolving Credit Dollar Commitments, Revolving Credit Commitment
Percentages, and identities and shall deliver such replacement Revolving Credit
Notes to the Agent (which promptly thereafter shall deliver to the Borrower the
Revolving Credit Notes so replaced) provided
however, in the event that a Revolving Credit Note is to be
exchanged following its acceleration or the entry of an order for relief under
the Bankruptcy Code with respect to the Borrower, the Agent, in lieu of causing
the Borrower to execute one or more new Revolving Credit Notes, may issue the
Agent’s Certificate confirming the resulting Revolving Credit Dollar
Commitments and Revolving Credit Percentage Commitments.


 


43

















 


(ii)           Such change shall be
effective from the effective date specified in such written notice and any
Person added as a Revolving Credit Lender shall have all rights and privileges
of a Revolving Credit Lender hereunder thereafter as if such Person had been a
signatory to this Agreement and any other Loan Document to which a Revolving
Credit Lender is a signatory and any Person removed as a Revolving Credit
Lender shall be relieved of any obligations or responsibilities of a Revolving
Credit Lender hereunder thereafter.


 


2.23.      Revolving Credit Funding Procedures.  Subject to Section 2.24:


 


(a)          The Agent shall advise
each Revolving Credit Lender, no later than 2:00PM on a date on which any
Revolving Credit Loan (other than a SwingLine Loan) is to be made on that
date.  Such advice, in each instance, may
be by telephone or facsimile transmission, provided
that if such advice is by telephone, it shall be confirmed in
writing.  Advice of a Revolving Credit
Loan shall include the amount of and interest rate applicable to the subject
Revolving Credit Loan.


 


(b)          Subject to that
Revolving Credit Lender’s Revolving Credit Dollar Commitment, each Revolving
Credit Lender, by no later than the end of business on the day on which the
subject Revolving Credit Loan is to be made, shall Transfer that Revolving
Credit Lender’s Revolving Credit Percentage Commitment of the subject Revolving
Credit Loan to the Agent.


 


(c)          Unless the Agent shall
have received notice from a Revolving Credit Lender at least one (1) Business
Day prior to the proposed date on which any Revolving Credit Loan (other than a
SwingLine Loan) is to be made that such Revolving Credit Lender will not make
available to the Agent such Revolving Credit Lender’s Revolving Credit
Percentage Commitment of such Revolving Credit Loan, the Agent may assume that
such Revolving Credit Lender has made such Revolving Credit Percentage
Commitment of such Revolving Credit Loan available on such date, and the Agent
may, in reliance upon such assumption, make available to the Borrower a
corresponding amount.  In such event, if
a Revolving Credit Lender has not in fact made its Revolving Credit Percentage
Commitment of such Revolving Credit Loan available, then the applicable
Revolving Credit Lender and the Borrower severally agree to pay to the Agent
forthwith on demand such corresponding amount in immediately available funds
with interest thereon, for each day from and including the date such amount is
made available to the Borrower to but excluding the date of payment to the
Agent, at (A) in the case of a payment to be made by such Revolving Credit Lender,
the greater of the Federal Funds Rate and a rate determined by the Agent in
accordance with banking industry rules on interbank compensation and (B) in the
case of a payment to be made by the Borrower, the interest rate applicable to
Base Rate Loans.  If the Borrower and
such Revolving Credit Lender shall pay such interest to the Agent for the same
or an overlapping period, the Agent shall promptly remit to the Borrower the
amount of such interest paid by the Borrower for such period.


 


(d)          Unless the Agent shall have received notice from the
Borrower at least one (1) Business Day prior
to the date on which any payment is due to the Agent for its account or the
account of the Revolving Credit Lenders hereunder that the Borrower will not
make such payment, the Agent may assume that the Borrower has made such payment
on such date in accordance herewith and may, in reliance upon such assumption,
distribute the amount due.  In such
event, if the Borrower has not in fact made such payment, then each of the Revolving
Credit Lenders severally agrees to repay to the Agent forthwith on demand the
amount so distributed to such Revolving Credit Lender, in immediately available
funds with interest


 


44

















 


thereon, for each day from and including the
date such amount is distributed to it to but excluding the date of payment to
the Agent, at the greater of the Federal Funds Rate and a rate determined by
the Agent in accordance with banking industry rules on interbank compensation.  A statement of the Agent submitted to such
Revolving Credit Lender with respect to any amounts owing under this paragraph
shall be conclusive (absent manifest error) evidence of the amount due and
owing to the Agent by such Revolving Credit Lender.


 


2.24.      SwingLine Loans.


 


(a)          In the event that, when
a Revolving Credit Loan is requested, the aggregate unpaid balance of the
SwingLine Loan is less than the SwingLine Loan Ceiling, then the SwingLine
Lender may advise the Agent that the SwingLine Lender has determined to include
up to the amount of the requested Revolving Credit Loan as part of the
SwingLine Loan.  In such event, the
SwingLine Lender shall Transfer the amount of the requested Revolving Credit
Loan to the Agent.


 


(b)           The SwingLine Loan shall
be converted to a Revolving Credit Loan in which all Revolving Credit Lenders
participate as follows:


 


(i)            At any time and from
time to time, the SwingLine Lender may advise the Agent that all, or any part
of the SwingLine Loan is to be converted to a Revolving Credit Loan in which
all Revolving Credit Lenders participate.


 


(ii)            At the initiation of a
Liquidation, the then entire unpaid principal balance of the SwingLine Loan
shall be converted to a Revolving Credit Loan in which all Revolving Credit Lenders
participate.


 


In either such
event, the Agent shall advise each Revolving Credit Lender of such conversion
as if, and with the same effect as if such conversion were the making of a
Revolving Credit Loan as provided in Section 2.1.


 


(c)           The
SwingLine Lender, in separate capacities, may also be the Agent and a Revolving
Credit Lender.


 


(d)           The SwingLine Lender,
in its capacity as SwingLine Lender, is not a “Revolving Credit Lender” for any
of the following purposes:


 


(i)             Except as otherwise
specifically provided in the relevant Section, any distribution pursuant to
Section 2.26.


 


(ii)            Determination of
whether the requisite Loan Commitments have Consented to action requiring such
Consent.


 


45

















 


2.25.      Agent’s Covering of Funding.


 


(a)           Subject to the
provisions of Section 2.22 hereof, each Revolving Credit Lender shall make
available to the Agent, as provided herein, that Revolving Credit Lender’s
Revolving Credit Percentage Commitment of the following:


 


(i)            Each Revolving Credit
Loan, up to the maximum amount of that Revolving Credit Lender’s Revolving
Credit Dollar Commitment of the Revolving Credit Loans.


 


(ii)           Up to the maximum
amount of that Revolving Credit Lender’s Revolving Credit Dollar Commitment of
each L/C Drawing (to the extent that such L/C Drawing is not “covered” by a
Revolving Credit Loan as provided herein).


 


(b)           In all circumstances,
the Agent may:


 


(i)            Assume that each
Revolving Credit Lender, subject to Section 2.25(a), timely shall make available
to the Agent that Revolving Credit Lender’s Revolving Credit Percentage
Commitment of each Revolving Credit Loan, notice of which is provided pursuant
to Section 2.23 and shall make available, to the extent not “covered” by a
Revolving Credit Loan, that Revolving Credit Lender’s Revolving Credit
Percentage Commitment of any honoring of an L/C.


 


(ii)           In reliance upon such
assumption, make available the corresponding amount to the Borrower.


 


(iii)           Assume
that each Revolving Credit Lender timely shall pay, and shall make available,
to the Agent all other amounts which that Revolving Credit Lender is obligated
to so pay and/or make available hereunder or under any of the Loan Documents.


 


(c)           In the event that, in
reliance upon any of such assumptions, the Agent makes available, a Revolving
Credit Lender’s Revolving Credit Percentage Commitment of one or more Revolving
Credit Loans, or any other amount to be made available hereunder or under any
of the Loan Documents, which amount a Revolving Credit Lender (a “Delinquent Revolving Credit Lender”) fails
to provide to the Agent within One (1) Business Day of written notice of such
failure, then:


 


(i)            The amount which had
been made available by the Agent is an “Agent’s
Cover” (and is so referred to herein).


 


(ii)           All interest paid by
the Borrower on account of the Revolving Credit Loan or coverage of the subject
L/C Drawing which consist of the Agent’s Cover shall be retained by the Agent
until the Agent’s Cover, with interest, has been paid.


 


(iii)          The Delinquent Revolving
Credit Lender shall pay to the Agent, on demand, interest at a rate equal to
the prevailing federal funds rate on any Agent’s Cover in respect of that
Delinquent Revolving Credit Lender.


 


(iv)          The Agent shall have
succeeded to all rights to payment to which the Delinquent Revolving Credit
Lender otherwise would have been entitled hereunder in respect of those amounts
paid by or in respect of the Borrower on account of the Agent’s


 


46

















 


Cover together
with interest until it is repaid.  Such
payments shall be deemed made first towards the amounts in respect of which the
Agent’s Cover was provided and only then towards amounts in which the
Delinquent Revolving Credit Lender is then participating.  For purposes of distributions to be made
pursuant to Section 2.26(a) (which relates to ordinary course distributions) or
Section 13.6 (which relates to distributions of proceeds of a Liquidation)
below, amounts shall be deemed distributable to a Delinquent Revolving Credit
Lender (and consequently, to the Agent to the extent to which the Agent is then
entitled) at the highest level of distribution (if applicable) at which the
Delinquent Revolving Credit Lender would otherwise have been entitled to a
distribution.


 


(v)           Subject to Subsection
2.25(c)(iv), the Delinquent Revolving Credit Lender shall be entitled to
receive any payments from the Borrower to which the Delinquent Revolving Credit
Lender is then entitled, provided however
there shall be deducted from such amount and retained by the Agent any interest
to which the Agent is then entitled on account of Section 2.25(c)(ii), above.


 


(vi)          A
Delinquent Revolving Credit Lender shall not be relieved of any obligation of
such Delinquent Revolving Credit Lender hereunder (all and each of which shall
constitute continuing obligations on the part of any Delinquent Revolving
Credit Lender).


 


(d)           A Delinquent Revolving
Credit Lender may cure its status as a Delinquent Revolving Credit Lender by
paying the Agent the aggregate of the following:


 


(i)            The Agent’s Cover (to
the extent not previously repaid by the Borrower and retained by the Agent in
accordance with Subsection 2.25(c)(iv), above) with respect to that Delinquent
Revolving Credit Lender.


 


Plus


 


(ii)           The aggregate of the
amount payable under Subsection 2.25(c)(iii), above (which relates to interest
to be paid by that Delinquent Revolving Credit Lender).


 


Plus


 


(iii)           All
such costs and expenses as may be incurred by the Agent in the enforcement of
the Agent’s rights against such Delinquent Revolving Credit Lender.


 


2.26.      Ordinary Course Distributions. This Section 2.26 applies unless the provisions of Section 13.6 (which
relates to distributions in the event of a Liquidation) becomes operative.


 


(a)           Weekly,
on such day as may be set from time to time by the Agent (or more frequently at
the Agent’s option) the Agent and each Revolving Credit Lender shall settle up
on amounts advanced under the Revolving Credit and collected funds received in
the Concentration Account.


 


(b)           The
Agent shall distribute to the SwingLine Lender and to each Revolving Credit
Lender, such Person’s respective pro-rata share of interest payments on the
Revolving Credit Loans when applied by the Agent as provided in Section 8.5(a).
For purposes of calculating


 


47

















 


interest due to a Revolving Credit Lender,
that Revolving Credit Lender shall be entitled to receive interest on the
actual amount contributed by that Revolving Credit Lender towards the principal
balance of the Revolving Credit Loans outstanding during the applicable period
covered by the interest payment made by the Borrower.  Any net principal reductions to the Revolving
Credit Loans received by the Agent in accordance with the Loan Documents during
such period shall not reduce such actual amount so contributed, for purposes of
calculation of interest due to that Revolving Credit Lender, until the Agent
has distributed to that Revolving Credit Lender its pro-rata share thereof.


 


(c)           The
Agent shall distribute to each Term Loan Lender such Person’s respective pro-rata
share of interest payments on the Term Loan when applied by the Agent as
provided in Section 8.5(a). For purposes of calculating interest due to a Term
Loan Lender, that Term Loan Lender shall be entitled to receive interest on the
actual amount contributed by that Term Loan Lender towards the principal
balance of the Term Loan outstanding during the applicable period covered by
the interest payment made by the Borrower. 
Any net principal reductions to the Term Loan received by the Agent in
accordance with the Loan Documents during such period shall not reduce such
actual amount so contributed, for purposes of calculation of interest due to
that Term Loan Lender, until the Agent has distributed to that Term Loan Lender
its pro-rata share thereof.


 


(d)           The
Agent shall distribute fees paid on account of the Revolving Credit in
accordance with the terms of the Agreement.


 


(e)           The
Agent shall distribute fees paid on account of the Term Loan in accordance with
the terms of the Agreement.


 


(f)            No
Revolving Credit Lender shall have any interest in, or right to receive any
part of, the Agent’s Fee to be paid by the Borrower to the Agent pursuant to
this Agreement.


 


(g)           Any
amount received by the Agent as reimbursement for any cost or expense
(including without limitation, attorneys’ reasonable fees) shall be distributed
by the Agent to that Person which is entitled to such reimbursement as provided
in this Agreement (and if such Person(s) is (are) the Revolving Credit Lenders
or the Term Loan Lenders, pro-rata based upon their respective Revolving Credit
Commitment Percentages or Term Loan Percentages, as applicable, at the date on
which the expense, in respect of which such reimbursement is being made, was
incurred).


 


(h)          Each distribution
pursuant to this Section 2.26 is subject to Section 2.25(c), above.


 


ARTICLE III.                  THE TERM LOAN


 


3.1.         Commitment to lend.  Subject to the terms and conditions set forth
in this Agreement, each Term Loan Lender agrees to lend to the Borrower on the
Restatement Effective Date the amount of its Term Loan Percentage of the
principal amount of $20,000,000.


 


3.2.         The Term Notes.  The Term Loan shall be evidenced by separate
promissory notes of the Borrower in substantially the form of Exhibit G
hereto (the “Term  Notes”), dated the Restatement Effective Date,
and completed with appropriate insertions. 
The Borrower irrevocably authorizes the Term Loan Lenders to make or
cause to be made a notation on the


 


48

















 


Term Loan Lender’s records
reflecting the original principal amount of such Term Loan Lender’s portion of
the Term Loan and, at or about the time of the Term Loan Lender’s receipt of
any principal payment on the Term Note, an appropriate notation on such Term
Loan Lender’s records reflecting such payment. 
The aggregate unpaid amount set forth on each Term Loan Lender’s records
shall be prima  facie evidence of the principal amount thereof
owed and unpaid on such Term Loan Lender’s Term Loan, but the failure to
record, or any error in so recording, any such amount on such Term Loan Lender’s
records shall not affect the obligations of the Borrower hereunder or under any
Term Notes to make payments of principal of and interest on the Term Notes when
due.


 


3.3.         Payments of
Principal of Term Loan.


 


(a)  Except as contemplated by
Section 13.6, the Borrower may not make any prepayments of principal on account
of the Term Loan until the Borrower’s Revolving Credit Obligations to the
Revolving Credit Lenders have been paid in full and the Revolving Credit Dollar
Commitments have been terminated;  provided,
however, from the period commencing on the first anniversary of the
Restatement Effective Date through the Maturity Date, the Borrower may prepay
the Term Loan in whole or in part, provided that at the time of such
prepayment


 


(i) the Borrower is not In Default, and no
Event of Default exists or would occur as a result of such prepayment,


 


(ii) the Borrower shall have delivered to the
Agent evidence for the 2 month period ending immediately prior to the
prepayment of the Term Loan demonstrating, in form and substance satisfactory
to the Agent, that Availability was greater than $50,000,000 at all times
during such 2 month period, and


 


(iii) the Borrower shall have delivered to
the Agent pro forma financial statements for the succeeding period of 2 months
demonstrating, in form and substance satisfactory to the Agent, that
Availability will exceed $50,000,000 at all times during such 2 month period
after giving effect to the prepayment of the Term Loan.


 


(b)  No amount repaid with
respect to the Term Loan may be reborrowed.


 


(c)  The Borrower promises to pay
on the Maturity Date, and there shall become absolutely due and payable on the
Maturity Date, the Term Loans outstanding on such date, together with any and
all accrued and unpaid interest thereon and fees in connection with the Term
Loan.


 


3.4.         Term Loan Early
Termination Fee.  If the
Termination Date occurs, on or prior to July 1, 2008, the Borrower shall pay to
the Agent for the pro  rata accounts of the Term Loan Lenders, in
view of the impracticality and extreme difficulty of ascertaining the actual
amount of damages to the Term Loan Lenders or profits lost by the Term Loan
Lenders as a result thereof, and by mutual agreement of the parties as to a
reasonable estimation and calculation of the lost profits or damages of the
Term Loan Lenders, a fee with respect to each such prepayment (the “Term
Loan  Early  Termination  Fee”) in an amount equal to


 


(a) 0.75% of the aggregate outstanding principal amount of the Term
Loan if the Termination Date occurs on or before July 1, 2007, or


 


49

















 


(b) 0.50% of the aggregate outstanding principal amount of the Term
Loan if the Termination Date occurs after July 1, 2007, but on or before July
1, 2008.  There shall be no Term Loan
Early Termination Fee payable if the Termination Date occurs after July 1, 2008.


 


3.5.         Interest on Term
Loan.


 


(a)  The outstanding amount of
the Term Loan shall bear interest until repaid at the rate per annum equal to
the sum of Base plus 2.00% unless
timely notice is given that all or a portion of the Term Loan is or is to be
converted to, a LIBOR Loan.


 


(b)  Each portion of the Term
Loan which consists of a LIBOR Loan shall bear interest at the sum of LIBOR plus 4.00%.


 


(c)  Subject to, and in
accordance with, the provisions of this Agreement, the Borrower may cause all
or a part of the unpaid principal balance of the Term Loan to bear interest
determined by reference to Base or LIBOR as specified from time to time by the
Borrower.  The Borrower shall notify the
Agent, such notice to be irrevocable, at least two (2) LIBOR Business Days
prior to the Drawdown Date if all or any portion of such Term Loan is to bear
interest at the LIBOR Offer Rate.  After
the Term Loan has been made, the provisions of Section 2.5 shall apply mutatis
mutandis with respect to all or any portion of such Term Loan so that the
Borrower may have the same interest rate options with respect to all or any
portion of the Term Loan as it would be entitled to with respect to Revolving
Credit Loans.


 


(d)  The Borrower shall not
select, renew, or convert any interest rate for all or any portion of the Term
Loan such that, in addition to interest at the Base plus 2.00% rate, there are more than six (6) portions of the
Term Loan which are LIBOR Loans at any one time.


 


(e)  The Borrower shall pay
accrued and unpaid interest on the Term Loan in arrears as follows


 


(i) on the applicable Interest Payment Date
for the relevant portion of the Term Loan,


 


(ii) on the Termination Date and on the End
Date, and


 


(iii) following the occurrence of any Event
of Default, with such frequency as may be determined by the Agent.


 


(f)  Following the occurrence and
continuance of any Event of Default, at the option of the Agent or at the
instruction of the SuperMajority Lenders (determined in this case solely by
reference to the Term Loan Lenders), interest shall accrue and shall be payable
on the unpaid principal balance of the Term Loan at a rate which is the
aggregate of the rate applicable to the unpaid principal balance of the Term
Loan as provided in clause (a) herein plus
three percent (3%) per annum.


 


3.6.        Payments on Account of Term Loan.  The Borrower authorizes the Agent to
determine and to pay over directly to the Term Loan Lenders any and all amounts
due and payable from time to time under or on account of the Term Loan as
advances under the Revolving Credit of the Borrower, it being understood, however,
that the authorization of the Agent provided in this Section 3.6 shall not
excuse the Borrower from fulfilling its obligations to


 


50

















 


the Term Loan Lenders on account of the Term Loan nor place any
obligation on the Agent to do so.  The
Agent shall provide prompt advice to the Borrower of any amount which is so
paid over by the Agent to the Term Loan Lenders pursuant to this Section 3.6.  The Borrower shall not be entitled to any
credit, rebate or repayment of any fee or assessment previously earned by the
Term Loan Lenders pursuant to this Agreement notwithstanding any termination of
this Agreement or suspension or termination of the Agent’s and any Lender’s
respective obligation to make loans and advances hereunder.


 


ARTICLE IV.                 CONDITIONS PRECEDENT


 


Except as otherwise agreed to by the Borrower
and the Agent in writing, as a condition to the amendment and restatement of
this Agreement, each of the documents respectively described in Sections 4.1
through and including 4.4 and 4.11 through and including 4.14, (each in form
and substance satisfactory to the Agent and each of the Revolving Credit
Lenders and the Term Loan Lenders) shall have been delivered to the Agent, and
the conditions respectively described in Sections 4.5 through and including
4.10, and 4.16, shall have been satisfied:


 


4.1.         Corporate Due
Diligence.


 


(a)           A
Certificate of corporate good standing issued as of a recent date by the
Secretary of State of Minnesota.


 


(b)           Certificates
of due qualification, in good standing, issued as of a recent date by the
Secretary(ies) of State of each State in which the nature the Borrower’s
business conducted or assets owned could require such qualification.


 


(c)           A
Certificate from a duly authorized officer of the Borrower, on behalf of the Borrower (i) of the due
adoption, continued effectiveness, and setting forth the texts of, each
corporate resolution adopted in connection with the establishment of the loan
arrangement contemplated by the Loan Documents, and (ii) and attesting to the
true signatures of each Person authorized as a signatory to any of the Loan
Documents.


 


4.2.         Opinions.  Opinions of (a) Faegre & Benson LLP,
counsel to the Borrower, and (b) internal legal counsel to the Borrower, each
in form and substance satisfactory to the Agent.


 


4.3.         Additional Documents.  Such additional instruments and documents as
the Agent or its counsel reasonably may require or request including, without
limitation, the following: the Revolving Credit Notes, the SwingLine Note, the
Term Notes, the Closing Certificate, the Fee Letter and any UCC financing
statements.


 


4.4.         Officers’
Certificates.  Certificates
executed by the President and the Chief Financial Officer of the Borrower which
state that:


 


(a)           Such
officer, acting on behalf of the Borrower, has reviewed each of the Loan
Documents and has had the benefit of independent counsel of the Borrower’s
selection (attorney Samuel P. Verduci) in
connection with the review and negotiation of the Loan Documents.  In particular, and without limiting the
generality of such review, the following


 


51

















 


provisions of the Loan
Documents have been brought to the attention of such officer by such counsel:


 


(i)            The waiver of the
right to a trial by jury in connection with controversies arising out of the
loan arrangement contemplated by the Loan Documents.


 


(ii)           The designation of, and
submission to the exclusive jurisdiction and venue of, certain courts.


 


(iii)          Various other waivers
and indemnifications included therein.


 


(iv)          The circumstances under
which the Liabilities could be accelerated and the grace periods available with
respect to certain Events of Default.


 


(b)           The
representations and warranties made by the Borrower to the Agent, the Revolving
Credit Lenders and the Term Loan Lenders in the Loan Documents are true and
complete as of the date of such certificate, and that no event has occurred
which is or which, solely with the giving of notice or passage of time (or
both), would be an Event of Default.


 


4.5.         Representations and Warranties.  Each of the representations made by or on
behalf of the Borrower in this Agreement or in any of the other Loan Documents
or in any other report, statement, document, or paper provided by or on behalf
of the Borrower shall be true and complete in all material respects as of the
date as of which such representation or warranty was made.


 


4.6.         Minimum Day One Availability.  After giving effect to any Revolving Credit
Loans to be made or otherwise outstanding on the Restatement Effective Date;
all then held checks (if any); accounts payable which are overdue by more than
Fifteen (15) days beyond credit terms then accorded the Borrower; overdrafts;
any charges to the Loan Account made in connection with the credit facility
contemplated hereby; and L/Cs to be outstanding as of or issued on or
immediately subsequent to, the Restatement Effective Date, Availability shall
not be less than $20,000,000.


 


4.7.         Capital Structure.  The Agent shall be satisfied with the capital
structure of the Borrower.


 


4.8.         All Fees and Expenses Paid.  All fees due under or with respect to the
credit facility provided to the Borrower by the Agent prior to the amendment
and restatement of this Agreement, and all costs and expenses incurred by the
Agent in connection with such credit facility (including the fees and expenses
of counsel to the Agent) shall have been paid in full.


 


4.9.         Borrower Not In Default.  The Borrower is not and will not be In
Default.


 


4.10.       No Adverse Change.  Other than as set forth on Schedule 5.18 to
the Closing Certificate, no event shall have occurred or failed to occur, which
occurrence or failure is or could have a materially adverse effect upon the
Borrower’s financial condition when compared with such financial condition at
the end of the fiscal year ended January 28, 2006.


 


4.11.       Perfection Certificate and UCC Search
Results.  The Agent shall have
received from the Borrower a completed and fully executed Perfection
Certificate and the results


 


52

















 


of UCC searches with respect to
its Collateral, indicating no liens other than Permitted Encumbrances, and
otherwise in form and substance satisfactory to the Agent.


 


4.12.       Certificates of Insurance.  The Agent shall have received a certificate
of insurance from an independent insurance broker dated as of the Restatement
Effective Date, identifying insurers, types of insurance, insurance limits, and
policy terms, and otherwise describing the insurance obtained in accordance
with the provisions of this Agreement.


 


4.13.       Blocked Account Agreements and
Notifications.  The Agent
shall have received copies of the notifications and the Blocked Account
Agreements required by Section 8.1(b).


 


4.14.       Borrowing Base Certificate.  The Agent shall have received from the
Borrower a Borrowing Base Certificate dated as of the Restatement Effective
Date.


 


4.15.       Benefit of Conditions Precedent.  The conditions set forth in this Article 4
are for the sole benefit of the Agent, each Revolving Credit Lender and each
Term Loan Lender and may be waived by the Agent (in consultation with the
Lenders), in whole or in part without prejudice to the Agent, any Revolving
Credit Lender or any Term Loan Lender.


 


No document shall be deemed delivered to the
Agent, any Revolving Credit Lender or any Term Loan Lender until received and
accepted by the Agent at its offices in Boston, Massachusetts.  The execution and delivery of this Agreement
or any other Loan Document shall not be deemed a waiver of any of the
conditions set forth in this Article 4. 
Under no circumstances shall this Agreement take effect until executed
and accepted by the Agent at said offices. 
For purposes of determining compliance with the conditions specified in
this Article 4, each Revolving Credit Lender and Term Loan Lender that has
signed this Agreement shall be deemed to have consented to, approved or
accepted or to be satisfied with, each document or other matter required
thereunder to be consented to or approved by or acceptable or satisfactory to a
Revolving Credit Lender or Term Loan Lender unless the Agent shall have
received notice from such Revolving Credit Lender or Term Loan Lender prior to
the proposed Restatement Effective Date specifying its objections thereto.


 


ARTICLE V.                   GENERAL REPRESENTATIONS, COVENANTS AND WARRANTIES


 


To induce each Revolving Credit Lender and
Term Loan Lender to amend and restate the credit facility as contemplated
herein and to induce the Revolving Credit Lenders and the Term Loan Lenders to
provide loans and advances under the Revolving Credit and the Term Loan (each
of which loans shall be deemed to have been made in reliance thereupon) the
Borrower, in addition to all other representations, warranties, and covenants
made by the Borrower in any other Loan Document, makes those representations,
warranties, and covenants included in this Agreement.


 


5.1.         Payment and Performance of Liabilities.  The Borrower shall pay each payment Liability
when due (or when demanded, if payable on demand) and shall promptly,
punctually, and faithfully perform each other Liability.


 


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5.2.         Due Organization,
Authorization, No Conflicts.


 


(a)           The
Borrower presently is and shall hereafter remain in good standing as a
Minnesota corporation and is and shall hereafter remain duly qualified and in
good standing in every other State in which, by reason of the nature or
location of the Borrower’s assets or operation of the Borrower’s business, such
qualification may be necessary, except where the failure to so qualify would
not have a material adverse effect on the business or assets of the Borrower.


 


(b)           The
Borrower’s exact legal name and organizational identification number assigned
to it by its applicable state of organization are listed in the Perfection
Certificate.


 


(c)           The
Borrower shall not change its State of organization; type of organization; any
organizational identification number assigned to the Borrower by that State; or
the Borrower’s federal taxpayer identification number.


 


(d)           Each
Affiliate is listed on Schedule 5.2 to the Closing Certificate. The Borrower shall
provide the Agent with prior written notice of any entity’s becoming or ceasing
to be an Affiliate.


 


(e)           The
Borrower has all requisite power and authority to execute and deliver all Loan
Documents to which the Borrower is a party and has and will hereafter retain
all requisite power to perform all Liabilities.


 


(f)            The
execution and delivery by the Borrower of each Loan Document to which it is a
party; the Borrower’s consummation of the transactions contemplated by such
Loan Documents (including, without limitation, the creation of Collateral
Interests by the Borrower to secure the Liabilities); the Borrower’s performance
under those of the Loan Documents to which it is a party; the borrowings
hereunder; and the use of the proceeds thereof:


 


(i)            Have been duly
authorized by all necessary action.


 


(ii)           Do not, and will not,
contravene in any material respect any provision of any Requirement of Law or
obligation of the Borrower.


 


(iii)          Will not result in the
creation or imposition of, or the obligation to create or impose, any
Encumbrance upon any assets of the Borrower pursuant to any Requirement of Law
or obligation, except pursuant to the Loan Documents.


 


(g)           The
Loan Documents have been duly executed and delivered by the Borrower and are
the legal, valid and binding obligations of the Borrower, enforceable against
the Borrower in accordance with their respective terms.


 


5.3.         Trade Names.  The Borrower will provide the Agent with not
less than Twenty-One (21) days prior written notice (with reasonable
particularity) of any change to the Borrower’s name from that under which the
Borrower is conducting its business at the execution of this Agreement and will
not effect such change if an Event of Default has occurred and is continuing.


 


54

















 


5.4.         Infrastructure.


 


(a)           The
Borrower has and will maintain a sufficient infrastructure to conduct its
business as presently conducted and as contemplated to be conducted following
its execution of this Agreement.


 


(b)           The
Borrower owns and possesses, or has the right to use (and will hereafter own,
possess, or have such right to use) all patents, industrial designs,
trademarks, trade names, trade styles, brand names, service marks, logos,
copyrights, trade secrets, know-how, confidential information, and other
intellectual or proprietary property of any third Person necessary for the Borrower’s
conduct of the Borrower’s business.


 


(c)           The
conduct by the Borrower of the Borrower’s business does not presently infringe
(nor will the Borrower conduct its business in the future so as to infringe)
the patents, industrial designs, trademarks, trade names, trade styles, brand
names, service marks, logos, copyrights, trade secrets, know-how, confidential
information, or other intellectual or proprietary property of any third Person,
except for such infringement which would not have a material adverse effect on
the Borrower’s business or assets.


 


5.5.         Locations.


 


(a)           The
Collateral, and the books, records, and papers of Borrower’s pertaining
thereto, are kept and maintained solely at (i) the Borrower’s chief executive
offices, (ii) other locations set forth in the Perfection Certificate, (iii)
temporary locations in connection with sales at trade shows, provided, however, that the aggregate
amount of Collateral at such locations shall not exceed $250,000 in the
aggregate at any time, and (iv) other locations, provided, however, the Borrower provides the Agent with
prior written notice at least Fourteen (14) days before moving any Collateral
into such location.


 


(b)           The
Borrower shall not remove any of the Collateral from said chief executive
office, those locations listed in the Perfection Certificate, temporary
locations in connection with trade shows to the extent permitted by Section
5.5(a), temporary staging areas in connection with new store openings the
location of which has been disclosed to the Agent, or those other locations for
which the Borrower has provided the Agent notice in accordance with
Section 5.5(a), except for the following purposes:


 


(i)            To accomplish sales of
Inventory in the ordinary course of business.


 


(ii)           To move Inventory or
other Collateral from one such location to another such location.


 


(iii)          To utilize such of the
Collateral as is removed from such locations in the ordinary course of business
(such as motor vehicles).


 


(iv)          To sell, lease or
dispose of the Collateral as permitted by Section 5.13(d).


 


(c)           The
Borrower will not open or close any location at which the Borrower maintains,
offers for sales, or stores any of the Collateral without providing the Agent
with prior written notice at least Fourteen (14) days before moving any
Collateral into or out of such location.


 


55

















 


(d)           Except
as otherwise disclosed pursuant to, or permitted by, this Section 5.5, no
tangible personal property of the Borrower is in the care or custody of any
third party or stored or entrusted with a bailee or other third party and none
shall hereafter be placed under such care, custody, storage, or entrustment,
all except for any property in transit to the Borrower, and any Collateral not
to exceed $1,000,000 at any one time.


 


5.6.         Title to Assets.


 


(a)           The
Borrower is, and shall hereafter remain, the owner of the Collateral free and
clear of all Encumbrances with the exceptions of the following (the “Permitted Encumbrances”):


 


(i)            Encumbrances in favor
of the Agent.


 


(ii)           purchase money security
interests in or purchase money mortgages on real or personal property acquired
after the date hereof to secure purchase money Indebtedness of the type and
amount permitted by Section 5.7(a)(iii), incurred in connection with the
acquisition of such property, which security interests or mortgages cover only
the real or personal property so acquired.


 


(iii)          liens to secure taxes,
assessments and other government charges in respect of obligations not overdue
or which are being contested in good faith by appropriate proceedings or liens
on properties to secure claims for labor, material or supplies in respect of
obligations not overdue or which are being contested in good faith by
appropriate proceedings, provided
that the Borrower will pay all such taxes, assessments, charges or claims
forthwith upon the commencement of proceedings to foreclose any lien that may
have attached as security therefor.


 


(iv)          deposits or pledges made
in connection with, or to secure payment of, workmen’s compensation,
unemployment insurance, old age pensions or other social security obligations.


 


(v)           liens of carriers,
warehousemen, mechanics and materialmen, and other like liens on properties, in
existence less than One Hundred Twenty (120) days from the date of creation
thereof in respect of obligations not overdue.


 


(vi)          Those Encumbrances (if
any) listed on Schedule
5.6 to the Closing Certificate.


 


(b)           The
Borrower does not and shall not, have, possession of any property on
consignment to the Borrower having a value in excess of $4,000,000 in the
aggregate at any time.


 


5.7.         Indebtedness.


 


The Borrower does not and shall not hereafter
have any Indebtedness with the exceptions of:


 


(i)            Any Indebtedness on
account of the Revolving Credit or the Term Loan.


 


56

















 


(ii)           Endorsements for
collection, deposit or negotiation and warranties of products or services, in
each case incurred in the ordinary course of business.


 


(iii)          Indebtedness incurred in
connection with the acquisition after the date hereof of any real or personal
property by the Borrower or under any Capitalized Lease, provided that the aggregate principal
amount of such Indebtedness of the Borrower shall not exceed the aggregate
amount of $20,000,000, or with the consent of the Agent $30,000,000, at any one
time.


 


(iv)          The Indebtedness (if
any) listed on Schedule
5.7 to the Closing Certificate.


 


(v)           Indebtedness consisting
of obligations to purchase, redeem, retire or otherwise acquire for value any
shares of the Borrower’s capital stock from current and former employees,
directors and consultants of the Borrower or any of its Affiliates, and any
estate or personal representative of such employee, director or consultant, provided, however, that the Borrower shall
have no obligation to purchase, redeem, retire or otherwise acquire any such
shares to the extent that such purchase, redemption, retirement or other
acquisition is not permitted by Section 5.20(b) of this Agreement.


 


(vi)          Other unsecured
Indebtedness in an aggregate amount not to exceed $75,000,000 outstanding at
any one time; provided, that the Borrower shall not be In Default (A)
immediately prior to the incurrence of such Indebtedness or (B) as a result of
the incurrence of such Indebtedness; and provided, further, that such Indebtedness shall be
upon terms and conditions, including without limitation covenants and events of
default, no more restrictive in the reasonable determination of the Agent than
the terms and conditions set forth in the Loan Documents.


 


5.8.         Insurance.


 


(a)           Schedule 5.8 to
the Closing Certificate, is a schedule of all insurance policies owned by the
Borrower or under which the Borrower is the named insured.  Each of such policies is in full force and
effect.  Neither the issuer of any such
policy nor the Borrower is in default or violation of any such policy.


 


(b)           The
Borrower shall have and maintain at all times insurance covering such risks, in
such amounts, containing such terms, in such form, for such periods, and
written by such companies as may be satisfactory to the Agent.


 


(c)           All
insurance carried by the Borrower shall provide for a minimum of Thirty (30)
days’ prior written notice of cancellation to the Agent and all such insurance
which covers the Collateral shall:


 


(i)            Be payable to the
Agent as loss payee and/or additional insured under a “standard” or “New York”
loss payee clause for the benefit of the Revolving Credit Lenders, the Term
Loan Lenders and the Agent.


 


(ii)           Not include an
endorsement in favor of any other Person with respect to insured Collateral.


 


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(d)           The
coverage reflected on Schedule 5.8 to the Closing Certificate, presently satisfies
the foregoing requirements, it being recognized
by the Borrower, however, that such requirements may change
hereafter to reflect changing circumstances.


 


(e)           The
Borrower shall furnish the Agent from time to time with certificates or other
evidence satisfactory to the Agent regarding compliance by the Borrower with
the foregoing requirements.


 


(f)            In
the event of the failure by the Borrower to maintain insurance as required
herein, the Agent, at its option, may obtain such insurance, provided, however, the Agent’s obtaining
of such insurance shall not constitute a cure or waiver of any Event of Default
occasioned by the Borrower’s failure to have maintained such insurance.


 


5.9.         Licenses.  Each license, distributorship, franchise, and
similar agreement issued to, or to which the Borrower is a party and is
material to the business of the Borrower is in full force and effect.  No party to any such license or agreement is
in default or violation thereof.  The
Borrower has not received any notice or threat of cancellation of any such
license or agreement.


 


5.10.       Leases.  Schedule 5.6 to the Closing Certificate lists all
presently effective Capital Leases and Schedule 4 to the Perfection Certificate lists all
other presently effective Leases.  Each
of such Leases and Capital Leases is in full force and effect.  The Borrower and, to the knowledge of the
Borrower, no other party to any such Lease or Capital Lease is in default or
violation of any such Lease or Capital Lease which is material to the business
of the Borrower.  The Borrower has not
received any notice or threat of cancellation of any such Lease or Capital
Lease.  The Borrower hereby authorizes
the Agent at any time and from time to time to contact any of the Borrower’s
landlords in order to confirm the Borrower’s continued compliance with the
terms and conditions of the Lease(s) between the Borrower and that landlord and
to discuss such issues, concerning the Borrower’s occupancy under such
Lease(s), as the Agent may determine.


 


5.11.       Requirements of Law.  The Borrower is in compliance with, and shall
hereafter comply with and use its assets in compliance with, all Requirements
of Law except where the failure of such compliance will not have a material adverse effect on the Borrower’s business
or assets.  The Borrower has not received
any notice of any violation of any Requirement of Law (other than of a
violation which has no material adverse
effect on the Borrower’s business or assets), which violation has not been
cured or otherwise remedied.


 


5.12.       Labor Relations.


 


(a)           The
Borrower is not presently a party to any collective bargaining or other labor
contract.


 


(b)           There
is not presently pending and, to the Borrower’s knowledge, there is not
threatened any of the following:


 


(i)            Any strike, slowdown,
picketing, work stoppage, or employee grievance process.


 


58

















 


(ii)           Any proceeding against
or affecting the Borrower relating to the alleged violation of any Applicable
Law pertaining to labor relations or before National Labor Relations Board, the
Equal Employment Opportunity Commission, or any comparable governmental body,
organizational activity, or other labor or employment dispute against or
affecting the Borrower, which, if determined adversely to the Borrower could
have more than a material adverse effect on the Borrower.


 


(iii)          Any lockout of any
employees by the Borrower (and no such action is contemplated by the Borrower).


 


(iv)          Any application for the
certification of a collective bargaining agent.


 


(c)           No
event has occurred or circumstance exists which could provide the basis for any
work stoppage or other labor dispute.


 


(d)           The
Borrower:


 


(i)            Has complied in all
material respects with all Applicable Law relating to employment, equal
employment opportunity, nondiscrimination, immigration, wages, hours, benefits,
collective bargaining, the payment of social security and similar taxes,
occupational safety and health, and plant closing.


 


(ii)           Is not liable for the
payment of any material amount of compensation, damages, taxes, fines,
penalties, or other amounts, however designated, for the Borrower’s failure to
comply with any Applicable Law referenced in Section 5.12(d)(i).


 


5.13.       Maintain Properties.  The Borrower shall:


 


(a)           Keep
the Collateral in good order and repair (ordinary reasonable wear and tear and
insured casualty excepted).


 


(b)           Not
suffer or cause the waste or destruction of any material part of the
Collateral.


 


(c)           Not
use any of the Collateral in violation of law or any policy of insurance
thereon.


 


(d)           Not
sell, lease, or otherwise dispose of any of the Collateral, other than the
following:


 


(i)            The sale of Inventory
in the ordinary course of business.


 


(ii)           The disposal of
property which is obsolete, worn out, or damaged beyond repair, in the ordinary
course of business consistent with past practices.


 


(iii)          Any sale, lease or other
disposal if the Borrower turns over to the Agent all Receipts from such sale,
lease or other disposal.


 


59

















 


5.14.       Taxes.


 


(a)           With
respect to the Borrower’s federal, state, and local tax liability and
obligations:


 


(i)            The Borrower, in
compliance with all Applicable Law, has properly filed all returns due to be
filed up to the date of this Agreement.


 


(ii)           Except
as described on Schedule
5.14 to the Closing Certificate:


 


(A)          At no time since
December 31, 1998 has the Borrower received from any taxing authority any
request to perform any examination of or with respect to the Borrower nor any
other written notice in any way relating to any claimed failure by the Borrower
to comply with all Applicable Law concerning payment of any taxes or other
amounts in the nature of taxes.


 


(B)           No agreement is extant
which waives or extends any statute of limitations applicable to the right of
any taxing authority to assert a deficiency or make any other claim for or in
respect to federal income taxes.


 


(C)           No issue has been
raised in any tax examination of the Borrower which, by application of similar
principles, reasonably could be expected to result in the assertion of a deficiency
for any fiscal year open for examination, assessment, or claim by any taxing
authority.


 


(b)           The
Borrower has, and hereafter shall: pay, as they become due and payable, all
taxes and unemployment contributions and other charges of any kind or nature levied,
assessed or claimed against the Borrower or the Collateral by any person or
entity whose claim could result in an Encumbrance upon any asset of the
Borrower or by any governmental authority; properly exercise any trust
responsibilities imposed upon the Borrower by reason of withholding from
employees’ pay or by reason of the Borrower’s receipt of sales tax or other
funds for the account of any third party; timely make all contributions and
other payments as may be required pursuant to any Employee Benefit Plan now or
hereafter established by the Borrower; and timely file all tax and other
returns and other reports with each governmental authority to whom the Borrower
is obligated to so file.


 


5.15.       No Margin Stock.  The Borrower is not engaged in the business
of extending credit for the purpose of purchasing or carrying any margin stock
(within the meaning of Regulations U, T, and X of the Board of Governors of the
Federal Reserve System of the United States). 
No part of the proceeds of any borrowing hereunder will be used at any
time to purchase or carry any such margin stock or to extend credit to others
for the purpose of purchasing or carrying any such margin stock.


 


5.16.       ERISA.


 


(a)           Neither
the Borrower nor any ERISA Affiliate has ever:


 


(i)            Violated or failed to
be in compliance in any material respect with the Borrower’s Employee Benefit
Plan.


 


60

















 


(ii)           Failed timely to file
all reports and filings required by ERISA to be filed by the Borrower, which
failure has resulted or could result in a material liability to the Borrower.


 


(iii)          Engaged in any material
nonexempt “prohibited transactions” or any “reportable event” (respectively as
described in ERISA) for which a report has not been waived under applicable
regulations.


 


(iv)          Engaged in, or
committed, any act such that a material tax or penalty reasonably could be
imposed upon the Borrower on account thereof pursuant to ERISA.


 


(v)           Accumulated any
material cumulative funding deficiency within the meaning of ERISA.


 


(vi)          Terminated any Employee
Benefit Plan such that a lien could be asserted against any assets of the
Borrower on account thereof pursuant to ERISA.


 


(b)           As
to any multiemployer plan (as defined in Section 3(37) of ERISA), neither the
Borrower nor any ERISA Affiliate has (x) incurred any material liability
(including secondary liability) to such multiemployer plan as a result of a
complete or partial withdrawal from such multiemployer plan under §4201 of
ERISA or as a result of a sale of assets described in §4204 of ERISA, or (y)
been notified that such multiemployer plan is in reorganization or insolvent
under and within the meaning of §4241 or §4245 of ERISA or is at risk of
entering reorganization or becoming insolvent, or that such multiemployer plan
intends to terminate or has been terminated under §4041A of ERISA.


 


(c)           Neither
the Borrower nor any ERISA Affiliate shall ever engage in any action of the
type described in Section 5.16(a) and (b).


 


5.17.       Hazardous Materials.


 


(a)           The
Borrower has never: (i) been notified it is legally responsible for any release
or threat of release of any Hazardous Material which would have a material
adverse effect on the Borrower’s business or assets or (ii) received
notification of the incurrence of any expense in connection with the
assessment, containment, or removal of any Hazardous Material for which the
Borrower would be responsible which would have a material adverse effect on the
Borrower’s business or assets.


 


(b)           The
Borrower shall: (i) dispose of any Hazardous Material only in compliance with
all Environmental Laws and (ii) have possession of any Hazardous Material only
in the ordinary course of the Borrower’s business and in compliance with all
Environmental Laws.


 


5.18.       Litigation.  Except as described in Schedule 5.18 to
the Closing Certificate, there is not presently pending or threatened by or
against the Borrower any suit, action, proceeding, or investigation which, if
determined adversely to the Borrower, would have a material adverse effect upon
the Borrower’s financial condition or ability to conduct its business as such
business is presently conducted or is contemplated to be conducted in the
foreseeable future.


 


61

















 


5.19.       Business Plan.  The Borrower has provided to the Agent and
the Lenders its Business Plan for the year 2006.


 


5.20.       Dividends.
Investments. Corporate Action. 
The Borrower shall not:


 


(a)           Pay
any cash dividend in respect of any class of the Borrower’s capital stock.


 


(b)           Own,
redeem, retire, purchase, or acquire any of the Borrower’s capital stock, other
than (i) repurchases of capital stock from current or former employees,
directors or consultants of the Borrower or any of its Affiliates and any
estate or personal representative of such employee, director or consultant in
an aggregate amount not to exceed $2,500,000 in any fiscal year and (ii)
purchases of capital stock of the Borrower made pursuant to an employee stock
purchase plan.


 


(c)           Invest
in or purchase any stock or securities or rights to purchase any such stock or
securities, of any Person, except for (i) marketable direct or guaranteed
obligations of the United States of America that mature within one (1) year
from the date of purchase by the Borrower; (ii) demand deposits, certificates
of deposit, bank acceptances and time deposits of United States banks having
total assets in excess of $1,000,000,000, and (iii) securities commonly known
as “commercial paper” issued by a
corporation organized and existing under the laws of the United States of
America or any state thereof that at the time of purchase have been rated and
the ratings for which are not less than “P-1” if rated by Moody’s Investors
Services, Inc., and not less than “A 1” if rated by Standard & Poor’s Ratings
Group (“Permitted Investments”).


 


(d)           Merge
or consolidate or be merged or consolidated with or into any other corporation
or other entity.


 


(e)           Consolidate
any of the Borrower’s operations with those of any other Person.


 


(f)            Organize
or create any Affiliate, other than a wholly-owned subsidiary of the Borrower
which becomes a Borrower under this Agreement.


 


(g)           Subordinate
any debts or obligations owed to the Borrower by any third party to any other
debts owed by such third party to any other Person.


 


(h)           Acquire
any assets other than in the ordinary course and conduct of the Borrower’s
business as described in Section 5.23 hereof.


 


5.21.       Loans.  The Borrower shall not make any loans or
advances to, nor acquire the Indebtedness of, any Person, provided, however, the foregoing does not
prohibit any of the following:


 


(a)           Advance
payments made to the Borrower’s suppliers in the ordinary course.


 


(b)           Advances
to the Borrower’s officers, employees, and salespersons with respect to
reasonable expenses to be incurred by such officers, employees, and
salespersons for the benefit of the Borrower, which expenses are properly
substantiated by the person seeking such advance and properly reimbursable by
the Borrower.


 


62

















 


(c)           Advances
to current or former employees, directors or consultants of the Borrower or any
of its Affiliates and any estate or personal representative of such employee,
director or consultant in connection with the purchase of capital stock of the
Borrower, provided that such
Advances shall not exceed $500,000 in any fiscal year.


 


5.22.       Protection of Assets.  The Agent, in the Agent’s discretion, and
from time to time, may discharge any tax or Encumbrance on any of the
Collateral, or take any other action which the Agent may deem necessary or
desirable to repair, insure, maintain, preserve, collect, or realize upon any
of the Collateral.  The Agent shall not
have any obligation to undertake any of the foregoing and shall have no
liability on account of any action so undertaken except where there is a
specific finding in a judicial proceeding (in which the Agent has had an
opportunity to be heard), from which finding no further appeal is available,
that the Agent had acted in actual bad faith or in a grossly negligent
manner.  The Borrower shall pay to the
Agent, on demand, or the Agent, in its discretion, may add to the Loan Account,
all amounts paid or incurred by the Agent pursuant to this Section 5.22.


 


5.23.       Line of Business.  The Borrower shall not engage in any business
other than the business in which it is currently engaged or a business
reasonably related thereto (the conduct of which reasonably related business is
reflected in the Business Plan), which may include, without limitation, any future
catalog or e-commerce business.


 


5.24.       Affiliate Transactions.  The Borrower shall not make any payment, nor
give any value to any Affiliate except for (a) goods and services described on Schedule 5.24 to
the Closing Certificate, and (b) other goods and services which are actually
purchased by the Borrower from, or sold by the Borrower to, such Affiliate for
a price and on terms which shall be no less favorable to the Borrower than
those which would have been charged and imposed in an arms length transaction.


 


5.25.       Collateral.


 


(a)           None
of the Collateral constitutes, or is the proceeds of, “farm products” as
defined in §9-102(a)(34).


 


(b)           None
of the account debtors or other persons obligated on any of the Collateral is a
governmental authority covered by the Federal Assignment of Claims Act or like
federal, state or local statute or rule in respect of such Collateral.


 


(c)           The
Borrower holds no commercial tort claim except as indicated on the Perfection
Certificate.


 


(d)           The
Borrower has at all times operated its business in compliance with all
applicable provisions of federal, state and local statutes and ordinances
dealing with the control, shipment, storage or disposal of hazardous materials
or substances, except for such noncompliance which would not have a material
adverse effect on the Borrower’s business or assets.


 


5.26.       Adequacy of
Disclosure.


 


(a)           Except
as set forth on Schedule
5.26 to the Closing Certificate, all financial statements furnished
to the Agent, to each Revolving Credit Lender and to each Term Loan


 


63

















 


Lender by the Borrower have
been prepared in accordance with GAAP consistently applied and present fairly
the condition of the Borrower at the date(s) thereof and the results of operations
and cash flows for the period(s) covered (provided
however, that unaudited financial statements are subject to normal
year end adjustments and to the absence of footnotes).  There has been no change in the financial
condition, results of operations, or cash flows of the Borrower since the date
of the most recent financial statements, other than changes in the ordinary
course of business, which changes have not been materially adverse, either
singularly or in the aggregate.


 


(b)           Except
as set forth on Schedule
5.26 to the Closing Certificate, as of the date of this Agreement,
the Borrower does not have any material contingent obligations or material
obligation under any Lease or Capital Lease which is not noted in the Borrower’s
financial statements furnished to the Agent, to each Revolving Credit Lender
and to each Term Loan Lender prior to the execution of this Agreement.


 


(c)           No
document, instrument, agreement, or paper now or hereafter given to the Agent,
to any Revolving Credit Lender or to any Term Loan Lender by or on behalf of
the Borrower in connection with the execution of this Agreement by the Agent,
each Revolving Credit Lender and each Term Loan Lender (other than projections
or forecasts, which are and will be made in good faith using reasonable
assumptions taken as a whole) contains or will contain any untrue statement of
a material fact or omits or will omit to state a material fact necessary in
order to make the statements therein not misleading.  There is no fact known to the Borrower which
has, or which, in the foreseeable future would reasonably be expected to have,
a material adverse effect on the financial condition of the Borrower which has
not been disclosed in writing to the Agent, to each Revolving Credit Lender and
to each Term Loan Lender.


 


(d)           Since
the date of the Borrower’s most recent financial statements, no Internal
Control Event has occurred.


 


5.27.       No Restrictions on
Liabilities.  The Borrower
shall not enter into or directly or indirectly become subject to any agreement
which prohibits or restricts, in any manner, the Borrower’s:


 


(a)           Creation
of, and granting of Collateral Interests in favor of the Agent.


 


(b)           Incurrence
of Liabilities.


 


5.28.       Other Covenants.  The Borrower shall not indirectly do or cause
to be done any act which, if done directly by the Borrower, would breach any
covenant contained in this Agreement.


 


64

















 


5.29.       Status of
Loans as Senior Debt.  All
Indebtedness of the Borrower to the Lenders and the Agent in respect of the
Obligations constitutes “Senior Debt” under the terms of the Note Purchase
Agreement dated as of August 16, 2005 by and between the David C. Pratt
Irrevocable Grantor Retained Annuity Trust, Dated December 1, 1992 and the
Borrower, as amended, supplemented or otherwise modified and in effect from
time to time (the “Pratt Note Purchase Agreement”).  The Borrower will not (a) amend, supplement
or otherwise modify the terms of the Pratt Note Purchase Agreement, except to
the extent set forth in the Subordination Agreement dated as of August 16, 2005
by and among Fleet Retail Group, LLC, the David C. Pratt Irrevocable Grantor
Retained Annuity Trust, Dated December 1, 1992 and the Borrower (the “Pratt
Subordination Agreement”),  provided
that the Borrower may not agree to increase the interest rate of the
Indebtedness under the Pratt Note Purchase Agreement by more than 2% per annum,
nor shorten the final maturity date or the weighted average life to maturity of
the Indebtedness under the Pratt Note Purchase Agreement, or (b) prepay, redeem
or repurchase (or offer to prepay, redeem or repurchase) any of the
Indebtedness under the Pratt Note Purchase Agreement.


 


5.30.       Further Assurances.


 


(a)           The
Borrower is not the owner of, nor has it any interest in, any material
Collateral which, immediately upon the satisfaction of the conditions precedent
to the effectiveness of the credit facility contemplated hereby (Article 4)
will not be subject to a perfected Collateral Interest in favor of the Agent
(subject only to Permitted Encumbrances) to secure the Liabilities.


 


(b)           The
Borrower will not hereafter acquire any material Collateral which is not,
immediately upon such acquisition, subject to such a perfected Collateral
Interest in favor of the Agent to secure the Liabilities (subject only to
Permitted Encumbrances).


 


(c)           The
Borrower shall execute and deliver to the Agent such instruments, documents,
and papers, and shall do all such things from time to time hereafter as the
Agent may request to carry into effect the provisions and intent of this
Agreement; to protect and perfect the Agent’s Collateral Interests in the
Collateral; and to comply with all applicable statutes and laws, and facilitate
the collection of the Receivables Collateral. 
The Borrower shall execute all such instruments as may be required by
the Agent with respect to the recordation and/or perfection of the Collateral
Interests created or contemplated herein.


 


(d)           The
Borrower hereby irrevocably constitutes and appoints the Agent as and for the
Borrower’s true and lawful attorney, with full power of substitution, to file
any financing statements in order to perfect or protect the Agent’s Collateral
Interests in the Collateral.


 


(e)           This
Agreement constitutes an authenticated record which authorizes the Agent to
file such financing statements as the Agent determines as appropriate to
perfect or protect the Collateral Interests created by this Agreement.


 


(f)            A
carbon, photographic, or other reproduction of this Agreement or of any
financing statement or other instrument executed pursuant to this Section 5.30
shall be sufficient for filing to perfect the security interests granted
herein.


 


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ARTICLE VI.                 FINANCIAL REPORTING AND PERFORMANCE COVENANTS


 


6.1.         Maintain Records.  The Borrower shall:


 


(a)           At
all times, keep proper books of account, in which full, true, and accurate
entries shall be made of all of the Borrower’s financial transactions, all in
accordance with GAAP applied consistently with prior periods (except as
required by changes in GAAP) to fairly reflect the financial condition of the
Borrower at the close of, and its results of operations for, the periods in
question.


 


(b)           Timely
provide the Agent with those financial reports, statements, and schedules
required by this Article 6 or otherwise, each of which reports, statements and
schedules shall be prepared, to the extent applicable, in accordance with GAAP
applied consistently with prior periods (except as required by changes in GAAP)
to fairly reflect the financial condition of the Borrower at the close of, and
the results of operations for, the period(s) covered therein, (provided, however, that unaudited
financial statements are subject to normal year end adjustments and to the
absence of footnotes).


 


(c)           At
all times, keep accurate current records of the Collateral including, without
limitation, accurate current stock, cost, and sales records of its Inventory,
accurately and sufficiently itemizing and describing the kinds, types, and
quantities of Inventory and the cost and selling prices thereof.


 


(d)           At
all times, retain independent certified public accountants who are reasonably
satisfactory to the Agent and instruct such accountants to fully cooperate
with, and be available to, the Agent to discuss the Borrower’s financial
performance, financial condition, operating results, controls, and such other
matters, within the scope of the retention of such accountants, as may be raised
by the Agent.


 


(e)           Not
change the Borrower’s fiscal year without the consent of the Agent.


 


The Borrower hereby acknowledges that (a) the
Agent and/or the Arranger will make available to the Revolving Credit Lenders
and the Term Loan Lenders materials and/or information provided by or on behalf
of the Borrower hereunder (collectively, “Borrower
Materials”) by posting the Borrower Materials on IntraLinks or
another similar electronic system (the “Platform”)
and (b) certain of the Revolving Credit Lenders and the Term Loan Lenders may
be “public-side” Lenders (i.e.,
Lenders that do not wish to receive material non-public information with
respect to the Borrower or its securities) (each, a “Public Lender”).  The
Borrower hereby agrees that so long as the Borrower is the issuer of any
outstanding debt or equity securities that are registered or issued pursuant to
a private offering or is actively contemplating issuing any such securities (w)
all Borrower Materials that are to be made available to Public Lenders shall be
clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that
the word “PUBLIC” shall appear prominently on the first page thereof; (x) by
marking Borrower Materials “PUBLIC,” the Borrower shall be deemed to have
authorized the Agent, the Arranger, the Issuer, the Revolving Credit Lenders
and the Term Loan Lenders to treat such Borrower Materials as either publicly
available information or not material information (although it may be sensitive
and proprietary) with respect to the Borrower or its securities for purposes of
United States Federal and state securities laws; (y) all Borrower Materials
marked “PUBLIC” are permitted to be made available through a portion of the
Platform designated “Public Investor;” and (z) the Agent and the Arranger shall
be entitled to treat any Borrower Materials that are not marked “PUBLIC” as
being suitable only for posting on a portion of the Platform not designated


 


66

















 


“Public Investor.  Notwithstanding the foregoing, the Borrower
shall be under no obligation to mark any Borrower Materials “PUBLIC.”


 


6.2.         Access to Records.


 


(a)           The
Borrower shall accord the Agent with access from time to time as the Agent may
require to all properties owned by or over which the Borrower has control.  The Agent shall have the right, and the
Borrower will permit the Agent from time to time as Agent may request, to
examine, inspect, copy, and make extracts from any and all of the Borrower’s
books, records, electronically stored data, papers, and files.  The Borrower shall make all of the Borrower’s
copying facilities available to the Agent.


 


(b)           The
Borrower hereby authorizes the Agent to:


 


(i)            Inspect, copy,
duplicate, review, cause to be reduced to hard copy, run off, draw off, and
otherwise use any and all computer or electronically stored information or data
which relates to the Borrower, or any service bureau, contractor, accountant,
or other person, and directs any such service bureau, contractor, accountant, or
other person fully to cooperate with the Agent with respect thereto.


 


(ii)           Verify at any time the
Collateral or any portion thereof, including verification with Account Debtors,
and/or with the Borrower’s computer billing companies, collection agencies, and
accountants and to sign the name of the Borrower on any notice to the Borrower’s
Account Debtors or verification of the Collateral.


 


(c)           The
Agent from time to time may designate one or more representatives to exercise
the Agent’s rights under this Section 6.2 as fully as if the Agent were doing
so.


 


6.3.         Notice to Agent.


 


(a)           The
Borrower shall provide the Agent with written notice within Three (3) Business
Days after the occurrence of any of the following events, which written notice
shall be with reasonable particularity as to the facts and circumstances in
respect of which such notice is being given:


 


(i)            Any change in the
Borrower’s President, Chief Executive Officer, Chief Operating Officer, and
Chief Financial Officer (without regard to the title(s) actually given to the
Persons discharging the duties customarily discharged by officers with those
titles).


 


(ii)           Any ceasing of the
Borrower’s making of payment, in the ordinary course, to any of its creditors
(other than its ceasing of making of such payments on account of an immaterial
dispute).


 


(iii)          Any failure by the
Borrower to pay rent at any of the Borrower’s locations, which failure
continues for more than Three (3) days following the last day on which such
rent was payable without a material adverse effect to the Borrower.


 


(iv)          Any material adverse
change in the business, operations, or financial affairs of the Borrower.


 


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(v)           The Borrower’s becoming
In Default.


 


(vi)          Any intention on the
part of the Borrower to discharge the Borrower’s present independent
accountants or any withdrawal or resignation by such independent accountants
from their acting in such capacity (as to which, see Subsection 6.1(d)).


 


(vii)         Any litigation which, if
determined adversely to the Borrower, might have a material adverse effect on
the financial condition of the Borrower.


 


(viii)        The occurrence of any
Internal Control Event.


 


(ix)           The incurrence of any
Indebtedness after the Restatement Effective Date if, after giving effect to
such incurrence, the Borrower shall have additional unsecured Indebtedness in
aggregate principal amount exceeding $10,000,000.


 


(b)           The
Borrower shall:


 


(i)            At the request of the
Agent, add the Agent as an addressee on all mailing lists maintained by or for
the Borrower.


 


(ii)           At the request of the
Agent, from time to time, provide the Agent with copies of all advertising
(including copies of all print advertising and duplicate tapes of all video and
radio advertising).


 


(iii)          Provide the Agent, when
received by the Borrower, with a copy of any management letter or similar
communications from any accountant of the Borrower.


 


6.4.         Borrowing Base Certificate.  Weekly, on Wednesday of each week (as of the
then immediately preceding Saturday) the Borrower shall provide the Agent with
a certificate (in the form of EXHIBIT C, annexed hereto, as such form may
be revised from time to time by the Agent) (the “Borrowing Base Certificate”). Such Borrowing Base Certificate
may be sent to the Agent by facsimile transmission, provided that the original thereof is forwarded to the Agent
on the date of such transmission.


 


6.5.         Monthly Reports.  Monthly, following the end of each of the
Borrower’s fiscal months, the Borrower shall provide the Agent with those financial
statements and reports described in Schedule 6.5, annexed hereto, such financial
statements and reports to be delivered at the times set forth on Schedule 6.5.


 


6.6.         Quarterly Reports.  Quarterly, within Forty-Five (45) days
following the end of each of the Borrower’s fiscal quarters, the Borrower shall
provide the Agent with the following:


 


(a)           A
management prepared financial statement of the Borrower for the period from the
beginning of the Borrower’s then current fiscal year through the end of the
subject quarter, with comparative information for the same period of the
previous fiscal year, which statement shall include, at a minimum, a balance
sheet, income statement (on a store specific and on a “consolidated” basis),
statement of changes in shareholders’ equity, and cash flows and comparisons
for the corresponding quarter of the then immediately previous year, as well as
to the Business Plan.


 


(b)           The
officer’s compliance certificate described in Section 6.8.


 


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6.7.         Annual Reports.


 


(a)           Annually,
within Ninety (90) days following the end of the Borrower’s fiscal year, the
Borrower shall furnish the Agent with the following (for distribution to the
Lenders):


 


(i)            The Borrower’s audited
annual financial statements, which statements shall bear the unqualified
opinion of a Registered Public Accounting Firm, which opinion shall be prepared
in accordance with generally accepted auditing standards and applicable
Securities Laws and shall not be subject to any “going concern” or like
qualification or exception or any qualification or exception as to the scope of
such audit, and an attestation report of such Registered Public Accounting Firm
as to the Borrower’s internal controls pursuant to Section 404 of Sarbanes-Oxley
expressing a conclusion to which the Majority Lenders do not object and in each
case shall include, at a minimum (with comparative information for the then
prior fiscal year) a balance sheet, income statement, statement of changes in
shareholders’ equity, and cash flows.


 


(ii)           The officer’s
compliance certificate described in Section 6.8.


 


(b)           The
Borrower has been advised that the Agent, each Revolving Credit Lender and each
Term Lender will rely thereon with respect to the administration of, and
transactions under, the credit facility contemplated by this Agreement.


 


6.8.         Officers’
Certificates.  The Borrower
shall cause either the Borrower’s President or its Chief Financial Officer, in
each instance, to provide such Person’s Certificate with those monthly,
quarterly, and annual statements to be furnished pursuant to this Agreement,
which Certificate shall:


 


(a)           Indicate
that the subject statement was prepared in accordance with GAAP consistently
applied (except for any required changes in GAAP) and presents fairly the
financial condition of the Borrower at the close of, and the results of the
Borrower’s operations and cash flows for, the period(s) covered, subject, however to the following:


 


(i)            Usual year end
adjustments (this exception shall not be included in the certificate which
accompanies such annual statement).


 


(ii)           Material Accounting
Changes (in which event, such certificate shall include a schedule (in
reasonable detail) of the effect of each such Material Accounting Change) not
previously specifically taken into account in the determination of the
financial performance covenant imposed pursuant to Section 6.11.


 


(b)           Indicate
either that (i) the Borrower is not In Default, or (ii) if such an event has
occurred, its nature (in reasonable detail) and the steps (if any) being taken
or contemplated by the Borrower to be taken on account thereof.


 


(c)           Include
calculations concerning the Borrower’s compliance (or failure to comply) at the
date of the subject statement with each of the financial performance covenants
included in Section 6.11 hereof.


 


69

















 


6.9.         Inventories,
Appraisals, and Audits.


 


(a)           The
Agent, at the expense of the Borrower, may participate in and/or observe each
physical count and/or inventory of so much of the Collateral as consists of
Inventory which is undertaken on behalf of the Borrower.


 


(b)           The
Borrower, at its own expense, shall cause not less than One (1) physical
inventory (which may include cycle counts of different locations at different
times) to be undertaken during any Fifteen (15) month period during which this
Agreement is in effect (the spacing of the scheduling of which inventories
shall be subject to the Agent’s discretion) conducted by such inventory takers as
are satisfactory to the Agent and following such methodology as may be
satisfactory to the Agent.


 


(i)            The Borrower shall
provide the Agent with a copy of the preliminary results of each such inventory
(as well as of any other physical inventory undertaken by the Borrower) at the
time the Borrower next delivers the reports required pursuant to
Section 6.5 following the completion of such inventory.


 


(ii)           The Borrower, at the
time the Borrower next delivers the reports required pursuant to
Section 6.5 following the completion of such inventory, shall provide the
Agent with a reconciliation of the results of each such inventory (as well as
of any other physical inventory undertaken by the Borrower) and shall post such
results to the Borrower’s stock ledger and, as applicable to the Borrower’s
other financial books and records.


 


(c)           The
Agent, in its discretion, if the Borrower is In Default, may cause such
additional inventories to be taken as the Agent determines (each, at the
expense of the Borrower).


 


(d)           The
Agent contemplates conducting Three (3) appraisals of the Collateral (in each
event, at the Borrower’s expense) during any Twelve (12) month period during
which this Agreement is in effect conducted by such appraisers as are
satisfactory to the Agent, but in its discretion, may undertake additional such
appraisals during such period.


 


(e)           The
Agent contemplates conducting Three (3) commercial finance field examinations
(in each event, at the Borrower’s expense) of the Borrower’s books and records
during any Twelve (12) month period during which this Agreement is in effect,
but in its discretion, may undertake additional such audits during such period.


 


6.10.       Additional Financial
Information.


 


(a)           In
addition to all other information required to be provided pursuant to this
Article 6, the Borrower promptly shall provide the Agent (and any guarantor of
the Liabilities), with such other and additional information concerning the
Borrower, the Collateral, the operation of the Borrower’s business, and the
Borrower’s financial condition, including original counterparts of financial
reports and statements, as the Agent may from time to time reasonably request
from the Borrower.


 


(b)           The
Borrower may provide the Agent, from time to time hereafter, with updated forecasts
of the Borrower’s anticipated performance and operating results.


 


70

















 


(c)           In
all events, the Borrower, no earlier than Sixty (60) days prior to the end of
each of the Borrower’s fiscal years and no later than the last day of each such
fiscal year, shall provide the Agent with an updated and extended forecast
which shall go out at least through the end of the then next fiscal year and
shall include an income statement, balance sheet, and statement of cash flow,
by month, each prepared in conformity with GAAP and consistent with the
Borrower’s then current practices.


 


(d)           The
Borrower recognizes that all appraisals, inventories, analysis, financial
information, and other materials which the Agent may obtain, develop, or
receive with respect to the Borrower are confidential to the Agent and that,
except as otherwise provided herein, the Borrower is not entitled to receipt of
any of such appraisals, inventories, analysis, financial information, and other
materials, nor copies or extracts thereof or therefrom.


 


6.11.       Minimum Operating
Cash Flow and Minimum EBITDA.


 


(a)           The
Borrower will not permit Operating Cash Flow as at the end of any Reference
Period to be less than the amount set forth opposite such period in the table
set forth on Schedule
6.11 hereto.


 


(b)           At
any time that Availability is less than Ten Percent (10%) of the then-current
Maximum Revolving Credit Ceiling (i) the Borrower will not permit EBITDA as of
the end of the most recently concluded Reference Period for which financial
statements have been delivered to be less than the amount set forth opposite
such Reference Period in the table set forth on Schedule 6.11 hereto, and (ii) in the
event that a judgment is rendered, or a settlement is agreed to, relating to
any matter described on Schedule 5.18 to the Closing Certificate,  EBITDA will be recalculated for the Reference
Period ended immediately prior to the date such judgment is rendered or
settlement occurs (and in the case that the financial statements and officer’s
certificates to be delivered pursuant to Article 6 for such Reference Period
have not yet been delivered, for the two Reference Periods most recently ended
prior to the rendering of such judgment or entering into of such settlement).


 


ARTICLE VII.                USE OF COLLATERAL


 


7.1.         Use of Inventory
Collateral.


 


(a)           Except
as otherwise permitted by Sections 5.5(b) or 5.13(d), the Borrower shall not
engage in:


 


(i)            Any sale of the
Inventory other than for fair consideration in the conduct of the Borrower’s
business in the ordinary course (which ordinary course conduct shall include,
without limitation, closure during any Fiscal year of the Borrower of up to
Five Percent (5%) of the number of Borrower’s retail outlets operating at the
commencement of such Fiscal year).


 


(ii)           Sales or other
dispositions to creditors.


 


(iii)          Sales or other
dispositions in bulk.


 


(iv)          Sales of any Collateral
in breach of any provision of this Agreement.


 


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(b)           No
sale of Inventory shall be on consignment, approval, or under any other
circumstances such that, with the exception of the Borrower’s customary return
policy applicable to the return of inventory purchased by the Borrower’s retail
customers in the ordinary course, such Inventory may be returned to the
Borrower without the consent of the Agent.


 


7.2.         Inventory Quality.  All Inventory now owned or hereafter acquired
by the Borrower is and will be of good and merchantable quality and free from
defects (other than defects within customary trade tolerances).


 


7.3.         Adjustments and Allowances.  The Borrower may grant such allowances or
other adjustments to the Borrower’s Account Debtors (exclusive of extending the
time for payment of any Account or Account Receivable, which shall not be done
without first obtaining the Agent’s prior written consent in each instance) as
the Borrower may reasonably deem to accord with sound business practice, provided, however, that during the
continuance of an Event of Default, the authority granted the Borrower pursuant
to this Section 7.3 may be limited or terminated by the Agent at any time in
the Agent’s discretion.


 


7.4.         Validity of Accounts.


 


(a)           The
amount of each Account shown on the books, records, and invoices of the
Borrower represented as owing by each Account Debtor is and will be the correct
amount actually owing by such Account Debtor and shall have been fully earned
by performance by the Borrower, subject to such Account Debtor’s rights to
return merchandise in the normal course of the Borrower’s business.


 


(b)           The
Borrower has no knowledge of any impairment of the validity or collectibility
of any of the Eligible Credit Card Receivables other than impairments arising
in the ordinary course of business  The
Borrower shall notify the Agent of any impairment outside the ordinary course
of business immediately after the Borrower becomes aware of any such
impairment.


 


7.5.         Notification to Account Debtors.  The Agent shall have the right during the
continuance of an Event of Default to notify any of the Borrower’s Account
Debtors to make payment directly to the Agent and to collect all amounts due on
account of the Collateral.


 


ARTICLE VIII.               CASH MANAGEMENT. PAYMENT OF LIABILITIES


 


8.1.         Depository Accounts.


 


(a)           Schedule 8.1 to
the Closing Certificate lists all present DDAs, which Schedule includes, with
respect to each depository (i) the name and ABA routing number of that
depository; (ii) the account number(s) of the account(s) maintained with such
depository; and (iii) a description of the type of account and (iv) whether
such DDA is a Local Account, a Blocked Account or an Exempt DDA.  The Borrower shall provide the Agent with the
name of a contact person at such depository.


 


72

















 


(b)           The
Borrower shall deliver the following to the Agent, as a condition to the
effectiveness of this Agreement:


 


(i)            Notification, executed
on behalf of the Borrower, to each depository institution with which any DDA is
maintained (other than any Exempt DDA and any Blocked Account), in form
satisfactory to the Agent of the Agent’s interest in such DDA.


 


(ii)           A
Blocked Account Agreement with any depository institution at which either of
the following conditions applies:


 


(A)          Both any DDA (other than
the Operating Account) and the Operating Account is maintained.


 


(B)           A Blocked Account is
maintained.


 


(c)           The
Borrower will not establish any DDA hereafter (other than an Exempt DDA)
unless, contemporaneous with such establishment, the Borrower delivers the
following to the Agent:


 


(i)            Notification to the
depository at which such DDA is established if the same would have been
required pursuant to Section 8.1(b)(ii)(A) if the subject DDA were open at the
execution of this Agreement.


 


(ii)           A Blocked Account
Agreement executed on behalf of the depository at which such DDA is established
if the same would have been required pursuant to Section 8.1(b)(ii)(B) if the
subject DDA were open at the execution of this Agreement.


 


8.2.         Credit Card Receipts.


 


(a)           Schedule 8.2 to
the Closing Certificate lists all arrangements to which the Borrower is a party
with respect to the payment to the Borrower of the proceeds of credit card
charges for sales by the Borrower.


 


(b)           The
Borrower shall deliver to the Agent, as a condition to the effectiveness of
this Agreement, notification, executed on behalf of the Borrower, to each of
the Borrower’s credit card clearinghouses and processors (in form satisfactory
to the Agent), which notification provides that payment of all credit card
charges submitted by the Borrower to that clearinghouse or other processor and
any other amount payable to the Borrower by such clearinghouse or other
processor shall be directed to the Blocked Account or as otherwise designated
from time to time by the Agent. The Borrower shall not change such direction or
designation except upon and with the prior written consent of the Agent.


 


8.3.         Cash Management.


 


(a)           The
following checking accounts have been or will be established (and are so
referred to herein):


 


(i)            The “Concentration Account” (so referred to
herein): Established by the Agent with Bank of America or an Affiliate thereof.


 


73

















 


(ii)           The “Local Accounts” (so referred to herein): as
set forth on Schedule
8.1 to the Closing Certificate.


 


(iii)          The “Blocked Accounts” (so referred to herein):
as set forth on Schedule
8.1 to the Closing Certificate.


 


(iv)          The “Operating Account” (so referred to
herein):  as set forth in Schedule 8.1 to
the Closing Certificate.


 


(b)           The
contents of each DDA (other than Exempt DDA) and of the Blocked Account
constitute Collateral and Proceeds of Collateral. The contents of the
Concentration Account constitute the Agent’s property.


 


(c)           The
Borrower shall pay all fees and charges of, and maintain such impressed
balances as may be required by the depository in which any account is opened as
required hereby (even if such account is opened by and/or is the property of
the Agent).


 


8.4.         Proceeds and
Collections.


 


(a)           All
Receipts and all cash proceeds of any sale or other disposition of any
Collateral:


 


(i)            Constitute Collateral
and Proceeds of Collateral.


 


(ii)           Shall be held in trust
by the Borrower for the Agent.


 


(iii)          Shall not be commingled
with the Borrower’s other funds, except as provided in Section 8.4(c).


 


(iv)          Shall be deposited
and/or transferred only to the Local Accounts, the Blocked Accounts or the
Concentration Account.


 


(b)           The
Borrower shall cause the then contents of each Local Account (other than any
Exempt DDA) to be transferred to a Blocked Account or the Concentration
Account, by ACH or wire transfer, no less frequently than daily on each
Business Day.


 


(c)           In
the event that, notwithstanding the provisions of this Section 8.4, the
Borrower receives or otherwise has dominion and control of any Receipts, or any
proceeds or collections of any Collateral, such Receipts, proceeds, and
collections shall be held in trust by the Borrower for the Agent and shall not
be commingled with any of the Borrower’s other funds and shall be deposited
and/or transferred to the Blocked Account or the Concentration Account directly
or as provided in paragraph (b).


 


8.5.         Payment of
Liabilities.


 


(a)           On
each Business Day, the Agent shall apply the then collected balance of the
Concentration Account (net of fees charged, and of such impressed balances as
may be required by the bank at which the Concentration Account is maintained)
on the day following the receipt of such funds: First, towards the SwingLine
Loans and Second, towards the unpaid balance of the Loan Account and all other
Liabilities.


 


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(b)           The
following rules shall apply to deposits and payments under and pursuant to this
Section 8.5:


 


(i)            Funds shall be deemed
to have been deposited to the Concentration Account on the Business Day on
which deposited, provided that notice
of such deposit is available to the Agent by 2:00PM on that Business Day.


 


(ii)           Funds paid to the
Agent, other than by deposit to the Concentration Account, shall be deemed to
have been received on the Business Day when they are good and collected funds, provided that notice of such payment is
available to the Agent by 2:00PM on that Business Day.


 


(iii)          If notice of a deposit
to the Concentration Account (Section 8.5(b)(i)) or payment (Section
8.5(b)(ii)) is not available to the Agent until after 2:00PM on a Business Day,
such deposit or payment shall be deemed to have been made at 9:00AM on the then
next Business Day.


 


(iv)          All deposits to the
Concentration Account and other payments to the Agent are subject to clearance
and collection.


 


(c)           The
Agent shall transfer to the Operating Account any surplus in the Concentration
Account remaining after any application towards the Liabilities required by
Section 8.5(a), above (less those amounts which are to be netted out, as
provided therein) provided, however,
in the event that


 


(i)            an Event of Default
has occurred and is continuing; and


 


(ii)           one or more L/Cs are
then outstanding,


 


then the Agent may establish a funded reserve of up to 105% of the
aggregate Stated Amounts of such L/Cs. 
Such funded reserve shall either be (i) returned to the Borrower provided that the Borrower is not In
Default or (ii) applied towards the Liabilities following the occurrence of any
Event of Default described in Section 11.11 or acceleration following the
occurrence of any other Event of Default.


 


8.6.         The Operating
Account.


 


Except as otherwise specifically provided in,
or permitted by, this Agreement, all checks shall be drawn by the Borrower upon,
and other disbursements shall be made by the Borrower solely from, the
Operating Account or an Exempt DDA.


 


ARTICLE IX.                 GRANT OF SECURITY INTEREST


 


9.1.         Grant of Security
Interest.


 


(a)           The
Borrower hereby grants to the Agent, for the benefit of the Revolving Credit
Lenders, the Term Loan Lenders and the Agent, to secure the payment and
performance in full of all of the Liabilities, a security interest in and so
pledges and assigns to the Agent, for the benefit of the Lenders and the Agent,
the following properties, assets and rights of the Borrower, wherever located,
whether now owned or hereafter acquired or arising, and all proceeds and
products thereof (all of the same being hereinafter called the “Collateral”):


 


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All personal property of every kind and nature including without
limitation all goods (including inventory, equipment and any accessions
thereto), instruments (including promissory notes), documents, accounts
(including health-care-insurance receivables), chattel paper (whether tangible
or electronic), deposit accounts, letter-of-credit rights (whether or not the
letter of credit is evidenced by a writing), commercial tort claims, securities
and all other investment property, supporting obligations, any other contract
rights or rights to the payment of money, insurance claims and proceeds, and
all general intangibles (including all payment intangibles)


 


(b)           Notwithstanding
the foregoing, Collateral shall not include Real Estate, Leases, fixtures or
Equipment or any license, permit or similar rights granted by any governmental
authority which either by its terms or under Applicable Law is not assignable
or in which the granting of a security interest is prohibited.


 


9.2.         Extent and Duration
of Security Interest.


 


(a)           The
security interest created and granted herein is in addition to, and
supplemental of, any security interest previously granted by the Borrower to
the Agent and shall continue in full force and effect applicable to all
Liabilities until both (i) all Liabilities have been paid and/or satisfied in
full and (ii) the security interest created herein is specifically terminated
in writing by a duly authorized officer of the Agent.


 


(b)           It
is intended that the Collateral Interests created herein extend to and cover
all assets of the Borrower other than Real Estate, fixtures or Equipment.


 


9.3.         Authorization to File Financing Statements.  The Agent may at any time and from time to
time, pursuant to the provisions of Section 9.4(c), file financing statements,
continuation statements and amendments thereto that describe the Collateral as
all assets of the Borrower or words of similar effect and which contain any
other information required by Part 5 of Article 9 of the UCC or such other
jurisdiction for the sufficiency or filing office acceptance of any financing
statement, continuation statement or amendment, including whether the Borrower
is an organization, the type of organization and any organizational
identification number issued to the Borrower. 
The Borrower agrees to furnish any such information to the Agent
promptly upon request.


 


9.4.         Authorization to File Financing Statements.  The Borrower shall at any time and from time
to time, take such steps as the Agent may reasonably request for the Agent (i)
to obtain an acknowledgement, in form and substance satisfactory to the Agent,
of any bailee having possession of any of the Collateral that the bailee holds
such Collateral for the benefit of the Agent, (ii) to obtain “control” of any
investment property, deposit accounts, promissory notes or tangible chattel
paper, electronic chattel paper or any “transferable record” as that 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, with any agreements establishing
control to be in form and substance satisfactory to the Agent, and (iii)
otherwise to insure the continued attachment perfection and priority of, and
the ability of the Agent to enforce, the Agent’s security interest in any and
all of the Collateral and of the preservation of its rights therein.


 


(a)           If
the Borrower shall at any time hold or acquire a commercial tort claim in
excess of $250,000, the Borrower shall immediately notify the Agent in a
writing signed by the Borrower


 


76

















 


of the brief details thereof
and grant to the Agent, for the benefit of the Revolving Credit Lenders and the
Term Loan Lenders, in such writing a security interest therein and in the
proceeds thereof, all upon the terms of the Agreement, with such writing to be
in form and substance satisfactory to the Agent.


 


(b)           If
the Borrower shall at any time be a beneficiary under a letter of credit in
excess of $250,000, the Borrower shall immediately notify the Agent thereof
and, of the request of the Agent, shall take such steps to (i) arrange for the
issuer and any confirmed or other nominated person of such letter of credit to
consent to an assignment to the Agent of the proceeds of such letter of credit
and (ii) arrange for the Agent to become the transferee beneficiary of such
letter of credit, such arrangements to be a form and substance satisfactory to
the Agent.


 


(c)           Nothing
contained in this Section 9.4 shall be construed to narrow the scope of the
Agent’s security interest in any of the Collateral or the perfection or
priority thereof or to impair or otherwise limit any of the rights, powers,
privileges or remedies of the Agent, any Revolving Credit Lender or any Term
Loan Lender hereunder.


 


ARTICLE X.                   AGENT AS BORROWER’S ATTORNEY-IN-FACT


 


10.1.       Appointment as
Attorney-In-Fact.  The
Borrower hereby irrevocably constitutes and appoints the Agent (acting through
any of its officers) as the Borrower’s true and lawful attorney, with full
power of substitution, following the occurrence and during the continuance of
an Event of Default, to convert the Collateral into cash at the sole risk,
cost, and expense of the Borrower, but for the sole benefit of the Agent, the
Revolving Credit Lenders and the Term Loan Lenders. The rights and powers
granted the Agent by this appointment include but are not limited to the right
and power to:


 


(a)           Prosecute,
defend, compromise, or release any action relating to the Collateral.


 


(b)           Sign
change of address forms to change the address to which the Borrower’s mail is
to be sent to such address as the Agent shall designate; receive and open the
Borrower’s mail; remove any Receivables Collateral and Proceeds of Collateral
therefrom and turn over the balance of such mail either to the Borrower or to
any trustee in bankruptcy or receiver of the Borrower, or other legal
representative of the Borrower whom the Agent determines to be the appropriate
person to whom to so turn over such mail.


 


(c)           Endorse
the name of the Borrower in favor of the Agent upon any and all checks, drafts,
notes, acceptances, or other items or instruments; sign and endorse the name of
the Borrower on, and receive as secured party, any of the Collateral, any
invoices, schedules of Collateral, freight or express receipts, or bills of
lading, storage receipts, warehouse receipts, or other documents of title
respectively relating to the Collateral.


 


(d)           Sign
the name of the Borrower on any notice to the Borrower’s Account Debtors or
verification of the Receivables Collateral; sign the Borrower’s name on any
Proof of Claim in Bankruptcy against Account Debtors, and on notices of lien,
claims of mechanic’s liens, or assignments or releases of mechanic’s liens
securing the Accounts.


 


(e)           Take
all such action as may be necessary to obtain the payment of any letter of
credit and/or banker’s acceptance of which the Borrower is a beneficiary.


 


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(f)            Repair,
manufacture, assemble, complete, package, deliver, alter or supply goods, if
any, necessary to fulfill in whole or in part the purchase order of any
customer of the Borrower.


 


(g)           Use,
license or transfer any or all General Intangibles of the Borrower.


 


10.2.       No Obligation to Act.  The Agent shall not be obligated to do any of
the acts or to exercise any of the powers authorized by Section 10.1 herein,
but if the Agent elects to do any such act or to exercise any of such powers,
it shall not be accountable for more than it actually receives as a result of
such exercise of power, and shall not be responsible to the Borrower for any
act or omission to act except for any act or omission to act as to which there
is a final determination made in a judicial proceeding (in which proceeding the
Agent has had an opportunity to be heard) which determination includes a
specific finding that the subject act or omission to act had been grossly
negligent or in actual bad faith.


 


ARTICLE XI.                 EVENTS OF DEFAULT


 


The occurrence of any event described in this
Article 11 respectively shall constitute an “Event
of Default” herein.  Upon the
occurrence of any Event of Default described in Section 11.11, any and all
Liabilities shall become due and payable without any further act on the part of
the Agent. Upon the occurrence of any other Event of Default, the Agent may,
and on the instruction of the SuperMajority Lenders as provided in Section
13.1(b) shall, declare any and all Liabilities immediately due and payable.  The occurrence of any Event of Default shall
also constitute, without notice or demand, a default under all other agreements
between the Agent, any Revolving Credit Lender, or any Term Loan Lender and the
Borrower and instruments and papers heretofore, now, or hereafter given the
Agent, any Revolving Credit Lender or any Term Loan Lender by the Borrower.


 


11.1.       Failure to Pay the Revolving Credit or the
Term Loan.  The failure by the
Borrower to pay when due any principal of, interest on, or fees in respect of,
the Revolving Credit or the Term Loan.


 


11.2.       Failure To Make Other Payments.  The failure by the Borrower to pay when due
(or within Two (2) days after demand, if payable on demand) any payment
Liability other than any payment liability on account of the principal of, or
interest on, or fees in respect of, the Revolving Credit or the Term Loan.


 


11.3.       Failure to Perform
Covenant or Liability (No Grace Period).  The failure by the Borrower to promptly,
punctually, faithfully and timely perform, discharge, or comply with any
covenant or Liability included in any of the following provisions hereof:


 


	
  Section

  	
   

  	
  Relates to

  
	
  5.7

  	
   

  	
  Indebtedness

  
	
   

  	
   

  	
   

  
	
  5.8(b)

  	
   

  	
  Maintenance
  of Insurance

  
	
   

  	
   

  	
   

  
	
  5.14

  	
   

  	
  Pay taxes

  
	
   

  	
   

  	
   

  
	
  5.20

  	
   

  	
  Dividends.
  Investments. Other Corporate Actions

  



 


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  5.24

  	
   

  	
  Affiliate
  Transactions

  
	
   

  	
   

  	
   

  
	
  Article 6:

  	
   

  	
  Financial
  Reporting and Performance Covenants

  
	
   

  	
   

  	
   

  
	
  Article 8:

  	
   

  	
  Cash
  Management; Payment of Liabilities

  



 


11.4.       Failure to Perform Covenant or Liability
(Grace Period).  The failure
by the Borrower; within Ten (10) days following the earlier of the Borrower’s
knowledge of a breach of any covenant or Liability not described in any of
Sections 11.1, 11.2, or 11.3 or of its receipt of written notice from the Agent
of the breach of any of such covenants or Liabilities to perform discharge or
comply with any such covenants or liabilities.


 


11.5.       Misrepresentation.  The determination by the Agent that any
representation or warranty at any time made by the Borrower to the Agent, any
Revolving Credit Lender or any Term Loan Lender was not true or complete in all
material respects when given.


 


11.6.       Acceleration of Other Debt. Breach of
Lease.  The occurrence of any
event such that any Indebtedness in excess of $1,000,000 of the Borrower to any
creditor other than the Agent, any Revolving Credit Lender or any Term Loan
Lender could be accelerated or, without the consent of the Borrower, any
Capital Lease valued in excess of $1,000,000 or more than Three (3) Leases could
be terminated (whether or not the subject creditor or lessor takes any action
on account of such occurrence).


 


11.7.       Default Under Other Agreements.  The occurrence of any breach of any covenant
or Liability imposed by, or of any default under, any agreement (including any
Loan Document) between the Agent, any Revolving Credit Lender or any Term Loan
Lender and the Borrower or instrument given by the Borrower to the Agent, any
Revolving Credit Lender or any Term Loan Lender and the expiry, without cure,
of any applicable grace period 
(notwithstanding that the subject Agent, Revolving Credit Lender or Term
Loan Lender may not have exercised all or any of its rights on account of such
breach or default).


 


11.8.       Uninsured Casualty Loss.  The occurrence of any uninsured loss, theft,
damage, or destruction of or to any portion of the Collateral valued at
$1,000,000 or greater.


 


11.9.       Attachment.
Judgment. Restraint of Business.


 


(a)           The
service of process upon the Agent, any Revolving Credit Lender or any Term Loan
Lender or any Participant seeking to attach, by trustee, mesne, or other
process, any funds of the Borrower on deposit with, or assets of the Borrower
in the possession of, the Agent, that Revolving Credit Lender, that Term Loan
Lender or such Participant, which funds or other assets are valued at
$1,000,000 or greater.


 


(b)           The
entry of any judgment in excess of $1,000,000 against the Borrower, which
judgment is not satisfied (if a money judgment) or appealed from (with
execution or similar process stayed) within Thirty (30) days of its entry.


 


(c)           The
entry of any order or the imposition of any other process having the force of
law, the effect of which is to restrain in any material way the conduct by the
Borrower of its business in the ordinary course.


 


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11.10.     Business Failure.  Any act by, against, or relating to the
Borrower, or its property or assets, which act constitutes the determination,
by the Borrower, to initiate a program of partial or total self-liquidation;
application for, consent to, or sufferance of the appointment of a receiver,
trustee, or other person, pursuant to court action or otherwise, over all, or
any material part of the Borrower’s property (and if commenced against the Borrower,
is not timely contested by the Borrower in good faith by appropriate
proceedings, and if not contested is not dismissed within Forty-Five (45)
days); the granting of any trust mortgage or execution of an assignment for the
benefit of the creditors of the Borrower, or the occurrence of any other
voluntary or involuntary liquidation or extension of debt agreement for the
Borrower; the offering by or entering into by the Borrower of any composition,
extension, or any other arrangement seeking relief from or extension of the
debts of the Borrower; or the initiation of any judicial or non-judicial
proceeding or agreement by, against, or including the Borrower which seeks or
intends to accomplish a reorganization or arrangement with creditors; and/or
the initiation by or on behalf of the Borrower of the liquidation or winding up
of all or any material part of the Borrower’s business or operations.


 


11.11.     Bankruptcy.  The failure by the Borrower to generally pay
the debts of the Borrower as they mature; adjudication of bankruptcy or
insolvency relative to the Borrower; the entry of an order for relief or
similar order with respect to the Borrower in any proceeding pursuant to the
Bankruptcy Code or any other federal bankruptcy law; the filing of any complaint,
application, or petition by the Borrower initiating any matter in which the
Borrower is or may be granted any relief from the debts of the Borrower
pursuant to the Bankruptcy Code or any other insolvency statute or procedure;
the filing of any complaint, application, or petition against the Borrower
initiating any matter in which the Borrower is or may be granted any relief
from the debts of the Borrower pursuant to the Bankruptcy Code or any other
insolvency statute or procedure, which complaint, application, or petition is
not timely contested in good faith by the Borrower by appropriate proceedings
or, if so contested, is not dismissed within Forty-Five (45) days of when
filed.


 


11.12.     Indictment - Forfeiture.  The indictment of, or institution of any legal
process or proceeding against, the Borrower, under any Applicable Law where the
relief, penalties, or remedies sought or available include the forfeiture of
any property of the Borrower and/or the imposition of any stay or other order,
the effect of which could be to restrain in any material way the conduct by the
Borrower of its business in the ordinary course.


 


11.13.     Challenge to Loan
Documents.


 


(a)           Any
challenge by or on behalf of the Borrower to the validity of any Loan Document
or the applicability or enforceability of any Loan Document strictly in
accordance with the subject Loan Document’s terms or which seeks to void,
avoid, limit, or otherwise adversely affect any security interest created by or
in any Loan Document or any payment made pursuant thereto.


 


(b)           Any
determination by any court or any other judicial or government authority that
any Loan Document is not enforceable strictly in accordance with the subject
Loan Document’s terms or which voids, avoids, limits, or otherwise adversely affects
any security interest created by any Loan Document or any payment made pursuant
thereto.


 


11.14.     Change in Control.  Any Change in Control.


 


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ARTICLE XII.                RIGHTS AND REMEDIES UPON DEFAULT


 


12.1.       Acceleration.  Upon the occurrence of any Event of Default
as described in Section 11.11, all Indebtedness of the Borrower to the
Revolving Credit Lenders and the Term Loan Lenders shall be immediately due and
payable. Upon the occurrence of any Event of Default other than as described in
Section 11.11, the Agent may (and on the issuance of Acceleration Notice(s)
requisite to the causing of Acceleration, the Agent shall) declare all
Indebtedness of the Borrower to the Revolving Credit Lenders and the Term Loan Lenders
to be immediately due and payable and may exercise all of the Agent’s Rights
and Remedies as the Agent from time to time thereafter determines as
appropriate.


 


12.2.       Rights of
Enforcement.  The Agent shall
have all of the rights and remedies of a secured party upon default under the
UCC, in addition to which the Agent shall have all and each of the following
rights and remedies:


 


(a)           To
give notice to any bank at which any DDA or Blocked Account is maintained and
in which Proceeds of Collateral are deposited, to turn over such Proceeds
directly to the Agent.


 


(b)           To
give notice to any of the Borrower’s customs brokers to follow the instructions
of the Agent as provided in any written agreement or undertaking of such broker
in favor of the Agent.


 


(c)           To
collect the Receivables Collateral with or without the taking of possession of
any of the Collateral.


 


(d)           To
take possession of all or any portion of the Collateral.


 


(e)           To
sell, lease, or otherwise dispose of any or all of the Collateral, in its then
condition or following such preparation or processing as the Agent deems
advisable and with or without the taking of possession of any of the
Collateral.


 


(f)            To
conduct one or more going out of business sales which include the sale or other
disposition of the Collateral.


 


(g)           To
apply the Receivables Collateral or the Proceeds of the Collateral towards (but
not necessarily in complete satisfaction of) the Liabilities.


 


(h)           To
exercise all or any of the rights, remedies, powers, privileges, and discretions
under all or any of the Loan Documents.


 


12.3.       Sale of Collateral.


 


(a)           Any
sale or other disposition of the Collateral may be at public or private sale
upon such terms and in such manner as the Agent deems advisable, having due
regard to compliance with any statute or regulation which might affect, limit,
or apply to the Agent’s disposition of the Collateral.


 


(b)           The
Agent, in the exercise of the Agent’s rights and remedies upon default, may
conduct one or more going out of business sales, in the Agent’s own right or by
one or more agents and contractors. Such sale(s) may be conducted upon any
premises owned, leased, or


 


81

















 


occupied by the Borrower.  The Agent and any such agent or contractor,
in conjunction with any such sale, may augment the Inventory with other goods
(all of which other goods shall remain the sole property of the Agent or such
agent or contractor).  Any amounts
realized from the sale of such goods which constitute augmentations to the Inventory
(net of an allocable share of the costs and expenses incurred in their
disposition) shall be the sole property of the Agent or such agent or
contractor and neither the Borrower nor any Person claiming under or in right
of the Borrower shall have any interest therein.


 


(c)           Unless
the Collateral is perishable or threatens to decline speedily in value, or is
of a type customarily sold on a recognized market (in which event the Agent
shall provide the Borrower such notice as may be practicable under the
circumstances), the Agent shall give the Borrower at least Ten (10) days prior
written notice of the date, time, and place of any proposed public sale, and of
the date after which any private sale or other disposition of the Collateral
may be made.  The Borrower agrees that
such written notice shall satisfy all requirements for notice to the Borrower
which are imposed under the UCC or other applicable law with respect to the
exercise of the Agent’s rights and remedies upon default.


 


(d)           The
Agent, any Revolving Credit Lender and any Term Loan Lender may purchase the
Collateral, or any portion of it at any sale held under this Article 12.


 


(e)           If
any of the Collateral is sold, leased, or otherwise disposed of by the Agent on
credit, the Liabilities shall not be deemed to have been reduced as a result
thereof unless and until payment is finally received thereon by the Agent.


 


(f)            The
Agent shall apply the proceeds of the Agent’s exercise of its rights and
remedies upon default pursuant to this Article 12 in accordance with Sections
13.6 and 13.7.


 


12.4.       Occupation of Business Location.  In connection with the Agent’s exercise of
the Agent’s rights under this Article 12, the Agent may enter upon, occupy, and
use any premises owned or occupied by the Borrower, and may exclude the
Borrower from such premises or portion thereof as may have been so entered
upon, occupied, or used by the Agent. 
The Agent shall not be required to remove any of the Collateral from any
such premises upon the Agent’s taking possession thereof, and may render any
Collateral unusable to the Borrower.  In
no event shall the Agent be liable to the Borrower for use or occupancy by the
Agent of any premises pursuant to this Article 12, nor for any charge (such as
wages for the Borrower’s employees and utilities) incurred in connection with
the Agent’s exercise of the Agent’s Rights and Remedies.


 


12.5.       Grant of Nonexclusive License.  The Borrower hereby grants to the Agent a
royalty free nonexclusive irrevocable license to use, apply, and affix any
trademark, trade name, logo, or the like in which the Borrower now or hereafter
has rights, such license being with respect to the Agent’s exercise of the
rights hereunder including, without limitation, in connection with any
completion of the manufacture of Inventory or sale or other disposition of
Inventory.


 


12.6.       Assembly of Collateral.  The Agent may require the Borrower to
assemble the Collateral and make it available to the Agent at the Borrower’s
sole risk and expense at a place or places which are reasonably convenient to
both the Agent and the Borrower.


 


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12.7.       Rights and Remedies.  The rights, remedies, powers, privileges, and
discretions of the Agent hereunder (herein, the “Agent’s Rights and Remedies”) shall be cumulative and not
exclusive of any rights or remedies which it would otherwise have.  No delay or omission by the Agent in
exercising or enforcing any of the Agent’s Rights and Remedies shall operate
as, or constitute, a waiver thereof.  No
waiver by the Agent of any Event of Default or of any default under any other
agreement shall operate as a waiver of any other default hereunder or under any
other agreement.  No single or partial
exercise of any of the Agent’s Rights or Remedies, and no express or implied
agreement or transaction of whatever nature entered into between the Agent and
any person, at any time, shall preclude the other or further exercise of the
Agent’s Rights and Remedies.  No waiver
by the Agent of any of the Agent’s Rights and Remedies on any one occasion
shall be deemed a waiver on any subsequent occasion, nor shall it be deemed a
continuing waiver.  The Agent’s Rights
and Remedies may be exercised at such time or times and in such order of
preference as the Agent may determine. The Agent’s Rights and Remedies may be
exercised without resort or regard to any other source of satisfaction of the
Liabilities.


 


ARTICLE
XIII.               ACCELERATION AND LIQUIDATION


 


13.1.       Acceleration Notices.


 


(a)           The
Agent may give the Lenders an Acceleration Notice at any time during the
continuance of an Event of Default.


 


(b)           The
SuperMajority Lenders may give the Agent an Acceleration Notice at any time
during the continuance of an Event of Default. Such notice may be by multiple
counterparts, provided that
counterparts executed by the requisite Lenders are received by the Agent within
a period of Five (5) consecutive Business Days.


 


13.2.       Acceleration.  Unless stayed by judicial or statutory
process, the Agent shall Accelerate the Obligations within a commercially
reasonable time following:


 


(a)           The
Agent’s giving of an Acceleration Notice to the Lenders as provided in Section
13.1(a).


 


(b)           The
Agent’s receipt of an Acceleration Notice from the SuperMajority Lenders, in
compliance with Section 13.1(b).


 


13.3.       Initiation of Liquidation.  Unless stayed by judicial or statutory
process, a Liquidation shall be initiated by the Agent within a commercially
reasonable time following Acceleration of the Obligations.


 


13.4.       Actions At and
Following Initiation of Liquidation.


 


(a)           At
the initiation of a Liquidation:


 


(i)            The
unpaid principal balance of the SwingLine Loan (if any) shall be converted,
pursuant to Section 2.24(b)(ii), to a Revolving Credit Loan in which all
Revolving Credit Lenders participate.


 


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(ii)           The
Agent and the Revolving Credit Lenders shall “net out” each Revolving Credit
Lender’s respective contributions towards the Revolving Credit Loans, so that
each Revolving Credit Lender holds that Revolving Credit Lender’s Revolving
Credit Percentage Commitment of the Revolving Credit Loans and advances.


 


(b)           Following
the initiation of a Liquidation, each Revolving Credit Lender shall contribute
(absent any Issuer’s gross negligence or willful misconduct), towards any L/C
thereafter honored and not immediately reimbursed by the Borrower, that
Revolving Credit Lender’s Revolving Credit Percentage Commitment of such
honoring.


 


13.5.       Agent’s Conduct of
Liquidation.


 


(a)           Any
Liquidation shall be conducted by the Agent, with the advice and assistance of
the Lenders.


 


(b)           The
Agent may establish one or more Nominees to “bid in” or otherwise acquire
ownership to any Post Foreclosure Asset.


 


(c)           The
Agent shall manage the Nominee and manage and dispose of any Post Foreclosure
Assets with a view towards the realization of the economic benefits of the
ownership of the Post Foreclosure Assets and in such regard, the Agent and/or
the Nominee may operate, repair, manage, maintain, develop, and dispose of any
Post Foreclosure Asset in such manner as the Agent determines as appropriate
under the circumstances.


 


(d)           The
Agent may decline to undertake or to continue taking a course of action or to
execute an action plan (whether proposed by the Agent or any Lender) unless
indemnified to the Agent’s satisfaction by the Lenders against any and all
liability and expense which may be incurred by the Agent by reason of taking or
continuing to take that course of action or action plan.


 


(e)           Each
Lender shall execute all such instruments and documents not inconsistent with
the provisions of this Agreement as the Agent and/or the Nominee reasonably may
request with respect to the creation and governance of any Nominee, the conduct
of the Liquidation, and the management and disposition of any Post Foreclosure
Asset.


 


13.6.       Distribution of
Liquidation Proceeds.


 


(a)           The
Agent may establish one or more reasonably funded reserve accounts into which
proceeds of the conduct of any Liquidation may be deposited in anticipation of
future expenses which may be incurred by the Agent in the exercise of rights as
a secured creditor of the Borrower and prior claims which the Agent anticipates
may need to be paid.


 


(b)           The
Agent shall distribute the net proceeds of Liquidation in accordance with the
relative priorities set forth in Section 13.7.


 


(c)           Each
Revolving Credit Lender and Term Loan Lender, on the written request of the
Agent and/or any Nominee, not more frequently than once each month, shall
reimburse the Agent and/or any Nominee, pro-rata in proportion to their
respective Revolving Credit Percentage Commitment and Term Loan Percentage, for
any cost or expense reasonably incurred by the Agent and/or the Nominee in the
conduct of a Liquidation, which amount is not


 


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covered out of current proceeds
of the Liquidation, which reimbursement shall be paid over to and distributed
by the Agent.


 


(d)           All
prepayments of LIBOR Loans prior to the end of an Interest Period shall
obligate the Borrower to pay any breakage costs associated with such LIBOR
Loans in accordance with Section 2.10(e). 
Prior to the occurrence of any Event of Default, the Borrower may elect
to avoid such breakage costs by providing to the Agent cash in an amount
sufficient to cash collateralize such LIBOR Loans, but in no event shall the
Borrower be deemed to have paid such LIBOR Loans until such cash has been paid
to the Agent for application to such LIBOR Loans.  The Agent may elect to cause such cash
collateral to be deposited into either (i) a cash collateral account pursuant
to the terms of a cash collateral agreement executed by the Borrower and the
Agent and in form and substance satisfactory to the Agent or (ii) the Borrower’s
Operating Account with appropriate instructions prohibiting the Borrower’s
withdrawal of such funds so long as they remain cash collateral.  In each such case, the Borrower agrees to
execute and deliver to the Agent such instruments and documents, including
Uniform Commercial Code financing statements and agreements with any third
party depository banks, as the Agent may request.


 


13.7.       Relative Priorities
To Proceeds of Liquidation. 
The relative priorities to the proceeds of a Liquidation are as follows:


 


(a)           To
the Agent as reimbursement for all reasonable third party costs and expenses
incurred by the Agent and to the Lenders’ Special Counsel and to any funded
reserve established pursuant to Section 13.6(a); and then


 


(b)           To
the SwingLine Lender, on account of any SwingLine loans not converted to
Revolving Credit Loans pursuant to Section 13.4(a)(i); and then


 


(c)           To
the payment of that portion of the Obligations constituting accrued and unpaid
L/C fees and interest on the Revolving Credit Loans and Reimbursement
Obligations, ratably among the Revolving Credit Lenders in proportion to the
respective amounts described in this clause payable to them; and then


 


(d)           To
the Revolving Credit Lenders (other than any Delinquent Revolving Credit
Lender), to the payment of that portion of the Obligations constituting unpaid
principal of the Revolving Credit Loans and Reimbursement Obligations, and to
the Agent, to cash collateralize that portion of the undrawn Stated Amount of
L/Cs outstanding, ratably in proportion to the respective amounts described in
this clause held by them; and then


 


(e)           To
any Delinquent Revolving Credit Lenders, pro-rata to amounts to which such
Revolving Credit Lenders otherwise would have been entitled pursuant to Section
13.7(d), and then


 


(f)            To
the Revolving Credit Lenders, pro-rata, to those fees (other than the Revolving
Credit Early Termination Fee) distributable hereunder to the Revolving Credit
Lenders; and then


 


(g)           To
the payment of that portion of the Obligations constituting accrued and unpaid
interest on the Term Loan, ratably among the Term Loan Lenders in proportion to
the respective amounts described in this clause payable to them; and then


 


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(h)           To
the Term Loan Lenders, to the payment of that portion of the Obligations
constituting unpaid principal of the Term Loans, ratably in proportion to the
respective amounts described in this clause held by them; and then


 


(i)            To
the Term Loan Lenders, pro-rata, to those fees (other than the Term Loan Early
Termination Fee) distributable hereunder to the Term Loan Lenders; and then


 


(j)            To
Liabilities owed to the Agent pursuant to clause (b) of the definition of
Liabilities relating to cash management services; and then


 


(k)           To
the Revolving Credit Lenders, pro-rata, to the extent of the Revolving Credit
Early Termination Fee; and then


 


(l)            To
the Term Loan Lenders, pro-rata, to the extent of the Term Loan Early
Termination Fee;  and then


 


(m)          To
any other Liabilities.


 


ARTICLE XIV.              THE AGENT


 


14.1.       Appointment of The
Agent.


 


(a)           Each
of the Revolving Credit Lenders, the Term Loan Lenders and the Issuer appoints
and designates Bank of America to act on its behalf as the “Agent” hereunder
and under the other Loan Documents.


 


(b)           Each
Revolving Credit Lender and Term Loan Lender authorizes the Agent:


 


(i)            To execute those of
the Loan Documents and all other instruments relating thereto to which the
Agent is a party.


 


(ii)           To take such action on
behalf of the Revolving Credit Lenders and the Term Loan Lenders and to
exercise all such powers as are expressly delegated to the Agent hereunder and
in the other Loan Documents and all related documents, together with such other
powers as are reasonably incident thereto.


 


The provisions of this Article 14 are solely for the benefit of the
Agent, the Revolving Credit Lenders, the Term Loan Lenders and the Issuer, and
the Borrower shall not have rights as a third party beneficiary of any of such
provisions.


 


14.2.       Responsibilities of
Agent.


 


(a)           The
Agent shall not have any duties or responsibilities to any Revolving Credit
Lender or any Term Loan Lender except for those expressly set forth in this
Agreement and in the other Loan Documents. 
Neither the Syndication Agent, the Documentation Agent nor the Collateral
Agent shall have any duties or responsibilities under this Agreement.


 


(b)           The
Agent shall not be subject to any fiduciary or other implied duties, regardless
of whether a Default has occurred and is continuing;


 


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(c)           Neither
the Agent nor any of its Affiliates shall be responsible to any Revolving
Credit Lender or Term Loan Lender for any of the following:


 


(i)            Any recitals,
statements, representations or warranties made by the Borrower or any other
Person.


 


(ii)           Any appraisals or other
assessments of the assets of the Borrower or of any other Person responsible
for or on account of the Liabilities.


 


(iii)          The value, validity,
effectiveness, genuineness, enforceability, or sufficiency of the Loan
Agreement, the Loan Documents or any other document referred to or provided for
therein.


 


(iv)          Any failure by the
Borrower or any other Person (other than the Agent) to perform its obligations
under the Loan Documents.


 


(d)           The
Agent may employ attorneys, accountants, and other professionals and agents and
attorneys-in-fact and shall not be responsible for the negligence or misconduct
of any such attorneys, accountants, and other professionals or agents or
attorneys-in-fact selected by the Agent with reasonable care.  No such attorney, accountant, other
professional, agent, or attorney-in-fact shall be responsible for any action
taken or omitted to be taken by any other such Person.


 


(e)           Neither
the Agent, nor any of its directors, officers, or employees shall be
responsible for any action taken or omitted to be taken or omitted to be taken
by any other of them in connection herewith in reliance upon advice of its
counsel nor, in any other event except for any action taken or omitted to be
taken as to which a final judicial determination has been or is made (in a
proceeding in which such Person has had an opportunity to be heard) that such
Person had acted in a grossly negligent manner, in actual bad faith, or in
willful misconduct.


 


(f)            The
Agent shall not have any responsibility in any event for more funds than the
Agent actually receives and collects.


 


(g)           The
Agent, in its separate capacity as a Revolving Credit Lender and Term Loan
Lender, shall have the same rights and powers hereunder as any other Revolving
Credit Lender or Term Loan Lender and may exercise the same as though it were
not the Agent and the terms “Revolving Credit Lender” or “Revolving Credit
Lenders” or “Term Loan Lender” or “Term Loan Lenders” shall, unless otherwise
expressly indicated or unless the context otherwise requires, include the
Person serving as the Agent hereunder in its individual capacity.  Such Person and its Affiliates may accept
deposits from, lend money to, act as the financial advisor or in any other
advisory capacity for and generally engage in any kind of business with the
Borrower or any Subsidiary or other Affiliate thereof as if such Person were
not the Agent hereunder and without any duty to account therefor to the
Revolving Credit Lenders or the Term Loan Lenders.


 


(h)           The
Agent shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Loan Documents that the Agent is required
to exercise as directed in writing by the SuperMajority Lenders (or such other
number or percentage of the Lenders as shall be expressly provided for herein
or in the other Loan Documents), provided
that the Agent


 


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shall not be required to take
any action that, in its opinion or the opinion of its counsel, may expose the
Agent to liability or that is contrary to any Loan Document or applicable law.


 


(i)            The
Agent shall not, except as expressly set forth herein and in the other Loan
Documents, have any duty to disclose, and shall not be liable for the failure
to disclose, any information relating to the Borrower or any of its Affiliates
that is communicated to or obtained by the Person serving as the Agent or any
of its Affiliates in any capacity.


 


(j)            The
Agent shall not be liable for any action taken or not taken by it (i) with the
consent or at the request of the SuperMajority Lenders (or such other number or
percentage of the Lenders as shall be necessary, or as the Agent shall believe
in good faith shall be necessary, under the circumstances) or (ii) in the
absence of its own gross negligence or willful misconduct.  The Agent shall be deemed not to have
knowledge of any Default unless and until notice describing such Default is
given to the Agent by the Borrower, a Revolving Credit Lender, a Term Loan
Lender or the Issuer.


 


(k)           The
Agent shall not be responsible for or have any duty to ascertain or inquire
into (i) any statement, warranty or representation made in or in connection
with this Agreement or any other Loan Document, (ii) the contents of any
certificate, report or other document delivered hereunder or thereunder or in
connection herewith or therewith, (iii) the performance or observance of
any of the covenants, agreements or other terms or conditions set forth herein
or therein or the occurrence of any Default, (iv) the validity, enforceability,
effectiveness or genuineness of this Agreement, any other Loan Document or any
other agreement, instrument or document or (v) the satisfaction of any
condition set forth in Article 4 or elsewhere herein, other than to confirm
receipt of items expressly required to be delivered to the Agent.


 


14.3.       Concerning
Distributions By the Agent.


 


(a)           The
Agent in the Agent’s reasonable discretion based upon the Agent’s determination
of the likelihood that additional payments will be received, expenses incurred,
and/or claims made by third parties to all or a portion of such proceeds, may
delay the distribution of any payment received on account of the Liabilities.


 


(b)           The
Agent may disburse funds prior to determining that the sums which the Agent
expects to receive have been finally and unconditionally paid to the
Agent.  If and to the extent that the
Agent does disburse funds and it later becomes apparent that the Agent did not
then receive a payment in an amount equal to the sum paid out, then any
Revolving Credit Lender or Term Loan Lender to whom the Agent made the funds
available, on demand from the Agent, shall refund to the Agent the sum paid to
that person.


 


(c)           If,
in the opinion of the Agent, the distribution of any amount received by the
Agent might involve the Agent in liability, or might be prohibited hereby, or
might be questioned by any Person, then the Agent may refrain from making
distribution until the Agent’s right to make distribution has been adjudicated
by a court of competent jurisdiction.


 


(d)           The
proceeds of any Lender’s exercise of any right of, or in the nature of, set-off
shall be deemed, First, to the
extent that such Lender is entitled to any distribution hereunder, to
constitute such distribution and Second,
shall be shared with the other Lenders as if distributed pursuant to (and shall
be deemed as distributions under) Section 13.7.


 


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(e)           Each
Lender recognizes that the crediting of the Borrower with the “proceeds” of any
transaction in which a Post Foreclosure Asset is acquired is a non-cash
transaction and that, in consequence, no distribution of such “proceeds” will
be made by the Agent to any Lender.


 


(f)            In
the event that (x) a court of competent jurisdiction shall adjudge that any
amount received and distributed by the Agent is to be repaid or disgorged or
(y) the SuperMajority Lenders determine to effect such repayment or
disgorgement, then each Lender to which any such distribution shall have been
made shall repay, to the Agent which had made such distribution, that Lender’s
pro-rata share of the amount so adjudged or determined to be repaid or
disgorged.


 


14.4.       Dispute Resolution.  Any dispute among the Lenders and/or the
Agent concerning the interpretation, administration, or enforcement of the
financing arrangements contemplated by this or any other Loan Document or the
interpretation or administration of this or any other Loan Document which cannot
be resolved amicably shall be resolved in the United States District Court for
the District of Massachusetts, sitting in Boston or in the Superior Court of
Suffolk County, Massachusetts, to the jurisdiction of which courts each Lender
hereto hereby submits.


 


14.5.       Distributions of
Notices and of Documents.  The
Agent will forward to each Lender, promptly after the Agent’s receipt thereof,
a copy of each notice or other document furnished to the Agent pursuant to this
Agreement, including monthly, quarterly, and annual financial statements and
borrowing base certificates received from the Borrower pursuant to Article 6,
other than any of the following:


 


(a)           Routine
communications associated with requests for Revolving Credit Loans and/or the
issuance of L/Cs.


 


(b)           Routine
or nonmaterial communications.


 


(c)           Any
notice or document required by any of the Loan Documents to be furnished to the
Lenders by the Borrower.


 


(d)           Any
notice or document of which the Agent has knowledge that such notice or
document had been forwarded to the Lenders other than by the Agent.


 


14.6.       Confidential
Information.


 


(a)           Each
Lender will maintain, as confidential, all of the following:


 


(i)            Proprietary
approaches, techniques, and methods of analysis which are applied by the Agent
in the administration of the credit facility contemplated by this Agreement.


 


(ii)           Proprietary forms and
formats utilized by the Agent in providing reports to the Lenders pursuant
hereto, which forms or formats are not of general currency.


 


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(b)           Nothing
included herein shall prohibit the disclosure of any such information as may be
required to be provided by judicial process or which may be required or
requested by regulatory authorities having jurisdiction over any party to this
Agreement.


 


14.7.       Reliance by Agent.  The Agent shall be entitled to rely upon, and
shall not incur any liability for relying upon, any certificate, notice or
other document (including any cable, telegram, telex, or facsimile) reasonably
believed by the Agent to be genuine and correct and to have been signed or sent
by or on behalf of the proper person or persons. The Agent also may rely upon
any statement made to it orally or by telephone and believed by it to have been
made by the proper Person, and shall not incur any liability for relying
thereon.  In determining compliance with
any condition hereunder to the making of a Loan, or the issuance of a L/C, that
by its terms must be fulfilled to the satisfaction of a Revolving Credit
Lender, a Term Loan Lender or the Issuer, the Agent may presume that such
condition is satisfactory to such Revolving Credit Lender, Term Loan Lender or
the Issuer unless the Agent shall have received notice to the contrary from
such Revolving Credit Lender, Term Loan Lender or the Issuer prior to the
making of such Loan or the issuance of such L/C.  The Agent may consult with legal counsel (who
may be counsel for the Borrower), independent accountants, and other experts
selected by it, and shall not be liable for any action taken or not taken by it
in accordance with the advice of any such counsel, accountants or experts.  As to any matters not expressly provided for
in this Agreement, any Loan Document, or in any other document referred to
therein, the Agent shall in all events be fully protected in acting, or in
refraining from acting, in accordance with the applicable Consent required by
this Agreement. Instructions given with the requisite Consent shall be binding
on all Lenders.


 


14.8.       Non-Reliance on
Agent and Other Lenders.


 


(a)           Each
Lender represents to all other Lenders and to the Agent that such Lender:


 


(i)            Independently and
without reliance on any representation or act by Agent or by any other Lender,
and based on such documents and information as that Lender has deemed
appropriate, has made such Lender’s own appraisal of the financial condition
and affairs of the Borrower and decision to enter into this Agreement.


 


(ii)           Has relied upon that
Lender’s review of the Loan Documents by that Lender and by counsel to that
Lender as that Lender deemed appropriate under the circumstances.


 


(b)           Each
Lender agrees that such Lender, independently and without reliance upon Agent
or any other Lender, and based upon such documents and information as such
Lender shall deem appropriate at the time, will continue to make such Lender’s
own appraisals of the financial condition and affairs of the Borrower when
determining whether to take or not to take any discretionary action under this
Agreement.


 


(c)           Except
as otherwise required by the provisions of this Agreement, the Agent, in the
discharge of that Agent’s duties hereunder, shall not be required to make
inquiry of, or to inspect the properties or books of, any Person.


 


(d)           Except
for notices, reports, and other documents and information expressly required to
be furnished to the Lenders by the Agent hereunder (as to which, see Section 14.5), the Agent shall not
have any affirmative duty or responsibility to provide any Lender with any


 


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credit or other information
concerning any Person, which information may come into the possession of Agent
or any Affiliate of the Agent.


 


(e)           Each
Lender, at such Lender’s request, shall have reasonable access to all
nonprivileged documents in the possession of the Agent, which documents relate
to the Agent’s performance of its duties hereunder.


 


14.9.       Indemnification.  Without limiting the liabilities of the
Borrower under Section 19.9(b), or any other Section of this Agreement or any
of the other Loan Documents, each Lender shall indemnify the Agent, pro-rata,
for any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever (including attorneys’ reasonable fees and expenses and other out-of-pocket
expenditures) which may at any time be imposed on, incurred by, or asserted
against the Agent and in any way relating to or arising out of this Agreement
or any other Loan Document or any documents contemplated by or referred to
therein or the transactions contemplated thereby or the enforcement of any of
terms hereof or thereof or of any such other documents, provided, however, no Lender shall be
liable for any of the foregoing to the extent that any of the foregoing arises
from any action taken or omitted to be taken by the Agent as to which a final
judicial determination has been or is made (in a proceeding in which the Agent
has had an opportunity to be heard) that the Agent had acted in a grossly
negligent manner, in actual bad faith, or in willful misconduct.


 


14.10.     Resignation of Agent.


 


(a)           The Agent may resign at
any time by giving Sixty (60) days prior written notice thereof to the
Revolving Credit Lenders, the Term Loan Lenders, the Issuer, and the Borrower.  Upon receipt of any such notice of
resignation, the SuperMajority Lenders shall have the right to appoint a
successor to such Agent (and if no Event of Default has occurred, with the
consent of the Borrower, not to be unreasonably withheld and, in any event,
deemed given by the Borrower if no written objection is provided by the
Borrower to the (resigning) Agent within Seven (7) Business Days notice of such
proposed appointment), which shall be a Revolving Credit Lender, Term Loan
Lender or a bank with an office in the United States, or an Affiliate of any
such bank with an office in the United States. 
If a successor Agent shall not have been so appointed and accepted such
appointment within Thirty (30) days after the giving of notice by the resigning
Agent, then the resigning Agent may appoint a successor Agent, which shall be a
Revolving Credit Lender, Term Loan Lender or a financial institution having a
rating of not less than “A” or its equivalent if rated by Standard & Poor’s
Ratings Group, provided that if
the Agent shall notify the Borrower and the Lenders that no qualifying Person
has accepted such appointment, then such resignation shall nonetheless become
effective in accordance with such notice and (1) the retiring Agent shall
be discharged from its duties and obligations hereunder and under the other
Loan Documents (except that in the case of any collateral security held by the
Agent on behalf of the Revolving Credit Lenders, the Term Loan Lenders or the
Issuer under any of the Loan Documents, the retiring Agent shall continue to
hold such collateral security until such time as a successor Agent is
appointed) and (2) all payments, communications and determinations
provided to be made by, to or through the Agent shall instead be made by or to
each Revolving Credit Lender, Term Loan Lender and the Issuer directly, until
such time as the SuperMajority Lenders appoint a successor Agent as provided
for above in this Section 14.10(a).  The
consent of the Borrower otherwise required by this Section 14.10(a) shall not
be required if an Event of Default has occurred and is continuing.


 


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(b)           Upon
the acceptance of any appointment as Agent hereunder by a successor Agent, such
successor shall thereupon succeed to, and become vested with, all the rights,
powers, privileges, and duties of the (resigning) Agent so replaced, and the
(resigning) Agent shall be discharged from the (resigning) Agent’s duties and
obligations hereunder or under the other Loan Documents (if not already
discharged therefrom as provided in this Section 14.10), other than on account
of any responsibility for any action taken or omitted to be taken by the
(resigning) Agent as to which a final judicial determination has been or is
made (in a proceeding in which the (resigning) Person has had an opportunity to
be heard) that such Person had acted in a grossly negligent manner or in bad
faith.


 


(c)           The
fees payable by the Borrower to a successor Agent shall be the same as those
payable to its predecessor unless otherwise agreed between the Borrower and
such successor.


 


(d)           After
any retiring Agent’s resignation, the provisions of this Article 14 and Section
19.8 shall continue in effect for the benefit of such retiring Agent, its sub-agents
and their respective Related Parties in respect of any actions taken or omitted
to be taken by any of them while the retiring Agent was acting as Agent.


 


(e)           Any
resignation by Bank of America as Agent pursuant to this Section 14.10 shall
also constitute its resignation as Issuer and SwingLine Lender.  Upon the acceptance of a successor’s
appointment as Agent hereunder, (a) such successor shall succeed to and become
vested with all of the rights, powers, privileges and duties of the retiring
Issuer and SwingLine Lender, (b) the retiring Issuer and SwingLine Lender shall
be discharged from all of their respective duties and obligations hereunder or
under the other Loan Documents, and (c) the successor Issuer shall issue
letters of credit in substitution for the L/Cs, if any, outstanding at the time
of such succession or make other arrangements satisfactory to the retiring
Issuer to effectively assume the obligations of the retiring Issuer with
respect to such L/Cs.


 


14.11.     Delegation of Duties.  The Agent may perform any and all of its
duties and exercise its rights and powers hereunder or under any other Loan
Document by or through any one or more sub-agents appointed by the Agent.  The Agent and any such sub-agent may perform
any and all of its duties and exercise its rights and powers by or through
their respective Related Parties.  The
exculpatory provisions of this Article 14 shall apply to any such sub-agent and
to the Related Parties of the Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Agent.


 


14.12.     Agent May File
Proofs of Claim.


 


(a)           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 Agent (irrespective of whether the
principal of any Loan or Reimbursement Obligation or Unpaid Reimbursement
Obligation shall then be due and payable as herein expressed or by declaration
or otherwise and irrespective of whether the Agent shall have made any demand
on the Borrower) shall be entitled and empowered, by intervention in such
proceeding or otherwise:


 


(i)            to file and prove a
claim for the whole amount of the principal and interest owing and unpaid in
respect of the Loans, Reimbursement Obligations, and all other


 


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Liabilities
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 Revolving Credit Lenders, the
Term Loan Lenders, the Issuer and the Agent (including any claim for the
reasonable compensation, expenses, disbursements and advances of the Revolving
Credit Lenders, the Term Loan Lenders, the Issuer, and the Agent and their
respective agents and counsel and all other amounts due the Revolving Credit
Lenders, the Term Loan Lenders, the Issuer, and the Agent under this Agreement)
allowed in such judicial proceeding; and


 


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


 


(b)           Any
custodian, receiver, assignee, trustee, liquidator, sequestrator or other
similar official in any such judicial proceeding is hereby authorized by each
Revolving Credit Lender, Term Loan Lender and the Issuer to make such payments
to the Agent and, in the event that the Agent shall consent to the making of
such payments directly to the Revolving Credit Lenders, the Term Loan Lenders
and the Issuer, to pay to the Agent any amount due for the reasonable
compensation, expenses, disbursements and advances of the Agent and its agents
and counsel, and any other amounts due the Agent under this Agreement.


 


(c)           Nothing
contained herein shall be deemed to authorize the Agent to authorize or consent
to or accept or adopt on behalf of any Revolving Credit Lender, Term Loan
Lender or the Issuer any plan of reorganization, arrangement, adjustment or
composition affecting the Liabilities or the rights of any Revolving Credit
Lender or any Term Loan Lender, or to authorize the Agent to vote in respect of
the claim of any Revolving Credit Lender in any such proceeding.


 


14.13.     Collateral Matters.


 


The Revolving Credit Lenders, the Term Loan
Lenders and the Issuer irrevocably authorize the Agent, at its option and in
its discretion:


 


(a)           to
release any Lien on any property granted to or held by the Agent under any Loan
Document (i) upon termination of the Loan Commitments and payment in full, in
cash, of all Liabilities (other than contingent indemnification obligations)
and the expiration or termination of all L/Cs, (ii) that is sold or to be sold
as part of or in connection with any sale permitted hereunder or under any
other Loan Document, or (iii) subject to Section 19.5, if approved, authorized
or ratified in writing by the SuperMajority Lenders;


 


(b)           to
subordinate any Lien on any property granted to or held by the Agent under any
Loan Document to the holder of any Lien on such property that is permitted by
Section 5.6(a)(ii); and


 


(c)           to
release any Subsidiary that is a Borrower from its obligations hereunder if
such Person ceases to be a Subsidiary as a result of a transaction permitted
hereunder.


 


Upon request by the Agent at any time, the SuperMajority Lenders shall
confirm in writing the Agent’s authority to release or subordinate its interest
in particular types or items of property, or to release any Subsidiary that is
a Borrower from its obligations hereunder pursuant to this Section 14.13.


 


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ARTICLE XV.                ACTION BY AGENTS - CONSENTS -
AMENDMENTS - WAIVERS


 


15.1.       Administration of
Credit Facilities.


 


(a)           Except
as otherwise specifically provided in this Agreement,  the Agent may take any action with respect to
the credit facility contemplated by the Loan Documents as the Agent determines
to be appropriate, provided, however,
the Agent is not under any affirmative obligation to take any action which it
is not required by this Agreement or the Loan Documents specifically to so
take.


 


(b)           Except
as specifically provided in the following Sections of this Agreement, whenever
a Loan Document or this Agreement provides that action may be taken or omitted
to be taken in the Agent’s discretion, the Agent shall have the sole right to
take, or refrain from taking, such action without, and notwithstanding, any
vote of the Lenders:


 


	
  Actions Described in Section

  	
   

  	
  Type of Consent Required

  
	
   

  	
   

  	
   

  
	
  15.2

  	
   

  	
  Majority
  Lenders

  
	
   

  	
   

  	
   

  
	
  15.3

  	
   

  	
  SuperMajority
  Lenders

  
	
   

  	
   

  	
   

  
	
  15.4

  	
   

  	
  Certain
  Consent

  
	
   

  	
   

  	
   

  
	
  15.5

  	
   

  	
  Unanimous
  Consent

  
	
   

  	
   

  	
   

  
	
  15.6

  	
   

  	
  Consent of
  SwingLine Lender

  
	
   

  	
   

  	
   

  
	
  15.7

  	
   

  	
  Consent of
  the Agent

  



 


(c)           The
rights granted to the Lenders in those sections referenced in Section 15.1(b)
shall not otherwise limit or impair the Agent’s exercise of its discretion
under the Loan Documents.


 


15.2.       Actions Requiring or On Direction of
Majority Lenders.  Except as
otherwise provided in this Agreement, the Consent or direction of the Majority
Lenders is required for any amendment, waiver, or modification of any Loan
Document.


 


15.3.       Actions Requiring or
On Direction of SuperMajority Lenders.  The Consent or direction of the SuperMajority
Lenders is required as follows:


 


(a)           The
Revolving Credit Lenders agree that any loan or advance under the Revolving
Credit which results in a Protective OverAdvance may be made by the Agent in
its discretion without the Consent of the Revolving Credit Lenders and that
each Revolving Credit Lender shall be bound thereby, provided, however, the Consent or direction of the
SuperMajority Lenders is required to permit a Protective OverAdvance to be
outstanding for more than Forty-Five (45) consecutive Business Days or more
than twice in any twelve month period.


 


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(b)           If
the Borrower is then In Default, the SuperMajority Lenders may direct the Agent
to suspend the Revolving Credit (including the making of any Protective
OverAdvances), whereupon, as long as the Borrower is In Default, the only
Revolving Credit Loans which may be made are the following:


 


(i)            Revolving Credit Loans
made to “cover” the honoring of L/Cs.


 


(ii)           Revolving Credit Loans
made with Consent of the SuperMajority Lenders.


 


(c)           If
an Event of Default has occurred and not been duly waived, the SuperMajority
Lenders may:


 


(i)            Give the Agent an
Acceleration Notice in accordance with Section 13.1(b).


 


(ii)           Direct the Agent to
increase the rate of interest to the default rate of interest as provided in,
and to the extent permitted by, this Agreement.


 


15.4.       Action Requiring Certain Consent.


 


(a)           The
consent of the SwingLine Lender and Lenders (other than Delinquent Revolving
Credit Lenders) holding 51% or more of the Aggregate Loan Commitments of the
Lenders (other than any Loan Commitments held by Delinquent Revolving Credit
Lenders) shall be required to increase the SwingLine Loan Ceiling.


 


(b)          The consent of the
Majority Lenders and Lenders (other than Delinquent Revolving Credit Lenders)
holding 51% or more of the aggregate outstanding principal amount of the Term
Loan at such date, after giving effect to any prepayments or repayments of the
Term Loan occurring on such date, shall be required to amend, modify or waive
Section 3.3(a).


 


15.5.       Actions Requiring or
Directed By Unanimous Consent. 
None of the following may take place except with Unanimous Consent:


 


(a)           Any
increase in any Lender’s Revolving Credit Dollar Commitment or Term Loan
Commitment, Maximum Revolving Credit Dollar Commitment, Revolving Credit
Percentage Commitment or Term Loan Percentage (other than by reason of the
application of Section 15.10 (which deals with NonConsenting Lenders) or
Section 16.1 (which deals with assignments and participations)).


 


(b)           Any
decrease in any interest rate or fee payable to the Lenders on account of the
Loans.


 


(c)           Any
extension of the Maturity Date.


 


(d)           Any
forgiveness of all or any portion of any payment Liability, provided, however, that the Agent shall be
permitted to forgive fees owed to it and not to any other Lender without any
consent being required.


 


95

















 


(e)           Any
decrease in any interest rate or fee payable under any of the Loan Documents
(other than any Agent’s Fee (for which the consent of the Agent shall also be
required)).


 


(f)            Any
release of a material portion of the Collateral not otherwise required or
provided for in the Loan Documents or to facilitate a Liquidation.


 


(g)           Any
amendment of the definition of the terms “Borrowing Base” or “Availability” or
of any definition of any component thereof, such that more credit would be
available to the Borrower, based on the same assets, as would have been
available to the Borrower immediately prior to such amendment, it being understood, however, that:


 


(i)            The foregoing shall
not limit the adjustment by the Agent of any Reserve in the Agent’s
administration of the Revolving Credit as otherwise permitted by this
Agreement.


 


(ii)           The foregoing shall not
prevent the Agent, in its administration of the Revolving Credit, from
restoring any component of Borrowing Base which had been lowered by the Agent
back to the value of such component, as stated in this Agreement or to an
intermediate value.


 


(h)           Any
release of any Person obligated on account of the Liabilities.


 


(i)            The
making of any Revolving Credit Loan which, when made, exceeds Availability and
is not a Protective OverAdvance, provided,
however,


 


(i)            no Consent shall be
required in connection with the making of any Revolving Credit Loan to “cover”
any honoring of a drawing under any L/C; and


 


(ii)           each Revolving Credit
Lender recognizes that subsequent to the making of a Revolving Credit Loan
which does not constitute a Protective OverAdvance, the unpaid principal
balance of the Loan Account may exceed the Borrowing Base on account of changed
circumstances beyond the control of the Agent (such as a drop in collateral
value).


 


(j)            The
waiver of the obligation of the Borrower to reduce the unpaid principal balance
of loans under the Revolving Credit to an amount so that no OverAdvance (other
than a Protective OverAdvance) is outstanding or, subject to the time limits
included in Section 15.3(a) (which places time and frequency limits on
Protective OverAdvance), to eliminate a Protective OverAdvance.


 


(k)           The
incurrence of any additional Indebtedness of the Borrower which is secured by
an Encumbrance not otherwise permitted by Section 5.6 hereof.


 


(l)            Any
amendment to clauses (a), (d) or (h) of Section 5.20.


 


(m)          Any
amendment of this Article 15 or Section 13.7.


 


(n)           Amendment
of any of the following Definitions:


 


“Appraised
Inventory Liquidation Value”


 


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“Appraised
Inventory Percentage”


“Inventory
Advance Rate”


“Majority
Lender”


“Protective
OverAdvance”


“SuperMajority
Lenders”


“Unanimous
Consent”


 


15.6.       Actions Requiring SwingLine Lender Consent.  No action, amendment, or waiver of compliance
with, any provision of the Loan Documents or of this Agreement which affects
the SwingLine Lender may be undertaken without the Consent of the SwingLine
Lender.


 


15.7.       Actions Requiring
Agent’s Consent.


 


(a)           No
action, amendment, or waiver of compliance with, any provision of the Loan
Documents or of this Agreement which affects the Agent in its capacity as Agent
may be undertaken without the written consent of the Agent.


 


(b)           No
action referenced herein which affects the rights, duties, obligations, or
liabilities of the Agent shall be effective without the written consent of the
Agent.


 


15.8.       Miscellaneous
Actions.


 


(a)           Notwithstanding
any other provision of this Agreement, no single Lender independently may
exercise any right of action or enforcement against or with respect to the
Borrower.


 


(b)           The
Agent shall be fully justified in failing or refusing to take action under this
Agreement or any Loan Document on behalf of any Lender unless the Agent shall
first:


 


(i)            receive such clear,
unambiguous, written instructions as the Agent deems appropriate; and


 


(ii)           be indemnified to the
Agent’s satisfaction by the Lenders against any and all liability and expense
which may be incurred by the Agent by reason of taking or continuing to take
any such action, unless such action had been grossly negligent, in willful
misconduct, or in bad faith.


 


(c)           The
Agent may establish reasonable procedures for the providing of direction and instructions
from the Lenders to the Agent, including its reliance on multiple counterparts,
facsimile transmissions, and reasonable time limits within which such direction
and instructions must be received in order to be included in a determination of
whether the requisite Loan Commitments has provided its direction, Consent, or
instructions.


 


15.9.       Actions Requiring
Borrower’s Consent.  The
Borrower’s consent is required for any amendment of this Agreement, except that
each of the following Articles (or Sections, as applicable) of this Agreement
may be amended without the consent of the Borrower:


 


97

















 


	
  Article

  	
   

  	
  Title of Article

  
	
   

  	
   

  	
   

  
	
  2 (only
  Sections 2.23, 2.24, 2.25 and 2.26):

  	
   

  	
  The
  Revolving Credit

  
	
   

  	
   

  	
   

  
	
  13:

  	
   

  	
  Acceleration
  and Liquidation

  
	
   

  	
   

  	
   

  
	
  14: (other
  than Section 14.10(a))

  	
   

  	
  The Agent

  
	
   

  	
   

  	
   

  
	
  16: (other
  than Sections 16.1(c)(iii) and (c)(iv))

  	
   

  	
  Successors
  and Assigns

  



 


15.10.     NonConsenting Lender.


 


(a)           In
the event that a Lender (in this Section 15.10, a “NonConsenting Lender”) does not provide its Consent to a
proposal by the Agent to take action which requires consent under this Article
15, then one or more Lenders who provided Consent to such action may require
the assignment, without recourse and in accordance with the procedures outlined
in Section 16.1, below, of the NonConsenting Lender’s commitment hereunder on
Fifteen (15) days written notice to the Agent and to the NonConsenting Lender.


 


(b)           At
the end of such Fifteen (15) days, and
provided that the NonConsenting Lender delivers the Notes held by
the NonConsenting Lender to the Agent, the Lenders who have given such written
notice shall Transfer the following to the NonConsenting Lender:


 


(i)            Such NonConsenting
Lender’s pro-rata share of the principal and interest of the Loans to the date
of such assignment.


 


(ii)           All fees distributable
hereunder to the NonConsenting Lender to the date of such assignment.


 


(iii)          Any out-of-pocket costs
and expenses for which the NonConsenting Lender is entitled to reimbursement
from the Borrower.


 


(c)           In
the event that the NonConsenting Lender fails to deliver to the Agent the Notes
held by the NonConsenting Lender as provided in Section 15.10(b), then:


 


(i)            The amount otherwise
to be Transferred to the NonConsenting Lender shall be Transferred to the Agent
and held by the Agent, without interest, to be turned over to the NonConsenting
Lender upon delivery of the Note held by that NonConsenting Lender.


 


(ii)           The Note held by the
NonConsenting Lender shall have no force or effect whatsoever.


 


(iii)          The NonConsenting Lender
shall cease to be a “Lender”.


 


(iv)          The Lender(s) which have
Transferred the amount to the Agent as described above shall have succeeded to
all rights and become subject to all of the obligations of the NonConsenting
Lender as “Lender”.


 


(d)           In
the event that more than One (1) Lender wishes to require such assignment, the
NonConsenting Lender’s commitment hereunder shall be divided among such
Lenders, pro-rata based upon their respective Revolving Credit Percentage
Commitments and Term Loan Percentages, with the Agent coordinating such
transaction.


 


98

















 


(e)           The
Agent shall coordinate the retirement of the Note held by the NonConsenting
Lender and the issuance of Notes to those Lenders which “take-out” such
NonConsenting Lender, provided, however, no
processing fee otherwise to be paid as provided in Section 16.2(b) shall be due
under such circumstances.


 


ARTICLE XVI.              SUCCESSORS AND ASSIGNS


 


16.1.       Assignments and Assumptions.


 


(a)           The
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns permitted
hereby, except that the Borrower may not assign or otherwise transfer any of
its rights or obligations hereunder without the prior written consent of the
Agent and each Lender, and no Lender may assign or otherwise transfer any of
its rights or obligations hereunder except (i) to one or more Eligible
Assignees (in this Section 16.1(a), each an “Assignee
Lender”) in accordance with the provisions of subsection (c) of this
Section, (ii) by way of participation in accordance with the provisions of
Section 16.3, (iii) by way of pledge or assignment of a security interest
subject to the restrictions of Section 16.5, or (iv) to an SPC in accordance
with the provisions of Section 16.7.


 


(b)           Nothing
in this Agreement, express or implied, shall be construed to confer upon any
Person (other than the Parties hereto, their respective successors and assigns
permitted hereby, Participants to the extent provided in subsection (d) of this
Section and, to the extent expressly contemplated hereby, the Related Parties
of each of the Agent, the Issuer, and the Lenders) any legal or equitable
right, remedy or claim under or by reason of this Agreement.


 


(c)           Assignments
by Lenders.  Any Lender may at any time
assign to one or more Eligible Assignees all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Revolving
Credit Dollar Commitment and the Loans made by it (including for purposes of
this subsection (b), participations in L/C Obligations and in SwingLine Loans
at the time owing to it); provided that


 


(i)            The Agent and, in the
case of assignments of Revolving Credit Dollar Commitments, the Issuer and the
SwingLine Lender, shall have given its prior written consent to such
assignment, which consent shall not be unreasonably withheld, but need not be
given if the proposed assignee is itself a Lender or an Affiliate of a Lender
(whether or not the proposed assignee would otherwise qualify as an Eligible
Assignee).


 


(ii)           Each partial assignment
shall be made as an assignment of a proportionate part of all the Assigning
Lender’s rights and obligations under this Agreement with respect to the Loans
or the Revolving Credit Dollar Commitment assigned, as the case may be, except
that this clause (ii) shall not apply to rights in respect of SwingLine Loans.


 


(iii)          Except in the case of an
assignment of the entire remaining amount of the Assigning Lender’s Revolving
Credit Dollar Commitment and the Loans at the time owing to it or in the case
of an assignment to a Lender or an Affiliate of a Lender or an Approved Fund,
the aggregate amount of the Revolving Credit Dollar Commitment (which for this
purpose includes Loans outstanding thereunder) or, if the Revolving Credit
Dollar Commitment of such Lender is not then in effect, the principal
outstanding


 


99

















 


balance of the
Revolving Credit Loans and/or the Term Loans of the assigning Lender subject to
each such assignment, determined as of the date the Assignment and Assumption
with respect to such assignment is delivered to the Agent or, if “Trade Date”
is specified in the Assignment and Assumption, as of the Trade Date, shall be
at least $5,000,000 unless each of the Agent and, so long as no Event of
Default has occurred and is continuing, the Borrower otherwise consents (each
such consent not to be unreasonably withheld or delayed); provided, however, that concurrent
assignments to members of an Assignee Group and concurrent assignments from
members of an Assignee Group to a single Eligible Assignee (or to an Eligible
Assignee and members of its Assignee Group) will be treated as a single
assignment for purposes of determining whether such minimum amount has been
met.


 


(iv)          The parties to such an
assignment shall execute and deliver to the Agent, for recording in the
Register, an Assignment and Assumption substantially in the form of EXHIBIT D, annexed hereto, or any
other form approved by the Agent (an “Assignment and Assumption”) together with a
processing and recordation fee in the amount, if any, required as set forth in Schedule 16.1, and
the Eligible Assignee, if it shall not be a Lender, shall deliver to the Agent
an Administrative Questionnaire.


 


(d)           The
Agent, acting solely for this purpose as an agent of the Borrower, shall
maintain at the Agent’s office a copy of each Assignment and Assumption
delivered to it and a register or similar list (the “Register”) for the recordation of the names and addresses of
the Lenders and of the Revolving Credit Percentage Commitment and Maximum
Revolving Credit Dollar Commitment of each Revolving Credit Lender, and
principal amounts of the Loans and L/C Obligations owing to, each Lender. The
Register shall be available for inspection by each of the Borrower, the Issuer
and each Lender (with respect only to such Lender’s interest) at any reasonable
time and from time to time upon reasonable prior notice.  The entries in the Register shall be
conclusive and binding on all Lenders. 
The Borrower, the Agent, and the Lenders may treat each Person whose
name is recorded in the Register pursuant to the terms hereof as a “Lender”
hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary.


 


16.2.       Effect of Assignment.


 


(a)           Subject
to acceptance and recording thereof by the Agent pursuant to Section 16.1, from
and after the effective date specified in an Assignment and Assumption which
has been executed, delivered, and recorded:


 


(i)            The Assignee Lender
shall be a party to this Agreement and the Loan Documents (and to any
amendments thereof) and, to the extent of the interest assigned by the
Assignment and Assumption, have the rights and obligations of a Lender under
this Agreement and the Loan Documents.


 


(ii)           The Assigning Lender
shall, to the extent of the interest assigned by such Assignment and
Assumption, be released from its obligations under this Agreement (and, in the
case of an Assignment and Assumption covering all of the assigning Lender’s
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto) but shall continue to be entitled to the benefits of Sections
19.8 and 19.9 with respect to facts and circumstances occurring prior to the
effective date of such assignment.


 


100

















 


(b)           By
executing and delivering an Assignment and Assumption, the parties thereto
confirm to and agree with each other and with all parties to this Agreement as
to those matters which are set forth in the subject Assignment and Assumption.


 


16.3.       Participations.  Any Lender may, at any time, without the
consent of, or notice to, the Borrower or the Agent, sell participations to one
or more Persons (other than a natural person or the Borrower or any of the
Borrower’s Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of that Lender’s rights
and/or obligations herein (including all or a portion of its Revolving Credit
Dollar Commitment and/or the Loans (including such Lender’s participations in
L/C Obligations and/or SwingLine Loans) owing to it); provided that such Lender’s obligations
under this Agreement shall remain unchanged, such Lender shall remain solely
responsible to the other parties hereto for the performance of such
obligations, and the Borrower, the Agent, the Lenders, and the Issuer shall
continue to deal solely and directly with such Lender in connection with such
Lender’s rights and obligations under this Agreement.


 


Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that such agreement or instrument
may provide that such Lender will not, without the consent of the Participant,
agree to any amendment, waiver or other modification described in Section 19.5
that affects such Participant.  The
Borrower agrees that each Participant shall be entitled to the benefits of
Section 19.8 to the same extent as if it were a Lender and had acquired its
interest by assignment pursuant to Section 16.1.  To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 19.17 as though
it were a Lender, provided such
Participant agrees to be subject to Section 2.22 as though it were a Lender.


 


16.4.       Limitations upon
Participant Rights.


 


A Participant shall not be entitled to
receive any greater payment hereunder than the applicable Lender would have
been entitled to receive with respect to the participation sold to such
Participant, unless the sale of the participation to such Participant is made
with the Borrower’s prior written consent. 
A Participant that would be a Foreign Lender if it were a Lender shall
not be entitled to the benefits of Section 19.8 unless the Borrower is notified
of the participation sold to such Participant and such Participant agrees, for
the benefit of the Borrower, to comply with Section 19.8 as though it were a
Lender.


 


16.5.       Certain Pledges.


 


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


 


16.6.       Electronic Execution
of Assignments.


 


The words “execution,” “signed,” “signature,”
and words of like import in any Assignment and Assumption shall be deemed to
include electronic signatures or the keeping of records in electronic form,
each of which shall be of the same legal effect, validity, or enforceability as
a manually executed signature or the use of a paper-based recordkeeping system,
as the case


 


101

















 


may be, to the extent and as provided for in
any applicable law, including the Federal Electronic Signature in Global and
National Commerce Act, the New York State Electronics Signatures and Records
Act, or any other similar state laws based on the Uniform Electronic Transfers
Act.


 


16.7.       Special Purpose
Funding Vehicles.


 


Notwithstanding anything to the contrary
contained herein, any Lender (a “Granting
Lender”) may grant to a special purpose funding vehicle identified
as such in writing from time to time by the Granting Lender to the Agent and
the Borrower (an “SPC”) the option
to provide all or any part of any Loan that such Granting Lender would
otherwise be obligated to make pursuant to this Agreement; provided that (i) nothing herein shall
constitute a commitment by any SPC to fund any Revolving Credit Loan, and (ii)
if an SPC elects not to exercise such option or otherwise fails to make all or
any part of such Revolving Credit Loan, the Granting Lender shall be obligated
to make such Revolving Credit Loan pursuant to the terms hereof or, if it fails
to do so, to make such payment to the Agent as is required under Section
2.23.  Each party hereto hereby agrees
that (i) neither the grant to any SPC nor the exercise by any SPC of such
option shall increase the costs or expenses or otherwise increase or change the
obligations of the Borrower under this Agreement, (ii) no SPC shall be liable
for any indemnity or similar payment obligation under this Agreement for which
a Lender would be liable, and (iii) the Granting Lender shall for all purposes,
including the approval of any amendment, waiver or other modification of any
provision of any Loan Document, remain the lender of record hereunder.  The making of a Revolving Credit Loan by an
SPC hereunder shall utilize the Revolving Credit Dollar Commitment of the
Granting Lender to the same extent, and as if, such Revolving Credit Loan were
made by such Granting Lender.  In
furtherance of the foregoing, each party hereto hereby agrees (which agreement
shall survive the termination of this Agreement) that, prior to the date that
is one year and one day after the payment in full of all outstanding commercial
paper or other senior debt of any SPC, it will not institute against, or join
any other Person in instituting against, such SPC any bankruptcy,
reorganization, arrangement, insolvency, or liquidation proceeding under the
laws of the United States or any State thereof. 
Notwithstanding anything to the contrary contained herein, any SPC may
(i) with notice to, but without prior consent of the Borrower and the Agent,
and with the payment of a processing fee in the amount of $2,500, assign all or
any portion of its right to receive payment with respect to any Loan to the
Granting Lender and (ii) disclose on a confidential basis any non-public
information relating to its funding of Loans to any rating agency, commercial
paper dealer or provider of any surety or Guarantee or credit or liquidity
enhancement to such SPC.


 


16.8.       Resignation After
Assignment.


 


Notwithstanding anything to the contrary
contained herein, if at any time Bank of America assigns all of its Revolving
Credit Dollar Commitment and Loans pursuant to Section 16.1 above, Bank of
America may, (i) upon 30 days’ notice to the Borrower and the Lenders, resign
as Issuer and/or (ii) upon 30 days’ notice to the Borrower, resign as SwingLine
Lender.  In the event of any such
resignation as Issuer or SwingLine Lender, the Borrower shall be entitled to
appoint from among the Lenders a successor Issuer or SwingLine Lender
hereunder; provided, however, that no failure by the Borrower
to appoint any such successor shall affect the resignation of Bank of America
as Issuer or SwingLine Lender, as the case may be.  If Bank of America resigns as Issuer, it
shall retain all the rights, powers, privileges and duties of the Issuer
hereunder with respect to all L/Cs outstanding as of the effective date of its
resignation as Issuer and all L/C Obligations with respect thereto (including
the right to require the Lenders to make Base Margin Loans or fund risk
participations in Unreimbursed Amounts pursuant to


 


102

















 


Section 2.20. 
If Bank of America resigns as SwingLine Lender, it shall retain all the
rights of the SwingLine Lender provided for hereunder with respect to SwingLine
Loans made by it and outstanding as of the effective date of such resignation,
including the right to require the Lenders to make Base Margin Loans or fund
risk participations in outstanding SwingLine Loans pursuant to Section
2.24.  Upon the appointment of a
successor Issuer and or SwingLine Lender, (a) such successor shall succeed to
and become vested with all of the rights, powers, privileges and duties of the
retiring Issuer or SwingLine Lender, as the case may be, and (b) the successor
Issuer shall issue letters of credit in substitution for the Letters of Credit,
if any, outstanding at the time of such succession or make other arrangements
satisfactory to Bank of America to assume effectively the obligations of Bank
of America with respect to such Letters of Credit.


 


16.9.       Accession.  Subject to the terms of Section 16.10 herein,
the Borrower may, with the consent of the Agent, request Eligible Assignees
(each such Eligible Assignee, an “Acceding
Lender”) to become party to this Credit Agreement by entering into
an Instrument of Accession in substantially the form of Exhibit F hereto (an “Instrument
of Accession”) with the Borrower and the Agent and assuming
thereunder a Revolving Credit Dollar Commitment, in an amount to be agreed upon
by the Borrower, such Acceding Lender and the Agent, to make Revolving Credit
Loans and participate in the risk relating to the Letters of Credit pursuant to
the terms hereof, and the Maximum Revolving Credit Ceiling shall thereupon be
increased by the amount of such Acceding Lender’s Revolving Credit Dollar
Commitment; provided, however,
that (a) the Agent shall have given its prior written consent to such accession
and (b) in no event shall the Maximum Revolving Credit Ceiling be increased
under any one or more of such Instruments of Accession so as to exceed, in the
aggregate, $300,000,000.  On the
effective date specified in any Instrument of Accession, Schedule 2.22
hereto shall be deemed to be amended to reflect (a) the name, address,
Revolving Credit Dollar Commitment and Revolving Credit Percentage Commitment
of such Acceding Lender, (b) the Maximum Revolving Credit Ceiling as increased
by such Acceding Lender’s Revolving Credit Dollar Commitment, and (c) the
changes to the other Lenders’ respective Revolving Credit Percentage
Commitments and any changes to the other Lenders’ respective Revolving Credit
Dollar Commitments (in the event such Lender is also the Acceding Lender)
resulting from such assumption and such increased Maximum Revolving Credit
Ceiling.


 


If on the effective date specified in any
Instrument of Accession, there are Revolving Credit Loans then outstanding or
exposure in respect of then outstanding L/Cs, the Acceding Lender shall
purchase Revolving Credit Loans and exposure in respect of outstanding L/Cs
from each other Lender in an amount such that, after such purchase or
purchases, the amount of outstanding Revolving Credit Loans and exposure in
respect of outstanding L/Cs from each Lender shall equal such Lender’s
respective Revolving Credit Percentage Commitment, as set forth on Schedule 2.22
multiplied by the aggregate amount of Revolving Credit Loans outstanding and
exposure in respect of outstanding L/Cs from all Lenders.  To the extent that any outstanding Revolving
Credit Loans bear interest at the LIBOR Rate, the Borrower shall pay any
additional costs described in Section 2.10(e) incurred by any Lender.


 


16.10.     Optional Increase of
Maximum Revolving Credit Ceiling.


 


So long as an
Event of Default shall not have occurred and be continuing or would result
therefrom, and subject to all terms and conditions set forth in the Loan
Agreement, the Borrower may request, by prior written notice to the Agent, that
the Maximum Revolving Credit Ceiling be increased up to $300,000,000. The
Borrower may, after initially requesting the existing


 


103

















 


Revolving Credit Lenders to increase on a pro
rata basis their respective Revolving Credit Dollar Commitments and after receiving
confirmation in writing that such Revolving Credit Lenders do not wish to
increase their respective Revolving Credit Dollar Commitments (or if the
aggregate desired increase in Revolving Credit Dollar Commitment by the
existing Revolving Credit Lenders is not sufficient to satisfy the increase in
the Maximum Revolving Credit Ceiling requested by the Borrower), solicit
Eligible Assignees to become new Revolving Credit Lenders pursuant to the terms
of Section 16.9 herein, provided,
that (a) each Person that becomes a new Revolving Credit Lender shall agree to
become a party to, and shall assume and agree to be bound by, this Loan
Agreement, subject to all terms and conditions thereof; (b) no Revolving Credit
Lender shall have an obligation to the Borrower to increase its Revolving
Credit Dollar Commitment; and (c) in no event shall the addition of any
Revolving Credit Lender increase the Maximum Revolving Credit Ceiling to an
amount greater than $300,000,000.


 


ARTICLE XVII.             NOTICES


 


17.1.       Notice Addresses.  All notices, demands, and other
communications made in respect of any Loan Document (other than a request for a
loan or advance or other financial accommodation under the Revolving Credit or
the Term Loan or a notice or other communication expressly permitted to be
given by telephone) shall be in writing and shall be delivered by hand or
overnight courier service, mailed by certified or registered mail or sent by
telecopier (and all notices and other communications expressly permitted
hereunder to be given by telephone shall be made to the applicable telephone
numbers) to the following addresses, each of which may be changed upon Seven
(7) days written notice to all others given by certified mail, return receipt
requested:


 


If to the Agent:


 


	
  Bank of America, N.A.

  
	
  40 Broad
  Street

  
	
  Boston,
  Massachusetts 02109

  
	
  Attention

  	
  Sally A.
  Sheehan

  
	
   

  	
  Managing
  Director

  
	
  Fax

  	
  (617) 434-4339

  



 


With a copy to:


 


	
  Bingham
  McCutchen LLP

  
	
  150 Federal
  Street

  
	
  Boston,
  Massachusetts 02110

  
	
  Attention

  	
  Robert A.J.
  Barry, Esquire

  
	
  Fax

  	
  (617) 951-8736

  



 


If to the Borrower:


 


	
  Gander
  Mountain Company

  
	
  180 East 5th
  Street, 13th Floor

  
	
  St. Paul,
  Minnesota 55101

  
	
  Attention

  	
  Chief
  Financial Officer

  
	
  Fax

  	
  (651)
  325-2001

  



 


104

















 


With a copy to:


 


	
  Gander
  Mountain Company

  
	
  180 East 5th
  Street, 13th Floor

  
	
  St. Paul,
  Minnesota 55101

  
	
  Attention

  	
  Legal
  Department

  
	
  Fax

  	
  (651)
  325-2006

  



 


In addition, each Lender agrees to notify the
Agent from time to time to ensure that the Agent has on record (i) an effective
address, contact name, telephone number and electronic mail address to which
notices and other communications may be sent and (ii) accurate wire
instructions for such Lender.


 


17.2.       Notice Given.


 


(a)           Except
as otherwise specifically provided herein, notices shall be deemed made and
correspondence received, as follows (all times being local to the place of
delivery or receipt):


 


(i)            By mail: the sooner of
when actually received or Three (3) days following deposit in the United States
mail, postage prepaid.


 


(ii)           By recognized overnight
express delivery: the Business Day following the day when sent.


 


(iii)          By Hand: If delivered on
a Business Day after 9:00AM and no later than Three (3) hours prior to the
close of customary business hours of the recipient, when delivered.  Otherwise, at the opening of the then next
Business Day.


 


(iv)          By Facsimile
transmission (which must include a header on which the party sending such
transmission is indicated): If sent on a Business Day after 9:00AM and no later
than Three (3) hours prior to the close of customary business hours of the
recipient, One (1) hour after being sent. 
Otherwise, at the opening of the then next Business Day.


 


(b)           Rejection
or refusal to accept delivery and inability to deliver because of a changed address
or Facsimile Number for which no due notice was given shall each be deemed
receipt of the notice sent.


 


(c)           The
Agent, the Issuer, the Revolving Credit Lenders and the Term Loan Lenders shall
be entitled to rely and act upon any notices purportedly given by or on behalf
of the Borrower even if (i) such notices were not made in a manner specified
herein, were incomplete or were not preceded or followed by any other form of
notice specified herein, or (ii) the terms thereof, as understood by the recipient,
varied from any confirmation thereof. 
The Borrower shall indemnify the Agent, the Issuer, each Revolving
Credit Lender, each Term Loan Lender and the Related Parties of each of them
from all losses, costs, expenses, and liabilities resulting from the reliance
by such Person on each notice purportedly given by or on behalf of the
Borrower.  All telephonic notices to and
other telephonic communications with the Agent may be recorded by the Agent and
each of the parties hereto hereby consents to such recording.


 


105

















 


17.3.       Wire Instructions
Notice Given.  Subject to
change in the same manner that a notice address may be changed (as to which,
see Section 17.1), wire transfers to the Agent shall be made in accordance with
the following wire instructions:


 


	
  Bank of America, N.A.

  
	
  ABA Number:

  	
  026-009-593

  
	
  Account
  Number:

  	
  530-39952

  
	
  Reference:

  	
  Gander
  Mountain

  



 


ARTICLE XVIII.            TERM


 


18.1.       Termination of Revolving Credit and Term
Loan.  The Revolving Credit
and the Term Loan shall remain in effect (subject to suspension as provided in
Section 2.5(g) hereof) until the Termination Date.


 


18.2.       Actions On
Termination.


 


(a)           On
the Termination Date, the Borrower shall pay the Agent (whether or not then
due), in immediately available funds, all then Liabilities including, without
limitation: the following:


 


(i)            The entire balance of
the Loan Account (including the unpaid principal balance of the Revolving
Credit Loans, and the SwingLine Loan ) and the Term Loan.


 


(ii)           Any then remaining
installments of the Upfront Fee.


 


(iii)          Any then remaining
installments of the Agent’s Fee.


 


(iv)          Any payments due on
account of the indemnification obligations included in Section 2.10(e).


 


(v)           Any accrued and unpaid
Unused Line Fee.


 


(vi)          Any applicable Revolving
Credit Early Termination Fee or Term Loan Early Termination Fee.


 


(vii)         All unreimbursed costs
and expenses of the Agent and of Lenders’ Special Counsel for which the
Borrower is responsible.


 


(b)           On
the Termination Date, the Borrower shall also make such arrangements concerning
any L/Cs then outstanding as are reasonably satisfactory to the Agent.


 


(c)           Until
such payment (Section 18.2(a)) and arrangements concerning L/Cs (Section
18.2(b)), all provisions of this Agreement, other than those included in
Article 2 which place any obligation on the Agent or any Lender to make any
loans or advances or to provide any financial accommodations to the Borrower
shall remain in full force and effect until all Liabilities shall have been
paid in full.


 


(d)           The
release by the Agent of the Collateral Interests granted the Agent by the
Borrower hereunder may be upon such conditions and indemnifications as the
Agent may require.


 


106

















 


ARTICLE XIX.              GENERAL


 


19.1.       Protection of Collateral.  The Agent’s sole duty with respect to the
custody, safe keeping and physical preservation of the Collateral in its
possession, under §9-207 of the UCC or otherwise, shall be to deal with such
Collateral in the same manner as the Agent deals with similar property for its
own account.


 


19.2.       Publicity.  Subject to the approval of the Borrower, such
approval not to be unreasonably withheld, the Agent may issue a “tombstone”
notice of the establishment of the credit facility contemplated by this
Agreement and may make reference to the Borrower (and may utilize any logo or
other distinctive symbol associated with the Borrower) in connection with any
advertising, promotion, or marketing undertaken by the Agent.


 


19.3.       Severability.  Any determination that any provision of this
Agreement or any application thereof is invalid, illegal, or unenforceable in
any respect in any instance shall not affect the validity, legality, or
enforceability of such provision in any other instance, or the validity,
legality, or enforceability of any other provision of this Agreement.


 


19.4.       The Platform.  THE PLATFORM IS PROVIDED “AS IS” AND “AS
AVAILABLE.”  THE AGENT PARTIES (AS
DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF ANY BORROWER
MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR
ERRORS IN OR OMISSIONS FROM ANY BORROWER MATERIALS.  NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR
STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR
OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH ANY BORROWER
MATERIALS OR THE PLATFORM.  IN NO EVENT
SHALL THE AGENT OR ANY OF ITS RELATED PARTIES (COLLECTIVELY, THE “AGENT PARTIES”) HAVE ANY LIABILITY TO THE
BORROWER, ANY LENDER, THE ISSUER OR ANY OTHER PERSON FOR LOSSES, CLAIMS,
DAMAGES, LIABILITIES OR EXPENSES OF ANY KIND (WHETHER IN TORT, CONTRACT OR
OTHERWISE) ARISING OUT OF THE BORROWER’S OR THE AGENT’S TRANSMISSION OF
BORROWER MATERIALS THROUGH THE INTERNET, EXCEPT TO THE EXTENT THAT SUCH LOSSES,
CLAIMS, DAMAGES, LIABILITIES OR EXPENSES ARE DETERMINED BY A COURT OF COMPETENT
JURISDICTION BY A FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH AGENT PARTY; PROVIDED, THAT IN NO EVENT SHALL ANY AGENT
PARTY HAVE ANY LIABILITY TO THE BORROWER, ANY LENDER, THE ISSUER OR ANY OTHER
PERSON FOR INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES (AS
OPPOSED TO DIRECT OR ACTUAL DAMAGES).


 


19.5.       Amendments.  Course of Dealing.


 


(a)           This
Agreement and the other Loan Documents incorporate all discussions and
negotiations between the Borrower and the Agent and each Lender, either express
or implied, concerning the matters included herein and in such other
instruments, any custom, usage, or course of dealings to the contrary
notwithstanding.  No such discussions,
negotiations, custom, usage, or course of dealings shall limit, modify, or
otherwise affect the provisions thereof. 
No failure by the Agent or any Lender to give notice to the Borrower of
the Borrower’s having failed


 


107

















 


to observe and comply with any warranty or
covenant included in any Loan Document shall constitute a waiver of such
warranty or covenant or the amendment of the subject Loan Document.  No change made by the Agent to the manner by
which Borrowing Base is determined shall obligate the Agent to continue to
determine Borrowing Base in that manner.


 


(b)           The
Borrower may undertake any action otherwise prohibited hereby, and may omit to
take any action otherwise required hereby, upon and with the express prior
written consent of the Agent given in accordance with the provisions of this
Agreement. Subject to Article 15, no modification, amendment, or waiver of any
provision of any Loan Document and no consent to any departure by the Borrower
or any other Loan Party therefrom, shall be effective unless executed in
writing by or on behalf of the party to be charged with such modification,
amendment, or waiver (and if such party is the Agent then by a duly authorized
officer thereof).  Any modification,
amendment, or waiver provided by the Agent shall be in reliance upon all
representations and warranties theretofore made to the Agent by or on behalf of
the Borrower (and any guarantor, endorser, or surety of the Liabilities) and
consequently may be rescinded in the event that any of such representations or
warranties was not true and complete in all material respects when given.  Any such amendment, waiver or consent as
described in this Section 19.5(b) shall be effective only in the specific
instance and for the specific purpose for which given.


 


(c)           No
amendment, waiver or consent shall, unless in writing and signed by the Issuer
in addition to the Revolving Credit Lenders and the Term Loan Lenders required
above, affect the rights or duties of the Issuer under this Agreement or any
Issuer Document relating to any L/C issued or to be issued by it. No amendment,
waiver or consent shall, unless in writing and signed by the SwingLine Lender
in addition to the Revolving Credit Lenders and the Term Loan Lenders required
above, affect the rights or duties of the SwingLine Lender under this
Agreement.  No amendment, waiver or
consent shall, unless in writing and signed by the Agent in addition to the
Revolving Credit Lenders and Term Loan Lenders required above, affect the
rights or duties of the Agent under this Agreement or any other Loan Document.  Notwithstanding anything to the contrary
herein, no Delinquent Revolving Credit Lender shall have any right to approve
or disapprove any amendment, waiver or consent hereunder, except that the Loan
Commitment of such Revolving Credit Lender may not be increased or extended
without the consent of such Revolving Credit Lender.


 


19.6.       Power of Attorney.  In connection with all powers of attorney
included in this Agreement, the Borrower hereby grants unto the Agent (acting
through any of its officers) full power to do any and all things necessary or
appropriate in connection with the exercise of such powers as fully and
effectually as the Borrower might or could do, hereby ratifying all that said
attorney shall do or cause to be done by virtue of this Agreement.  No power of attorney set forth in this
Agreement shall be affected by any disability or incapacity suffered by the
Borrower and each shall survive the same. All powers conferred upon the Agent
by this Agreement, being coupled with an interest, shall be irrevocable until
this Agreement is terminated by a written instrument executed by a duly
authorized officer of the Agent.


 


19.7.       Application of Proceeds.  The proceeds of any collection, sale, or
disposition of the Collateral, or of any other payments received hereunder,
shall be applied towards the Liabilities in such order and manner as the Agent
determines in its sole discretion, consistent, however, with Sections 13.6 and
13.7 and any other applicable provisions of this Agreement.  The Borrower shall remain liable for any
deficiency remaining following such application.


 


108

















 


19.8.       Increased Costs.  If, as a result of any change arising after
the Restatement Effective Date in any Requirement of Law, or of the interpretation
or application thereof by any court or by any governmental or other authority
or entity charged with the administration thereof, whether or not having the
force of law, which:


 


(a)           subjects
any Lender to any taxes or changes the basis of taxation, or increases any
existing taxes, on payments of principal, interest or other amounts payable by
the Borrower to the Agent or any Lender under this Agreement (except for taxes
on the Agent or any Lender based on net income or capital);


 


(b)           imposes,
modifies or deems applicable any reserve, cash margin, special deposit or
similar requirements against assets held by, or deposits in or for the account
of or loans by or any other acquisition of funds by the relevant funding office
of any Lender;


 


(c)           imposes
on any Lender any other condition with respect to any Loan Document; or


 


(d)           imposes
on any Lender a requirement to maintain or allocate capital in relation to the
Liabilities;


 


and the result of any of the foregoing, in such Lender’s reasonable
opinion, is to increase the cost to that Lender of making or maintaining any
loan, advance or financial accommodation or to reduce the income receivable by
that Lender in respect of any loan, advance or financial accommodation by an
amount which that Lender deems to be material, then upon written notice from
the Agent, from time to time, to the Borrower (such notice to set out in
reasonable detail the facts giving rise to and a summary calculation of such
increased cost or reduced income), the Borrower shall forthwith pay to the
Agent, for the benefit of the subject Lender, upon receipt of such notice, that
amount which shall compensate the subject Lender for such additional cost or
reduction in income.


 


19.9.       Expenses; Indemnity;
Damage Waiver.


 


(a)           Costs
and Expenses.  The
Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the
Agent and its Affiliates (including the reasonable fees, charges, and
disbursements of counsel for the Agent), in connection with the syndication of
the credit facilities provided for herein, the preparation, negotiation,
execution, delivery, and administration of this Agreement and the other Loan
Documents or any amendments, modifications, waivers of the provisions hereof or
thereof (whether or not the transactions contemplated hereby or thereby shall
be consummated), (ii) all reasonable out-of-pocket expenses incurred by the
Agent in connection with the issuance, amendment, renewal or extension of any
L/C or any demand for payment thereunder, and (iii) all out-of-pocket expenses
incurred by the Agent or any Lender (including the fees, charges, and
disbursement of any counsel for the Agent or any Lender), and shall pay all
fees and time charges for attorneys who may be employees of the Agent or any
Lender, in connection with the enforcement or protection of its rights (A) in
connection with this Agreement and the other Loan Documents, including its
rights under this Section 19.9, or (B) in connection with the Loans made or
L/Cs issued hereunder, including all such out-of-pocket expenses incurred
during any workout, restructuring or negotiations in respect of such Loans or
L/Cs.


 


109

















 


(b)           Indemnification
by the Borrower.  The Borrower shall indemnify the Agent (and any
sub-agent thereof) and each Lender, and each Related Party of any of the
foregoing Persons (each such Person, an “Indemnified
Person”) against, and hold each Indemnified Person harmless from,
any and all losses, claims, damages, liabilities, and related expenses (including
the fees, charges, and disbursements of any counsel for any Indemnified
Person), and shall indemnify and hold harmless each Indemnified Person from all
fees and time charges and disbursements for attorneys who may be employees of
any Indemnified Person, incurred by any Indemnified Person or asserted against
any Indemnified Person by any third party or by the Borrower or any other Loan
Party arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any
other Loan Document or any agreement or instrument contemplated hereby or
thereby, the performance by the parties hereto of their respective obligations
hereunder or thereunder or the consummation of the transactions contemplated
hereby or thereby, or, in the case of the Agent (and any sub-agent thereof) and
its Related Parties only, the administration of this Agreement and the other
Loan Documents, (ii) any Revolving Credit Loan or L/C, all or any portion of
the Term Loan, or the use or proposed use of the proceeds therefrom (including
any refusal by the Agent to honor a demand for payment under a L/C if the
documents presented in connection with such demand do not strictly comply with
the terms of such L/C), (iii) any actual or alleged presence or release of
Hazardous Substances on or from any property owned or operated by the Borrower
or any of its Subsidiaries, or any Environmental Liability related in any way
to the Borrower or any of its Subsidiaries, or (iv) any actual or prospective
claim, litigation, investigation or proceeding relating to any of the
foregoing, whether based on contract, tort or any other theory, whether brought
by a third party or by the Borrower or any other Loan Party, and regardless of
whether any Indemnified Person is a party thereto, in all cases, whether or not
caused by or arising, in whole or in part, out of the comparative, contributory
or sole negligence of the Indemnified Person; provided
that such indemnity shall not, as to any Indemnified Person, be available to
the extent that such losses, claims, damages, liabilities or related expenses
(x) are determined by a court of competent jurisdiction by final and
nonappealable judgment to have resulted from the gross negligence or willful
misconduct of such Indemnified Person or (y) result from a claim brought by the
Borrower or any other Loan Party against an Indemnified Person for breach in
bad faith of such Indemnified Person’s obligations hereunder or under any other
Loan Document, if the Borrower or such Loan Party has obtained a final and
nonappealable judgment in its favor on such claim as determined by a court of
competent jurisdiction.


 


(c)           Waiver of Consequential Damages, Etc.  To the fullest extent permitted by applicable
law, the Borrower shall not assert, and hereby waives, any claim against any
Indemnified Person, 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
other Loan Document or any agreement or instrument contemplated hereby, the
transactions contemplated hereby or thereby, any Loan or L/C or the use of the
proceeds thereof.  No Indemnified Person
referred to in subsection (b) 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 the other Loan
Documents or the transactions contemplated hereby or thereby.


 


(d)           Payments.  All
amounts due under this Section 19.9 shall be payable not later than Ten (10)
Business Days after demand therefor.


 


110

















 


(e)           Survival.  The
agreements in this Section 19 shall survive the resignation of the Agent, the
replacement of any Revolving Credit Lender or Term Loan Lender, the termination
of the Loan Commitments and the repayment, satisfaction or discharge of all the
other Liabilities.


 


19.10.     Copies and Facsimiles.  Each Loan Document and all documents and
papers which relate thereto which have been or may be hereinafter furnished the
Agent or any Lender may be reproduced by that Lender or by the Agent by any
photographic, microfilm, xerographic, digital imaging, or other process, and
such Person making such reproduction may destroy any document so
reproduced.  Any such reproduction shall
be admissible in evidence as the original itself in any judicial or
administrative proceeding (whether or not the original is in existence and
whether or not such reproduction was made in the regular course of
business).  Any facsimile which bears
proof of transmission shall be binding on the party which or on whose behalf
such transmission was initiated and likewise shall be so admissible in evidence
as if the original of such facsimile had been delivered to the party which or
on whose behalf such transmission was received.


 


19.11.     Massachusetts Law.  This Agreement and all rights and obligations
hereunder, including matters of construction, validity, and performance, shall
be governed by the laws of The Commonwealth of Massachusetts.


 


19.12.     Consent to
Jurisdiction.


 


(a)           The
Borrower agrees that any legal action, proceeding, case, or controversy against
the Borrower with respect to any Loan Document may be brought in the Superior
Court of Suffolk County Massachusetts or in the United States District Court,
District of Massachusetts, sitting in Boston, Massachusetts, as the Agent may
elect in the Agent’s sole discretion.  By
execution and delivery of this Agreement, the Borrower, for itself and in
respect of its property, accepts, submits, and consents generally and
unconditionally, to the jurisdiction of the aforesaid courts.


 


(b)           The
Borrower WAIVES
personal service of any and all process upon it, and irrevocably consents to
the service of process out of any of the aforementioned courts in any such
action or proceeding by the mailing of copies thereof by certified mail,
postage prepaid, to the Borrower at the Borrower’s address for notices as
specified herein, such service to become effective Five (5) Business Days after
such mailing.


 


(c)           The
Borrower WAIVES
any objection based on forum non conveniens
and any objection to venue of any action or proceeding instituted under any of
the Loan Documents and consents to the granting of such legal or equitable
remedy as is deemed appropriate by the Court.


 


(d)           Nothing
herein shall affect the right of the Agent to bring legal actions or
proceedings in any other competent jurisdiction.


 


(e)           The
Borrower agrees that any action commenced by the Borrower asserting any claim
arising under or in connection with this Agreement or any other Loan Document
shall be brought solely in the Superior Court of Suffolk County Massachusetts or
in the United States District Court, District of Massachusetts, sitting in
Boston, Massachusetts, and that such Courts shall have exclusive jurisdiction
with respect to any such action.


 


111

















 


19.13.     Confidentiality.  Each of the Revolving Credit Lenders, the
Term Loan Lenders, the Issuer, and the Agent agrees, on behalf of itself and
each of its affiliates, directors, officers, employees and representatives, to
use reasonable precautions to keep confidential, in accordance with their
customary procedures for handling Information (as defined below) of the same
nature and in accordance with safe and sound banking practices, any
Information, provided that
nothing herein shall limit the disclosure of any such Information (a) after
such Information shall have become public other than through a violation of
this Section 19.13, or becomes available to any of the Lenders or the Agent on
a nonconfidential basis from a source other than the Borrower, (b) to the extent
required by statute, rule, regulation or judicial process, (c) to counsel for
any of the Lenders or the Agent, (d) to bank examiners or any other regulatory
authority having jurisdiction over any Lender or the Agent, or to auditors or
accountants, (e) to the Agent or any Lender, (f) in connection with any
litigation to which any one or more of the Lenders or the Agent is a party, or
in connection with the enforcement of rights or remedies hereunder or under any
other Loan Document, (g) to an affiliate of any Lender or the Agent, or (h) to
any actual or prospective assignee or participant or any actual or prospective
counterparty (or its advisors) to any swap or derivative transactions
referenced to credit or other risks or events arising under this Agreement or
any other Loan Document so long as such assignee, participant or counterparty,
as the case may be, agrees to be bound by the provisions of this Section 19.13.


 


For purposes of this Section, “Information” means all information received
from the Borrower or any Subsidiary relating to the Borrower or any Subsidiary
or any of their respective businesses, other than any such information that is
available to the Agent, any Lender or the Issuer on a nonconfidential basis
prior to disclosure by the Borrower or any Subsidiary, provided that, in the case of information
received from the Borrower or any Subsidiary after the date hereof, such
information is clearly identified at the time of delivery as confidential.  Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered
to have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.


 


Each of the Agent, the Lenders and the Issuer
acknowledges that (a) the Information may include material non-public
information concerning the Borrower or a Subsidiary, as the case may be, (b) it
has developed compliance procedures regarding the use of material non-public
information and (c) it will handle such material non-public information in
accordance with Applicable Law.


 


19.14.     Survival of Representations and Warranties.  All representations and warranties made
hereunder and in any other Loan Document or other document delivered pursuant
hereto or thereto or in connection herewith or therewith shall survive the
execution and delivery hereof and thereof. 
Such representations and warranties have been or will be relied upon by
the Agent and each Lender, regardless of any investigation made by the Agent or
any Lender or on their behalf and notwithstanding that the Agent or any Lender
may have had notice or knowledge of any Event of Default at the time of any
issuance, extension or renewal of any L/Cs, and shall continue in full force
and effect as long as any Loan or any other Liability hereunder shall remain
unpaid or unsatisfied or any L/C shall remain outstanding.


 


112

















 


19.15.     Rules of
Construction.  The following
rules of construction shall be applied in the interpretation, construction, and
enforcement of this Agreement and of the other Loan Documents:


 


(a)           Unless
otherwise specifically provided for herein, interest on Base Margin Loans and
all or any relevant portion of the Term Loan, and any fee or charge which is
stated as a per annum percentage shall be calculated based on a 365 day year
and actual days elapsed and interest on LIBOR Loans and all or any relevant
portion of the Term Loan shall be calculated based on a 360 day year and actual
days elapsed.


 


(b)           Words
in the singular include the plural and words in the plural include the
singular.


 


(c)           Cross
references to Sections in this Agreement begin with the Article in which that
Section appears, followed by a colon, and then the Section to which reference
is made. (For example, a reference to “Section 6.6” is to Section 6.6, which
appears in Article 6 of this Agreement).


 


(d)           Titles,
headings (indicated by being underlined or shown in Small Capitals) and any Table of
Contents are solely for convenience of reference; do not constitute a part of
the instrument in which included; and do not affect such instrument’s meaning,
construction, or effect.


 


(e)           The
words “includes” and “including” are not limiting.


 


(f)            Text
which follows the words “including, without limitation” (or similar words) is
illustrative and not limitational.


 


(g)           Text
which is shown in italics (except
for parenthesized italicized text), shown in bold,
shown IN ALL CAPITAL LETTERS, or in any combination of the foregoing, shall be
deemed to be conspicuous.


 


(h)           The
words “may not” are prohibitive and not permissive.


 


(i)            Any
reference to a Person’s “knowledge” (or words of similar import) are to such
Person’s knowledge assuming that such Person has undertaken reasonable and
diligent investigation with respect to the subject of such “knowledge” (whether
or not such investigation has actually been undertaken).


 


(j)            Terms
which are defined in one section of any Loan Document are used with such
definition throughout the instrument in which so defined.


 


(k)           The
symbol “$” refers to United States Dollars.


 


(l)            Unless
limited by reference to a particular Section or provision, any reference to “herein”,
“hereof”, or “within” is to the entire Loan Document in which such reference is
made.


 


(m)          References
to “this Agreement” or to any other Loan Document is to the subject instrument
as amended to the date on which application of such reference is being made.


 


113

















 


(n)           Except
as otherwise specifically provided, all references to time are to Boston time.


 


(o)           In
the determination of any notice, grace, or other period of time prescribed or
allowed hereunder:


 


(i)            Unless otherwise provided
(A) the day of the act, event, or default from which the designated period of
time begins to run shall not be included and the last day of the period so
computed shall be included unless such last day is not a Business Day, in which
event the last day of the relevant period shall be the then next Business Day
and (B) the period so computed shall end at 5:00 PM on the relevant Business
Day.


 


(ii)           The word “from” means “from
and including”.


 


(iii)          The words “to” and “until”
each mean “to, but excluding”.


 


(iv)          The word “through” means
“to and including”.


 


(p)           The
Loan Documents shall be construed and interpreted in a harmonious manner and in
keeping with the intentions set forth in Section 19.16 hereof, provided, however, in the event of any
inconsistency between the provisions of this Agreement and any other Loan
Document, the provisions of this Agreement shall govern and control.


 


(q)           This
Agreement and the other Loan Documents are the result of negotiation among, and
have been reviewed by counsel to, among others, the Agent and the Borrower and
are the product of discussions and negotiations among all parties.  Accordingly, this Agreement and the other
Loan Documents are not intended to be construed against the Agent or any of the
Lenders merely on account of the Agent’s or any Lender’s involvement in the
preparation of such documents


 


19.16.     Intent.  It is intended that:


 


(a)           This
Agreement take effect as a sealed instrument.


 


(b)           The
scope of all Collateral Interests created by the Borrower to secure the
Liabilities be broadly construed in favor of the Agent and that they cover all
assets of the Borrower, other than Real Estate, fixtures and Equipment.


 


(c)           All
Collateral Interests created in favor of the Agent at any time and from time to
time secure all Liabilities, whether now existing or contemplated or hereafter
arising.


 


(d)           All
reasonable costs, expenses, and disbursements incurred by the Agent, the Lead
Arranger and, to the extent provide in Section 19.9 each Lender, in connection
with such Person’s relationship(s) with the Borrower shall be borne by the
Borrower.


 


(e)           Unless
otherwise explicitly provided herein, the Agent’s consent to any action of the
Borrower which is prohibited unless such consent is given may be given or
refused by the Agent in its sole discretion and without reference to Section
2.17 hereof.


 


19.17.     Right of Set-Off.  Any and all deposits or other sums at any
time credited by or due to the Borrower from the Agent or any Lender or any
Participant or from any Affiliate of any


 


114

















 


of the foregoing, and any cash,
securities, instruments or other property of the Borrower in the possession of
any of the foregoing, whether for safekeeping or otherwise (regardless of the
reason such Person had received the same) shall at all times constitute
security for all Liabilities and for any and all obligations of the Borrower to
the Agent and such Lender or any Participant or such Affiliate and may be
applied or set off against the Liabilities and against such obligations at any
time, whether or not such are then due and whether or not other collateral is
then available to the Agent or that Lender.


 


19.18.     Maximum Interest Rate.  Regardless of any provision of any Loan
Document, neither the Agent nor any Lender shall be entitled to contract for,
charge, receive, collect, or apply as interest on any Liability, any amount in
excess of the maximum rate imposed by Applicable Law.  Any payment which is made which, if treated
as interest on a Liability would result in such interest’s exceeding such
maximum rate shall be held, to the extent of such excess, as additional
collateral for the Liabilities as if such excess were “Collateral.”


 


19.19.     Waivers.


 


(a)           The
Borrower (and all guarantors, endorsers, and sureties of the Liabilities) make
each of the waivers included in Section 19.19(b), below, knowingly,
voluntarily, and intentionally, and understands that Agent and each Lender, in
establishing the facilities contemplated hereby and in providing loans and
other financial accommodations to or for the account of the Borrower as
provided herein, whether not or in the future, is relying on such waivers.


 


(b)           THE
BORROWER, AND EACH SUCH GUARANTOR, ENDORSER, AND SURETY RESPECTIVELY WAIVES THE FOLLOWING:


 


(i)            Except as otherwise
specifically required hereby, notice of non-payment, demand, presentment,
protest and all forms of demand and notice, both with respect to the
Liabilities and the Collateral.


 


(ii)           Except as otherwise
specifically required hereby, the right to notice and/or hearing prior to the
Agent’s exercising of the Agent’s rights upon default.


 


(iii)          THE RIGHT
TO A JURY IN ANY TRIAL OF ANY CASE OR CONTROVERSY IN WHICH THE AGENT OR ANY
LENDER IS OR BECOMES A PARTY (WHETHER SUCH CASE OR CONTROVERSY IS INITIATED BY
OR AGAINST THE AGENT OR ANY LENDER OR IN WHICH THE AGENT OR ANY LENDER IS
JOINED AS A PARTY LITIGANT), WHICH CASE OR CONTROVERSY ARISES OUT OF OR IS IN
RESPECT OF, ANY RELATIONSHIP AMONGST OR BETWEEN THE BORROWER OR ANY OTHER
PERSON AND THE AGENT AND EACH LENDER LIKEWISE WAIVES THE RIGHT TO A JURY IN ANY
TRIAL OF ANY SUCH CASE OR CONTROVERSY).


 


(iv)          The benefits or
availability of any stay, limitation, hindrance, delay, or restriction
(including, without limitation, any automatic stay which otherwise might be
imposed pursuant to Section 362 of the Bankruptcy Code) with respect to any
action which the Agent may or may become entitled to take hereunder.


 


(v)           Any defense,
counterclaim, set-off, recoupment, or other basis on which the amount of any Liability,
as stated on the books and records of the Agent, could be


 


115

















 


reduced or claimed to be paid otherwise than in accordance with the
tenor of and written terms of such Liability.


 


(vi)          Any claim to
consequential, special, or punitive damages.


 


19.20.     US Patriot Act
Notice.


 


Each Lender that is subject to the
Act (as hereinafter defined) and the Agent (for itself and not on behalf of any
Lender) hereby notifies the Borrower that pursuant to the requirements of the
USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)) (the “Act”), it is required
to obtain, verify and record information that identifies the Borrower, which
information includes the name and address of the Borrower and other information
that will allow such Lender or the Agent, as applicable, to identify the
Borrower in accordance with the Act.


 


19.21.     Transitional
Arrangements.


 


(a)          Existing Loan Agreement
Superseded.  On the Restatement Effective
Date, this Agreement shall supersede the Existing Loan Agreement in its
entirety, except as provided in this Section 19.21.  On the Restatement Effective Date, the rights
and obligations of the parties evidenced by the Existing Loan Agreement shall
be evidenced by this Agreement and the other Loan Documents, the “Revolving
Credit Loans” as defined in the Existing Loan Agreement shall be continued as
Loans as defined herein and the Existing Letters of Credit issued by the Agent
for the account of the Borrower prior to the Restatement Effective Date shall
be treated as L/Cs under this Agreement. 
The parties hereto agree that the changes to the terms and conditions of
the Existing Loan Agreement set out herein and the execution of these presents
shall not constitute novation and all the security interests, pledges and other
collateral of whatever nature securing any of the Revolving Credit Obligations
shall continue to apply to the Existing Loan Agreement, as amended and restated
by these presents, and to the other Loan Documents.  Without limiting the generality of the
foregoing and to the extent necessary, the Revolving Credit Lenders and the Agent
reserve all of their rights under each of the Loan Documents.


(b)          Interest and Fees under
Superseded Existing Loan Agreement.  All
interest and fees and expenses, if any, owing or accruing under or in respect
of the Existing Loan Agreement through the Restatement Effective Date shall be
calculated as of the Restatement Effective Date (pro rated in the case of any
fractional periods).  Commencing on the
Restatement Effective Date, the fees hereunder shall be payable by the Borrower
to the Agent in accordance with Article 2.


 


 


[Signature Pages Follow]


 


116

















 


IN WITNESS WHEREOF,
the parties hereto have caused this Second Amended and Restated Loan and
Security Agreement to be executed by their respective officers thereunto duly
authorized as of the day and year first above written.


 


 


	
   

  	
  GANDER MOUNTAIN COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Dennis M. Lindahl

  
	
   

  	
   

  	
  Name:  Dennis M. Lindahl

  
	
   

  	
   

  	
  Title:  Treasurer

  



 


 


Signature Page to Loan and Security Agreement


 

















 


	
   

  	
  BANK OF AMERICA, N.A., as Agent and as a

  Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Sally A. Sheehan

  
	
   

  	
   

  	
  Name:  Sally A. Sheehan

  
	
   

  	
   

  	
  Title:  Managing Director

  



 


 


Signature Page to Loan and Security Agreement


 

















 


	
   

  	
  WELLS FARGO FOOTHILL, INC., (f/k/a Foothill

  Capital Corporation), as Syndication Agent and as

  a Revolving Credit Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Donna Arenson

  
	
   

  	
   

  	
  Name:  Donna Arenson

  
	
   

  	
   

  	
  Title:  Assistant Vice President

  



 


 


Signature Page to Loan and Security Agreement


 

















 


	
   

  	
  THE CIT GROUP/BUSINESS CREDIT, INC.,

  as a Revolving Credit Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Adrian Avalos

  
	
   

  	
   

  	
  Name:  Adrian Avalos

  
	
   

  	
   

  	
  Title:  Vice President

  



 


 


Signature Page to Loan and Security Agreement


 

















 


	
   

  	
  WEBSTER BUSINESS CREDIT CORPORATION
(f/k/a Whitehall Business Credit Corporation), as a

  Revolving Credit Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Christopher O’Connor

  
	
   

  	
  Name:  Christopher O’Connor

  
	
   

  	
  Title:  EVP

  



 


 


Signature Page to Loan and Security Agreement


 

















 


	
   

  	
  GENERAL ELECTRIC CAPITAL CORPORATION,

  as a Revolving Credit Lender

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert M. Kadlick

  
	
   

  	
   

  	
  Name:  Robert M. Kadlick

  
	
   

  	
   

  	
  Title:  Duly Authorized Signatory

  



 


 


Signature Page to Loan and Security Agreement


 

















 


	
   

  	
  UBS AG, STAMFORD BRANCH, as a Revolving

  Credit Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jocelin Fernandes

  
	
   

  	
   

  	
  Name:  Jocelin Fernandes

  
	
   

  	
   

  	
  Title:  Associate Director Banking Products
  Services, US

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Bailoz Slides

  
	
   

  	
   

  	
  Name:  Bailoz Slides

  
	
   

  	
   

  	
  Title:  Associate Director Banking Products
  Services, US

  



 


 


Signature Page to Loan and Security Agreement


 

















 


	
   

  	
  LASALLE RETAIL FINANCE,
  a division of LaSalle

  Business Credit, LLC, as agent for LaSalle Bank

  Midwest N.A., as a Revolving Credit Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Craig G. Nutbrown

  
	
   

  	
   

  	
  Name: Craig
  G. Nutbrown

  
	
   

  	
   

  	
  Title: Vice
  President

  
	
   

  	
   

  	
   

  



 


 


Signature Page to Loan and Security Agreement


 

















 


Schedule
2.22


 


REVOLVING CREDIT  LENDERS; TERM  LOAN
LENDERS;  COMMITMENT  PERCENTAGES;  ADDRESSES


 


	
  LENDER

  	
   

  	
  Maximum

  Revolving Credit

  Dollar

  Commitment

  	
   

  	
  Revolving

  Credit

  Percentage

  Commitment

  	
   

  	
  Term Loan

  Commitment

  	
   

  	
  Term Loan

  Percentage

  	
   

  
	
  BANK
  OF AMERICA, N.A.



  40 Broad Street

  Boston, MA
  02109

  Attention: Sally
  A. Sheehan

  

  Fax: (617)
  434-4339

  	
   

  	
  $

  	
  69,500,000

  	
   

  	
  25.27

  	
  %

  	
  $

  	
  20,000,000

  	
   

  	
  100

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  WELLS
  FARGO FOOTHILL, INC.

   

  2450 Colorado Avenue,
  Suite 3000 West

  Santa Monica,
  CA 90404

  Attention:
  Donna Arenson

  

  Fax: (310)
  453-7446

  	
   

  	
  $

  	
  30,000,000

  	
   

  	
  10.91

  	
  %

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  THE
  CIT GROUP/ BUSINESS CREDIT, INC.

   

  300 South Grand Ave.,
  10th Floor

  Los Angeles,
  CA 90071-3109

  Attention:
  Adrian Avalos

  

  Fax: (213)
  613-2599

  	
   

  	
  $

  	
  45,000,000

  	
   

  	
  16.36

  	
  %

  	
   

  	
   

  	
   

  	
   

  
												



 

















 


	
  GENERAL ELECTRIC CAPITAL CORPORATION



  201 Merritt 7

  PO Box 5201

  Norwalk, CT 06856

  

  Attention: Paul Vitti

  

  Fax: (203) 956-4006

  	
   

  	
  $

  	
  64,500,000

  	
   

  	
  23.46

  	
  %

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  WEBSTER
  BUSINESS CREDIT CORPORATION

   

  73 Belmont Street, 2nd Floor

  South Easton, MA 02375

  Attention: Chris O’Connor

  

  Fax: (508) 513-1339

  	
   

  	
  $

  	
  15,000,000

  	
   

  	
  5.46

  	
  %

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  UBS AG, STAMFORD BRANCH

   

  677 Washington Blvd.

  Stamford, CT 06901

  Attention: Thomas Watson

  

  Fax: (203) 719-5259

  	
   

  	
  $

  	
  31,000,000

  	
   

  	
  11.27

  	
  %

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LASALLE RETAIL FINANCE, a division of
  LaSalle Business Credit, LLC, as agent for LaSalle Bank Midwest N.A.

   

  25 Braintree Hill Office Park, Suite 205

  Braintree, MA 02184

  Attention: Andy Cerussi

  

  Fax: (781) 353-6101

  	
   

  	
  $

  	
  20,000,000

  	
   

  	
  7.27

  	
  %

  	
   

  	
   

  	
   

  



 


2

















 


Schedule 6.11


Minimum Operating Cash Flow and Minimum EBITDA


 


	
  Reference Period Ending

  With the Month End:

  	
   

  	
  Operating Cash Flow

  Amount

  	
   

  	
  EBITDA

  	
   

  
	
  January, 2005

  	
   

  	
   

  	
   

  	
  $

  	
  16,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  February, 2005

  	
   

  	
   

  	
   

  	
  $

  	
  11,500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  March, 2005

  	
   

  	
   

  	
   

  	
  $

  	
  11,500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  April, 2005

  	
   

  	
   

  	
   

  	
  $

  	
  10,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  May, 2005

  	
   

  	
   

  	
   

  	
  $

  	
  10,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  June, 2005

  	
   

  	
   

  	
   

  	
  $

  	
  11,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  July, 2005

  	
   

  	
   

  	
   

  	
  $

  	
  11,500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  August, 2005

  	
   

  	
   

  	
   

  	
  $

  	
  13,500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  September, 2005

  	
   

  	
   

  	
   

  	
  $

  	
  16,500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  October, 2005

  	
   

  	
   

  	
   

  	
  $

  	
  6,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  November, 2005

  	
   

  	
   

  	
   

  	
  $

  	
  8,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  December, 2005

  	
   

  	
   

  	
   

  	
  $

  	
  15,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  January, 2006

  	
   

  	
  $

  	
  -20,444,000

  	
   

  	
  $

  	
  15,500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  February, 2006

  	
   

  	
   

  	
   

  	
  $

  	
  14,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  March, 2006

  	
   

  	
   

  	
   

  	
  $

  	
  14,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  April, 2006

  	
   

  	
  $

  	
  -7,184,000

  	
   

  	
  $

  	
  16,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  May, 2006

  	
   

  	
   

  	
   

  	
  $

  	
  18,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  June, 2006

  	
   

  	
   

  	
   

  	
  $

  	
  21,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  July, 2006

  	
   

  	
  $

  	
  8,995,000

  	
   

  	
  $

  	
  22,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  August, 2006

  	
   

  	
   

  	
   

  	
  $

  	
  25,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  September, 2006

  	
   

  	
   

  	
   

  	
  $

  	
  28,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  October, 2006

  	
   

  	
  $

  	
  5,555,000

  	
   

  	
  $

  	
  30,000,000

  	
   

  



 

















 


	
  Reference Period Ending

  With the Month End:

  	
   

  	
  Operating Cash Flow

  Amount

  	
   

  	
  EBITDA

  	
   

  
	
  November, 2006

  	
   

  	
   

  	
   

  	
  $

  	
  30,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  December, 2006

  	
   

  	
   

  	
   

  	
  $

  	
  30,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  January, 2007

  	
   

  	
  $

  	
  11,718,000

  	
   

  	
  $

  	
  30,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  February, 2007

  	
   

  	
   

  	
   

  	
  $

  	
  30,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  March, 2007

  	
   

  	
   

  	
   

  	
  $

  	
  30,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  April, 2007

  	
   

  	
  $

  	
  4,404,000

  	
   

  	
  $

  	
  30,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  May, 2007

  	
   

  	
   

  	
   

  	
  $

  	
  25,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  June, 2007

  	
   

  	
   

  	
   

  	
  $

  	
  25,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  July, 2007

  	
   

  	
  $

  	
  4,891,000

  	
   

  	
  $

  	
  25,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  August, 2007

  	
   

  	
   

  	
   

  	
  $

  	
  25,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  September, 2007

  	
   

  	
   

  	
   

  	
  $

  	
  25,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  October, 2007

  	
   

  	
  $

  	
  4,146,000

  	
   

  	
  $

  	
  25,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  November, 2007

  	
   

  	
   

  	
   

  	
  $

  	
  30,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  December, 2007

  	
   

  	
   

  	
   

  	
  $

  	
  30,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  January, 2008

  	
   

  	
  $

  	
  10,632,000

  	
   

  	
  $

  	
  30,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  February, 2008

  	
   

  	
   

  	
   

  	
  $

  	
  30,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  March, 2008

  	
   

  	
   

  	
   

  	
  $

  	
  30,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  April, 2008

  	
   

  	
   

  	
   

  	
  $

  	
  30,000,000

  	
   

  



 


2

















 


	
  Reference Period Ending

  With the Month End:

  	
   

  	
  Operating Cash Flow

  Amount

  	
   

  	
  EBITDA

  	
   

  
	
  May, 2008

  	
   

  	
   

  	
   

  	
  $

  	
  25,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  June, 2008

  	
   

  	
   

  	
   

  	
  $

  	
  25,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  July, 2008

  	
   

  	
   

  	
   

  	
  $

  	
  25,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  August, 2008

  	
   

  	
   

  	
   

  	
  $

  	
  25,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  September, 2008

  	
   

  	
   

  	
   

  	
  $

  	
  25,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  October, 2008

  	
   

  	
   

  	
   

  	
  $

  	
  25,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  November, 2008

  	
   

  	
   

  	
   

  	
  $

  	
  30,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  December, 2008

  	
   

  	
   

  	
   

  	
  $

  	
  30,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  January, 2009

  	
   

  	
  $

  	
  15,000,000

  	
   

  	
  $

  	
  30,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  February, 2009

  	
   

  	
   

  	
   

  	
  $

  	
  30,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  March, 2009

  	
   

  	
   

  	
   

  	
  $

  	
  30,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  April, 2009

  	
   

  	
   

  	
   

  	
  $

  	
  30,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  May, 2009

  	
   

  	
   

  	
   

  	
  $

  	
  25,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  June, 2009

  	
   

  	
   

  	
   

  	
  $

  	
  25,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  July, 2009

  	
   

  	
   

  	
   

  	
  $

  	
  25,000,000

  	
   

  
								



 


3

















 


Schedule 16.1


 


Processing and  Recordation
Fees


 


The Agent will charge a processing and recordation fee (an “Assignment Fee”) in the amount of $2,500
for each assignment; provided, however, that in the event of two or more
concurrent assignments to members of the same Assignee Group (which may be
effected by a suballocation of an assigned amount among members of such
Assignee Group) or two or more concurrent assignments by members of the same
Assignee Group to a single Eligible Assignee (or to an Eligible Assignee and
members of its Assignee Group), the Assignment Fee will be $2,500 plus the
amount set forth below:


 


	
  Transaction

  	
   

  	
  Assignment Fee

  
	
   

  	
   

  	
   

  
	
  First four
  concurrent assignments or suballocations to members of an Assignee Group (or
  from members of an Assignee Group, as applicable)

  	
   

  	
  -0-

  
	
   

  	
   

  	
   

  
	
  Each
  additional concurrent assignment or suballocation to a member of such
  Assignee Group (or from a member of such Assignee Group, as applicable)

  	
   

  	
  $ 500