Exhibit 10.3




 





 


EXECUTION COPY


 


CREDIT AGREEMENT


Dated as of February 13, 2009


among


COLDWATER CREEK U.S. INC.,

as the Lead Borrower


and


THE OTHER BORROWERS PARTY HERETO


and


THE GUARANTORS PARTY HERETO


and


WELLS FARGO RETAIL FINANCE, LLC,

as Administrative Agent, Collateral Agent and Swing Line Lender


and


THE OTHER LENDERS PARTY HERETO




 





 

















 


TABLE OF CONTENTS


 


	
  Section

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE I DEFINITIONS AND ACCOUNTING TERMS

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.01

  	
   

  	
  Defined Terms

  	
   

  	
  1

  
	
  1.02

  	
   

  	
  Other Interpretive Provisions

  	
   

  	
  41

  
	
  1.03

  	
   

  	
  Accounting Terms

  	
   

  	
  42

  
	
  1.04

  	
   

  	
  Rounding

  	
   

  	
  42

  
	
  1.05

  	
   

  	
  Times of Day

  	
   

  	
  42

  
	
  1.06

  	
   

  	
  Letter of Credit Amounts

  	
   

  	
  42

  
	
  1.07

  	
   

  	
  Currency Equivalents Generally

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II THE COMMITMENTS AND CREDIT EXTENSIONS

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.01

  	
   

  	
  Committed Loans; Reserves

  	
   

  	
  43

  
	
  2.02

  	
   

  	
  Borrowings, Conversions and Continuations of
  Committed Loans

  	
   

  	
  44

  
	
  2.03

  	
   

  	
  Letters of Credit

  	
   

  	
  45

  
	
  2.04

  	
   

  	
  Swing Line Loans

  	
   

  	
  53

  
	
  2.05

  	
   

  	
  Prepayments

  	
   

  	
  56

  
	
  2.06

  	
   

  	
  Termination or Reduction of Commitments

  	
   

  	
  57

  
	
  2.07

  	
   

  	
  Repayment of Loans

  	
   

  	
  57

  
	
  2.08

  	
   

  	
  Interest

  	
   

  	
  58

  
	
  2.09

  	
   

  	
  Fees

  	
   

  	
  58

  
	
  2.10

  	
   

  	
  Computation of Interest and Fees

  	
   

  	
  59

  
	
  2.11

  	
   

  	
  Evidence of Debt

  	
   

  	
  59

  
	
  2.12

  	
   

  	
  Payments Generally; Administrative Agent’s Clawback

  	
   

  	
  59

  
	
  2.13

  	
   

  	
  Sharing of Payments by Lenders

  	
   

  	
  61

  
	
  2.14

  	
   

  	
  Settlement Amongst Lenders

  	
   

  	
  61

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY;
  APPOINTMENT OF LEAD BORROWER

  	
   

  	
  62

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.01

  	
   

  	
  Taxes

  	
   

  	
  62

  
	
  3.02

  	
   

  	
  Illegality

  	
   

  	
  63

  
	
  3.03

  	
   

  	
  Inability to Determine Rates

  	
   

  	
  64

  
	
  3.04

  	
   

  	
  Increased Costs; Reserves on LIBO Rate Loans

  	
   

  	
  64

  
	
  3.05

  	
   

  	
  Compensation for Losses

  	
   

  	
  65

  
	
  3.06

  	
   

  	
  Mitigation Obligations; Replacement of Lenders

  	
   

  	
  66

  
	
  3.07

  	
   

  	
  Survival

  	
   

  	
  66

  
	
  3.08

  	
   

  	
  Designation of Lead Borrower as Borrowers’ Agent

  	
   

  	
  66

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

  	
   

  	
  67

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.01

  	
   

  	
  Conditions of Initial Credit Extension

  	
   

  	
  67

  
	
  4.02

  	
   

  	
  Conditions to all Credit Extensions

  	
   

  	
  70

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V REPRESENTATIONS AND WARRANTIES

  	
   

  	
  71

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.01

  	
   

  	
  Existence, Qualification and Power

  	
   

  	
  71

  
	
  5.02

  	
   

  	
  Authorization; No Contravention

  	
   

  	
  72

  
	
  5.03

  	
   

  	
  Governmental Authorization; Other Consents

  	
   

  	
  72

  
	
  5.04

  	
   

  	
  Binding Effect

  	
   

  	
  72

  
	
  5.05

  	
   

  	
  Financial Statements; No Material Adverse Effect

  	
   

  	
  72

  
	
  5.06

  	
   

  	
  Litigation

  	
   

  	
  73

  
	
  5.07

  	
   

  	
  No Default

  	
   

  	
  73

  



 


i

















 


	
  5.08

  	
   

  	
  Ownership of Property; Liens

  	
   

  	
  73

  
	
  5.09

  	
   

  	
  Environmental Compliance

  	
   

  	
  74

  
	
  5.10

  	
   

  	
  Insurance

  	
   

  	
  74

  
	
  5.11

  	
   

  	
  Taxes

  	
   

  	
  74

  
	
  5.12

  	
   

  	
  ERISA Compliance

  	
   

  	
  75

  
	
  5.13

  	
   

  	
  Subsidiaries; Equity Interests

  	
   

  	
  75

  
	
  5.14

  	
   

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

  	
   

  	
  76

  
	
  5.15

  	
   

  	
  Disclosure

  	
   

  	
  76

  
	
  5.16

  	
   

  	
  Compliance with Laws

  	
   

  	
  76

  
	
  5.17

  	
   

  	
  Intellectual Property; Licenses, Etc.

  	
   

  	
  76

  
	
  5.18

  	
   

  	
  Labor Matters

  	
   

  	
  77

  
	
  5.19

  	
   

  	
  Security Documents

  	
   

  	
  78

  
	
  5.20

  	
   

  	
  Solvency

  	
   

  	
  79

  
	
  5.21

  	
   

  	
  Deposit Accounts; Credit Card Arrangements

  	
   

  	
  79

  
	
  5.22

  	
   

  	
  Brokers

  	
   

  	
  79

  
	
  5.23

  	
   

  	
  Customer and Trade Relations

  	
   

  	
  79

  
	
  5.24

  	
   

  	
  Material Contracts

  	
   

  	
  79

  
	
  5.25

  	
   

  	
  Casualty

  	
   

  	
  79

  
	
  5.26

  	
   

  	
  Anti-Terrorism Laws

  	
   

  	
  79

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI AFFIRMATIVE COVENANTS

  	
   

  	
  80

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.01

  	
   

  	
  Financial Statements

  	
   

  	
  80

  
	
  6.02

  	
   

  	
  Certificates; Other Information

  	
   

  	
  81

  
	
  6.03

  	
   

  	
  Notices

  	
   

  	
  83

  
	
  6.04

  	
   

  	
  Payment of Obligations

  	
   

  	
  84

  
	
  6.05

  	
   

  	
  Preservation of Existence, Etc.

  	
   

  	
  84

  
	
  6.06

  	
   

  	
  Maintenance of Properties

  	
   

  	
  85

  
	
  6.07

  	
   

  	
  Maintenance of Insurance

  	
   

  	
  85

  
	
  6.08

  	
   

  	
  Compliance with Laws

  	
   

  	
  86

  
	
  6.09

  	
   

  	
  Books and Records; Accountants

  	
   

  	
  86

  
	
  6.10

  	
   

  	
  Inspection Rights

  	
   

  	
  87

  
	
  6.11

  	
   

  	
  Use of Proceeds

  	
   

  	
  87

  
	
  6.12

  	
   

  	
  Additional Loan Parties

  	
   

  	
  87

  
	
  6.13

  	
   

  	
  Cash Management

  	
   

  	
  88

  
	
  6.14

  	
   

  	
  Information Regarding the Collateral

  	
   

  	
  89

  
	
  6.15

  	
   

  	
  Physical Inventories

  	
   

  	
  89

  
	
  6.16

  	
   

  	
  Environmental Laws

  	
   

  	
  90

  
	
  6.17

  	
   

  	
  Further Assurances

  	
   

  	
  90

  
	
  6.18

  	
   

  	
  Compliance with Terms of Leaseholds

  	
   

  	
  91

  
	
  6.19

  	
   

  	
  Material Contracts

  	
   

  	
  91

  
	
  6.20

  	
   

  	
  ERISA

  	
   

  	
  91

  
	
  6.21

  	
   

  	
  Insurance and Condemnation Proceeds

  	
   

  	
  92

  
	
  6.22

  	
   

  	
  Post-Closing Covenants

  	
   

  	
  92

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII NEGATIVE COVENANTS

  	
   

  	
  92

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.01

  	
   

  	
  Liens

  	
   

  	
  92

  
	
  7.02

  	
   

  	
  Investments

  	
   

  	
  93

  
	
  7.03

  	
   

  	
  Indebtedness; Disqualified Stock

  	
   

  	
  93

  
	
  7.04

  	
   

  	
  Fundamental Changes

  	
   

  	
  93

  
	
  7.05

  	
   

  	
  Dispositions

  	
   

  	
  93

  



 


ii

















 


	
  7.06

  	
   

  	
  Restricted Payments

  	
   

  	
  94

  
	
  7.07

  	
   

  	
  Prepayments of Indebtedness

  	
   

  	
  94

  
	
  7.08

  	
   

  	
  Change in Nature of Business

  	
   

  	
  95

  
	
  7.09

  	
   

  	
  Transactions with Affiliates

  	
   

  	
  95

  
	
  7.10

  	
   

  	
  Burdensome Agreements

  	
   

  	
  95

  
	
  7.11

  	
   

  	
  Use of Proceeds

  	
   

  	
  95

  
	
  7.12

  	
   

  	
  Amendment of Material Documents

  	
   

  	
  95

  
	
  7.13

  	
   

  	
  Fiscal Year

  	
   

  	
  95

  
	
  7.14

  	
   

  	
  Deposit Accounts; Blocked Accounts; Credit Card
  Processors

  	
   

  	
  95

  
	
  7.15

  	
   

  	
  Consignments

  	
   

  	
  96

  
	
  7.16

  	
   

  	
  Inventory Book Value

  	
   

  	
  96

  
	
  7.17

  	
   

  	
  Minimum Availability

  	
   

  	
  96

  
	
  7.18

  	
   

  	
  Capital Expenditures

  	
   

  	
  96

  
	
  7.19

  	
   

  	
  Loan Restriction

  	
   

  	
  96

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES

  	
   

  	
  96

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.01

  	
   

  	
  Events of Default

  	
   

  	
  96

  
	
  8.02

  	
   

  	
  Remedies Upon Event of Default

  	
   

  	
  99

  
	
  8.03

  	
   

  	
  Application of Funds

  	
   

  	
  100

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX ADMINISTRATIVE AGENT

  	
   

  	
  101

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.01

  	
   

  	
  Appointment and Authority

  	
   

  	
  101

  
	
  9.02

  	
   

  	
  Rights as a Lender

  	
   

  	
  101

  
	
  9.03

  	
   

  	
  Exculpatory Provisions

  	
   

  	
  102

  
	
  9.04

  	
   

  	
  Reliance by Agents

  	
   

  	
  103

  
	
  9.05

  	
   

  	
  Delegation of Duties

  	
   

  	
  103

  
	
  9.06

  	
   

  	
  Resignation of Agents

  	
   

  	
  103

  
	
  9.07

  	
   

  	
  Non-Reliance on Administrative Agent and Other
  Lenders

  	
   

  	
  104

  
	
  9.08

  	
   

  	
  Administrative Agent May File Proofs of Claim

  	
   

  	
  104

  
	
  9.09

  	
   

  	
  Collateral and Guaranty Matters

  	
   

  	
  105

  
	
  9.10

  	
   

  	
  Notice of Transfer

  	
   

  	
  105

  
	
  9.11

  	
   

  	
  Reports and Financial Statements

  	
   

  	
  105

  
	
  9.12

  	
   

  	
  Agency for Perfection

  	
   

  	
  106

  
	
  9.13

  	
   

  	
  Indemnification of Agents

  	
   

  	
  106

  
	
  9.14

  	
   

  	
  Relation among Lenders

  	
   

  	
  106

  
	
  9.15

  	
   

  	
  Defaulting Lender

  	
   

  	
  106

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X MISCELLANEOUS

  	
   

  	
  107

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.01

  	
   

  	
  Amendments, Etc.

  	
   

  	
  107

  
	
  10.02

  	
   

  	
  Notices, Financial Statements and Other Documents;
  Effectiveness; Electronic Communications

  	
   

  	
  109

  
	
  10.03

  	
   

  	
  No Waiver; Cumulative Remedies

  	
   

  	
  110

  
	
  10.04

  	
   

  	
  Expenses; Indemnity; Damage Waiver

  	
   

  	
  110

  
	
  10.05

  	
   

  	
  Payments Set Aside

  	
   

  	
  111

  
	
  10.06

  	
   

  	
  Successors and Assigns

  	
   

  	
  112

  
	
  10.07

  	
   

  	
  Treatment of Certain Information; Confidentiality

  	
   

  	
  115

  
	
  10.08

  	
   

  	
  Right of Setoff

  	
   

  	
  116

  
	
  10.09

  	
   

  	
  Interest Rate Limitation

  	
   

  	
  116

  
	
  10.10

  	
   

  	
  Counterparts; Integration; Effectiveness

  	
   

  	
  116

  
	
  10.11

  	
   

  	
  Survival

  	
   

  	
  117

  
	
  10.12

  	
   

  	
  Severability

  	
   

  	
  117

  



 


iii

















 


	
  10.13

  	
   

  	
  Replacement of Lenders

  	
   

  	
  117

  
	
  10.14

  	
   

  	
  Governing Law; Jurisdiction; Etc.

  	
   

  	
  118

  
	
  10.15

  	
   

  	
  Waiver of Jury Trial

  	
   

  	
  119

  
	
  10.16

  	
   

  	
  No Advisory or Fiduciary Responsibility

  	
   

  	
  119

  
	
  10.17

  	
   

  	
  USA PATRIOT Act Notice

  	
   

  	
  120

  
	
  10.18

  	
   

  	
  Foreign Asset Control Regulations

  	
   

  	
  120

  
	
  10.19

  	
   

  	
  Time of the Essence

  	
   

  	
  120

  
	
  10.20

  	
   

  	
  Press Releases

  	
   

  	
  120

  
	
  10.21

  	
   

  	
  Additional Waivers

  	
   

  	
  120

  
	
  10.22

  	
   

  	
  No Strict Construction

  	
   

  	
  122

  
	
  10.23

  	
   

  	
  Attachments

  	
   

  	
  122

  



 


	
  SIGNATURES

  	
   

  	
  S-123

  



 


iv

















 


	
  SCHEDULES

  	
   

  
	
  1.01

  	
  Borrowers

  
	
  1.02

  	
  Guarantors

  
	
  2.01

  	
  Commitments and Applicable Percentages

  
	
  2.03

  	
  Existing Letters of Credit

  
	
  5.01

  	
  Loan Parties Organizational Information

  
	
  5.05

  	
  Material Indebtedness

  
	
  5.06

  	
  Litigation

  
	
  5.08(b)(1)

  	
  Owned Real Estate

  
	
  5.08(b)(2)

  	
  Leased Real Estate

  
	
  5.09

  	
  Environmental Matters

  
	
  5.10

  	
  Insurance

  
	
  5.13

  	
  Subsidiaries; Other Equity Investments; Equity Interests in the
  Borrower

  
	
  5.17

  	
  Intellectual Property Matters

  
	
  5.18

  	
  Labor Matters

  
	
  5.21(a)

  	
  DDAs

  
	
  5.21(b)

  	
  Credit Card Arrangements

  
	
  5.24

  	
  Material Contracts

  
	
  6.02

  	
  Financial and Collateral Reporting

  
	
  7.01

  	
  Existing Liens

  
	
  7.02

  	
  Existing Investments

  
	
  7.03

  	
  Existing Indebtedness

  
	
  10.02

  	
  Administrative Agent’s Office; Certain
  Addresses for Notices

  



 


EXHIBITS


 


	
   

  	
   

  	
  Form of

  
	
  A

  	
   

  	
  Committed Loan Notice

  
	
  B

  	
   

  	
  Swing Line Loan Notice

  
	
  C-1

  	
   

  	
  Committed Loan Note

  
	
  C-2

  	
   

  	
  Swing Line Loan Note

  
	
  D

  	
   

  	
  Compliance Certificate

  
	
  E

  	
   

  	
  Borrowing Base Certificate

  
	
  F

  	
   

  	
  Assignment and Assumption

  
	
  G

  	
   

  	
  Credit Card Notification

  
	
  H

  	
   

  	
  DDA Notification

  
	
  I

  	
   

  	
  Joinder Agreement

  



 


v

















 


CREDIT AGREEMENT


 


This CREDIT AGREEMENT (“Agreement”) is
entered into as of February 13, 2009, among


 


(i)            COLDWATER CREEK U.S. INC., a Delaware
corporation (the “Lead Borrower”), as agent for the Borrowers now or
hereafter party hereto,


 


(ii)           the BORROWERS now or hereafter party hereto,


 


(iii)          the GUARANTORS now or hereafter party hereto,


 


(iv)          each lender from time to time party hereto
(each individually, a “Lender” and collectively, the “Lenders”),
and


 


(v)           WELLS FARGO RETAIL FINANCE, LLC, as
Administrative Agent, Collateral Agent and Swing Line Lender.


 


The Borrowers have requested that the Lenders
provide a revolving credit facility, and the Lenders have indicated their
willingness to lend, in each case on the terms and conditions set forth herein.


 


In consideration of the mutual covenants and
agreements herein contained, the parties hereto covenant and agree as follows:


 


ARTICLE I


DEFINITIONS AND
ACCOUNTING TERMS


 


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


 


“ACH” means automated clearing house
transfers.


 


“Accommodation Payment” as defined in Section 10.21(d).


 


“Account” means “accounts” as defined
in the UCC, and also means a right to payment of a monetary obligation, whether
or not earned by performance, (a) for property that has been or is to be
sold, leased, licensed, assigned, or otherwise disposed of, (b) for
services rendered or to be rendered, (c) for a policy of insurance issued
or to be issued, (d) for a secondary obligation incurred or to be
incurred, (e) for energy provided or to be provided, (f) for the use
or hire of a vessel under a charter or other contract, (g) arising out of
the use of a credit or charge card or information contained on or for use with
the card, or (h) as winnings in a lottery or other game of chance operated
or sponsored by a state, governmental unit of a state, or person licensed or
authorized to operate the game by a state or governmental unit of a state.  The term “Account” includes
health-care-insurance receivables.


 


“Acquisition” means, with respect to
any Person (a) an Investment in, or a purchase of a Controlling interest
in, the Equity Interests of any other Person, (b) a purchase or other
acquisition of all or substantially all of the assets or properties of, another
Person or of any business unit of another Person, (c) any merger or
consolidation of such Person with any other Person or other transaction or
series of transactions resulting in the acquisition of all or substantially all
of the assets, or a Controlling interest in the Equity Interests, of any
Person, or (d) any acquisition of any Store locations of any other Person,
in each case in any transaction or group of transactions which are part of a
common plan.


 


“Act” shall have the meaning provided
in Section 10.17.


 


“Adjusted LIBO Rate” means:


 


(a)           for any Interest Period with respect to any
LIBO Borrowing, an interest rate per annum (rounded upwards, if necessary, to
the next 1/16 of one percent) equal to (i) the LIBO Rate for such Interest
Period multiplied by (ii) the Statutory Reserve Rate; and


 


(b)           for any interest rate calculation with respect
to any Base Rate Loan, an interest rate per annum (rounded upwards, if
necessary, to the next 1/100 of one percent) equal to (i) the LIBO 


 


1

















 


Rate for an Interest Period commencing on the
date of such calculation and ending on the date that is thirty (30) days
thereafter multiplied by (ii) the Statutory Reserve Rate.


 


The Adjusted LIBO Rate will be adjusted
automatically as of the effective date of any change in the Statutory Reserve
Rate.


 


“Adjustment Date” means the first day
of each Fiscal Quarter, commencing August 1, 2009.


 


“Administrative Agent” means Wells
Fargo Retail Finance, LLC, in its capacity as administrative agent under any of
the Loan Documents, or any successor administrative agent.


 


“Administrative Agent’s Office” means
the Administrative Agent’s address and, as appropriate, account as set forth on
Schedule 10.02, or such other address or account as the Administrative
Agent may from time to time notify the Lead Borrower and the Lenders.


 


“Administrative Questionnaire” means
an Administrative Questionnaire in a form supplied by the Administrative Agent.


 


“Affiliate” means, with respect to any
Person, (i) 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, (ii) any director, officer, managing member,
partner, trustee, or beneficiary of that Person, (iii) any other Person
directly or indirectly holding 10% or more of any class of the Equity Interests
of that Person, and (iv) any other Person 10% or more of any class of
whose Equity Interests is held directly or indirectly by that Person.


 


“Agent(s)” means, individually, the
Administrative Agent or the Collateral Agent, and collectively means both of
them.


 


“Aggregate Commitments” means the
Commitments of all the Lenders.


 


“Agreement” means this Credit
Agreement.


 


“Allocable Amount” has the meaning
specified in Section 10.21(d).


 


“Applicable Margin” means:


 


(a)         From and after
the Closing Date until the first Adjustment Date, the percentages set forth in
Level I of the pricing grid below; and


 


(b)         On the first Adjustment Date, and on each
Adjustment Date thereafter, the Applicable Margin shall be determined from the
following pricing grid based upon the Average Availability as of the Fiscal
Quarter ended immediately preceding such Adjustment Date; provided, however,
that notwithstanding anything to the contrary set forth herein, upon the
occurrence and during the continuation of an Event of Default, the
Administrative Agent may, and at the direction of the Required Lenders shall,
immediately increase the Applicable Margin to that set forth in Level III (even
if the Average Availability requirements for a different Level have been met) and
interest shall accrue at the Default Rate; provided, further if
any of the financial statements delivered pursuant to Section 6.01
of this Agreement or any Borrowing Base Certificate is at any time restated or
otherwise revised (including as a result of an audit) or if the information set
forth in any such financial statements or Borrowing Base Certificate otherwise
proves to be false or incorrect such that the Applicable Margin would have been
higher than was otherwise in effect during any period, without constituting a
waiver of any Default or Event of Default arising as a result thereof, interest
due under this Agreement shall be immediately recalculated at such higher rate
for any applicable periods and shall be due and payable on demand.


 


	
  Level

  	
   

  	
  Average Availability

  	
   

  	
  LIBOR

  Margin

  	
   

  	
  Base Rate

  Margin

  	
   

  
	
  I

  	
   

  	
  Greater than or equal to 50% of the Loan
  Cap

  	
   

  	
  2.25

  	
  %

  	
  2.25

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  II

  	
   

  	
  Less than 50% of the Loan Cap but greater
  than or equal to 25% of the Loan Cap

  	
   

  	
  2.50

  	
  %

  	
  2.50

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  III

  	
   

  	
  Less than 25% of the Loan Cap

  	
   

  	
  2.75

  	
  %

  	
  2.75

  	
  %

  



 


2





















 


“Applicable
Percentage” means with respect to any Lender at any time, the percentage
(carried out to the ninth decimal place) of the Aggregate Commitments
represented by such Lender’s Commitment at such time.  If the commitment of each Lender to make
Loans and the obligation of the L/C Issuer to make L/C Credit Extensions have
been terminated pursuant to Section 8.02 or if the Aggregate
Commitments have expired, then the Applicable Percentage of each Lender shall
be determined based on the Applicable Percentage of such Lender most recently
in effect, giving effect to any subsequent assignments.  The initial Applicable Percentage of each Lender
is set forth opposite the name of such Lender on Schedule 2.01 or in the
Assignment and Assumption pursuant to which such Lender becomes a party hereto,
as applicable.


 


“Applicable Rate” means, at any time
of calculation, (a) with respect to Commercial Letters of Credit, a per
annum rate equal to the Applicable Margin for Loans which are LIBOR Rate Loans less one half of one percent (0.50%), and (b) with
respect to Standby Letters of Credit, a per annum rate equal to the Applicable
Margin for Loans which are LIBOR Rate Loans.


 


“Appraisal Percentage” means 85%.


 


“Appraised Value” means with respect
to the Borrowers’ Eligible Inventory, the appraised orderly liquidation value,
net of costs and expenses to be incurred in connection with any such
liquidation, which value is expressed as a percentage of Cost of the Borrowers’
Eligible Inventory as set forth in the Borrowers’ inventory stock ledger, which
value shall be determined from time to time by the most recent appraisal
undertaken by an independent appraiser engaged by the Administrative Agent.


 


 “Approved
Fund” means 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” means two or more
Eligible Assignees that are Affiliates of one another or two or more Approved
Funds managed by the same investment advisor.


 


“Assignment and Assumption” means an
assignment and assumption entered into by a Lender and an Eligible Assignee
(with the consent of any party whose consent is required by Section 10.06(b)),
and accepted by the Administrative Agent, in substantially the form of Exhibit F
or any other form approved by the Administrative Agent.


 


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


 


“Audited Financial Statements” means
the audited Consolidated balance sheet of the Parent and its Subsidiaries for
the Fiscal Year ended February 2, 2008, and the related consolidated
statements of income or operations, Shareholders’ Equity and cash flows for
such Fiscal Year of the Parent and its Subsidiaries, including the notes
thereto.


 


“Auto-Extension Letter of Credit”
shall have the meaning specified in Section 2.03(b)(iii).


 


 “Availability”
means, as of any date of determination thereof by the Administrative Agent, the
result, if a positive number, of:


 


(a)           the Loan Cap


 


3

















 


minus


 


(b)           the
aggregate Outstanding Amount of all Credit Extensions to, or for the account
of, the Borrowers.


 


In calculating Availability at any time and
for any purpose under this Agreement, the Lead Borrower shall certify to the
Administrative Agent that all accounts payable and Taxes are being paid on a
timely basis and consistent with past practices (absent which the
Administrative Agent may establish a Reserve therefor).


 


“Availability Period” means the period
from and including the Closing Date to the earliest of (a) the Maturity
Date, (b) the date of termination of the Aggregate Commitments pursuant to
Section 2.06, and (c) the date of termination of the
commitment of each Lender to make Loans and of the obligation of the L/C Issuer
to make L/C Credit Extensions pursuant to Section 8.02.


 


“Availability Reserves” means, without
duplication of any other Reserves or items that are otherwise addressed or
excluded through eligibility criteria, such reserves as the Administrative
Agent from time to time determines in its discretion as being appropriate (a) to
reflect the impediments to the Agents’ ability to realize upon the Collateral, (b) to
reflect claims and liabilities that the Administrative Agent determines will
need to be satisfied in connection with the realization upon the Collateral, (c) to
reflect criteria, events, conditions, contingencies or risks which adversely
affect any component of the Borrowing Base, or the assets, business, financial
performance or financial condition of any Loan Party, or (d) to reflect
that a Default or an Event of Default then exists. Without limiting the
generality of the foregoing, Availability Reserves may include (but are not
limited to), in the Administrative Agent’s discretion, reserves based on: (i) rent;
(ii) customs duties and other costs to release Inventory which is included
in the Borrowing Base and which is being imported into the United States; (iii) outstanding
Taxes and other governmental charges, including, without limitation, ad
valorem, real estate, personal property, sales, and other Taxes which may have
priority over the interests of the Collateral Agent in the Collateral; (iv) salaries,
wages and benefits due to employees of any Loan Party, (v) Customer Credit
Liabilities, (vi) warehousemen’s or bailee’s charges and other Permitted
Encumbrances which may have priority over the interests of the Collateral Agent
in the Collateral, (vii) amounts due to vendors on account of consigned
goods, (viii) Cash Management Reserves, and (ix) Bank Products
Reserves.


 


“Average Availability” shall mean the
average daily Availability for the immediately preceding Fiscal Quarter.


 


“Bank Products” means any services or
facilities provided to any Loan Party by a Lender or any of its Affiliates,
including, without limitation, on account of (a) credit cards, (b) Swap
Contracts, (c) purchase cards, and (d) leasing, but excluding Cash
Management Services.


 


“Bank Products Reserves” means such
reserves as the Administrative Agent from time to time determines in its
discretion as being appropriate to reflect the liabilities and obligations of
the Loan Parties with respect to Bank Products then provided or outstanding.


 


“Base Rate”   means, for any day, a fluctuating rate per
annum equal to the highest of (a) the Federal Funds Rate, as in effect from
time to time, plus one-half of one percent (0.50%), (b) except
during any period of time during which a notice delivered to the Lead Borrower
in accordance with Section 3.03 shall remain in full force and
effect, the Adjusted LIBO Rate plus one percent (1.00%), or (c) the rate of
interest in effect for such day as publicly announced from time to time by Wells
Fargo Bank as
its “prime rate.”  The “prime rate”
is a rate set by Wells Fargo Bank based upon various factors including Wells
Fargo Bank’s costs and desired return, general economic conditions and other
factors, and is used as a reference point for pricing some 


 


4

















 


loans, which may be priced at, above, or
below such announced rate.  Any change in
such rate announced by Wells Fargo Bank shall take effect at the opening of
business on the day specified in the public announcement of such change.


 


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


 


“Blocked Account” has the meaning
provided in Section 6.13(a)(iii).


 


“Blocked Account Agreement” means with
respect to a Blocked Account established by a Loan Party, an agreement, in form
and substance satisfactory to the Collateral Agent, establishing Control (as
defined in the Security Agreement) of such account by the Collateral Agent.


 


“Blocked Account Bank” means each bank
with whom deposit accounts are maintained in which any funds of any of the Loan
Parties from one or more DDAs are concentrated and with whom a Blocked Account
Agreement has been, or is required to be, executed in accordance with the terms
hereof.


 


“Borrowers” means, collectively, the
Lead Borrower, each Person listed on Schedule 1.01 annexed hereto, and
each other Person who shall from time to time execute and deliver a Joinder
Agreement as a Borrower or such other document as the Administrative Agent
deems appropriate in accordance with Section 6.12.


 


“Borrowing” means a Committed
Borrowing or a Swing Line Borrowing, as the context may require.


 


“Borrowing Base” means, at any time of
calculation, an amount equal to:


 


(a)           the lesser of (i) the Cost of Eligible
Inventory (net of Inventory Reserves), multiplied by the Inventory Advance
Rate, or (ii) the Cost of Eligible Inventory (net of Inventory Reserves),
multiplied by the Appraisal Percentage of the Appraised Value of Eligible
Inventory;


 


plus


 


(b)           the amount of Eligible Credit Card
Receivables multiplied by the Credit Card Advance Rate;


 


plus


 


(d)           the amount of Eligible Trade Receivables (net
of Receivables Reserves applicable thereto) multiplied by the Trade Receivables
Advance Rate;


 


minus


 


(g)           the then amount of all Availability Reserves.


 


“Borrowing Base Certificate” means a
certificate substantially in the form of Exhibit E hereto (with
such changes therein as may be required by the Administrative Agent to reflect
the components of and Reserves against the Borrowing Base as provided for
hereunder from time to time), executed and certified as accurate and complete
by a Responsible Officer of the Lead Borrower which shall include appropriate
exhibits, schedules, supporting documentation, and additional reports as
reasonably requested by the Administrative Agent.


 


“Business Day” means any day other
than a Saturday, Sunday or other day on which commercial banks are authorized
to close under the Laws of, or are in fact closed in, the state where the
Administrative Agent’s Office is located and, if such day relates to any LIBO
Rate Loan, means any such day on which dealings in Dollar deposits are
conducted by and between banks in the London interbank market.


 


 “Capital
Expenditures” means, with respect to any Person for any period, (a) all
expenditures made (whether made in the form of cash or other property) or costs
incurred for the acquisition or improvement of fixed or capital assets of such
Person (excluding normal replacements and maintenance which are properly charged
to current operations), in each case that are (or should 


 


5

















 


be) set forth as capital expenditures in a
Consolidated statement of cash flows of such Person for such period, in each
case prepared in accordance with GAAP, and (b) Capital Lease Obligations
incurred by a Person during such period.


 


“Capital
Leases” shall mean any and all lease obligations that, in accordance with
GAAP, are required to be capitalized on the books of a lessee.


 


“Capital Lease Obligations” means,
with respect to any Person for any period, the obligations of such Person to
pay rent or other amounts under any lease of (or other arrangement conveying
the right to use) real or personal property, or a combination thereof, which obligations
are required to be classified and accounted for as liabilities on a balance
sheet of such Person under GAAP and the amount of which obligations shall be
the capitalized amount thereof determined in accordance with GAAP.


 


“Cash Collateral Account” means a
non-interest bearing account established by one or more of the Loan Parties
with Wells Fargo Bank, and in the name of, the Collateral Agent (as the
Collateral Agent shall otherwise direct) and under the sole and exclusive
dominion and control of the Collateral Agent, in which deposits are required to
be made in accordance with Section 2.03(g) or 8.02(c).


 


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


 


“Cash Dominion Event” means either (i) the
occurrence and continuance of any Event of Default, or (ii) the failure of
the Borrowers to maintain Availability in an amount equal to at least twenty
five percent (25%) of the then applicable Loan Cap.  For purposes of this Agreement, the
occurrence of a Cash Dominion Event shall be deemed continuing at the
Administrative Agent’s option (a) so long as such Event of Default has not
been waived, and/or (b) if the Cash Dominion Event arises as a result of
the Borrowers’ failure to maintain Availability as described in clause (ii) hereunder,
until the Borrowers maintain Availability in an amount equal to at least twenty
five percent (25%) of the then applicable Loan Cap for forty-five (45)
consecutive days, in which case a Cash Dominion Event shall no longer be deemed
to be continuing for purposes of this Agreement; provided  that a Cash Dominion Event shall
be deemed continuing (even if an Event of Default is no longer continuing
and/or Availability exceeds the required amount for forty-five (45) consecutive
days) at all times after a Cash Dominion Event has occurred and been
discontinued on two (2) occasion(s) after the Closing Date.


 


“Cash Management Reserves” means such
reserves as the Administrative Agent, from time to time, determines in its
discretion as being appropriate to reflect the reasonably anticipated
liabilities and obligations of the Loan Parties with respect to Cash Management
Services then provided or outstanding.


 


“Cash Management Services” means any
one or more of the following types or services or facilities provided to any Loan
Party by the Administrative Agent or any of its Affiliates: (a) ACH
transactions, (b) cash management services, including, without limitation,
controlled disbursement services, treasury, depository, overdraft, and
electronic funds transfer services, (c) foreign exchange facilities, (d) credit
or debit cards, and (e) merchant services not constituting a Bank Product.


 


“CERCLA” means the Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9601
et seq.


 


“CERCLIS” means the Comprehensive
Environmental Response, Compensation, and Liability Information System
maintained by the United States Environmental Protection Agency.


 


“CFC” means a Person that is a
controlled foreign corporation under Section 957 of the Code.


 


6

















 


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


 


“Change of Control” means an event or
series of events by which:


 


(a)           any “person” or “group” (as such terms are
used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, but excluding any employee benefit plan of such person or its
subsidiaries, and any person or entity acting in its capacity as trustee, agent
or other fiduciary or administrator of any such plan), other than a Permitted
Holder, 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, whether such right is exercisable
immediately or only after the passage of time (such right, an “option right”)),
directly or indirectly, of twenty five percent (25%) or more of the Equity Interests of the Parent entitled to vote for members of the board of
directors or equivalent governing body of the Parent on a fully-diluted basis
(and taking into account all such Equity Interests that such “person” or “group”
has the right to acquire pursuant to any option right); or


 


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


 


(c)           any Person or two or more Persons not
constituting Permitted Holders acting in concert shall have acquired by
contract or otherwise, or shall have entered into a contract or arrangement
that, upon consummation thereof, will result in its or their acquisition of the
power to exercise, directly or indirectly, a controlling influence over the
management or policies of the Parent, or control over the Equity Interests of
the Parent entitled to vote for members of the board of directors or equivalent
governing body of the Parent on a fully-diluted basis (and taking into account
all such securities that such Person or Persons have the right to acquire
pursuant to any option right) representing twenty five percent (25%) or more of the combined voting power of such
securities; or


 


(d)           any “change in control” or “sale” or “disposition”
or similar event as defined in any Organizational Document of any Loan Party or
in any Material Contract, or any document governing Material Indebtedness of
any Loan Party; or


 


7

















 


(e)           (i) the Parent fails at any time to own,
directly or indirectly 100% of the Equity Interests of any Loan Party, in each
case free and clear of all Liens (other than the Liens in favor of the
Collateral Agent and those Liens specified in clauses (a), (e), (i) and (l) in
the definition of Permitted Encumbrances), except where such failure is as a
result of a transaction permitted by the Loan Documents.


 


“Closing Date” means the first date
all the conditions precedent in Section 4.01 are satisfied or
waived in accordance with Section 10.01.


 


“Code” means the Internal Revenue Code
of 1986, and the regulations promulgated thereunder, as amended and in effect.


 


“Coldwater HK” means Coldwater Creek
HK Limited, an entity formed under the laws of Hong Kong.


 


“Collateral” means any and all “Collateral”
as defined in any applicable Security Document and all other property that is
or is intended under the terms of the Security Documents to be subject to Liens
in favor of the Collateral Agent.


 


“Collateral Access Agreement” means an
agreement reasonably satisfactory in form and substance to the Collateral Agent
executed by (a) a bailee or other Person in possession of Collateral, and (b) a
landlord of Real Estate leased by any Loan Party, pursuant to which such Person
(i) acknowledges the Collateral Agent’s Lien on the Collateral, (ii) releases
or subordinates such Person’s Liens in the Collateral held by such Person or
located on such Real Estate, (iii) as to any landlord, provides the
Collateral Agent with access to the Collateral located in or on such Real
Estate and a reasonable time to sell and dispose of the Collateral from such
Real Estate, and (iv) makes such other agreements with the Collateral
Agent as the Collateral Agent may reasonably require.


 


“Collateral Agent” means Wells Fargo
Retail Finance, LLC, acting in such capacity for its own benefit and the
ratable benefit of the other Credit Parties, or any successor collateral agent.


 


“Commercial Letter of Credit” means
any Letter of Credit issued for the purpose of providing the primary payment
mechanism in connection with the purchase of any materials, goods or services
by a Borrower in the ordinary course of business of such Borrower.


 


“Commitment” means, as to each Lender,
its obligation to (a) make Committed Loans to the Borrowers pursuant to Section 2.01,
(b) purchase participations in L/C Obligations, and (c) purchase
participations in Swing Line Loans, in an aggregate principal amount at any one
time outstanding not to exceed the amount set forth opposite such Lender’s name
on Schedule 2.01 or in the Assignment and Assumption pursuant to which such
Lender becomes a party hereto, as applicable, as such amount may be adjusted
from time to time in accordance with this Agreement.


 


“Commitment Fee” has the meaning
provided in Section 2.09(a).


 


“Committed Borrowing” means a
borrowing consisting of simultaneous Committed Loans of the same Type and, in
the case of LIBO Rate Loans, having the same Interest Period made by each of
the Lenders pursuant to Section 2.01.


 


“Committed Loan” has the meaning
specified in Section 2.01.


 


“Committed Loan Note” means a
promissory note made by the Borrowers in favor of a Lender evidencing Committed
Loans made by such Lender, substantially in the form of Exhibit C-1.


 


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


 


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


 


8


















 


“Concentration Account” has the
meaning provided in Section 6.13(c).


 


“Consent” means actual consent given
by a Lender from whom such consent is sought; or the passage of seven (7) Business
Days from receipt of written notice to a Lender from the Administrative Agent
of a proposed course of action to be followed by the Administrative Agent
without such Lender’s giving the Administrative Agent written notice of that
Lender’s objection to such course of action.


 


“Consolidated” means, when used to
modify a financial term, test, statement, or report of a Person, the
application or preparation of such term, test, statement or report (as
applicable) based upon the consolidation, in accordance with GAAP, of the
financial condition or operating results of such Person and its Subsidiaries.


 


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


 


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


 


“Cost” means the lower of cost or
market value of Inventory, based upon the Borrowers’ accounting practices,
known to the Administrative Agent, which practices are in effect on the Closing
Date as such calculated cost is determined from invoices received by the
Borrowers, the Borrowers’ purchase journals or the Borrowers’ stock
ledger.  “Cost” does not include
inventory capitalization costs or other non-purchase price charges (such as
freight and warehouse markups) used in the Borrowers’ calculation of cost of
goods sold.


 


“Credit Card Advance Rate” means 85%.


 


“Credit Card Notifications” has the
meaning provided in Section 6.13(a)(ii).


 


“Credit Card Receivables” means each “Account”
(as defined in the UCC) together with all income, payments and proceeds thereof,
owed by a major credit or debit card issuer (including, but not limited to,
Visa, Mastercard, Discover and American Express and such other issuers approved
by the Administrative Agent) to a Loan Party resulting from charges by a
customer of a Loan Party on credit or debit cards issued by such issuer in
connection with the sale of goods by a Loan Party, or services performed by a
Loan Party, in each case in the ordinary course of its business.


 


“Credit Extensions” mean each of the
following: (a) a Borrowing, (b) an L/C Credit Extension, and (c) a
Permitted Overadvance.


 


“Credit Party” or “Credit Parties”
means (a) individually, (i) each Lender and its Affiliates, (ii) each
Agent, (iii) each L/C Issuer, (iv) each beneficiary of each
indemnification obligation undertaken by any Loan Party under any Loan
Document, (v) any other Person to whom Obligations under this Agreement
and other Loan Documents are owing, and (vi) the successors and assigns of
each of the foregoing, and (b) collectively, all of the foregoing.


 


“Credit Party Expenses” means, without
limitation, (a) all reasonable out-of-pocket expenses incurred by the
Agents and their respective Affiliates, in connection with this Agreement and
the other Loan Documents, including without limitation (i) the reasonable
fees, charges and disbursements of (A) counsel for the Agents, (B) outside
consultants for the Agents, (C) appraisers, (D) commercial finance
examiners, and (E) all such out-of-pocket expenses incurred during any
workout, restructuring or negotiations in respect of the Obligations, (ii) in
connection with (A) the preparation, negotiation, administration,
management, execution and delivery of this Agreement and the other Loan
Documents or any amendments, modifications or waivers of the 


 


9

















 


provisions thereof (whether or not the
transactions contemplated hereby or thereby shall be consummated), (B) the
enforcement or protection of their rights in connection with this Agreement or
the Loan Documents or efforts to preserve, protect, collect, or enforce the
Collateral or in connection with any proceeding under any Debtor Relief Laws,
or (C) any workout, restructuring or negotiations in respect of any
Obligations, and (b) with respect to the L/C Issuer, and its Affiliates,
all reasonable out-of-pocket expenses incurred in connection with the issuance,
amendment, renewal or extension of any Letter of Credit or any demand for
payment thereunder; and (c) all reasonable out-of-pocket expenses incurred
by the Credit Parties who are not the Agents, the L/C Issuer or any Affiliate
of any of them, after the occurrence and during the continuance of an Event of
Default, provided  that such Credit Parties shall be entitled to
reimbursement for no more than one primary counsel and one local counsel in
each applicable jurisdiction representing all such Credit Parties (absent a
conflict of interest in which case the Credit Parties may engage and be
reimbursed for additional counsel).


 


 “Customer
Credit Liabilities” means at any time, the aggregate remaining value at
such time of (a) outstanding Gift Cards, and (b) outstanding Customer
Deposits of the Loan Parties.


 


“Customer Deposits” means all customer
deposits, including, without limitation, all framing deposits.


 


“Customs Broker Agreement” means an
agreement, in form and substance reasonably satisfactory to the Collateral
Agent, among a Loan Party, a customs broker, freight forward or other carrier,
and the Collateral Agent, in which the customs broker, freight forward or other
carrier acknowledges that it has control over and holds the documents
evidencing ownership of the subject Inventory for the benefit of the Collateral
Agent and agrees, upon notice from the Collateral Agent, to hold and dispose of
the subject Inventory solely as directed by the Collateral Agent.


 


“DDA” means each checking, savings or
other demand deposit account maintained by any of the Loan Parties.  All funds in each DDA shall be conclusively
presumed to be Collateral and proceeds of Collateral and the Agents and the
Lenders shall have no duty to inquire as to the source of the amounts on
deposit in any DDA.


 


“DDA Notification” has the meaning
provided therefor in Section6.13(a)(i).


 


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


 


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


 


“Default Rate” means (a) when
used with respect to Obligations other than Letter of Credit Fees, an interest
rate equal to (i) the Base Rate plus (ii) the Applicable Margin, if
any, applicable to Base Rate Loans, plus (iii) 2% per annum; provided,
however, that with respect to a LIBO Rate Loan, the Default Rate shall
be an interest rate equal to the interest rate (including any Applicable
Margin) otherwise applicable to such LIBO Rate Loan plus 2% per annum, and (b) when
used with respect to Letter of Credit Fees, a rate equal to the Applicable Rate
for Standby Letters of Credit or Commercial Letters of Credit, as applicable,
plus 2% per annum.


 


“Defaulting Lender” means any Lender
that (a) has failed to fund any portion of the Committed Loans, participations
in L/C Obligations or participations in Swing Line Loans required to be funded
by it hereunder within one Business Day of the date required to be funded by it



 


10

















 


hereunder, (b) has otherwise failed to
pay over to the Administrative Agent or any other Lender any other amount
required to be paid by it hereunder within one Business Day of the date when
due, unless the subject of a good faith dispute, or (c) has been deemed
insolvent or become the subject of a bankruptcy or insolvency proceeding.


 


“Deteriorating Lender” means any
Defaulting Lender or any Lender as to which (a) the Administrative Agent
or L/C Issuer believes in good faith that such Lender has defaulted in
fulfilling its obligations under one or more other syndicated credit
facilities, or (b) a Person that Controls such Lender has been deemed
insolvent by the Administrative Agent or become the subject of any proceeding
under any Debtor Relief Law.


 


“Disbursement Letter”
means an instructional letter executed and delivered by Borrowers to the
Administrative Agent regarding the Committed Loan to be made on the Closing
Date, the form and substance of which is satisfactory to the Administrative
Agent.


 


“Disposition” or “Dispose”
means the sale, transfer, license, lease or other disposition (including,
without limitation, any sale-leaseback transaction and any sale, transfer,
license or other disposition of (whether in one transaction or in a series of
transactions) of any property (including, without limitation, any Equity
Interests) by any Person (or the granting of any option or other right to do
any of the foregoing), including any sale, assignment, transfer or other
disposal, with or without recourse, of any notes or accounts receivable or any rights
and claims associated therewith.


 


“Disqualified
Stock” means any Equity Interest that, by its terms (or by the terms of any
security into which it is convertible, or for which it is exchangeable for
cash, in each case at the option of the holder thereof), or upon the happening
of any event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable at the option of the holder thereof, in
whole or in part, on or prior to the date that is 91 days after the Maturity
Date; provided, however, that (i) only the portion of such
Equity Interests which so matures or is mandatorily redeemable, is so
convertible or exchangeable or is so redeemable at the option of the holder
thereof prior to such date shall be deemed to be Disqualified Stock, (ii) with
respect to any Equity Interests issued to any employee or to any plan for the
benefit of employees of the Parent or its Subsidiaries or by any such plan to
such employees, such Equity Interest shall not constitute Disqualified Stock
solely because it may be required to be repurchased by the Parent or one of its
Subsidiaries in order to satisfy applicable statutory or regulatory obligations
or as a result of such employee’s termination, resignation, death or disability
and (iii) if any class of Equity Interest of such Person by its terms
authorizes such Person to satisfy its obligations thereunder by delivery of an
Equity Interest that is not Disqualified Stock, such Equity Interests shall not
be deemed to be Disqualified Stock. Notwithstanding the preceding sentence, any
Equity Interest that would constitute Disqualified Stock solely because the
holders thereof have the right to require a Loan Party to repurchase such
Equity Interest upon the occurrence of a change of control or an asset sale
shall not constitute Disqualified Stock. 
The amount of Disqualified Stock deemed to be outstanding at any time
for purposes of this Agreement will be the maximum amount that the Parent and
its Subsidiaries may become obligated to pay upon maturity of, or pursuant to
any mandatory redemption provisions of, such Disqualified Stock or portion
thereof, plus accrued dividends.


 


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


 


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


 


“Early Termination Fee” has the
meaning set forth in Section 2.09(b).


 


11

















 


“EBITDA” means, with respect to any
fiscal period, without duplication, the sum of (a) Net Income for that
period, plus (b) any extraordinary loss, minus (c) any
extraordinary gain, plus (d) Interest Expense for that period, plus
(e) the aggregate amount of federal and state taxes on or measured by
income for that period (whether or not payable during that period), plus
(f) depreciation and amortization expense for that period, plus (g) all
other non-cash expenses (less non-cash gains) for that period, in each case as
determined in accordance with GAAP, consistently applied and, in the case of
items (b), (c), (d), (e), (f), and (g),
to the extent deducted in determining such Net Income for that period, minus
(h) the aggregate amount of any income from interest for that period
(whether or not payable during that period).


 


“Eligible Assignee” means (a) a
Credit Party or any of its Affiliates; (b) a bank, insurance company, or
company engaged in the business of making commercial loans, which Person,
together with its Affiliates, has a combined capital and surplus in excess of
$250,000,000; (c) an Approved Fund; (d) any Person to whom a Credit
Party assigns its rights and obligations under this Agreement as part of an
assignment and transfer of such Credit Party’s rights in and to a material
portion of such Credit Party’s portfolio of asset based credit facilities, and (e) any
other Person (other than a natural person) approved by (i) the
Administrative Agent, the L/C Issuer and the Swing Line Lender, and (ii) unless
an Event of Default has occurred and is continuing, the Lead Borrower (each
such approval not to be unreasonably withheld or delayed); provided that
notwithstanding the foregoing, “Eligible Assignee” shall not include a Loan
Party or any of the Loan Parties’ Affiliates or Subsidiaries.


 


“Eligible Credit Card Receivables”
means at the time of any determination thereof, each Credit Card Receivable
that satisfies the following criteria at the time of creation and continues to
meet the same at the time of such determination: such Credit Card Receivable (i) has
been earned by performance and represents the bona fide amounts due to a Loan
Party from a credit card payment processor and/or credit card issuer, and in
each case originated in the ordinary course of business of such Loan Party, and
(ii) in each case is acceptable to the Administrative Agent in its
discretion, and is not ineligible for inclusion in the calculation of the
Borrowing Base pursuant to any of clauses (a) through (k) below.  Without limiting the foregoing, to qualify as
an Eligible Credit Card Receivable, an Account shall indicate no Person other
than a Loan Party as payee or remittance party. 
In determining the amount to be so included, the face amount of an
Account shall be reduced by, without duplication, to the extent not reflected
in such face amount, (i) the amount of all accrued and actual discounts,
claims, credits or credits pending, promotional program allowances, price
adjustments, finance charges or other allowances (including any amount that a
Loan Party may be obligated to rebate to a customer, a credit card payment
processor, or credit card issuer pursuant to the terms of any agreement or
understanding (written or oral)) and (ii) the aggregate amount of all cash
received in respect of such Account but not yet applied by the Loan Parties to reduce
the amount of such Credit Card Receivable. 
Any Credit Card Receivables meeting the foregoing criteria shall be
deemed Eligible Credit Card Receivables but only as long as such Credit Card
Receivable is not included within any of the following categories, in which
case such Credit Card Receivable shall not constitute an Eligible Credit Card
Receivable:


 


(a)           Credit Card Receivable which do not
constitute an “Account” (as defined in the UCC);


 


(b)           Credit Card Receivables that have been
outstanding for more than five (5) Business Days from the date of sale;


 


12

















 


(c)           Credit Card Receivables with respect to which
a Loan Party does not have good,
valid and marketable title, free and clear of any Lien (other than Liens
granted to the Collateral Agent);


 


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


 


(e)           Credit Card Receivables which are disputed,
are with recourse, or with respect to which a claim, counterclaim, offset or
chargeback has been asserted (to the extent of such claim, counterclaim, offset
or chargeback);


 


(f)            Credit Card Receivables as to which the
credit card processor has the right under certain circumstances to require a
Loan Party to repurchase the Accounts from such credit card processor;


 


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


 


(h)           Credit Card Receivables which are not a
valid, legally enforceable obligation of the applicable issuer with respect
thereto;


 


(i)            Credit Card
Receivables which do not conform to all representations, warranties or other
provisions in the Loan Documents relating to Credit Card Receivables;


 


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


 


(k)           Credit Card Receivables which the
Administrative Agent determines in its discretion to be uncertain of
collection.


 


“Eligible Inventory” means, as of the
date of determination thereof, without duplication, items of Inventory of a
Loan Party that are finished goods, merchantable and readily saleable to the
public in the ordinary course deemed by the Administrative Agent in its
discretion to be eligible for inclusion in the calculation of the Borrowing
Base, in each case that, except as otherwise agreed by the Administrative
Agent, complies with each of the representations and warranties respecting
Inventory made by the Loan Party in the Loan Documents, and that is not
excluded as ineligible by virtue of one or more of the criteria set forth
below.  Except as otherwise agreed by the
Administrative Agent, the following items of Inventory shall not be included in
Eligible Inventory:


 


(a)           Inventory that is not solely owned by a Loan
Party or a Loan Party does not have good and valid title thereto;


 


(b)           Inventory that is leased by or is on
consignment to a Loan Party or
which is consigned by a Loan Party to
a Person which is not a Loan Party;


 


(c)           Inventory that is not located in the United
States of America (excluding territories or possessions of the United States)
at a location that is owned or leased by a Loan Party, except to the extent that the Loan
Parties have furnished the
Administrative Agent with (i) any UCC financing statements or other
documents that the Administrative Agent may determine to be necessary to
perfect its security interest in such Inventory at such location, and (ii) a
Collateral Access Agreement executed by the Person owning any such location on
terms reasonably acceptable to the Administrative Agent;


 


(d)           Inventory that is comprised of goods which (i) are
damaged, defective, “seconds,” or otherwise unmerchantable, (ii) are to be
returned to the vendor, (iii) are obsolete or 


 


13

















 


slow moving, or are special order or custom items, work-in-process, raw
materials, or that constitute spare parts, promotional, marketing, packaging and
shipping materials or supplies used or consumed in a Loan Party’s business, (iv) are seasonal in nature
and which have been packed away for sale in the subsequent season, (v) not
in compliance with all standards imposed by any Governmental Authority having
regulatory authority over such Inventory, its use or sale, or (vi) are
bill and hold goods;


 


(e)           Inventory that is not subject to a perfected
first-priority security interest in favor of the Collateral Agent;


 


(f)            Inventory that consists of samples, labels,
bags, packaging, and other similar non-merchandise categories;


 


(g)           Inventory that is not insured in compliance
with the provisions of Section 5.10 hereof;


 


(h)           Inventory that has been sold but not yet
delivered or as to which a Loan Party has accepted a deposit;


 


(j)            Inventory that is subject to any licensing,
patent, royalty, trademark, trade name or copyright agreement with any third
party from which any Loan Party or
any of its Subsidiaries has received notice of a dispute in respect of any such
agreement;  or


 


(k)           Inventory acquired in a Permitted
Acquisition, unless and until the Collateral Agent has completed or received (A) an
appraisal of such Inventory from appraisers satisfactory to the Collateral
Agent, establishes Inventory Reserves (if applicable) therefor, and otherwise
agrees that such Inventory shall be deemed Eligible Inventory, and (B) such
other due diligence as the Agents may require, all of the results of the
foregoing to be reasonably satisfactory to the Agents.


 


“Eligible Trade Receivables” means
Accounts arising from the sale of the Loan Parties’ Inventory (other than those
consisting of Credit Card Receivables) that satisfies the following criteria at
the time of creation and continues to meet the same at the time of such determination:
such Account (i) has been earned by performance and represents the bona
fide amounts due to a Loan Party from an account debtor, and in each case
originated in the ordinary course of business of such Loan Party, and (ii) in
each case is acceptable to the Administrative Agent in its discretion, and is
not ineligible for inclusion in the calculation of the Borrowing Base pursuant
to any of clauses (a) through (t) below.  Without limiting the foregoing, to qualify as
an Eligible Trade Receivable, an Account shall indicate no Person other than a
Loan Party as payee or remittance party. 
In determining the amount to be so included, the face amount of an
Account shall be reduced by, without duplication, to the extent not reflected
in such face amount, (i) the amount of all accrued and actual discounts,
claims, credits or credits pending, promotional program allowances, price
adjustments, finance charges or other allowances (including any amount that a
Loan Party may be obligated to rebate to a customer pursuant to the terms of
any agreement or understanding (written or oral)) and (ii) the aggregate
amount of all cash received in respect of such Account but not yet applied by
the Loan Parties to reduce the amount of such Eligible Trade Receivable.  Any Accounts meeting the foregoing criteria
shall be deemed Eligible Trade Receivables but only as long as such Account is
not included within any of the following categories, in which case such Account
shall not constitute an Eligible Trade Receivable:


 


(a)           Accounts that are not evidenced by an
invoice;


 


(b)           Accounts that have been outstanding for more
than sixty (60) days from the date of sale or more than thirty (3) days
past the due date;


 


14

















 


(c)           Accounts due from any account debtor which is
obligated on any accounts described in clause (b), above.


 


(d)           Accounts with respect to which a Loan
Party does not have good, valid and
marketable title thereto, free and clear of any Lien (other than Liens granted
to the Collateral Agent pursuant to the Security Documents);


 


(e)           Accounts which are disputed or with respect
to which a claim, counterclaim, offset or chargeback has been asserted, but
only to the extent of such dispute, counterclaim, offset or chargeback;


 


(f)            Accounts which arise out of any sale made not
in the ordinary course of business, made on a basis other than upon credit
terms usual to the business of a Loan Party or are not payable in Dollars;


 


(g)           Accounts which are owed by any account debtor
whose principal place of business is not within the continental United States;


 


(h)           Accounts which are owed by any Affiliate or
any employee of a Loan Party;


 


(i)            Accounts for which all consents, approvals or
authorizations of, or registrations or declarations with any Governmental
Authority required to be obtained, effected or given in connection with the
performance of such Account by the account debtor or in connection with the
enforcement of such Account by the Agents have been duly obtained, effected or
given and are in full force and effect;


 


(j)            Accounts due from an account debtor which is
the subject of any bankruptcy or insolvency proceeding, has had a trustee or
receiver appointed for all or a substantial part of its property, has made an
assignment for the benefit of creditors or has suspended its business;


 


(k)           Accounts due from any Governmental Authority
except to the extent that the subject account debtor is the federal government
of the United States of America and has complied with the Federal Assignment of
Claims Act of 1940 and any similar state legislation;


 


(l)            Accounts (i) owing from any Person that
is also a supplier to or creditor of a Loan Party or any of its Subsidiaries or
(ii) representing any manufacturer’s or supplier’s credits, discounts,
incentive plans or similar arrangements entitling a Loan Party or any of its
Subsidiaries to discounts on future purchase therefrom;


 


(m)          Accounts arising out of sales on a
bill-and-hold, guaranteed sale, sale-or-return, sale on approval or consignment
basis or subject to any right of return, setoff or charge back;


 


(n)           Accounts arising out of sales to account
debtors outside the United States;


 


(o)           Accounts payable other than in Dollars or
that are otherwise on terms other than those normal and customary in the Loan
Parties’ business;


 


(p)           Accounts evidenced by a promissory note or
other instrument;


 


(q)           Accounts consisting of amounts due from
vendors as rebates or allowances;


 


(r)            Accounts which are in excess of the credit
limit for such account debtor established by a Loan Party in the ordinary course of business and
consistent with past practices;


 


(s)           Accounts which include extended payment terms
(datings) beyond those generally furnished to other account debtors in the
ordinary course of business; or


 


(t)            Accounts which the Administrative Agent
determines in its discretion to be unacceptable for borrowing.


 


15

















 


Notwithstanding the foregoing, in no event
shall any Account constitute Eligible Trade Receivables unless and until the
Administrative Agent has (i) received a satisfactory field exam detailing
all Accounts in form and substance satisfactory to the Administrative Agent in
its sole discretion, and (ii) completed its due-diligence with respect to
the Loan Parties’ Eligible Trade Receivables, to the satisfaction of the
Administrative Agent in its sole discretion.


 


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


 


“Environmental Liability” means any
liability, obligation, damage, loss, claim, action, suit, judgment, order,
fine, penalty, fee, expense, or cost, contingent or otherwise (including any
liability for damages, costs of environmental remediation, fines, penalties or
indemnities), of any Borrower, any other Loan Party or any of their respective
Subsidiaries directly or indirectly resulting from or based upon (a) violation
of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment, disposal or presence of any Hazardous
Materials, (c) exposure to any Hazardous Materials, (d) the release
or threatened release of any Hazardous Materials into the environment or (e) any
contract, agreement or other consensual arrangement pursuant to which liability
is assumed or imposed with respect to any of the foregoing.


 


“Equipment” has the meaning provided
in the UCC.


 


“Equity Interests” means, with respect
to any Person, all of the shares of capital stock of (or other ownership or
profit interests in) such Person, all of the warrants, options or other rights
for the purchase or acquisition from such Person of shares of capital stock of
(or other ownership or profit interests in) such Person, all of the securities
convertible into or exchangeable for shares of capital stock of (or other
ownership or profit interests in) such Person or warrants, rights or options
for the purchase or acquisition from such Person of such shares (or such other
interests), and all of the other ownership or profit interests in such Person
(including partnership, member or trust interests therein), whether voting or
nonvoting, and whether or not such shares, warrants, options, rights or other
interests are outstanding on the date of determination.


 


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


 


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


 


“ERISA Event” means (a) a
Reportable Event with respect to a Pension Plan; (b) a withdrawal by the
Lead Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063
of ERISA during a plan year in which it was a substantial employer (as defined
in Section 4001(a)(2) of ERISA) or a cessation of operations that is
treated as such a withdrawal under Section 4062(e) of ERISA; (c) a
complete or partial withdrawal by the Lead Borrower or any ERISA Affiliate from
a Multiemployer Plan or notification that a Multiemployer Plan is in
reorganization; (d) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Sections 4041 or 4041A of
ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multiemployer Plan; (e) an event or condition which constitutes
grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan or Multiemployer Plan;
or (f) the imposition of any 


 


16

















 


liability under Title IV of ERISA, other than
for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon
the Lead Borrower or any ERISA Affiliate.


 


“Event of Default” has the meaning
specified in Section 8.01. 
An Event of Default shall be deemed to be continuing unless and until
that Event of Default has been duly waived as provided in Section 10.03
hereof.


 


“Excess Availability” means, as of any
date of determination thereof by the Administrative Agent, the result, if a
positive number, of (i) the Borrowing Base at such time, minus (ii) the
aggregate Outstanding Amount of all Credit Extensions to, or for the account
of, the Borrowers.


 


“Excluded Taxes” means, with respect
to the Administrative Agent, any Lender, the L/C Issuer or any other recipient
of any payment to be made by or on account of any obligation of the Borrowers
hereunder, (a) taxes imposed on or measured by its overall net income
(however denominated), and franchise taxes imposed on it (in lieu of net income
taxes), by the jurisdiction (or any political subdivision thereof) under the laws
of which such recipient is organized or in which its principal office is
located or, in the case of any Lender, in which its applicable Lending Office
is located, (b) any branch profits taxes imposed by the United States or
any similar tax imposed by any other jurisdiction in which any Borrower is
located and (c) in the case of a Foreign Lender (other than an assignee
pursuant to a request by the Lead Borrower under Section 10.13),
any withholding tax that is imposed on amounts payable to such Foreign Lender
at the time such Foreign Lender becomes a party hereto (or designates a new
Lending Office) or is attributable to such Foreign Lender’s failure or
inability (other than as a result of a Change in Law) to comply with Section 3.01(e),
except to the extent that such Foreign Lender (or its assignor, if any) was
entitled, at the time of designation of a new Lending Office (or assignment),
to receive additional amounts from the Borrowers with respect to such
withholding tax pursuant to Section 3.01(a).


 


“Executive Order” has the meaning set
forth in Section 10.18.


 


“Existing Credit Agreement” means that
certain Amended and Restated Credit Agreement, dated as of February 13,
2007, between the Parent and Wells Fargo Bank, National Association, as amended
from time to time.


 


“Existing Letters of Credit” means,
collectively, each of the letters of credit issued under the Existing Credit
Agreement and outstanding on the Closing Date, as listed on Schedule 2.03.


 


“Extraordinary Receipt” means any
cash received by or paid to or for the account of any Person not in the
ordinary course of business, including tax refunds, pension plan reversions,
proceeds of insurance (other than proceeds of business interruption insurance
to the extent such proceeds constitute compensation for lost earnings),
condemnation awards (and payments in lieu thereof), indemnity payments and any
purchase price adjustments.


 


“Facility Guaranty” means the Guaranty
made by the Guarantors in favor of the Agents and the Lenders, in form and
substance reasonably satisfactory to the Administrative Agent.


 


“Family Group” means, with respect to
any Person (i) such Person’s spouse, children, grandchildren, heirs,
lineal descendants, executors and administrators, and (ii) any trust,
family partnership or similar investment entity of which any of the foregoing
Persons are trustee(s), managing member(s), managing partner(s) or similar
officer(s) and/or that is for the benefit of any of the foregoing Persons
as long as one or more of such Persons has the exclusive or joint right to
control the voting and disposition of securities held by such trust, family
partnership or similar investment entity.


 


“Federal Funds Rate”  means,
for any day, the rate per annum equal to the weighted average of the rates on
overnight Federal funds transactions with members of the Federal Reserve System



 


17

















 


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 Wells Fargo Bank on such day on such transactions as determined by
the Administrative Agent.


 


“Fee Letter” means the letter
agreement, dated the Closing Date, among the Borrowers and the Administrative
Agent.


 


“Fiscal Month” means any fiscal month
of any Fiscal Year, which months generally end on the last Saturday of each
calendar month in accordance with the fiscal accounting calendar of the Loan
Parties.


 


“Fiscal Quarter” means any fiscal
quarter of any Fiscal Year, which quarters generally end on the last Saturday
of each January, April, July and October of such Fiscal Year in
accordance with the fiscal accounting calendar of the Loan Parties.


 


“Fiscal Year” means the fiscal year of
the Lead Borrower and its Subsidiaries ending on the Saturday closest to each January 31st of any calendar year.


 


“Fixed Charge Coverage” shall mean the
ratio of (a) the sum of EBITDA, to (b) the sum of (without
duplication) (i) Interest Expense for such period, (ii) the sum of
the scheduled current maturities (determined on a Consolidated basis in
accordance with GAAP) of Total Funded Debt during the period in question, and (iii) all
amount payable with respect to Capital Lease Obligations for the period in
question.


 


“Foreign Asset Control Regulations”
has the meaning set forth in Section 10.18.


 


“Foreign Lender” means any Lender that
is organized under the laws of a jurisdiction other than that in which the Lead
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.


 


“Fronting Fee” has the meaning
assigned to such term in Section 2.03(j).


 


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


 


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


 


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


 


“Gift Cards” means all merchandise
credits, gift certificates and gift cards of the Borrowers entitling the holder
thereof to use all or a portion of the credit, certificate or gift card to pay
all or a portion of the purchase price for any Inventory.


 


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


 


18

















 


government (including any supra-national
bodies such as the European Union or the European Central Bank).


 


“Guarantee” means, as to any Person,
any (a) any obligation, contingent or otherwise, of such Person
guaranteeing or having the economic effect of guaranteeing any Indebtedness or
other obligation payable or performable by another Person (the “primary
obligor”) in any manner, whether directly or indirectly, and including any
obligation of such Person, direct or indirect, (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or
other obligation or to purchase (or advance or supply funds for the purchase
of) any security for the payment of such Indebtedness or obligation, (ii) to
purchase or lease property, securities or services for the purpose of assuring
the obligee in respect of such Indebtedness or other obligation of the payment
or performance of such Indebtedness or other obligation, (iii) to maintain
working capital, equity capital or any other financial statement condition or
liquidity or level of income or cash flow of the primary obligor so as to
enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered
into for the purpose of assuring in any other manner the obligee in respect of
such Indebtedness or other obligation of the payment or performance thereof or
to protect such obligee against loss in respect thereof (in whole or in part), (b) any
Lien on any assets of such Person securing any Indebtedness or other obligation
of any other Person, whether or not such Indebtedness or other obligation is
assumed by such Person (or any right, contingent or otherwise, of any holder of
such Indebtedness to obtain any such Lien), or (c) as an account party in
respect of any letter of credit or letter of credit guaranty issued to support
such Indebtedness or obligation.  The
amount of any Guarantee shall be deemed to be an amount equal to the stated or
determinable amount of the related primary obligation, or portion thereof, in
respect of which such Guarantee is made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof as determined by
the guaranteeing Person in good faith. 
The term “Guarantee” as a verb has a corresponding meaning.


 


“Guarantor” means, collectively, the
Persons listed on Schedule 1.02 hereto, and each other Person who shall
from time to time execute and deliver a Joinder Agreement as a Guarantor or
such other document as may be required in accordance with Section 6.12.


 


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


 


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


 


“Immaterial Subsidiary” means, on any
date of determination, a Loan Party (other than a Borrower) or a Subsidiary of
a Loan Party (other than a Loan Party), which neither owns nor has any interest
in any assets or other property that is included in the Borrowing Base, and
which (a) owns or has any interest in any assets or other property with an
aggregate book value (as reflected on the financial statements of such Person)
of less than $100,000 on such date, and (b) has annual revenue of less
than $100,000 on such date.


 


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


 


(a)           all obligations of such Person for borrowed
money and all obligations of such Person evidenced by bonds, debentures, notes,
loan agreements or other similar instruments;


 


19

















 


(b)           the maximum amount of all direct or
contingent obligations of such Person arising under letters of credit
(including standby and commercial), bankers’ acceptances, bank guaranties,
surety bonds and similar instruments;


 


(c)           net obligations of such Person under any Swap
Contract;


 


(d)           all obligations of such Person to pay the
deferred purchase price of property or services (other than trade accounts
payable in the ordinary course of business and, in each case, not past due for
more than 60 days after the date on which such trade account payable was
created);


 


(e)           indebtedness (excluding prepaid interest
thereon) secured by a Lien on property owned or being purchased by such Person
(including indebtedness arising under conditional sales or other title
retention agreements), whether or not such indebtedness shall have been assumed
by such Person or is limited in recourse;


 


(f)            All Attributable Indebtedness of such Person;


 


(g)           all obligations of such Person to purchase,
redeem, retire, defease or otherwise make any payment in respect of any Equity
Interest in such Person or any other Person, or any warrant, right or option to
acquire such Equity Interest, valued, in the case of a redeemable preferred
interest, at the greater of its voluntary or involuntary liquidation preference
plus accrued and unpaid dividends; and


 


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


 


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


 


“Indemnified Taxes” means Taxes other
than Excluded Taxes.


 


“Indemnitees” has the meaning
specified in Section 10.04(b).


 


“Information” has the meaning
specified in Section 10.07.


 


“Intellectual Property” means all
present and future: trade secrets, know-how and other proprietary information;
trademarks, trademark applications, internet domain names, service marks, trade
dress, trade names, business names, designs, logos, slogans (and all
translations, adaptations, derivations and combinations of the foregoing)
indicia and other source and/or business identifiers, and all registrations or
applications for registrations which have heretofore been or may hereafter be
issued thereon throughout the world; copyrights and copyright applications;
(including copyrights for computer programs) and all tangible and intangible
property embodying the copyrights, unpatented inventions (whether or not
patentable); patents and patent applications; industrial design applications
and registered industrial designs; license agreements related to any of the
foregoing and income therefrom; books, records, writings, computer tapes or
disks, flow diagrams, specification sheets, computer software, source codes,
object codes, executable code, data, databases and other physical
manifestations, embodiments or incorporations of any of the foregoing; all
other intellectual property; and all common law and other rights throughout the
world in and to all of the foregoing.


 


“Intellectual Property Security Agreement” means the
Intellectual Property Security Agreement dated as of the Closing Date among the
Loan Parties and the Collateral Agent, granting a Lien in the Intellectual
Property and certain other assets of the Loan Parties, as amended and in effect
from time to time.


 


20

















 


“Interest
Expense” shall mean, for any period, the sum, for the Loan Parties
(determined on a Consolidated basis without duplication in accordance with
GAAP), of the following: (a) all interest, fees, charges and related
expenses payable during such period to any Person in connection with
Indebtedness or the deferred purchase price of assets that is treated as
interest in accordance with GAAP, (b) the Synthetic Lease Interest
component for such period, and (c) the net amounts payable (or minus
the net amounts receivable) under any Swap Contract accrued during such period
(whether or not actually paid or received during such period).


 


“Interest Payment Date” means (a) as
to each Base Rate Loan (including a Swing Line Loan, the first calendar day of
each month and the Maturity Date, and (b) as to each LIBO Rate Loan, the
first calendar day of each month, the last day of each Interest Period
applicable to such LIBO Rate Loan, and the Maturity Date.


 


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


 


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


 


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


 


(iii)          no Interest Period shall extend beyond the
Maturity Date; and


 


(iv)          notwithstanding the provisions of clause (iii) no
Interest Period shall have a duration of less than one (1) month, and if
any Interest Period applicable to a LIBO Borrowing would be for a shorter
period, such Interest Period shall not be available hereunder.


 


For purposes hereof, the date of
a Borrowing initially shall be the date on which such Borrowing is made and
thereafter shall be the effective date of the most recent conversion or
continuation of such Borrowing.


 


“Internal
Control Event” means a material weakness in, or fraud that involves
management or other employees who have a significant role in, the Parent’s and/or its Subsidiaries’ internal controls over financial
reporting as described in the Securities Laws and/or the collateral reporting
obligations hereunder.


 


“Inventory” has the meaning given that
term in the UCC, and shall also  include, without limitation,
all: (a) goods which (i) are leased by a Person as lessor, (ii) are
held by a Person for sale or lease or to be furnished under a contract of
service, (iii) are furnished by a Person under a contract of service, or (iv) 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 or rejected; and (d) packaging,
advertising, and shipping materials related to any of the foregoing.


 


“Inventory Advance Rate” means 75%.


 


“Inventory Reserves” means such
reserves as may be established from time to time by the Administrative Agent in
the Administrative Agent’s discretion with respect to the determination 


 


21

















 


of the saleability, at retail, of the
Eligible Inventory or which reflect such other factors as affect the market
value of the Eligible Inventory. Without limiting the generality of the
foregoing, Inventory Reserves may, in the Administrative Agent’s discretion,
include (but are not limited to) reserves based on:


 


(a)           obsolescence;


 


(b)           seasonality;


 


(c)           Shrink;


 


(d)           imbalance;


 


(e)           change in Inventory character;


 


(f)            change in Inventory composition;


 


(g)           change in Inventory mix;


 


(h)           mark-downs (both permanent and point of
sale);


 


(i)            retail mark-ons and mark-ups inconsistent
with prior period practice and performance, industry standards, current
business plans or advertising calendar and planned advertising events; and


 


(j)            out-of-date and/or expired Inventory.


 


“Investment” means, as to any Person,
any direct or indirect acquisition or investment by such Person, whether by
means of (a) the purchase or other acquisition Equity Interests of another
Person, (b) a loan, advance or capital contribution to, Guarantee or
assumption of debt of, or purchase or other acquisition of any other debt or
interest in, another Person, or (c) any Acquisition, or (d) any other
investment of money or capital in order to obtain a profitable return.  For purposes of covenant compliance, the
amount of any Investment shall be the amount actually invested, without
adjustment for subsequent increases or decreases in the value of such
Investment.


 


“IRS” means the United States Internal
Revenue Service.


 


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


 


“Joinder Agreement” means an
agreement, in the form attached hereto as Exhibit I pursuant to
which, among other things, a Person becomes a party to, and bound by the terms
of, this Agreement and/or the other Loan Documents in the same capacity and to
the same extent as either a Borrower or a Guarantor, as the Administrative
Agent may determine.


 


“Landlord Lien State” means such state(s) in
which a landlord’s claim for rent may have priority over the lien of the
Collateral Agent in any of the Collateral. As of the Closing Date, such states
will be limited to Pennsylvania, Virginia and Washington.


 


“Laws” means each international,
foreign, Federal, state and local statute, treaty, rule, guideline, regulation,
ordinance, code and administrative or judicial precedent or authority,
including the interpretation or administration thereof by any Governmental
Authority charged with the enforcement, interpretation or administration
thereof, and each applicable administrative order, directed duty, request,
license, authorization and permit of, and agreement with, any Governmental
Authority, in each case whether or not having the force of law.


 


22

















 


“L/C Advance” means, with respect to
each Lender, such Lender’s funding of its participation in any L/C Borrowing in
accordance with its Applicable Percentage.


 


“L/C Borrowing” means an extension of
credit resulting from a drawing under any Letter of Credit which has not been
reimbursed on the date when made or refinanced as a Committed Borrowing.


 


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


 


“L/C Issuer” means (a) Wells
Fargo Bank in its capacity as issuer of Letters of Credit hereunder, or any
successor issuer of Letters of Credit (including Existing Letters of Credit)
hereunder (which successor may only be a Lender selected by the Administrative
Agent in its discretion that is reasonably satisfactory to the Lead Borrower),
and (b) any other Lender selected by the Administrative Agent in its
discretion that is reasonably satisfactory to the Lead Borrower.  The L/C Issuer may, in its discretion, arrange
for one or more Letters of Credit to be issued by Affiliates of the L/C Issuer
that is reasonably satisfactory to the Lead Borrower, in which case the term “L/C
Issuer” shall include any such Affiliate with respect to Letters of Credit
issued by such Affiliate.


 


“L/C Obligations” means, as at any
date of determination, the aggregate undrawn amount available to be drawn under
all outstanding Letters of Credit plus the aggregate of all Unreimbursed
Amounts, including all L/C Borrowings. 
For purposes of computing the amounts available to be drawn under any
Letter of Credit, the amount of such Letter of Credit shall be determined in
accordance with Section 1.06. 
For all purposes of this Agreement, if on any date of determination a
Letter of Credit has expired by its terms but any amount may still be drawn
thereunder by reason of the operation of Rule 3.14 of the ISP, such Letter
of Credit shall be deemed to be “outstanding” in the amount so remaining
available to be drawn.


 


“Lease” means any agreement, whether
written or oral, no matter how styled or structured, pursuant to which a Loan
Party is entitled to the use or occupancy of any real property for any period
of time.


 


“Lender” has the meaning specified in
the introductory paragraph hereto and, as the context requires, includes the
Swing Line Lender, and collectively means all of them.


 


“Lending Office” means, as to any
Lender, the office or offices of such Lender described as such in such Lender’s
Administrative Questionnaire, or such other office or offices as a Lender may
from time to time notify the Lead Borrower and the Administrative Agent.


 


“Letter of Credit” means each Standby
Letter of Credit and each Commercial Letter of Credit issued in accordance
herewith and shall include the Existing Letters of Credit. Without limiting the
foregoing, all Existing Letters of Credit shall be deemed to have been issued
hereunder and shall for all purposes be deemed to be “Letters of Credit”
hereunder.


 


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


 


“Letter of Credit Expiration Date”
means the day that is seven 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 Fee” has the meaning
specified in Section 2.03(i).


 


“Letter of Credit Sublimit” means an
amount equal to $70,000,000.  The Letter
of Credit Sublimit is part of, and not in addition to, the Aggregate
Commitments.  A permanent reduction of
the Aggregate Commitments shall require a corresponding pro rata reduction in
the Letter of Credit Sublimit to an amount equal to (or, at Lead Borrower’s
option, less than) the Aggregate Commitments.


 


23














 


“LIBO Borrowing” means a Borrowing comprised of LIBO Rate Loans.


 


“LIBO Rate” means for any Interest Period with respect to a LIBO
Rate Loan, the rate per annum equal to the British Bankers Association LIBOR
Rate (“BBA LIBOR”), as published by Reuters (or other commercially
available source providing quotations of BBA LIBOR as designated by the
Administrative Agent from time to time) at approximately 11:00 a.m.,
London time, two Business Days prior to the commencement of such Interest
Period, for Dollar deposits (for delivery on the first day of such Interest
Period) with a term equivalent to such Interest Period.  If such rate is not available at such time
for any reason, then the “LIBO Rate” for such Interest Period shall be the rate
per annum determined by the Administrative Agent to be the rate at which
deposits in Dollars for delivery on the first day of such Interest Period in
same day funds in the approximate amount of the LIBO Rate Loan being made,
continued or converted by Wells Fargo Bank and with a term equivalent to such
Interest Period would be offered to Wells Fargo Bank by major banks in the
London interbank eurodollar market in which Wells Fargo Bank participates at
their request at approximately 11:00 a.m. (London time) two Business Days
prior to the commencement of such Interest Period.


 


“LIBO Rate Loan” means a Committed Loan that bears interest at a
rate based on the Adjusted LIBO Rate.


 


“Lien” means (a) any mortgage, deed of trust, 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, Capital Lease Obligation, Synthetic
Lease Obligation 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) and (b) in
the case of securities, any purchase option, call or similar right of a third
party with respect to such securities; provided, however, “Lien”
shall not include (i) any Loan Party’s obligation to repurchase or
exchange any Inventory sold in the ordinary course of business in accordance
with such Loan Party’s prevailing return and exchange policies, or (ii) any
reserves retained by a Loan Party’s credit card issuer or credit card processor
in its ordinary course of business.


 


“Liquidation” means the exercise by the Administrative Agent or
Collateral Agent of those rights and remedies accorded to such Agents under the
Loan Documents and applicable Law as a creditor of the Loan Parties with
respect to the realization on the Collateral, including (after the occurrence
and continuation of an Event of Default) the conduct by the Loan Parties acting
with the consent of the Administrative Agent, of any public, private or “going-out-of-business”,
“store closing” or other similar sale or any other disposition of the
Collateral for the purpose of liquidating the Collateral.  Derivations of the word “Liquidation” (such
as “Liquidate”) are used with like meaning in this Agreement.


 


“Loan” means an extension of credit by a Lender to any Borrower
under Article II in the form of a Committed Loan or a Swing Line
Loan.


 


“Loan Account” has the meaning assigned to such term in Section 2.11(a).


 


“Loan
Cap” means, at any time of determination, the lesser of (a) the
Aggregate Commitments at such time, or (b) the Borrowing Base at such
time.


 


“Loan Documents” means this Agreement, each Note, each Issuer
Document, the Fee Letter, all Borrowing Base Certificates, the Blocked Account
Agreements, the DDA Notifications, the Credit Card Notifications, the Security
Documents, the Facility Guaranty and any other instrument or agreement now or
hereafter executed and delivered in connection herewith, or in 


 


24

















 


connection with any transaction arising out of any Cash Management
Services and Bank Products provided by the Administrative Agent or any of its
Affiliates, each as amended and in effect from time to time.


 


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


 


“Material Adverse Effect” means (a) a material adverse
change in, or a material adverse effect upon, the operations, business,
properties, liabilities (actual or contingent), condition (financial or
otherwise) or prospects of (i) the Borrowers taken as a whole, or (ii) the
Loan Parties taken as a whole; (b) a material impairment of the ability of
(i) the Borrowers taken as a whole, or (ii) the Loan Parties taken as
a whole, to perform their obligations under any Loan Document; (c) a
material impairment of the rights and remedies of, or benefit to, the Agent or
the Lenders under any Loan Document or a material adverse effect upon the
legality, validity, binding effect or enforceability against any Loan Party of
any Loan Document to which it is a party; or (d) a material adverse change
in, or a material adverse effect upon, the Collateral.  In determining whether any individual event
would result in a Material Adverse Effect, notwithstanding that such event in
and of itself does not have such effect, a Material Adverse Effect shall be
deemed to have occurred if the cumulative effect of such event and all other
then existing events occurring on or after the Closing Date would result in a
Material Adverse Effect.


 


“Material Contract” means, with respect to any Person, each
agreement to which such Person is a party, the termination or breach of which
could reasonably be expected to result in a Material Adverse Effect.


 


“Material Indebtedness” means Indebtedness (other than the
Obligations) of the Loan Parties in an aggregate principal amount exceeding
$2,500,000.  For purposes of determining
the amount of Material Indebtedness at any time, the amount of the obligations
in respect of any Swap Contract at such time shall be calculated at the Swap
Termination Value thereof.


 


“Maturity Date” means February 13, 2012.


 


“Maximum Rate” has the meaning provided therefor in Section 10.09.


 


“Moody’s” means Moody’s Investors Service, Inc. and any
successor thereto.


 


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


 


“Net Income” shall mean with respect to any
fiscal period, the net income of the Loan Parties determined in accordance with
GAAP, consistently applied.


 


“Net Proceeds” means (a) with respect to any Disposition by
any Loan Party or any of its
Subsidiaries, or any Extraordinary Receipt received or paid to the account of any Loan Party or any of its
Subsidiaries, the excess, if any, of (i) the sum of cash and cash
equivalents received in connection with such transaction (including any cash or
cash equivalents received by way of deferred payment pursuant to, or by
monetization of, a note receivable or otherwise, but only as and when so
received) over (ii) the sum of (A) the principal amount of any
Indebtedness that is secured by the applicable asset by a Lien permitted
hereunder which is senior to the Collateral Agent’s Lien on such asset and that
is required to be repaid (or to establish an escrow for the future repayment
thereof) in connection with such transaction (other than Indebtedness under the
Loan Documents), (B) the reasonable and customary out-of-pocket expenses
incurred by such Loan Party or
such Subsidiary in connection with such transaction (including, without
limitation, appraisals, and brokerage, legal, title and recording or transfer
tax expenses and commissions) paid by any Loan Party to third parties (other
than Affiliates)); and


 


25

















 


(b)           with respect to the
sale or issuance of any Equity Interest by any Loan Party or any of its Subsidiaries, or the incurrence or
issuance of any Indebtedness by any Loan Party or any of its Subsidiaries, the
excess of (i) the sum of the cash and cash equivalents received in
connection with such transaction over (ii) the underwriting discounts and
commissions, and other reasonable and customary out-of-pocket expenses,
incurred by such Loan Party or such Subsidiary in connection therewith.


 


“Non-Consenting Lender” has the meaning provided therefor in Section 10.01.


 


“Non-Extension Notice Date” has the meaning specified in Section 2.03(b)(iii).


 


“Note” means (a) each Committed Loan Note, and (b) the
Swing Line Loan Note, as each may be amended, supplemented or modified from
time to time.


 


“NPL” means the
National Priorities List under CERCLA.


 


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


 


“Operating Leases” shall mean any lease of
property (whether real, personal or mixed) for a period of longer than one year
by a Person under which such Person is lessee, other than a Capital Lease.


 


“Organization Documents” means, (a) with respect to any
corporation, the certificate or articles of incorporation and the bylaws (or
equivalent or comparable constitutive documents with respect to any non-U.S.
jurisdiction); (b) with respect to any limited liability company, the
certificate or articles of formation or organization and operating agreement; (c) with
respect to any partnership, joint venture, trust or other form of business
entity, the partnership, joint venture or other applicable agreement of
formation or organization and any agreement, instrument, filing or notice with
respect thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity, and (d) in each case, all shareholder or
other equity holder agreements, voting trusts and similar arrangements to which
such Person is a party or which is applicable to its Equity Interests and all
other arrangements relating to the Control or management of such Person.


 


“Other Liabilities” means any obligation on account of (a) any
Cash Management Services furnished to any of the Loan Parties or any of their
Subsidiaries and/or (b) any transaction with any Agent, any Lender or any
of their respective Affiliates, which arises out of any Bank Products entered
into with any Loan Party and any such Person, as each may be amended from time
to time


 


“Other Taxes” means all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or under any other Loan Document or from the
execution, delivery or enforcement of, or otherwise with respect to, this
Agreement or any other Loan Document.


 


26

















 


“Outstanding Amount” means (i) with respect to Committed
Loans and Swing Line Loans on any date, the aggregate outstanding principal
amount thereof after giving effect to any borrowings and prepayments or
repayments of Committed Loans and Swing Line Loans, as the case may be,
occurring on such date; and (ii) with respect to any L/C Obligations on
any date, the amount of such L/C Obligations on such date after giving effect
to any L/C Credit Extension occurring on such date and any other changes in the
aggregate amount of the L/C Obligations as of such date, including as a result
of any reimbursements by the Borrowers of Unreimbursed Amounts.


 


“Overadvance” means a Credit Extension to the extent that,
immediately after its having been made, Availability is less than zero.


 


“Parent” means Coldwater Creek Inc., a Delaware corporation.


 


“Participant” has the meaning specified in Section 10.06(d).


 


“Payment Conditions” means, at the time of determination with
respect to any specified transaction or payment, that (a) no Default or
Event of Default has occurred and is continuing or would arise as a result of
entering into such transaction or the making such payment, and (b) after
giving effect to such transaction or payment, the Pro Forma Availability
Condition has been satisfied.  Prior to
undertaking any transaction or payment which is subject to the Payment
Conditions, the Loan Parties shall deliver to the Administrative Agent evidence
of satisfaction of the conditions contained in clause (b) above on
a basis and on assumptions reasonably satisfactory to the Administrative Agent.


 


“PBGC” means the Pension Benefit Guaranty Corporation.


 


“PCAOB” means the Public Company Accounting Oversight Board.


 


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


 


“Permitted Acquisition” means an Acquisition in which all of the
following conditions are satisfied:


 


(a)           No Default or Event of Default has
occurred and is continuing or,
immediately following such Acquisition or after taking into account the pro
forma financials, would result from the consummation of such Acquisition;


 


(b)           Such Acquisition shall have been
approved by the Board of Directors of the Person (or similar governing body if
such Person is not a corporation) which is the subject of such Acquisition and
such Person shall not have announced that it will oppose such Acquisition or
shall not have commenced any action which alleges that such Acquisition shall
violate applicable Law;


 


(c)           The Lead Borrower shall have
furnished the Administrative Agent with thirty (30) days’ prior written notice
of such intended Acquisition and shall have furnished the Administrative Agent
with a current draft of the agreements, certificates and other documents
delivered or to be delivered in connection therewith (and final copies thereof
as and when executed), a summary of any due diligence undertaken by the Loan
Parties in connection with such Acquisition, appropriate financial statements
of the Person which is the subject of such Acquisition, pro forma projected
financial statements for the twelve (12) month period following such
Acquisition after giving effect to such Acquisition 


 


27

















 


(including
balance sheets, cash flows and income statements by quarter for the acquired
Person, individually, and on a Consolidated basis with all Loan Parties), and
such other information as the Administrative Agent may reasonably require, all
of which shall be reasonably satisfactory to the Administrative Agent;


 


(d)           Either (i) the legal structure of
the Acquisition shall be acceptable to the Administrative Agent in its
reasonable discretion, or (ii) the Loan Parties shall have provided the
Administrative Agent with a solvency opinion from an unaffiliated third party
valuation firm reasonably satisfactory to the Administrative Agent;


 


(e)           After giving effect to the
Acquisition, if the Acquisition is an Acquisition of the Equity Interests, a
Loan Party shall acquire and own, directly or indirectly, a majority of the
Equity Interests in the Person being acquired and shall Control a majority of
any voting interests or shall otherwise Control the governance of the Person
being acquired;


 


(f)            If the assets acquired in such
Acquisition are to be included in the Borrowing Base upon the consummation of
such Acquisition, the Administrative Agent shall have received (i) the
results of appraisals of the assets (or the assets of the Person) to be
acquired in such Acquisition and of a commercial finance examination of the
Person which is (or whose assets are) being acquired, and (ii) such other
due diligence as the Administrative Agent may reasonably require, all of the
results of the foregoing to be reasonably satisfactory to the Administrative
Agent;


 


(g)           Any assets acquired shall be utilized
in, and if the Acquisition involves a merger, consolidation or stock
acquisition, the Person which is the subject of such Acquisition shall be
engaged in, a business otherwise permitted to be engaged in by a Borrower under
this Agreement;


 


(h)           If the Person which is the subject of
such Acquisition will be maintained as a Subsidiary of a Loan Party, or if the
assets acquired in an acquisition will be transferred to a Subsidiary which is
not then a Loan Party, such Subsidiary shall have been joined as a “Borrower”
hereunder or as a Facility Guarantor, as the Administrative Agent shall
determine, and the Collateral Agent shall have received a first priority
security interest in such Subsidiary’s Equity Interests, Inventory, Accounts
and other property of the same nature as constitutes collateral under the
Security Documents;


 


(i)            Either (A) the consideration
paid for (i) any one such Acquisition (whether in cash, tangible property,
notes or other property, other than Equity Interests) after the Closing Date
shall not exceed the sum of $10,000,000, and (ii) all such Acquisitions
(whether in cash, tangible property, notes or other property, other than Equity
Interests) after the Closing Date shall not exceed, in the aggregate, the sum
of $25,000,000, or (B) the consideration for any such Acquisition is paid
in Equity Interests issued by the Parent or with the Net Proceeds from a sale
or issuance by the Parent of the Equity Interests of Parent, provided, that,
such Net Proceeds are applied for the consummation of such Acquisition within ninety
(90) days of the receipt thereof; and


 


(j)            The Loan Parties shall have
satisfied the Payment Conditions.


 


“Permitted Discretion” means the Administrative Agent’s good
faith credit judgment based upon any factor or circumstance which it reasonably
believes in good faith: (i) will or could reasonably be expected to
adversely affect the value of the Collateral, the enforceability or priority of
the Collateral Agent’s Liens thereon in favor of the Credit Parties or the
amount which the Collateral Agent and the Credit Parties would likely receive
(after giving consideration to delays in payment and costs of enforcement) in
the liquidation of such Collateral; (ii) suggests 


 


28

















 


that any collateral report or financial information delivered to the
Administrative Agent by or on behalf of the Loan Parties is incomplete,
inaccurate or misleading in any material respect; (iii) could reasonably
be expected to materially increase the likelihood of a bankruptcy, reorganization
or other insolvency proceeding involving any Loan Party; or (iv) creates
or reasonably could be expected to create a Default or Event of Default.  In exercising such judgment, the
Administrative Agent may consider, without limitation, such factors or
circumstances already addressed in or tested by the definition of Eligible
Inventory, Eligible Credit Card Receivables or Eligible Trade Receivables, as
well as any of the following: (A) the financial and business climate and
prospects of any Loan Party’s industry and general macroeconomic conditions; (B) changes
in demand for and pricing of Inventory; (C) changes in any concentration
of risk with respect to Inventory; (D) any other factors or circumstances
that will or could reasonably be expected to have a Material Adverse Effect; (E) audits
of books and records by third parties, history of chargebacks or other credit
adjustments; and (F) any other factors that change or could reasonably be
expected to change the credit risk of lending to the Borrowers on the security
of the Collateral.


 


“Permitted Disposition” means any of the following:


 


(a)           bulk sales or other Dispositions of
the Inventory of a Loan Party in the ordinary course of business, provided,
that, at the time of any such bulk sales, and immediately after giving
effect thereto, a Usage Event Period Event is not in effect, and the aggregate
amount of all such bulk sales does not exceed $1,000,000 in any Fiscal Year;


 


(b)           bulk sales or other Dispositions of
the Inventory of a Loan Party not in the ordinary course of business, made in
connection with Store closings, at arm’s length, provided, that
such Store closures and related Inventory Dispositions shall not exceed (i) in
any Fiscal Year of the Parent and its Subsidiaries, five percent (5%) of the
number of the Loan Parties’ Stores as of the beginning of such Fiscal Year (net
of new Store openings) and (ii) in the aggregate from and after the
Closing Date, ten percent (10%) of the number of the Loan Parties’ Stores in
existence as of the Closing Date (net of new Store openings), provided, further,
that all sales of Inventory in connection with Store closings shall be
in accordance with liquidation agreements and with professional liquidators
reasonably acceptable to the Agents; provided, further, that
as long as a Cash Dominion Event shall have occurred and be continuing, all Net
Proceeds received in connection therewith are applied to the Obligations in
accordance with Section 2.05 hereof;


 


(c)           non-exclusive licenses of
Intellectual Property of a Loan Party or any of its Subsidiaries in the
ordinary course of business;


 


(d)           licenses for the conduct of licensed
departments within the Loan Parties’ Stores in the ordinary course of business;
provided that, if requested by the Agents, the Agents shall have entered into
an intercreditor agreement with the Person operating such licensed department
on terms and conditions reasonably satisfactory to the Agents;


 


(e)           Dispositions of Equipment in the
ordinary course of business that is substantially worn, damaged, obsolete or,
in the judgment of a Loan Party, no longer useful or necessary in its business
or that of any Subsidiary;


 


(f)            sales, transfers and Dispositions (i) among
the Loan Parties, (ii) by any Subsidiary to a Loan Party or (iii) to
the extent constituting a Permitted Investment, by any Loan Party to any
Subsidiary;


 


29

















 


(g)           sales, transfers and Dispositions of
or by any Subsidiary which is not a Loan Party to another Subsidiary that is
not a Loan Party; and


 


(h)           as long as no Default or Event of
Default shall have occurred and be continuing or would arise therefrom, sales
of Real Estate of any Loan Party (or sales of any Person or Persons created to
hold such Real Estate or the equity interests in such Person or Persons),
including sale-leaseback transactions involving any such Real Estate pursuant
to leases on market terms, provided, that (A) such sale is made for fair
market value, (B) as long as a Cash Dominion Event shall have occurred and
be continuing, the Net Proceeds of any such sale are utilized to repay the
Obligations, and (C) in the case of any sale-leaseback transaction
permitted hereunder, the Collateral Agent shall have received from such each
purchaser or transferee a Collateral Access Agreement on terms and conditions
reasonably satisfactory to the Agents.


 


“Permitted Encumbrances” means:


 


(a)           Liens imposed by law for Taxes that
are not yet due or are being contested in compliance with Section 6.04;


 


(b)           carriers’, warehousemen’s, mechanics’,
materialmen’s, repairmen’s and other like Liens imposed by applicable Law,
arising in the ordinary course of business and securing obligations that are
not overdue by more than thirty (30) days or are being contested in compliance
with Section 6.04;


 


(c)           pledges and deposits made (i) in
the ordinary course of business in compliance with workers’ compensation,
unemployment insurance and other social security laws or regulations, other
than any Lien imposed by ERISA and (ii) in connection with an Acquisition
or Permitted Disposition otherwise permitted hereunder, whether as an earnest
money deposit or an escrow arrangement;


 


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


 


(e)           Liens in respect of judgments that
would not constitute an Event of Default hereunder;


 


(f)            easements, covenants, conditions,
restrictions, building code laws, zoning restrictions, rights-of-way and
similar encumbrances on real property imposed by law or arising in the ordinary
course of business that do not secure any monetary obligations and do not
materially interfere with the ordinary conduct of business of a Loan Party and
such other minor title defects or survey matters that do not materially
interfere with the current use of the real property;


 


(g)           Liens existing on the date hereof and
listed on Schedule 7.01 and any renewals or extensions thereof, provided
that (i) the property covered thereby is not changed, (ii) except as
permitted pursuant to clause (a) of the definition of “Permitted
Indebtedness,” the amount secured or benefited thereby is not increased, (iii) the
direct or any contingent obligor with respect thereto is not changed, and (iv) any
renewal or extension of the obligations secured or benefited thereby is
otherwise permitted hereunder;


 


(h)           Liens on fixed or capital assets
acquired by any Loan Party which are permitted under clause (c) of
the definition of Permitted Indebtedness so long as (i) such Liens and the
Indebtedness secured thereby are incurred prior to or within ninety (90) days
after such acquisition, (ii) the Indebtedness secured thereby does not
exceed the cost of 


 


30

















 


acquisition
of such fixed or capital assets and (iii) such Liens shall not extend to
any other property or assets of the Loan Parties;


 


(i)            Liens in favor of the Collateral
Agent;


 


(j)            Landlords’ and lessors’ Liens in
respect of rent not in default;


 


(k)           possessory Liens in favor of brokers
and dealers arising in connection with the acquisition or disposition of
Investments owned as of the date hereof and Permitted Investments, provided
that such liens (a) attach only to such Investments and (b) secure
only obligations incurred in the ordinary course and arising in connection with
the acquisition or disposition of such Investments and not any obligation in
connection with margin financing;


 


(l)            Liens arising solely by virtue of
any statutory or common law provisions relating to banker’s liens, liens in
favor of securities intermediaries, rights of setoff or similar rights and
remedies as to deposit accounts or securities accounts or other funds
maintained with depository institutions or securities intermediaries;


 


(m)          Liens arising from (i) precautionary
UCC filings regarding “true” operating leases or, to the extent permitted under
the Loan Documents, the consignment of goods to a Loan Party, or (ii) UCC
filings which (x) have lapsed or (y) relate to obligations that have
been indefeasibly repaid in full and for which no rights to obtain further
extensions of credit or other financial accommodations remain outstanding;


 


(n)           voluntary Liens on property (other
than property of the type included in the Borrowing Base) in existence at the
time such property is acquired pursuant to a Permitted Acquisition or on such
property of a Subsidiary of a Loan Party in existence at the time such
Subsidiary is acquired pursuant to a Permitted Acquisition; provided,
that such Liens are not incurred in connection with or in anticipation of such
Permitted Acquisition and do not attach to any other assets of any Loan Party
or any Subsidiary;


 


(o)           Liens in favor of customs and
revenues authorities imposed by applicable Law arising in the ordinary course
of business in connection with the importation of goods and securing
obligations (i) that are not overdue by more than thirty (30) days, or
(ii)(A) that are being contested in good faith by appropriate proceedings,
(B) the applicable Loan Party or Subsidiary has set aside on its books
adequate reserves with respect thereto in accordance with GAAP and (C) such
contest effectively suspends collection of the contested obligation and
enforcement of any Lien securing such obligation;


 


(p)           Liens on cash collateral securing
letters of credit which are permitted under clause (k) of the
definition of Permitted Indebtedness; and


 


(r)            Liens on fixed or capital assets
acquired or held by any Loan Party relating to a financing permitted under clause
(f) of the definition of Permitted Indebtedness so long as such Liens
shall not extend to any other property or assets of the Loan Parties.


 


provided, however,  that, except as provided in any one or more
of clauses (a) through (r) above, the term “Permitted
Encumbrances” shall not include any Lien securing Indebtedness.


 


“Permitted Holder” means any one of the following: (i) Dennis
Pence and (ii) Ann Pence, and any member of the Family Group of each such
Person.


 


“Permitted Indebtedness” means each of the following as long as
no Default or Event of Default has occurred and is continuing or would arise
from the incurrence thereof:


 


(a)           Indebtedness outstanding on the date
hereof and listed on Schedule 7.03 and any refinancings, refundings,
renewals or extensions thereof; provided that (i) the amount of
such Indebtedness is not increased at the time of such refinancing, refunding,
renewal or


 


31

















 


extension
except by an amount equal to a reasonable premium or other reasonable amount
paid, and fees and expenses reasonably incurred, in connection with such
refinancing and by an amount equal to any existing commitments unutilized
thereunder, and the direct or contingent obligor with respect thereto is not
changed as a result of or in connection with such refinancing, refunding,
renewal or extension, (ii) the result of such extension, renewal or
replacement shall not be an earlier maturity date or decreased weighted average
life of such Indebtedness, and (iii) the terms relating to principal
amount, amortization, maturity, collateral (if any) and subordination (if any),
and other material terms taken as a whole, of any such refinancing, refunding,
renewing or extending Indebtedness, and of any agreement entered into and of
any instrument issued in connection therewith, are no less favorable in any
material respect to the Loan Parties or the Lenders than the terms of any
agreement or instrument governing the Indebtedness being refinanced, refunded,
renewed or extended;


 


(b)           Indebtedness of any Loan Party to any
other Loan Party; provided  that such Indebtedness shall (i) be
evidenced by such documentation as the Administrative Agent may reasonably
require, (ii) constitute “Collateral” under this Agreement and the
Security Documents, (iii) be on terms (including subordination terms)
reasonably acceptable to the Administrative Agent, and (iv) be otherwise
permitted pursuant to Section 7.03;


 


(c)           without duplication of Indebtedness
described in clause (f) of this definition, purchase money
Indebtedness of any Loan Party to finance the acquisition of any fixed or
capital assets, including Capital Lease Obligations and Synthetic Lease
Obligations, and any Indebtedness
assumed in connection with the acquisition of any such assets or secured by a
Lien on any such assets prior to the acquisition thereof, and extensions,
renewals and replacements of any such Indebtedness that do not increase the
outstanding principal amount thereof or result in an earlier maturity date or
decreased weighted average life thereof provided that the terms relating to
principal amount, amortization, maturity, collateral (if any) and subordination
(if any), and other material terms taken as a whole, of any such refinancing,
refunding, renewing or extending Indebtedness, and of any agreement entered
into and of any instrument issued in connection therewith, are no less
favorable in any material respect to the Loan Parties or the Lenders than the
terms of any agreement or instrument governing the Indebtedness being
refinanced, refunded, renewed or extended and the interest rate applicable to
any such refinancing, refunding, renewing or extending Indebtedness does not
exceed the then applicable market interest rate, provided, however,
that, in addition to the Capital Lease Obligations outstanding on the date hereof and listed on Schedule
7.03, the aggregate principal amount of all Indebtedness permitted by this clause
(c) shall not exceed (i) $5,000,000 in any any Fiscal Year, or (ii) $15,000,000
at any time on or after the Closing Date, and provided, further,
that, if requested by the Collateral Agent, the Loan Parties shall cause the
holders of any such Indebtedness to enter into a Collateral Access Agreement on
terms reasonably satisfactory to the Collateral Agent;


 


(d)           obligations (contingent or otherwise)
of any Loan Party or any Subsidiary thereof existing or arising under any Swap
Contract, provided that such obligations are (or were) entered into by
such Person in the ordinary course of business for the purpose of directly
mitigating risks associated with fluctuations in interest rates or foreign
exchange rates, and not for purposes of speculation or taking a “market view;” provided
that the


 


32

















 


aggregate
Swap Termination Value thereof shall not exceed $2,500,000 at any time
outstanding;


 


(e)           contingent liabilities under surety
bonds or similar instruments incurred in the ordinary course of business;


 


(f)            Indebtedness (i) incurred for
the construction or acquisition or improvement of, or to finance or to
refinance, any Real Estate owned by any Loan Party (including therein any
Indebtedness incurred in connection with sale-leaseback transactions permitted
hereunder), provided  that, (A) as long as a Cash Dominion
Event shall have occurred and be continuing, all Net Proceeds received in
connection with any such Indebtedness are applied to the Obligations, and (B) the
Collateral Agent shall have received from the holders of such Indebtedness a
Collateral Access Agreement on terms reasonably satisfactory to the Collateral
Agent, or (ii) constituting Capital Lease Obligations relating to Real
Estate that is subject to a sale-leaseback transaction permitted pursuant to clause
(h) of the definition of Permitted Disposition;


 


(g)           Indebtedness with respect to the
deferred purchase price for any Permitted Acquisition, provided, that
such Indebtedness does not require the payment in cash of principal (other than
in respect of working capital adjustments) prior to the Maturity Date, has a
maturity which extends beyond the Maturity Date, and is subordinated to the
Obligations on terms reasonably acceptable to the Agents;


 


(h)           Indebtedness of (i) any Person
that becomes a Subsidiary of a Loan Party in a Permitted Acquisition, which
Indebtedness is existing at the time such Person becomes a Subsidiary of a Loan
Party (other than Indebtedness incurred solely in contemplation of such Person’s
becoming a Subsidiary of a Loan Party) or (ii) any Subsidiary to the
extent that such Indebtedness constitutes a Permitted Investment pursuant to clause
(g)(iv) of the definition thereof;


 


(i)            the Obligations;


 


(j)            Subordinated Indebtedness;


 


(k)           (i) unsecured Indebtedness, not
otherwise permitted under subsections (a) through (j) above,
or (ii) Indebtedness relating to cash collateralized Letters of Credit, provided,
that, the aggregate principal amount of all Indebtedness specified in clauses
(i) and (ii) hereto shall collectively not exceed
$1,000,000 at any one time outstanding;


 


(l)            Guarantees of any
Loan Party or other Subsidiary in respect of obligations of another Loan Party
that are otherwise permitted to be incurred under this Agreement and the other
Loan Documents; and


 


(m)          all Indebtedness
referred to in clause (g) to the definition of Indebtedness, other
than any such Indebtedness which constitutes Disqualified Stock.


 


“Permitted Investments” means each of the following as long as
no Default or Event of Default exists or would arise from the making of such
Investment:


 


(a)           readily marketable obligations
issued or directly and fully guaranteed or insured by the United States of
America or any agency or instrumentality thereof having maturities of not more
than 360 days from the date of acquisition thereof; provided that the full faith and credit of the United States
of America is pledged in support thereof;


 


(b)           commercial paper issued by any
Person organized under the laws of any state of the United States of America
and rated at least “Prime-1” (or the then equivalent grade) by Moody’s or
at least “A-1” (or the then equivalent grade) by S&P, in each case
with maturities of not more than 180 days from the date of acquisition thereof;


 


33

















 


(c)           time deposits with, or insured
certificates of deposit or bankers’ acceptances of, any commercial bank that (i) (A) is
a Lender or (B) is organized under the laws of the United States of
America, any state thereof or the District of Columbia or is the principal
banking subsidiary of a bank holding company organized under the laws of the
United States of America, any state thereof or the District of Columbia, and is
a member of the Federal Reserve System, (ii) issues (or the parent of
which issues) commercial paper rated as described in clause (c) of
this definition and (iii) has combined capital and surplus of at least
$1,000,000,000, in each case with maturities of not more than 180 days from the
date of acquisition thereof;


 


(d)           fully collateralized repurchase
agreements with a term of not more than thirty (30) days for securities
described in clause (a) above (without regard to the limitation on
maturity contained in such clause) and entered into with a financial
institution satisfying the criteria described in clause (c) above
or with any primary dealer and having a market value at the time that such
repurchase agreement is entered into of not less than 100% of the repurchase
obligation of such counterparty entity with whom such repurchase agreement has
been entered into;


 


(e)           Investments, classified in accordance
with GAAP as current assets of the Loan Parties, in any money market fund,
mutual fund, or other investment companies that are registered under the
Investment Company Act of 1940, as amended, which are administered by financial
institutions that have the highest rating obtainable from either Moody’s or
S&P, and which invest solely in one or more of the types of securities
described in clauses (a) through (d) above;


 


(f)            Investments existing on the Closing
Date, and set forth on Schedule 7.02, but not any increase in the amount
thereof or any other modification of the terms thereof;


 


(g)           (i) Investments by any Loan
Party and its Subsidiaries in their respective Subsidiaries outstanding on the
date hereof, (ii) additional Investments by any Loan Party and its
Subsidiaries in Loan Parties, (iii) additional Investments by any
Subsidiary that is not a Loan Party in another Subsidiary that is not a Loan
Party, and (iv) additional investments by any Loan Party in a Subsidiary
that is not a Loan Party so long as, in the case of this clause (iv),
the proceeds of any such Investment is used by each such Subsidiary to pay for
its operating expenses incurred in the ordinary course of its business, and the
aggregate amount of such Investments following the Closing Date (y) in all
such Subsidiaries (other than Coldwater HK), does not exceed $100,000 per
Fiscal Year, and (z) in Coldwater HK, does not exceed $3,000,000 per
Fiscal Year;


 


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


 


(i)            Guarantees constituting Permitted
Indebtedness;


 


(j)            Investments by any Loan Party in
Swap Contracts permitted hereunder;


 


(k)           Investments received in connection
with the bankruptcy or reorganization of, or settlement of delinquent accounts
and disputes with, customers and suppliers, in each case in the ordinary course
of business;


 


(l)            advances to officers, directors and
employees of the Loan Parties and Subsidiaries in the ordinary course of
business in an amount not to exceed $300,000 to any individual 


 


34

















 


at
any time or in an aggregate amount not to exceed $300,000 at any time
outstanding, for travel, entertainment, relocation and analogous ordinary
business purposes;


 


(m)          Investments constituting Permitted
Acquisitions;


 


(n)           Capital contributions made by any
Loan Party to another Loan Party;


 


(o)           to the extent constituting an Investment,
all Capital Expenditures permitted hereunder.


 


provided, however,
that notwithstanding the foregoing, after the occurrence and during the
continuance of a Cash Dominion Event, no such Investments specified in clauses
(a) through (e) shall be permitted unless (i) either (A) no
Loans are then outstanding, or (B) the Investment is a temporary
Investment pending expiration of an Interest Period for a LIBO Rate Loan, the
proceeds of which Investment will be applied to the Obligations after the
expiration of such Interest Period, and (ii) such Investments are pledged
to the Collateral Agent as additional Collateral for the Obligations pursuant
to such agreements as may be reasonably required by the Collateral Agent.


 


“Permitted Overadvance” means an Overadvance made by the Administrative
Agent, in its discretion, which:


 


(a)           Is made to maintain, protect or
preserve the Collateral and/or the Credit Parties’ rights under the Loan
Documents or which is otherwise for the benefit of the Credit Parties; or


 


(b)           Is made to enhance the likelihood of,
or to maximize the amount of, repayment of any Obligation;


 


(c)           Is made to pay any other amount
chargeable to any Loan Party hereunder; and


 


(d)           Together with all other Permitted
Overadvances then outstanding, shall not (i) exceed ten percent (10%) of
the Loan Cap at any time or (ii) unless a Liquidation is occurring, remain
outstanding for more than forty-five (45) consecutive Business Days, unless in
each case, the Required Lenders otherwise agree.


 


provided, however,
that the foregoing shall not (i) modify or abrogate any of the provisions
of Section 2.03 regarding the Lender’s obligations with respect to
Letters of Credit, or (ii) result in any claim or liability against the
Administrative Agent (regardless of the amount of any Overadvance) for “inadvertent
Overadvances” (i.e. where an Overadvance results from changed circumstances
beyond the control of the Administrative Agent (such as a reduction in the
collateral value)), and such “inadvertent Overadvances” shall not reduce the
amount of Permitted Overadvances allowed hereunder, and provided  further
that in no event shall the Administrative Agent make an Overadvance, if
after giving effect thereto, the principal amount of the Credit Extensions
would exceed the Aggregate Commitments (as in effect prior to any termination
of the Commitments pursuant to Section 2.06 hereof).


 


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


 


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


 


“Pledge Agreement” means, collectively, the Pledge Agreements
dated as of the Closing Date among the Loan Parties party thereto and the
Collateral Agent, as amended and in effect from time to time.


 


“Prepayment Event” means:


 


35

















 


(a)           any Disposition (including, without
limitation, pursuant to any sale-leaseback transaction) of any property or
asset of a Loan Party;


 


(b) any
casualty or other insured damage to, or any taking under power of eminent
domain or by condemnation or similar proceeding of, any property or asset of a
Loan Party, unless (i) the proceeds therefrom are required to be paid to
the holder of a Lien on such property or asset having priority over the Lien of
the Collateral Agent or (ii) prior to the occurrence of a Cash Dominion
Event, the proceeds therefrom are utilized in accordance with Section 6.21;


 


(c)           the issuance by a Loan Party of any
Equity Interests, other than any such issuance of Equity Interests (i) to
a Loan Party, (ii) as consideration for a Permitted Acquisition or (iii) as
a compensatory issuance to any employee, director, or consultant (including
under any option plan);


 


(d)           the incurrence by a Loan Party of any
Indebtedness for borrowed money other than Permitted Indebtedness; or


 


(e)           the receipt by any Loan Party of any
Extraordinary Receipts.


 


“Pro Forma Availability
Condition” shall mean, for any date of calculation with respect to any
transaction or payment, the Pro Forma Availability following, and after giving
effect to, such transaction or payment, will be equal to or greater than thirty
percent (30%) of the Loan Cap.


 


“Pro Forma Availability”
shall mean, for any date of calculation, the projected average Availability
(exclusive of any projected Short-Term Borrowings) for each Fiscal Month during
any projected twelve (12) Fiscal Months.


 


“Real Estate” means all Leases and all land, together with the
buildings, structures, parking areas, and other improvements thereon, now or
hereafter owned by any Loan Party, including all easements, rights-of-way, and
similar rights relating thereto and all leases, tenancies, and occupancies
thereof.


 


“Receivables Reserves” means such Reserves as may be established
from time to time by the Administrative Agent in the Administrative Agent’s
discretion with respect to the determination of the collectability in the
ordinary course of Eligible Trade Receivables.


 


“Register” has the meaning specified in Section 10.06(c).


 


“Registered Public Accounting Firm” has the meaning specified by
the Securities Laws and shall be independent of the Parent and its Subsidiaries
as prescribed by the Securities Laws.


 


“Related Parties” means, with respect to any Person, such Person’s
Affiliates and the partners, directors, officers, employees, agents, advisors,
attorneys and representatives of such Person and of such Person’s Affiliates.


 


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


 


“Reports” has the meaning provided in Section 9.11.


 


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


 


“Required Lenders” means, as of any date of determination, at
least two Lenders holding more than 50% of the Aggregate Commitments or, if the
Commitment of each Lender to make Loans and the obligation of the L/C Issuer to
make L/C Credit Extensions have been terminated pursuant to Section 8.02,
at least two Lenders holding in the aggregate more than 50% of the Total
Outstandings (with the aggregate amount of each Lender’s risk participation and
funded 


 


36

















 


participation in L/C Obligations and Swing Line Loans being deemed “held”
by such Lender for purposes of this definition); provided that the Commitment
of, and the portion of the Total Outstandings held or deemed held by, any
Defaulting Lender shall be excluded for purposes of making a determination of
Required Lenders.


 


“Reserves” means all (if any) Inventory Reserves, Availability
Reserves and Receivables Reserves.


 


“Responsible Officer” means the chief executive officer,
president, chief financial officer of a Loan Party or any of the other
individuals designated in writing to the Administrative Agent by an existing
Responsible Officer of a Loan Party as an authorized signatory of any
certificate or other document to be delivered hereunder.  Any document delivered hereunder that is
signed by a Responsible Officer of a Loan Party shall be conclusively presumed
to have been authorized by all necessary corporate, partnership and/or other
action on the part of such Loan Party and such Responsible Officer shall be
conclusively presumed to have acted on behalf of such Loan Party.


 


“Restricted Payment” means any dividend or other distribution
(whether in cash, securities or other property) with respect to any capital
stock or other Equity Interest of any Person or any of its Subsidiaries, or any
payment (whether in cash, securities or other property), including any sinking
fund or similar deposit, on account of the purchase, redemption, retirement,
defeasance, acquisition, cancellation or termination of any such capital stock
or other Equity Interest, or on account of any return of capital to such Person’s
stockholders, partners or members (or the equivalent of any thereof), or any
option, warrant or other right to acquire any such dividend or other
distribution or payment.  Without
limiting the foregoing, “Restricted Payments” with respect to any Person shall
also include all payments made by such Person with any proceeds of a
dissolution or liquidation of such Person.


 


“Restricted Payment Conditions” means, at the time of
determination with respect to any specified transaction or payment, that (a) no
Default or Event of Default has occurred and is continuing or would arise as a
result of entering into such transaction or making such payment, (b) after
giving effect to such transaction or payment, the Restricted Pro Forma
Availability Condition has been satisfied, and (c) on the date of such
transaction or payment, the amount of Total Outstandings (other than the
undrawn amount available to be drawn under all outstanding Letters of Credit
and Short-Term Borrowings) shall be zero.


 


“Restricted Preferred Equity Dividend Conditions” means, at the
time of determination with respect to any specified dividend payment in respect
of preferred equity, that (a) no Default or Event of Default has occurred
and is continuing or would arise as a result of making such payment, and (b) after
giving effect to such payment, the Restricted Preferred Equity Dividend Pro
Forma Liquidity Amount is not less than $25,000,000


 


“Restricted Preferred Equity Dividend Pro Forma Liquidity Amount”
shall mean, for any date on which any dividend payment in respect of preferred
equity is paid, after giving effect to such payment, and projected for the 90
consecutive day period following the date of the proposed payment, the sum of (a) Availability
plus (b) cash and cash equivalents of the type described in clauses (a) through
(e) of the definition of Permitted Investments held by the Loan Parties.


 


“Restricted
Pro Forma Availability” shall mean, for any date of calculation, the
projected average Availability (exclusive of any projected Short-Term Borrowings) for the 90
consecutive day period following a proposed Restricted Payment, as reasonably
projected by the Lead Borrower in good faith.


 


“Restricted Pro Forma Availability Condition” shall mean, for any date of calculation
with respect to any transaction or payment, the Restricted Pro Forma Availability following, and after 


 


37

















 


giving effect to, such
transaction or payment, will be equal to or greater than fifty percent (50%) of
the Loan Cap.


 


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


 


“Sarbanes-Oxley” means the Sarbanes-Oxley Act of 2002.


 


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


 


“Securities Laws” means 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 PCAOB.


 


“Security Agreement” means the Security Agreement dated as of
the Closing Date among the Loan Parties and the Collateral Agent.


 


“Security Documents” means the Security Agreement, the Pledge
Agreement, the Intellectual Property Security Agreement, the Blocked Account
Agreements, the DDA Notifications, the Credit Card Notifications, and each
other security agreement or other instrument or document executed and delivered
to the Collateral Agent pursuant to this Agreement or any other Loan Document
granting a Lien to secure any of the Obligations.


 


“Settlement Date” has the meaning provided in Section 2.14(a).


 


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


 


“Short-Term Borrowings” means any Loan, the proceeds of which
are used to repay any interest, fees, costs, Credit Party Expenses or any
Unreimbursed Amount incurred in connection with this Agreement or the other
Loan Documents, which is fully repaid by the Borrower, in cash, within 15 days
following notice of such Loan.


 


“Shrink” means Inventory which has been lost, misplaced, stolen,
or is otherwise unaccounted for.


 


“Solvent” and “Solvency” means, with respect to any
Person on a particular date, that on such date (a) at fair valuation, all
of the properties and assets of such Person are greater than the sum of the
debts, including contingent liabilities, of such Person, (b) the present
fair saleable value of the properties and assets of such Person is not less
than the amount that would be required to pay the probable liability of such
Person on its debts as they become absolute and matured, (c) such Person
is able to realize upon its properties and assets and pay its debts and other
liabilities, contingent obligations and other commitments as they mature in the
normal course of business, (d) such Person does not intend to, and does
not believe that it will, incur debts beyond such Person’s ability to pay as
such debts mature, and (e) such Person is not engaged in a business or a
transaction, and is not about to engage in a business or transaction, for which
such Person’s properties and assets would constitute unreasonably small capital
after giving due consideration to the prevailing practices in the industry in
which such Person is engaged.  The amount
of all guarantees at any time shall be computed as the amount that, in light of
all the facts and circumstances existing at the time, can reasonably be
expected to become an actual or matured liability.


 


“Standby Letter of Credit” means any Letter of Credit that is
not a Commercial Letter of Credit and that (a) is used in lieu or in
support of performance guaranties or performance, surety or similar bonds
(excluding appeal bonds) arising in the ordinary course of business, (b) is
used in lieu or in support of stay or appeal bonds, (c) supports the
payment of insurance premiums for 


 


38

















 


reasonably necessary casualty insurance carried by any of the Loan
Parties, or (d) supports payment or performance for identified purchases
or exchanges of products or services in the ordinary course of business.


 


“Stated Amount” means at any time the maximum amount for which a
Letter of Credit may be honored.


 


“Statutory Reserve Rate” means a fraction (expressed as a
decimal), the numerator of which is the number one and the denominator of which
is the number one minus the aggregate of the maximum reserve percentages
(including any marginal, special, emergency or supplemental reserves) expressed
as a decimal established by the FRB to which Wells Fargo Bank is
subject with respect to the Adjusted LIBO Rate, for eurocurrency funding
(currently referred to as “Eurocurrency Liabilities” in Regulation D of
the Board). Such reserve percentages shall include those imposed pursuant to
such Regulation D.  LIBO Rate Loans
shall be deemed to constitute eurocurrency funding and to be subject to such
reserve requirements without benefit of or credit for proration, exemptions or
offsets that may be available from time to time to any Lender under such
Regulation D or any comparable regulation. The Statutory Reserve Rate
shall be adjusted automatically on and as of the effective date of any change
in any reserve percentage.


 


“Store” means any retail store (which may include any real
property, fixtures, Equipment, Inventory and other property related thereto)
operated, or to be operated, by any Loan Party.


 


“Subordinated Indebtedness” means Indebtedness which is
expressly subordinated in right of payment to the prior payment in full of the
Obligations and which is in form and on terms approved in writing by the
Administrative Agent.


 


“Subsidiary” of a Person means a corporation, partnership, joint
venture, limited liability company or other business entity of which a majority
of the Equity Interests having ordinary voting power for the election of
directors or other governing body 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 a Loan Party.


 


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


 


“Swap Termination Value” means, in respect of any one or more
Swap Contracts, after taking into account the effect of any legally enforceable
netting agreement relating to such Swap Contracts, (a) for any date on or
after the date such Swap Contracts have been closed out and


 


39

















 


termination value(s) determined in accordance therewith, such
termination value(s), and (b) for any date prior to the date referenced in
clause (a), the amount(s) determined as the mark-to-market value(s) for
such Swap Contracts, as determined based upon one or more mid-market or other
readily available quotations provided by any recognized dealer in such Swap
Contracts (which may include a Lender or any Affiliate of a Lender).


 


“Swing Line” means the revolving credit facility made available
by the Swing Line Lender pursuant to Section 2.04.


 


“Swing Line Borrowing” means a borrowing of a Swing Line Loan
pursuant to Section 2.04.


 


“Swing Line Lender” means Wells Fargo Retail Finance, LLC, its
capacity as provider of Swing Line Loans, or any successor swing line lender
hereunder.


 


“Swing Line Loan” has the meaning specified in Section 2.04(a).


 


“Swing Line Loan Notice” means a notice of a Swing Line
Borrowing pursuant to Section 2.04(b), which, if in writing, shall
be substantially in the form of Exhibit B.


 


“Swing Line Loan Note” means the promissory note of the
Borrowers substantially in the form of Exhibit C-2, payable to the
order of the Swing Line Lender, evidencing the Swing Line Loans made by the
Swing Line Lender.


 


“Swing Line Sublimit” means an amount equal to the lesser of (a) $10,000,000,
and (b) the Aggregate Commitments. 
The Swing Line Sublimit is part of, and not in addition to, the
Aggregate Commitments.


 


“Synthetic Lease” shall mean each
arrangement, however described, under which the obligor accounts for its
interest in the property covered thereby under GAAP as lessee of a lease which
is not a Capital Lease and accounts for its interest in the property covered
thereby for Federal income tax purposes to the owner.


 


“Synthetic Lease Interest Component” shall
mean, with respect to any Person for any period, the portion of rent paid or
payable (without duplication) for such period under Synthetic Leases of such
Person that would be treated as interest in accordance with Financial
Accounting Standards Board Statement No. 13 if such Synthetic Leases were
treated as capital leases under GAAP.


 


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


 


“Taxes” means all present or future taxes, levies, imposts,
duties, deductions, withholdings, assessments, fees or other charges imposed by
any Governmental Authority, including any interest, additions to tax or
penalties applicable thereto.


 


“Termination Date” means the earliest to occur of (i) the
Maturity Date, (ii) the date on which the maturity of the Obligations is
accelerated (or deemed accelerated) and the Commitments are irrevocably
terminated (or deemed terminated) in accordance with Article VIII.


 


“Total Funded Debt” shall mean all Indebtedness (to the extent
included as Indebtedness in accordance with GAAP) of the Loan Parties on a
Consolidated basis.


 


“Total Outstandings” means the aggregate Outstanding Amount of
all Loans and all L/C Obligations.


 


“Trade Receivables Advance Rate” means 85%.


 


40














 


“Trading with the Enemy Act” has the meaning set forth in Section 10.18.


 


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


 


“UCC” or “Uniform Commercial Code” means the Uniform
Commercial Code as in effect from time to time in the State of New York; provided,
however, that if a term is defined in Article 9 of the Uniform
Commercial Code differently than in another Article thereof, the term
shall have the meaning set forth in Article 9; provided further that, if
by reason of mandatory provisions of law, perfection, or the effect of
perfection or non-perfection, of a security interest in any Collateral or the
availability of any remedy hereunder is governed by the Uniform Commercial Code
as in effect in a jurisdiction other than New York, “Uniform Commercial Code”
means the Uniform Commercial Code as in effect in such other jurisdiction for
purposes of the provisions hereof relating to such perfection or effect of
perfection or non-perfection or availability of such remedy, as the case may
be.


 


“UFCA “ has the
meaning specified in Section 10.21(d).


 


“UFTA” has the meaning specified in Section 10.21(d).


 


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


 


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


 


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


 


“Usage Event Period” means, any period during which any of the
following conditions exists: (i) a Default or Event of Default has
occurred and is continuing, (ii) Availability is less than or equal to 50%
of the Loan Cap, (iii) the Loan Parties maintain (a) on a 30 day
average basis, less than $30,000,000 of cash and cash equivalents of the type
described in clauses (a) through (e) of the definition of Permitted Investments,
or (b) at any time, less than $20,000,000 of cash and cash equivalents of
the type described in clauses (a) through (e) of the definition of
Permitted Investments, or (iv) Total Outstandings (other than the undrawn
amount available to be drawn under outstanding Letters of Credit and Short-Term
Borrowings) is greater than zero.  The “Usage
Event Period” shall commence with and include the Fiscal Month during which any
such condition first occurred and continue until the expiration of 30 consecutive
Business Days after the date on which no such conditions exist.


 


“Wells Fargo Bank” means Wells Fargo Bank, N.A., a national
banking association.


 


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


 


(a)           The definitions of terms
herein shall apply equally to the singular and plural forms of the terms
defined.  Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms.  The words “include,”
“includes” and “including” shall be deemed to be followed by the
phrase “without limitation.”  The word “will”
shall be construed to have the same meaning and effect as the word “shall.”  Unless the context requires otherwise, (i) any
definition of or reference to any agreement, instrument or other document
(including any Organization Document) shall be construed as referring to such
agreement, instrument or other document as from time to time amended, supplemented
or otherwise modified (subject to any restrictions on such amendments,
supplements or modifications set forth herein or in any other Loan Document), (ii) any
reference herein to any Person shall be construed to include such Person’s
successors and assigns, (iii) the words “herein,” “hereof”
and “hereunder,” and words of similar import when used in any Loan Document,
shall be construed to refer to such Loan Document in its entirety and not to
any


 


41

















 


particular
provision thereof, (iv) all references in a Loan Document to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, the Loan Document in which such
references appear, (v) any reference to any law shall include all
statutory and regulatory provisions consolidating, amending replacing or
interpreting such law and any reference to any law or regulation shall, unless
otherwise specified, refer to such law or regulation as amended, modified or
supplemented from time to time, and (vi) the words “asset” and “property”
shall be construed to have the same meaning and effect and to refer to any and
all tangible and intangible assets and properties, including cash, securities,
accounts and contract rights.


 


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


 


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


 


(d)           In the case of any component of the
calculation of Reserves or Borrowing Base that provides for a determination to
be made in the Administrative Agent’s discretion, such discretion shall be
exercised by the Administrative Agent in its Permitted Discretion.


 


1.03        Accounting
Terms


 


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


 


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


 


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


 


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


 


1.06        Letter of Credit
Amounts. Unless otherwise specified, all references
herein to the amount of a Letter of Credit at any time shall be deemed to be
the Stated Amount of such Letter of Credit in effect at such time; provided,
however, that with respect to any Letter of Credit that, by its terms or the
terms of any Issuer Documents related
thereto, provides for one or more automatic increases in the Stated Amount
thereof, the amount of such Letter of Credit shall be


 


42

















 


deemed to be the maximum Stated Amount of
such Letter of Credit after giving effect to all such increases, whether or not
such maximum Stated Amount is in effect at such time.


 


1.07        Currency Equivalents
Generally. Any amount specified in this Agreement
(other than in Articles II, IX and X) or any of the other
Loan Documents to be in Dollars shall also include the equivalent of such
amount in any currency other than Dollars, such equivalent amount thereof in
the applicable currency to be determined by the Administrative Agent at such
time on the basis of the Spot Rate (as defined below) for the purchase of such
currency with Dollars.  For purposes of
this Section 1.07, the “Spot Rate” for a currency means the
rate determined by the Administrative Agent to be the rate quoted by the Person
acting in such capacity as the spot rate for the purchase by such Person of
such currency with another currency through its principal foreign exchange trading
office at approximately 11:00 a.m. on the date two Business Days prior to
the date of such determination; provided that the Administrative Agent
may obtain such spot rate from another financial institution designated by the
Administrative Agent if the Person acting in such capacity does not have as of
the date of determination a spot buying rate for any such currency.


 


ARTICLE
II

THE COMMITMENTS AND CREDIT EXTENSIONS


 


2.01        Committed Loans;
Reserves. (a) Subject to the terms and conditions
set forth herein, each Lender severally agrees to make loans (each such loan, a
“Committed Loan”) to the Borrowers from time to time, on any Business
Day during the Availability Period, in an aggregate amount not to exceed at any
time outstanding the lesser of (x) the amount of such Lender’s Commitment,
or (y) such Lender’s Applicable Percentage of the Borrowing Base; subject
in each case to the following limitations:


 


(i)            after giving effect to any
Committed Borrowing, the Total Outstandings shall not exceed the lesser of (A) the
Aggregate Commitments, or (B) the Borrowing Base;


 


(ii)           after giving effect to any Committed
Borrowing, the aggregate Outstanding Amount of the Committed Loans of any
Lender, plus such Lender’s Applicable Percentage of the Outstanding
Amount of all L/C Obligations, plus such Lender’s Applicable Percentage
of the Outstanding Amount of all Swing Line Loans shall not exceed such Lender’s
Commitment;


 


(iii)          the Outstanding Amount of all L/C
Obligations shall not at any time exceed the Letter of Credit Sublimit; and


 


(iv)          after giving effect to all Credit
Extensions, no Overadvance shall exist.


 


Within the limits of each Lender’s
Commitment, and subject to the other terms and conditions hereof, the Borrowers
may borrow under this Section 2.01, prepay under Section 2.05,
and reborrow under this Section 2.01.  Committed Loans may be Base Rate Loans or
LIBO Rate Loans, as further provided herein.


 


(b)           The following are the
Reserves which may be established as of the Closing Date:


 


(i)            rent (an Availability Reserve): An
amount equal to two (2) months’ rent for all of the Borrowers’ leased
locations in each Landlord Lien State, other than leased locations with respect
to which the Collateral Agent has received a Collateral Access Agreement in
form reasonably satisfactory to the Collateral Agent;


 


(ii)           Customer Credit Liabilities (an
Availability Reserve);


 


(iii)          self funded health insurance (an
Availability Reserve);


 


(iv)          Shrink (an Inventory
Reserve); and


 


(v)           any additional Reserves described in
the Borrowing Base Certificate delivered on the Closing Date.


 


43

















 


(c)           The Administrative Agent
shall have the right, at any time and from time to time on or after the Closing
Date in its discretion to
establish new, or modify or eliminate any existing, eligibility criteria or
Reserves.


 


2.02        Borrowings, Conversions
and Continuations of Committed Loans.


 


(a)           Committed Loans (other than
Swing Line Loans) shall be either Base Rate Loans or LIBO Loans as the Lead
Borrower may request subject to and in accordance with this Section 2.02.  All Swing Line Loans shall be only Base Rate
Loans.  Subject to the other provisions
of this Section 2.02, Committed Borrowings of more than one Type
may be incurred at the same time.


 


(b)           Each Committed Borrowing, each
conversion of Committed Loans from one Type to the other, and each continuation
of LIBO Rate Loans shall be made upon the Lead Borrower’s irrevocable notice to
the Administrative Agent, which may be given by telephone.  Each such notice must be received by the
Administrative Agent not later than 11:00 a.m. (i) three Business
Days prior to the requested date of any Borrowing of, conversion to or
continuation of LIBO Rate Loans or of any conversion of LIBO Rate Loans to Base
Rate Loans, and (ii) one Business Day prior to the requested date of any
Borrowing of Base Rate Loans.  Each
telephonic notice by the Lead Borrower pursuant to this Section 2.02(b) must
be confirmed promptly by delivery to the Administrative Agent of a written
Committed Loan Notice, appropriately completed and signed by a Responsible
Officer of the Lead Borrower.  Each
Borrowing of, conversion to or continuation of LIBO Rate Loans shall be in a
principal amount of $1,000,000 or a whole multiple of $500,000 in excess
thereof.  Except as provided in Sections
2.03(c) and 2.04(c), each Borrowing of or conversion to Base
Rate Loans shall be in a principal amount of $500,000 or a whole multiple of
$100,000 in excess thereof.  Each
Committed Loan Notice (whether telephonic or written) shall specify (i) whether
the Lead Borrower is requesting a Committed Borrowing, a conversion of
Committed Loans from one Type to the other, or a continuation of LIBO Rate
Loans, (ii) the requested date of the Borrowing, conversion or
continuation, as the case may be (which shall be a Business Day), (iii) the
principal amount of Committed Loans to be borrowed, converted or continued, (iv) the
Type of Committed Loans to be borrowed or to which existing Committed Loans are
to be converted, and (v) if applicable, the duration of the Interest
Period with respect thereto.  If the Lead
Borrower fails to specify a Type of Committed Loan in a Committed Loan Notice
or if the Lead Borrower fails to give a timely notice requesting a conversion
or continuation, then the applicable Committed Loans shall be made as, or
converted to, Base Rate Loans.  Any such
automatic conversion to Base Rate Loans shall be effective as of the last day
of the Interest Period then in effect with respect to the applicable LIBO Rate
Loans.  If the Lead Borrower requests a
Borrowing of, conversion to, or continuation of LIBO Rate Loans in any such
Committed Loan Notice, but fails to specify an Interest Period, it will be
deemed to have specified an Interest Period of one month.  Notwithstanding anything to the contrary
herein, a Swing Line Loan may not be converted to a LIBO Rate Loan.


 


(c)           Following receipt of a Committed Loan
Notice, the Administrative Agent shall promptly notify each Lender of the
amount of its Applicable Percentage of the applicable Committed Loans, and if
no timely notice of a conversion or continuation is provided by the Lead
Borrower, the Administrative Agent shall notify each Lender of the details of
any automatic conversion to Base Rate Loans described in Section 2.02(b).  In the case of a Committed Borrowing, each
Lender shall make the amount of its Committed Loan available to the
Administrative Agent in immediately available funds at the Administrative Agent’s
Office not later than 1:00 p.m. on the Business Day specified in the
applicable Committed Loan Notice.  Upon
satisfaction of the applicable conditions set forth in Section 4.02
(and, if such Borrowing is the initial Credit Extension, Section 4.01),
the Administrative Agent shall use reasonable efforts to make all funds so
received available to the Borrowers in like funds by no later than 4:00 p.m.
on the day of receipt by the Administrative Agent either by (i) crediting
the account of the Lead Borrower on the books of the Administrative Agent with
the amount of such funds or (ii) wire transfer of such funds, in each case
in accordance with instructions provided to (and reasonably acceptable to) the
Administrative Agent by the Lead Borrower; provided, however,
that if, on the date the Committed Loan Notice with respect to such Borrowing
is given by the Lead Borrower, there are L/C Borrowings


 


44

















 


outstanding, then the proceeds of such Borrowing, first,
shall be applied to the payment in full of any such L/C Borrowings, and second,
shall be made available to the Borrowers as provided above.


 


(d)           The Administrative Agent, without the
request of the Lead Borrower, may advance any interest, fee, expenses, service
charge, Credit Party Expenses, or other payment to which any Credit Party is
entitled from the Loan Parties pursuant hereto or any other Loan Document, in
each case, as and when due and payable, and may charge the same to the Loan
Account notwithstanding that an Overadvance may result thereby.  The Administrative Agent shall advise the
Lead Borrower of any such advance or charge promptly after the making
thereof.  Such action on the part of the
Administrative Agent shall not constitute a waiver of the Administrative Agent’s
rights and the Borrowers’ obligations under Section 2.05.  Any amount which is added to the principal
balance of the Loan Account as provided in this Section 2.02(d) shall
bear interest at the interest rate then and thereafter applicable to Base Rate
Loans.


 


(e)           Except as otherwise provided herein,
a LIBO Rate Loan may be continued or converted only on the last day of an Interest
Period for such LIBO Rate Loan.  Upon the
occurrence and during the continuation of an Event of Default, the
Administrative Agent may, and at the direction of the Required Lenders shall,
prohibit Loans from being requested as, converted to, or continued as, LIBO
Rate Loans.


 


(f)            The Administrative Agent shall
promptly notify the Lead Borrower and the Lenders of the interest rate
applicable to any Interest Period for LIBO Rate Loans upon determination of
such interest rate.  At any time that Base
Rate Loans are outstanding, the Administrative Agent shall notify the Lead
Borrower and the Lenders of any change in Wells Fargo Bank’s prime rate used in
determining the Base Rate promptly following the public announcement of such
change.


 


(g)           After giving effect to all Committed
Borrowings, all conversions of Committed Loans from one Type to the other, and
all continuations of Committed Loans as the same Type, there shall not be more
than five (5) Interest Periods in effect with respect to Committed Loans.


 


(h)           The Administrative Agent, the
Lenders, the Swing Line Lender and the L/C Issuer shall have no obligation to
make any Loan, or to cause the issuance of or provide any Letter of Credit, if
an Overadvance would result.  The
Administrative Agent may, in its discretion, make Permitted Overadvances
without the consent of the Lenders, the Swing Line Lender and the L/C Issuer
and each Lender shall be bound thereby. 
Any Permitted Overadvance may constitute a Swing Line Loan. A Permitted
Overadvance is for the account of the Borrowers and shall constitute a Loan and
an Obligation and shall be repaid by the Borrowers in accordance with the
provisions of Section 2.05(c). 
The making of any such Permitted Overadvance on any one occasion shall
not obligate the Administrative Agent or any Lender to make or permit any
Permitted Overadvance on any other occasion or to permit such Permitted
Overadvances to remain outstanding. The making by the Administrative Agent of a
Permitted Overadvance shall not modify or abrogate any of the provisions of Section 2.03
regarding the Lenders’ obligations to purchase participations with respect to
Letters of Credit or of Section 2.04 regarding the Lenders’
obligations to purchase participations with respect to Swing Line Loans.  Without limiting the foregoing, the
Administrative Agent shall have no liability for, and no Loan Party or Credit
Party shall have the right to, or shall, bring any claim of any kind whatsoever
against the Administrative Agent with respect to “inadvertent Overadvances”
(i.e. where an Overadvance results from changed circumstances beyond the
control of the Administrative Agent (such as a reduction in the collateral
value)) regardless of the amount of any such Overadvance(s).


 


2.03        Letters of Credit.


 


(a)           The Letter of Credit
Commitment.


 


(i)            Subject to the terms and conditions set forth
herein, (A) the Administrative Agent, in reliance upon the
agreements of the Lenders set forth in this Section 2.03, shall
cause the L/C Issuer from time to time on any Business Day during the period
from the Closing Date until the Letter of Credit Expiration Date, to issue Letters of Credit for the account
of the Borrowers, and to amend or extend Letters of Credit previously issued by
the L/C


 


45

















 


Issuer,
in accordance with Section 2.03(b) below; and (B) the
Lenders severally agree to participate in Letters of Credit issued for the
account of the Borrowers and any drawings thereunder; provided that
after giving effect to any L/C Credit Extension with respect to any Letter of
Credit, (x) the Total Outstandings shall not exceed the lesser of the
Aggregate Commitments or the Borrowing Base, (y) the aggregate Outstanding
Amount of the Committed Loans of any Lender, plus such Lender’s
Applicable Percentage of the Outstanding Amount of all L/C Obligations, plus
such Lender’s Applicable Percentage of the Outstanding Amount of all Swing Line
Loans shall not exceed such Lender’s Commitment, and (z) the Outstanding
Amount of the L/C Obligations shall not exceed the Letter of Credit
Sublimit.  Each request by the Lead
Borrower for the issuance or amendment of a Letter of Credit shall be deemed to
be a representation by the Borrowers that the L/C Credit Extension so requested
complies with the conditions set forth in the proviso to the preceding
sentence.  Within the foregoing limits,
and subject to the terms and conditions hereof, the Borrowers’ ability to
obtain Letters of Credit shall be fully revolving, and accordingly the
Borrowers may, during the foregoing period, obtain Letters of Credit to replace
Letters of Credit that have expired or that have been drawn upon and
reimbursed.  Any L/C Issuer (other than Wells
Fargo Bank or any of its
Affiliates) shall notify the Administrative Agent in writing on each Business
Day of all Letters of Credit issued on the prior Business Day by such L/C
Issuer.  All Existing Letters of Credit
shall be deemed to have been issued pursuant hereto, and from and after the
Closing Date shall be subject to and governed by the terms and conditions
hereof (notwithstanding the fact that the Existing Letters of Credit were
issued for the account of the Parent and not the Borrowers).


 


(ii)           No Letter of Credit shall be issued
if:


 


(A)          subject to Section 2.03(b)(iii),
the expiry date of such requested Standby Letter of Credit would occur more
than twelve months after the date of issuance or last extension, unless the
Required Lenders have approved such expiry date; or


 


(B)           subject
to Section 2.03(b)(iii), the expiry date of such requested
Commercial Letter of Credit would occur more than 120 days after the date of
issuance or last extension, unless the Required Lenders have approved such
expiry date; or


 


(C)           the
expiry date of such requested Letter of Credit would occur after the Letter of
Credit Expiration Date, unless either such Letter of Credit is Cash
Collateralized on or prior to the Letter of Credit Expiration Date or all the
Lenders have approved such expiry date.


 


(iii)          No Letter of Credit shall be issued, without the prior consent of the
Administrative Agent, if:


 


(A)          any order, judgment or decree of any
Governmental Authority or arbitrator shall by its terms purport to enjoin or
restrain the L/C Issuer from issuing such Letter of Credit, or any Law
applicable to the L/C Issuer or any request or directive (whether or not having
the force of law) from any Governmental Authority with jurisdiction over the
L/C Issuer shall prohibit, or request that the L/C Issuer refrain from, the
issuance of letters of credit generally or such Letter of Credit in particular
or shall impose upon the L/C Issuer with respect to such Letter of Credit any
restriction, reserve or capital requirement (for which the L/C Issuer is not
otherwise compensated hereunder) not in effect on the Closing Date, or shall
impose upon the L/C Issuer any unreimbursed 


 


46

















 


loss, cost or expense which was not applicable on the Closing Date and
which the L/C Issuer in good faith deems material to it;


 


(B)           the
issuance of such Letter of Credit would violate one or more policies of the L/C
Issuer applicable to letters of credit generally;


 


(C)           except
as otherwise agreed by the Administrative Agent and the L/C Issuer, such Letter
of Credit is in an initial Stated Amount less than $50,000, in the case of a
Commercial Letter of Credit, or $100,000, in the case of a Standby Letter of
Credit;


 


(D)          such
Letter of Credit is to be denominated in a currency other than Dollars;


 


(E)           such Letter of Credit contains any provisions for
automatic reinstatement of the Stated Amount after any drawing thereunder; or


 


(F)           a default of any Lender’s obligations to fund
under Section 2.03(c) exists or any Lender is at such time a
Defaulting Lender or Deteriorating Lender hereunder, unless the Administrative Agent or the L/C Issuer has
entered into satisfactory arrangements with the Borrowers or such Lender to
eliminate the L/C Issuer’s risk with respect to such Lender.


 


(iv)          The Borrowers shall not permit any Letter of Credit to be amended if (A) the
L/C Issuer would not be permitted at such time to issue such Letter of Credit
in its amended form under the terms hereof or (B) if the beneficiary of
such Letter of Credit does not accept the proposed amendment to such Letter of
Credit.


 


(v)           The L/C Issuer shall act on behalf of
the Lenders with respect to any Letters of Credit issued by it and the
documents associated therewith, and the L/C Issuer shall have all of the
benefits and immunities (A) provided to the Administrative Agent in Article IX
with respect to any acts taken or omissions suffered by the L/C Issuer in
connection with Letters of Credit issued by it or proposed to be issued by it
and Issuer Documents pertaining to such Letters of Credit as fully as if the
term “Administrative Agent” as used in Article IX included the L/C
Issuer with respect to such acts or omissions, and (B) as additionally
provided herein with respect to the L/C Issuer.


 


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


 


(i)            Each Letter of Credit shall be issued or
amended, as the case may be, upon the request of the Lead Borrower delivered to
the L/C Issuer (with a copy to the Administrative Agent) in the form of a
Letter of Credit Application, appropriately completed and signed by a
Responsible Officer of the Lead Borrower. 
Any Letter of Credit Application or other document delivered hereunder
that is signed by a Responsible Person shall be conclusively presumed to have
been authorized by all necessary corporate, partnership and/or other action,
and such Responsible Officer shall be conclusively presumed to have acted on
behalf of the Borrowers.  Such Letter of
Credit Application must be received by the Administrative Agent and the L/C
Issuer not later than 11:00 a.m. at least two Business Days (or such other
date and time as the Administrative Agent and the L/C Issuer may agree in a
particular instance in their sole discretion) prior to the proposed issuance
date or date of amendment, as the case may be. 
Promptly after receipt of any Letter of Credit Application, the
Administrative Agent will confirm with the L/C Issuer (other than Wells
Fargo Bank or any of its Affiliates),
by telephone or in writing, that the L/C Issuer has received a copy of such
Letter of Credit Application from the Lead Borrower and, if not, the
Administrative Agent will provide the L/C Issuer with a copy thereof.  In
the case of a request for an initial issuance of a Letter of Credit, such
Letter of Credit 


 


47

















 


Application
shall specify in form and detail satisfactory to the Administrative Agent and
the L/C Issuer: (A) the proposed issuance date of the requested Letter of
Credit (which shall be a Business Day); (B) the amount thereof; (C) the
expiry date thereof; (D) the name and address of the beneficiary thereof; (E) the
documents to be presented by such beneficiary in case of any drawing
thereunder; (F) the full text of any certificate to be presented by such
beneficiary in case of any drawing thereunder; and (G) such other matters
as the Administrative Agent or the L/C Issuer may require.  In the case of a request for an amendment of
any outstanding Letter of Credit, such Letter of Credit Application shall
specify in form and detail satisfactory to the Administrative Agent and the L/C
Issuer (A) the Letter of Credit to be amended; (B) the proposed date
of amendment thereof (which shall be a Business Day); (C) the nature of
the proposed amendment; and (D) such other matters as the Administrative
Agent or the L/C Issuer may require. 
Additionally, the Lead Borrower shall furnish to the L/C Issuer and the
Administrative Agent such other documents and information pertaining to
such requested Letter of Credit issuance or amendment, including any Issuer
Documents, as the L/C Issuer or the Administrative Agent may require.


 


(ii)           Unless the L/C Issuer has received
written notice from any Lender, the Administrative Agent or any Loan Party, at
least one Business Day prior to the requested date of issuance or amendment of
the applicable Letter of Credit, that one or more applicable conditions
contained in Article IV shall not then be satisfied, then, subject
to the terms and conditions hereof, the L/C Issuer shall, on the requested
date, issue a Letter of Credit for the account of the applicable Borrower or
enter into the applicable amendment, as the case may be, in each case in
accordance with the L/C Issuer’s usual and customary business practices.  Immediately upon the issuance or amendment of
each Letter of Credit, each Lender shall be deemed to (without any further
action), and hereby irrevocably and unconditionally agrees to, purchase from
the L/C Issuer, without recourse or warranty, a risk participation in such
Letter of Credit in an amount equal to the product of such Lender’s Applicable
Percentage times the amount of such Letter of Credit.  Upon any change in the Commitments under this
Agreement, it is hereby agreed that with respect to all L/C Obligations, there
shall be an automatic adjustment to the participations hereby created to
reflect the new Applicable Percentages of the assigning and assignee Lenders.


 


(iii)          If the Lead Borrower so requests in
any applicable Letter of Credit Application, the Administrative Agent may, in
its sole and absolute discretion, cause the L/C Issuer to issue a Standby
Letter of Credit that has automatic extension provisions (each, an “Auto-Extension
Letter of Credit”); provided that any such Auto-Extension Letter of
Credit must permit the L/C Issuer to prevent any such extension at least once
in each twelve-month period (commencing with the date of issuance of such
Standby Letter of Credit) by giving prior notice to the beneficiary thereof not
later than a day (the “Non-Extension Notice Date”) in each such
twelve-month period to be agreed upon at the time such Standby Letter of Credit
is issued.  Unless otherwise directed by
the Administrative Agent or the L/C Issuer, the Lead Borrower shall not be
required to make a specific request to the Administrative Agent or the L/C
Issuer for any such extension.  Once an
Auto-Extension Letter of Credit has been issued, the Lenders shall be deemed to
have authorized (but may not require) the L/C Issuer to permit the extension of
such Standby Letter of Credit at any time to an expiry date not later than the
Letter of Credit Expiration Date; provided, however, that the
Administrative Agent shall instruct the L/C Issuer not to permit any such
extension if (A) the Administrative Agent has determined that it would not
be permitted, or would have no obligation, at such time to cause or have the
L/C Issuer issue 


 


48

















 


such
Standby Letter of Credit in its revised form (as extended) under the terms
hereof (by reason of the provisions of clause (ii) or (iii) of
Section 2.03(a) or otherwise), or (B) the L/C Issuer has
received notice (which may be by telephone or in writing) on or before the day
that is five Business Days before the Non-Extension Notice Date (1) from
the Administrative Agent that the Required Lenders have elected not to permit
such extension or (2) from the Administrative Agent, any Lender or the
Lead Borrower that one or more of the applicable conditions specified in Section 4.02
is not then satisfied, and in each such case directing the L/C Issuer not to
permit such extension.


 


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


 


(c)           Drawings and Reimbursements;
Funding of Participations.


 


(i)            Upon receipt from the beneficiary of any
Letter of Credit of any notice of a drawing under such Letter of Credit, the
Administrative Agent shall notify the Lead Borrower thereof; provided, however,
that any failure to give or delay in giving such notice shall not relieve the
Borrowers of their obligation to reimburse the L/C Issuer and the Lenders with
respect to any such payment.  Not later
than 11:00 a.m. on the date of any payment by the L/C Issuer under a
Letter of Credit (each such date, an “Honor Date”), the Borrowers shall
reimburse the L/C Issuer through the Administrative Agent on the same day in an
amount equal to the amount of such drawing, less the amount of any funds
withdrawn by the L/C Issuer from account number 4121499255, maintained at Wells
Fargo Bank (or such other account maintained at Wells Fargo Bank as the
Borrowers shall designate from time to time in writing), that the L/C Issuer
used to repay such drawing, provided, that the Administrative
Agent has received written notice of such withdrawal and the amount
thereof.  If the Borrowers fail to fully
reimburse the L/C Issuer by such time, the Administrative Agent shall promptly
notify each Lender of the Honor Date, the amount of the unreimbursed drawing
(the “Unreimbursed Amount”), and the amount of such Lender’s Applicable
Percentage thereof.  In such event, the
Borrowers shall be deemed to have requested a Committed Borrowing of Base Rate
Loans to be disbursed on the Honor Date in an amount equal to the Unreimbursed
Amount, without regard to the minimum and multiples specified in Section 2.02
for the principal amount of Base Rate Loans, but subject to the amount of the
unutilized portion of the Aggregate Commitments and the conditions set forth in
Section 4.02 (other than the delivery of a Committed Loan
Notice).  Any notice given by the L/C
Issuer or the Administrative Agent pursuant to this Section 2.03(c)(i) may
be given by telephone or electronic means.


 


(ii)           Each Lender shall upon any notice
pursuant to Section 2.03(c)(i) make funds available to the
Administrative Agent for the account of the L/C Issuer at the Administrative
Agent’s Office in an amount equal to its Applicable Percentage of the
Unreimbursed Amount not later than 1:00 p.m. on the Business Day specified
in such notice by the Administrative Agent, whereupon, subject to the
provisions of Section 2.03(c)(iii), each Lender that so makes funds
available shall be deemed to have made a Base Rate Loan to the Borrowers in
such amount.  The Administrative Agent
shall remit the funds so received to the L/C Issuer.


 


(iii)          With respect to any Unreimbursed
Amount that is not fully refinanced by a Committed Borrowing of Base Rate Loans
because the conditions set forth in Section 4.02 cannot be
satisfied or for any other reason, the Borrowers shall be deemed to have
incurred from the L/C Issuer an L/C Borrowing in the amount of the Unreimbursed
Amount that 


 


49

















 


is not so refinanced,
which L/C Borrowing shall be due and payable on demand (together with interest)
and shall bear interest at the Default Rate. 
In such event, each Lender’s payment to the Administrative Agent for the
account of the L/C Issuer pursuant to Section 2.03(c)(ii) shall
be deemed payment in respect of its participation in such L/C Borrowing and
shall constitute an L/C Advance from such Lender in satisfaction of its participation
obligation under this Section 2.03.


 


(iv)          Until each Lender funds its Committed
Loan or L/C Advance pursuant to this Section 2.03(c) to
reimburse the L/C Issuer for any amount drawn under any Letter of Credit,
interest in respect of such Lender’s Applicable Percentage of such amount shall
be solely for the account of the L/C Issuer.


 


(v)           Each Lender’s obligation to make
Committed Loans or L/C Advances to reimburse the L/C Issuer for amounts drawn
under Letters of Credit, as contemplated by this Section 2.03(c),
shall be absolute and unconditional and shall not be affected by any
circumstance, including (A) any setoff, counterclaim, recoupment, defense
or other right which such Lender may have against the L/C Issuer, any Borrower
or any other Person for any reason whatsoever; (B) the occurrence or
continuance of a Default, or (C) any other occurrence, event or condition,
whether or not similar to any of the foregoing; provided, however,
that each Lender’s obligation to make Committed Loans pursuant to this Section 2.03(c) is
subject to the conditions set forth in Section 4.02 (other than
delivery by the Lead Borrower of a Committed Loan Notice).  No such making of an L/C Advance shall
relieve or otherwise impair the obligation of the Borrowers to reimburse the
L/C Issuer for the amount of any payment made by the L/C Issuer under any
Letter of Credit, together with interest as provided herein.


 


(vi)          If any Lender fails to make available
to the Administrative Agent for the account of the L/C Issuer any amount
required to be paid by such Lender pursuant to the foregoing provisions of this
Section 2.03(c) by the time specified in Section 2.03(c)(ii),
the L/C Issuer shall be entitled to recover from such Lender (acting through
the Administrative 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 L/C Issuer at a rate per annum equal to the
greater of the Federal Funds Rate and a rate determined by the L/C Issuer in
accordance with banking industry rules on interbank compensation plus any
administrative, processing or similar fees customarily charged by the L/C
Issuer in connection with the foregoing. 
If such Lender pays such amount (with interest and fees as aforesaid),
the principal amount so paid shall constitute such Lender’s Committed Loan
included in the relevant Committed Borrowing or L/C Advance in respect of the
relevant L/C Borrowing, as the case may be. 
A certificate of the L/C Issuer submitted to any Lender (through the
Administrative Agent) with respect to any amounts owing under this clause (vi) shall
be conclusive absent manifest error.


 


(d)           Repayment of Participations.


 


(i)            At any time after the L/C Issuer has made a
payment under any Letter of Credit and has received from any Lender such Lender’s
L/C Advance in respect of such payment in accordance with Section 2.03(c),
if the Administrative Agent receives for the account of the L/C Issuer any
payment in respect of the related Unreimbursed Amount or interest thereon
(whether directly from the Borrowers or otherwise, including proceeds of Cash
Collateral applied thereto by the Administrative Agent), the Administrative
Agent will distribute to such Lender its Applicable Percentage thereof
(appropriately adjusted, in the case of interest payments, to reflect the
period of time during which such Lender’s L/C Advance was outstanding) in the
same funds as those received by the Administrative Agent.


 


50

















 


(ii)           If any payment received by the
Administrative Agent for the account of the L/C Issuer pursuant to Section 2.03(c)(i) is
required to be returned under any of the circumstances described in Section 10.05
(including pursuant to any settlement entered into by the L/C Issuer in its
discretion), each Lender shall pay to the Administrative Agent for the account
of the L/C Issuer its Applicable Percentage thereof on demand of the
Administrative Agent, plus interest thereon from the date of such demand to the
date such amount is returned by such Lender, at a rate per annum equal to the
Federal Funds Rate from time to time in effect. 
The obligations of the Lenders under this clause shall survive the
payment in full of the Obligations and the termination of this Agreement.


 


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


 


(i)            any lack of validity or enforceability of
such Letter of Credit, this Agreement, or any other Loan Document;


 


(ii)           the existence of any claim,
counterclaim, setoff, defense or other right that the Borrowers or any
Subsidiary may have at any time against any beneficiary or any transferee of
such Letter of Credit (or any Person for whom any such beneficiary or any such
transferee may be acting), the L/C Issuer or any other Person, whether in
connection with this Agreement, the transactions contemplated hereby or by such
Letter of Credit or any agreement or instrument relating thereto, or any
unrelated transaction;


 


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


 


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


 


(v)           any other circumstance or happening
whatsoever, whether or not similar to any of the foregoing, including any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, the Borrowers or any of their Subsidiaries; or


 


(vi)          the fact that any Event of Default
shall have occurred and be continuing.


 


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


 


(f)            Role of L/C Issuer.  Each Lender and the Borrowers agree that, in
paying any drawing under a Letter of Credit, the L/C Issuer shall not have any
responsibility to obtain any document (other than any sight draft, certificates
and documents expressly required by the Letter of Credit) or to 


 


51

















 


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. 
None of the L/C Issuer, the Administrative Agent, any of their respective
Related Parties nor any correspondent, participant or assignee of the L/C
Issuer shall be liable to any Lender for (i) any action taken or omitted
in connection herewith at the request or with the approval of the Lenders or
the Required Lenders, as applicable; (ii) any action taken or omitted in
the absence of gross negligence or willful misconduct; (iii) any error,
omission, interruption, loss or delay in transmission or delivery of any draft,
notice or other communication under or relating to any Letter of Credit or any
error in interpretation of technical terms; or (iv) the due execution,
effectiveness, validity or enforceability of any document or instrument related
to any Letter of Credit or Issuer Document. 
The Borrowers hereby assume all risks of the acts or omissions of any
beneficiary or transferee with respect to its use of any Letter of Credit; provided,
however, that this assumption is not intended to, and shall not,
preclude the Borrowers’ pursuing such rights and remedies as it may have
against the beneficiary or transferee at law or under any other agreement.  None of the L/C Issuer, the Administrative
Agent, any of their respective Related Parties nor any correspondent,
participant or assignee of the L/C Issuer shall be liable or responsible for any
of the matters described in clauses (i) through (v) of Section 2.03(e);
provided, however, that anything in such clauses to the contrary
notwithstanding, the Borrowers may have a claim against the L/C Issuer, and the
L/C Issuer may be liable to the Borrowers, to the extent, but only to the
extent, of any direct, as opposed to consequential or exemplary, damages
suffered by the Borrowers which the Borrowers prove were caused by the L/C
Issuer’s willful misconduct or gross negligence or the L/C Issuer’s willful
failure to pay under any Letter of Credit after the presentation to it by the
beneficiary of a sight draft and certificate(s) strictly complying with
the terms and conditions of a Letter of Credit. 
In furtherance and not in limitation of the foregoing, the L/C Issuer
may accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary (or the L/C Issuer may refuse to accept and make
payment upon such documents if such documents are not in strict compliance with
the terms of such Letter of Credit), and the L/C Issuer shall not be
responsible for the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign a Letter of Credit or the rights
or benefits thereunder or proceeds thereof, in whole or in part, which may
prove to be invalid or ineffective for any reason.


 


(g)           Cash Collateral.  Upon the request of the Administrative Agent,
(i) if the L/C Issuer has honored any full or partial drawing request
under any Letter of Credit and such drawing has resulted in an L/C Borrowing
that remains outstanding, or (ii) if, as of the Letter of Credit
Expiration Date, any L/C Obligation for any reason remains outstanding, the
Borrowers shall, in each case, immediately Cash Collateralize the then
Outstanding Amount of all L/C Obligations. 
Sections 2.05 and 8.02(c) set forth certain
additional requirements to deliver Cash Collateral hereunder.  For purposes of this Section 2.03,
Section 2.05 and Section 8.02(c), “Cash
Collateralize” means to pledge and deposit with or deliver to the
Collateral Agent, for the benefit of the L/C Issuer and the Lenders, as
collateral for the L/C Obligations, cash or deposit account balances in an amount
equal to 105% of the Outstanding Amount of all L/C Obligations, pursuant to
documentation in form and substance satisfactory to the Collateral Agent and
the L/C Issuer (which documents are hereby Consented to by the Lenders).  Derivatives of such term have corresponding
meanings.  The Borrowers hereby grant to
the Collateral Agent a security interest in all such cash, deposit accounts and
all balances therein and all proceeds of the foregoing.  Cash Collateral shall be maintained in the
Cash Collateral Account.  If at any time
the Collateral Agent determines that any funds held as Cash Collateral are
subject to any right or claim of any Person other than the Collateral Agent or
that the total amount of such funds is less than the aggregate Outstanding
Amount of all L/C Obligations, the Borrowers will, forthwith upon demand by the
Collateral Agent, pay to the Collateral Agent, as additional funds to be
deposited as Cash Collateral, an amount equal to the excess of (x) such
aggregate Outstanding Amount over (y) the total amount of funds, if any,
then held as Cash Collateral that the Collateral Agent determines to be free
and clear of any such right and claim. 
Upon the drawing of any Letter of Credit for which funds are on deposit
as Cash Collateral, 


 


52

















 


such funds shall be applied, to the extent permitted
under applicable Laws, to reimburse the L/C Issuer and, to the extent not so
applied, shall thereafter be applied to satisfy other Obligations.


 


(h)           Applicability of ISP and UCP.  Unless otherwise expressly agreed by the L/C
Issuer and the Lead Borrower when a Letter of Credit is issued (including any
such agreement applicable to an Existing Letter of Credit), (i) the rules of
the ISP shall apply to each Standby Letter of Credit, and (ii) the rules of
the Uniform Customs and Practice for Documentary Credits, as most recently
published by the International Chamber of Commerce at the time of issuance
shall apply to each Commercial Letter of Credit.


 


(i)            Letter of Credit Fees.  The Borrowers shall pay to the Administrative
Agent, for the account of each Lender in accordance with its Applicable
Percentage, a Letter of Credit fee (the “Letter of Credit Fee”) for each
Letter of Credit equal to the Applicable Rate times the daily Stated
Amount under each such Letter of Credit (as determined pursuant to Section 1.06).  For purposes of computing the daily Stated
Amount available to be drawn under any Letter of Credit, the Stated Amount of
the Letter of Credit shall be determined in accordance with Section 1.06.  Letter of Credit Fees shall be (i) due
and payable on the first calendar day of each month, commencing with the first
such date to occur after the issuance of such Letter of Credit, on the Letter
of Credit Expiration Date and thereafter on demand, and (ii) computed on a
monthly basis in arrears.  If there is
any change in the Applicable Rate during any month, the daily amount available
to be drawn under of each Letter of Credit shall be computed and multiplied by
the Applicable Rate separately for each period during such month that such
Applicable Rate was in effect. 
Notwithstanding anything to the contrary contained herein, while any
Event of Default has occurred and is continuing, the Administrative Agent may,
and upon the request of the Required Lenders shall, notify the Lead Borrower
that all Letter of Credit Fees shall accrue at the Default Rate and thereafter
such Letter of Credit Fees shall accrue at the Default Rate to the fullest
extent permitted by applicable Laws.


 


(j)            Fronting Fee and Documentary and
Processing Charges Payable to L/C Issuer. 
The Borrowers shall pay to the Administrative Agent, for the account of
the L/C Issuer, a fronting fee (i) with respect to each Commercial Letter
of Credit, at a rate equal to 0.125 per cent per annum, computed on the amount
of such Letter of Credit, and payable upon the issuance thereof, (ii) with
respect to any amendment of a Commercial Letter of Credit increasing the amount
of such Letter of Credit, at a rate separately agreed between the Lead Borrower
and the L/C Issuer, computed on the amount of such increase, and payable upon
the effectiveness of such amendment, and (iii) with respect to each
Standby Letter of Credit, at a rate equal to 0.125 percent per annum, computed
on the daily amount available to be drawn under such Letter of Credit and on a
monthly basis in arrears.  Such fronting
fees shall be due and payable on the first calendar day of each month,
commencing with the first such date to occur after the issuance of such Letter
of Credit, on the Letter of Credit Expiration Date and thereafter on
demand.  For purposes of computing the
daily amount available to be drawn under any Letter of Credit, the amount of
the Letter of Credit shall be determined in accordance with Section 1.06.  In addition, the Borrowers shall pay to the
Administrative Agent, for the account of the L/C Issuer, the customary
issuance, presentation, amendment and other processing fees, and other standard
costs and charges, of the L/C Issuer relating to letters of credit as from time
to time in effect.  Such customary fees
and standard costs and charges are due and payable on demand and are
nonrefundable.


 


(k)           Consignment of Bill of Lading.  The Borrowers shall, upon the request of the
Administrative Agent, consign to the L/C Issuer any bill of lading for
Inventory which is supported by a Commercial Letter of Credit issued by the L/C
Issuer.


 


(l)            Conflict with Issuer Documents.  In the event of any conflict between the
terms hereof and the terms of any Issuer Document, the terms hereof shall
control.


 


2.04        Swing Line Loans.


 


(a)           The Swing Line.  Subject to the terms and conditions set forth
herein, the Swing Line Lender agrees, in reliance upon the agreements of the
other Lenders set forth in this Section 2.04, to make loans (each
such loan, a “Swing Line Loan”) to the Borrowers from time to time on
any Business Day during the Availability Period in an aggregate amount not to
exceed at any time outstanding the 


 


53

















 


amount of the Swing Line
Sublimit, notwithstanding the fact that such Swing Line Loans, when aggregated
with the Applicable Percentage of the Outstanding Amount of Committed Loans and
L/C Obligations of the Lender acting as Swing Line Lender, may exceed the
amount of such Lender’s Commitment; provided, however, that after
giving effect to any Swing Line Loan, (i) the Total Outstandings shall not
exceed the lesser of (A) the Aggregate Commitments, or (B) the
Borrowing Base, and (ii) the aggregate Outstanding Amount of the Committed
Loans of any Lender at such time, plus such Lender’s Applicable
Percentage of the Outstanding Amount of all L/C Obligations at such time, plus
such Lender’s Applicable Percentage of the Outstanding Amount of all Swing Line
Loans at such time shall not exceed such Lender’s Commitment, and provided,
further, that the Borrowers shall not use the proceeds of any Swing Line
Loan to refinance any outstanding Swing Line Loan.  Within the foregoing limits, and subject to
the other terms and conditions hereof, the Borrowers may borrow under this Section 2.04,
prepay under Section 2.05, and reborrow under this Section 2.04.  Each Swing Line Loan shall bear interest only
at a rate based on the Base Rate. 
Immediately upon the making of a Swing Line Loan, each Lender shall be
deemed to, and hereby irrevocably and unconditionally agrees to, purchase from
the Swing Line Lender a risk participation in such Swing Line Loan in an amount
equal to the product of such Lender’s Applicable Percentage times the
amount of such Swing Line Loan.


 


(b)           Borrowing Procedures.  Each Swing Line Borrowing shall be made upon
the Lead Borrower’s irrevocable notice to the Swing Line Lender and the
Administrative Agent, which may be given by telephone. Each such notice must be
received by the Swing Line Lender and the Administrative Agent not later than
1:00 p.m. on the requested borrowing date, and shall specify (i) the
amount to be borrowed, which shall be a minimum of $100,000, and (ii) the
requested borrowing date, which shall be a Business Day.  Each such telephonic notice must be confirmed
promptly by delivery to the Swing Line Lender and the Administrative Agent of a
written Swing Line Loan Notice, appropriately completed and signed by a Responsible
Officer of the Lead Borrower.  Promptly
after receipt by the Swing Line Lender of any telephonic Swing Line Loan
Notice, the Swing Line Lender will confirm with the Administrative Agent (by
telephone or in writing) that the Administrative Agent has also received such
Swing Line Loan Notice and, if not, the Swing Line Lender will notify the
Administrative Agent (by telephone or in writing) of the contents thereof.  Unless the Swing Line Lender has received
notice (by telephone or in writing) from the Administrative Agent at the
request of the Required Lenders prior to 2:00 p.m. on the date of the
proposed Swing Line Borrowing (A) directing the Swing Line Lender not to
make such Swing Line Loan as a result of the limitations set forth in the
proviso to the first sentence of Section 2.04(a), or (B) that
one or more of the applicable conditions specified in Article IV is
not then satisfied, then, subject to the terms and conditions hereof, the Swing
Line Lender may, not later than 3:00 p.m. on the borrowing date specified
in such Swing Line Loan Notice, make the amount of its Swing Line Loan
available to the Borrowers at its office by crediting the account of the Lead
Borrower on the books of the Swing Line Lender in immediately available funds.


 


(c)           Refinancing of Swing Line Loans.


 


(i)            The Swing Line Lender at any time in its sole
and absolute discretion may request, on behalf of the Borrowers (which hereby
irrevocably authorize the Swing Line Lender to so request on their behalf),
that each Lender make a Base Rate Loan in an amount equal to such Lender’s
Applicable Percentage of the amount of Swing Line Loans then outstanding.  Such request shall be made in writing (which
written request shall be deemed to be a Committed Loan Notice for purposes
hereof) and in accordance with the requirements of Section 2.02,
without regard to the minimum and multiples specified therein for the principal
amount of Base Rate Loans, but subject to the unutilized portion of the
Aggregate Commitments and the conditions set forth in Section 4.02.  The Swing Line Lender shall furnish the Lead
Borrower with a copy of the applicable Committed Loan Notice promptly after
delivering such notice to the Administrative Agent.  Each Lender shall make an amount equal to its
Applicable Percentage of the amount specified in such Committed Loan Notice
available to the Administrative Agent in immediately available funds for the
account of the Swing Line Lender 


 


54

















 


at
the Administrative Agent’s Office not later than 1:00 p.m. on the day
specified in such Committed Loan Notice, whereupon, subject to Section 2.04(c)(ii),
each Lender that so makes funds available shall be deemed to have made a Base
Rate Loan to the Borrowers in such amount. 
The Administrative Agent shall remit the funds so received to the Swing
Line Lender.


 


(ii)           If for any reason any Swing Line Loan
cannot be refinanced by such a Committed Borrowing in accordance with Section 2.04(c)(i),
the request for Base Rate Loans submitted by the Swing Line Lender as set forth
herein shall be deemed to be a request by the Swing Line Lender that each of
the Lenders fund its risk participation in the relevant Swing Line Loan and
each Lender’s payment to the Administrative Agent for the account of the Swing
Line Lender pursuant to Section 2.04(c)(i) shall be deemed
payment in respect of such participation.


 


(iii)          If any Lender fails to make available
to the Administrative Agent for the account of the Swing Line Lender any amount
required to be paid by such Lender pursuant to the foregoing provisions of this
Section 2.04(c) by the time specified in Section 2.04(c)(i),
the Swing Line Lender shall be entitled to recover from such Lender (acting
through the Administrative 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 Swing Line Lender at a rate per annum
equal to the greater of the Federal Funds Rate and a rate determined by the Swing
Line Lender in accordance with banking industry rules on interbank
compensation plus any administrative, processing or similar fees customarily
charged by the Swing Line Lender in connection with the foregoing.  If such Lender pays such amount (with interest
and fees as aforesaid), the principal amount so paid shall constitute such
Lender’s Committed Loan included in the relevant Committed Borrowing or funded
participation in the relevant Swing Line Loan, as the case may be.  A certificate of the Swing Line Lender
submitted to any Lender (through the Administrative Agent) with respect to any
amounts owing under this clause (iii) shall be conclusive absent
manifest error.


 


(iv)          Each Lender’s obligation to make
Committed Loans or to purchase and fund risk participations in Swing Line Loans
pursuant to this Section 2.04(c) shall be absolute and
unconditional and shall not be affected by any circumstance, including (A) any
setoff, counterclaim, recoupment, defense or other right which such Lender may
have against the Swing Line Lender, the Borrowers or any other Person for any
reason whatsoever, (B) the occurrence or continuance of a Default, or (C) any
other occurrence, event or condition, whether or not similar to any of the
foregoing; provided, however, that each Lender’s obligation to
make Committed Loans pursuant to this Section 2.04(c) is
subject to the conditions set forth in Section 4.02.  No such funding of risk participations shall
relieve or otherwise impair the obligation of the Borrowers to repay Swing Line
Loans, together with interest as provided herein.


 


(d)           Repayment of Participations.


 


(i)            At any time after any Lender has purchased
and funded a risk participation in a Swing Line Loan, if the Swing Line Lender
receives any payment on account of such Swing Line Loan, the Swing Line Lender
will distribute to such Lender its Applicable Percentage of such payment
(appropriately adjusted, in the case of interest payments, to reflect the
period of time during which such Lender’s risk participation was funded) in the
same funds as those received by the Swing Line Lender.


 


(ii)           If any payment received by the Swing
Line Lender in respect of principal or interest on any Swing Line Loan is
required to be returned by the Swing Line Lender under any of the circumstances
described in Section 10.05 (including pursuant to any settlement
entered into by the Swing Line Lender in its discretion), each Lender shall pay
to the Swing Line 


 


55

















 


Lender its Applicable
Percentage thereof on demand of the Administrative Agent, plus interest thereon
from the date of such demand to the date such amount is returned, at a rate per
annum equal to the Federal Funds Rate. 
The Administrative Agent will make such demand upon the request of the
Swing Line Lender.  The obligations of
the Lenders under this clause shall survive the payment in full of the
Obligations and the termination of this Agreement.


 


(e)           Interest for Account of
Swing Line Lender.  The Swing
Line Lender shall be responsible for invoicing the Borrowers for interest on
the Swing Line Loans.  Until each Lender
funds its Base Rate Loan or risk participation pursuant to this Section 2.04
to refinance such Lender’s Applicable Percentage of any Swing Line Loan,
interest in respect of such Applicable Percentage shall be solely for the
account of the Swing Line Lender.


 


(f)            Payments Directly to Swing Line
Lender.  The Borrowers shall make all
payments of principal and interest in respect of the Swing Line Loans directly
to the Swing Line Lender.


 


2.05        Prepayments.


 


(a)           The Borrowers may, upon
irrevocable notice from the Lead Borrower to the Administrative Agent, at any
time or from time to time voluntarily prepay Committed Loans in whole or in
part without premium or penalty; provided that (i) such notice must
be received by the Administrative Agent not later than 11:00 a.m. (A) three
Business Days prior to any date of prepayment of LIBO Rate Loans and (B) on
the date of prepayment of Base Rate Loans; (ii) any prepayment of LIBO Rate
Loans shall be in a principal amount of $1,000,000 or a whole multiple of
$500,000 in excess thereof; and (iii) any prepayment of Base Rate Loans
shall be in a principal amount of $500,000 or a whole multiple of $100,000 in
excess thereof or, in each case, if less, the entire principal amount thereof
then outstanding.  Each such notice shall
specify the date and amount of such prepayment and the Type(s) of
Committed Loans to be prepaid and, if LIBO Rate Loans, the Interest Period(s) of
such Committed Loans.  The Administrative
Agent will promptly notify each Lender of its receipt of each such notice, and
of the amount of such Lender’s Applicable Percentage of such prepayment.  If such notice is given by the Lead Borrower,
the Borrowers shall make such prepayment and the payment amount specified in
such notice shall be due and payable on the date specified therein.  Any prepayment of a LIBO Rate Loan shall be
accompanied by all accrued interest on the amount prepaid, together with any
additional amounts required pursuant to Section 3.05.  Each such prepayment shall be applied to the
Committed Loans of the Lenders in accordance with their respective Applicable
Percentages.


 


(b)           The Borrowers may, upon irrevocable
notice from the Lead Borrower to the Swing Line Lender (with a copy to the
Administrative Agent), at any time or from time to time, voluntarily prepay
Swing Line Loans in whole or in part without premium or penalty; provided
that (i) such notice must be received by the Swing Line Lender and the
Administrative Agent not later than 1:00 p.m. on the date of the
prepayment, and (ii) any such prepayment shall be in a minimum principal
amount of $100,000.  Each such notice
shall specify the date and amount of such prepayment.  If such notice is given by the Lead Borrower,
the Borrowers shall make such prepayment and the payment amount specified in
such notice shall be due and payable on the date specified therein.


 


(c)           If for any reason the Total
Outstandings at any time exceed the lesser of the Aggregate Commitments or the
Borrowing Base, each as then in effect, the Borrowers shall immediately prepay Committed Loans, Swing Line Loans and L/C
Borrowings and/or Cash Collateralize the L/C Obligations (other than L/C
Borrowings) in an aggregate amount equal to such excess; provided, however,
that the Borrowers shall not be required to Cash Collateralize the L/C
Obligations pursuant to this Section 2.05(c) unless after the
prepayment in full of the Loans the Total Outstandings exceed the lesser of the
Aggregate Commitments or the Borrowing Base, each as then in effect.


 


(d)           After the occurrence and
during the continuance of a Cash Dominion Event, any proceeds deposited to the
Concentration Account in accordance with the provisions of Section 6.13,
including, without limitation, any Net Proceeds received by a Loan Party upon
the occurrence of a Prepayment Event shall be transferred to the Concentration
Account in accordance with Section 6.13 and shall, (i) if
deposited in the Concentration Account not later than 2:00 p.m. in
immediately available 


 


56

















 


funds, be utilized to prepay
the Loans on the date such funds were deposited into the in the Concentration
Account, or (ii) if deposited in the Concentration Account after 2:00 p.m.
in immediately available funds, be utilized to prepay the Loans on the next
Business Day following the date such funds were deposited into the in the
Concentration Account, in either case in the order of priority set forth in Section 2.05(e).  The application of all such proceeds to the
Loans shall not reduce the Commitments. 
If no Cash Dominion Event exists (or if all Obligations then due
pursuant to Section 2.05(e) are paid in full during the
existence of a Cash Dominion Event), then any proceeds deposited to the
Concentration Account shall be remitted without any deduction of any kind to
the operating account of the Borrowers designated by the Lead Borrower on (i) if
received in the Concentration Account not later than 2:00 p.m. in
immediately available funds, the date such funds were deposited into the in the
Concentration Account, or (ii) if received in the Concentration Account
after 2:00 p.m. in immediately available funds, the next Business Day
following the date such funds were deposited into the in the Concentration
Account.


 


(e)           Prepayments made pursuant to
this Section 2.05, first, shall be applied ratably to the
L/C Borrowings and the Swing Line Loans, second, shall be applied
ratably to the outstanding Committed Loans, third, in the case of
payments other than pursuant to Section 2.05(d) when no Event
of Default exists, shall be used to Cash Collateralize the remaining L/C
Obligations in accordance with Section 2.03(g); and, fourth,
the amount remaining, if any, after the prepayment in full of all L/C
Borrowings, Swing Line Loans and Committed Loans outstanding at such time and
the Cash Collateralization of the remaining L/C Obligations in full may be
retained by the Borrowers for use in the ordinary course of its business.  Upon the drawing of any Letter of Credit that
has been Cash Collateralized, the funds held as Cash Collateral shall be
applied (without any further action by or notice to or from the Borrowers or
any other Loan Party) to reimburse the L/C Issuer or the Lenders, as applicable.


 


2.06        Termination or
Reduction of Commitments.


 


(a)         The Borrowers may, upon
irrevocable notice from the Lead Borrower to the Administrative Agent,
terminate the Aggregate Commitments, the Letter of Credit Sublimit or the Swing
Line Sublimit or from time to time permanently reduce the Aggregate
Commitments, the Letter of Credit Sublimit or the Swing Line Sublimit; provided
that (i) any such notice shall be received by the Administrative Agent not
later than 11:00 a.m. five Business Days prior to the date of any such
termination or reduction, (ii) any such partial reduction shall be in an
aggregate amount of $10,000,000 or any whole multiple of $1,000,000 in excess
thereof, (iii) the Borrowers shall not terminate or reduce (A) the
Aggregate Commitments if, after giving effect thereto and to any concurrent
prepayments hereunder, the Total Outstandings would exceed the Aggregate
Commitments, (B) the Letter of Credit Sublimit if, after giving effect
thereto, the Outstanding Amount of L/C Obligations not fully Cash
Collateralized hereunder would exceed the Letter of Credit Sublimit, and (C) the
Swing Line Sublimit if, after giving effect thereto, and to any concurrent
payments hereunder, the Outstanding Amount of Swing Line Loans hereunder would
exceed the Swing Line Sublimit.


 


(b)         If, after giving effect to any
reduction of the Aggregate Commitments, the Letter of Credit Sublimit or the
Swing Line Sublimit exceeds the amount of the Aggregate Commitments, such
Letter of Credit Sublimit or Swing Line Sublimit shall be automatically reduced
by the amount of such excess.


 


(c)         The Administrative Agent will promptly
notify the Lenders of any termination or reduction of the Letter of Credit
Sublimit, Swing Line Sublimit or the Aggregate Commitments under this Section 2.06.  Upon any reduction of the Aggregate
Commitments, the Commitment of each Lender shall be reduced by such Lender’s
Applicable Percentage of such reduction amount. 
All fees (including, without limitation, Commitment Fees, Early
Termination Fees, and Letter of Credit Fees) and interest in respect of the
Aggregate Commitments accrued until the effective date of any termination of
the Aggregate Commitments shall be paid on the effective date of such termination.


 


2.07        Repayment of Loans.


 


(a)           The Borrowers shall repay to
the Lenders on the Termination Date the aggregate principal amount of Committed
Loans outstanding on such date.


 


57














 


(b)           To the extent not
previously paid, the Borrowers shall repay the outstanding balance of the Swing
Line Loans on the Termination Date.


 


2.08        Interest.


 


(a)           Subject to the
provisions of Section 2.08(b) below, (i) each LIBO Rate
Loan shall bear interest on the outstanding principal amount thereof for each
Interest Period at a rate per annum equal to the Adjusted LIBO Rate for such
Interest Period plus the Applicable Margin; (ii) each Base Rate
Loan shall bear interest on the outstanding principal amount thereof from the
applicable borrowing date at a rate per annum equal to the Base Rate plus
the Applicable Margin; and (iii) each Swing Line Loan shall bear interest
on the outstanding principal amount thereof from the applicable borrowing date
at a rate per annum equal to the Base Rate plus the Applicable Margin.


 


(b)           (i)            If any amount payable under any Loan
Document is not paid when due (without regard to any applicable grace periods),
whether at stated maturity, by acceleration or otherwise, such amount shall
thereafter bear interest at a fluctuating interest rate per annum at all times
equal to the Default Rate to the fullest extent permitted by applicable Laws.


 


(ii)           If any other Event of
Default has occurred and is continuing, then the Administrative Agent may, and
upon the request of the Required Lenders shall, notify the Lead Borrower that
all outstanding Obligations shall thereafter bear interest at a fluctuating
interest rate per annum at all times equal to the Default Rate and thereafter,
until such Event of Default has been duly waived as provided in Section 10.01
hereof, such Obligations shall bear interest at the Default Rate to the fullest
extent permitted by applicable Laws.


 


(iii)          Accrued and unpaid
interest on past due amounts (including interest on past due interest) shall be
due and payable upon demand.


 


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


 


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


 


(a)           Commitment Fee.  The Borrowers shall pay to the Administrative
Agent, for the account of each Lender, in accordance with its Applicable
Percentage, a commitment fee (the “Commitment Fee”) equal to one half of
one percent (0.50%) times the average daily amount by which the
Aggregate Commitments exceed the sum of (i) the Outstanding Amount of
Loans and (ii) the Outstanding Amount of L/C Obligations.  The Commitment Fee shall accrue at all times
during the Availability Period, including at any time during which one or more
of the conditions in Article IV is not met, and shall be due and
payable monthly in arrears on the first calendar day of each month, commencing
with the first such date to occur after the Closing Date, and on the last day
of the Availability Period.  The
Commitment Fee shall be calculated monthly in arrears, and if there is any
change in the Applicable Margin during any month, the average daily amount
shall be computed and multiplied by the Applicable Margin separately for each
period during such month that such Applicable Margin was in effect.


 


(b)           Early Termination
Fee.  In the event that at any time
on or before February 13, 2011, (i) the Termination Date occurs, for
any reason, or (ii) the Lead Borrower elects to permanently reduce the
Commitments pursuant to Section 2.06 hereof, then in each case the
Borrowers shall pay to the Administrative Agent, for the ratable benefit of the
Lenders, a fee (the “Early Termination Fee”) in respect of amounts which
are or become payable by reason thereof equal to one percent (1%) of the
Aggregate Commitments then in effect.  Notwithstanding anything to the
contrary contained herein, no Early Termination Fee shall be due if the
Commitments are irrevocably terminated and the Obligations repaid in full in
cash at any time after February 13, 2010, as a result of the loan
arrangement evidenced by this Agreement and the other Loan Documents being
refinanced in its entirety by an Affiliate of the Administrative Agent.  No Early Termination Fee shall be due if the
Termination Date or such reduction 


 


58

















 


of the Commitments shall occur
at any time after February 13, 2011. 
All parties to this Agreement agree and acknowledge that the Lenders
will have suffered damages on account of the early termination of this
Agreement and that, in view of the difficulty in ascertaining the amount of
such damages, the Early Termination Fee constitutes reasonable compensation and
liquidated damages to compensate the Lenders on account thereof.


 


(c)           Other Fees.  The Borrowers shall pay to the Administrative
Agent, for its own account, fees in the amounts and at the times specified in
the Fee Letter.  Such fees shall be fully
earned when paid and shall not be refundable for any reason whatsoever.


 


2.10        Computation
of Interest and Fees.  All
computations of interest and fees shall be made on the basis of a 360-day year
and actual days elapsed.  Interest shall
accrue on each Loan for the day on which the Loan is made, and shall not accrue
on a Loan, or any portion thereof, for the day on which the Loan or such
portion is paid, provided that any Loan that is repaid on the same day
on which it is made shall, subject to Section 2.12, bear interest
for one day.  Each determination by the
Administrative Agent of an interest rate or fee hereunder shall be conclusive
and binding for all purposes, absent manifest error.


 


2.11        Evidence
of Debt.


 


(a)           The Credit Extensions
made by each Lender shall be evidenced by one or more accounts or records
maintained by the Administrative Agent (the “Loan Account”) in the
ordinary course of business.  In
addition, each Lender may record in such Lender’s internal records, an
appropriate notation evidencing the date and amount of each Loan from such
Lender, each payment and prepayment of principal of any such Loan, and each
payment of interest, fees and other amounts due in connection with the
Obligations due to such Lender.  The
accounts or records maintained by the Administrative Agent and each Lender shall
be conclusive absent manifest error of the amount of the Credit Extensions made
by the Lenders to the Borrowers and the interest and payments thereon.  Any failure to so record or any error in
doing so shall not, however, limit or otherwise affect the obligation of the
Borrowers hereunder to pay any amount owing with respect to the
Obligations.  In the event of any
conflict between the accounts and records maintained by any Lender and the
accounts and records of the Administrative Agent in respect of such matters,
the accounts and records of the Administrative Agent shall control in the
absence of manifest error.  Upon the
request of any Lender made through the Administrative Agent, the Borrowers
shall execute and deliver to such Lender (through the Administrative Agent) a
Note, which shall evidence such Lender’s Loans in addition to such accounts or
records.  Each Lender may attach
schedules to its Note and endorse thereon the date, Type (if applicable),
amount and maturity of its Loans and payments with respect thereto.  Upon receipt of an affidavit of a Lender as
to the loss, theft, destruction or mutilation of such Lender’s Note and upon
cancellation of such Note, the Borrowers will issue, in lieu thereof, a
replacement Note in favor of such Lender, in the same principal amount thereof
and otherwise of like tenor.


 


(b)           In addition to the
accounts and records referred to in Section 2.11(a), each Lender
and the Administrative Agent shall maintain in accordance with its usual
practice accounts or records evidencing the purchases and sales by such Lender
of participations in Letters of Credit and Swing Line Loans.  In the event of any conflict between the
accounts and records maintained by the Administrative Agent and the accounts
and records of any Lender in respect of such matters, the accounts and records
of the Administrative Agent shall control in the absence of manifest error.


 


2.12        Payments
Generally; Administrative Agent’s Clawback.


 


(a)           General.  All payments to be made by the Borrowers
shall be made without condition or deduction for any counterclaim, defense,
recoupment or setoff.  Except as
otherwise expressly provided herein, all payments by the Borrowers hereunder
shall be made to the Administrative Agent, for the account of the respective
Lenders to which such payment is owed, at the Administrative Agent’s Office in
Dollars and in immediately available funds not later than 2:00 p.m. on the
date specified herein.  The
Administrative Agent will promptly distribute to each Lender its Applicable
Percentage (or other applicable share as provided herein) of such payment in
like funds as received by 


 


59

















 


wire transfer to such Lender’s
Lending Office.  All payments received by
the Administrative Agent after 2:00 p.m. shall be deemed received on the
next succeeding Business Day and any applicable interest or fee shall continue
to accrue.  If any payment to be made by
the Borrowers shall come due on a day other than a Business Day, payment shall
be made on the next following Business Day, and such extension of time shall be
reflected in computing interest or fees, as the case may be.


 


(b)           (i)            Funding by Lenders; Presumption by
Administrative Agent.  Unless the
Administrative Agent shall have received notice from a Lender prior to the
proposed date of any Borrowing of LIBO Rate Loans (or in the case of any
Borrowing of Base Rate Loans, prior to 12:00 noon on the date of such
Borrowing) that such Lender will not make available to the Administrative Agent
such Lender’s share of such Borrowing, the Administrative Agent may assume that
such Lender has made such share available on such date in accordance with Section 2.02
(or in the case of a Borrowing of Base Rate Loans, that such Lender has made
such share available in accordance with and at the time required by Section 2.02)
and may, in reliance upon such assumption, make available to the Borrowers a
corresponding amount.  In such event, if
a Lender has not in fact made its share of the applicable Committed Borrowing available
to the Administrative Agent, then the applicable Lender and the Borrowers
severally agree to pay to the Administrative Agent forthwith on demand such
corresponding amount in immediately available funds with interest thereon, for
each day from and including the date such amount is made available to the
Borrowers to but excluding the date of payment to the Administrative Agent, at (A) in
the case of a payment to be made by such Lender, the greater of the Federal
Funds Rate and a rate determined by the Administrative Agent in accordance with
banking industry rules on interbank compensation plus any administrative
processing or similar fees customarily charged by the Administrative Agent in
connection with the foregoing, and (B) in the case of a payment to be made
by the Borrowers, the interest rate applicable to Base Rate Loans.  If the Borrowers and such Lender shall pay
such interest to the Administrative Agent for the same or an overlapping
period, the Administrative Agent shall promptly remit to the Borrowers the
amount of such interest paid by the Borrowers for such period.  If such Lender pays its share of the
applicable Committed Borrowing to the Administrative Agent, then the principal
amount so paid shall constitute such Lender’s Committed Loan included in such
Committed Borrowing.  Any payment by the
Borrowers shall be without prejudice to any claim the Borrowers may have
against a Lender that shall have failed to make such payment to the
Administrative Agent.


 


(ii)           Payments by
Borrowers; Presumptions by Administrative Agent.  Unless the Administrative Agent shall have
received notice from the Lead Borrower prior to the time at which any payment
is due to the Administrative Agent for the account of the Lenders or the L/C
Issuer hereunder that the Borrowers will not make such payment, the
Administrative Agent may assume that the Borrowers have made such payment on
such date in accordance herewith and may, in reliance upon such assumption,
distribute to the Lenders or the L/C Issuer, as the case may be, the amount
due.  In such event, if the Borrowers
have not in fact made such payment, then each of the Lenders or the L/C Issuer,
as the case may be, severally agrees to repay to the Administrative Agent
forthwith on demand the amount so distributed to such Lender or the L/C Issuer,
in immediately available funds with interest thereon, for each day from and
including the date such amount is distributed to it to but excluding the date
of payment to the Administrative Agent, at the greater of the Federal Funds
Rate and a rate determined by the Administrative Agent in accordance with
banking industry rules on interbank compensation. A notice of the
Administrative Agent to any Lender or the Lead Borrower with respect to any
amount owing under this subsection (b) shall be conclusive, absent
manifest error.


 


(c)           Failure to Satisfy
Conditions Precedent.  If any Lender
makes available to the Administrative Agent funds for any Loan to be made by
such Lender as provided in the foregoing provisions of this Article II,
and such funds are not made available to the Borrowers by the Administrative
Agent because the conditions to the applicable Credit Extension set forth in Article IV
are 


 


60

















 


not satisfied or waived in accordance
with the terms hereof (subject to the provisions of the last paragraph of Section 4.02
hereof), the Administrative Agent shall return such funds (in like funds as
received from such Lender) to such Lender, without interest.


 


(d)           Obligations of Lenders
Several.  The obligations of the
Lenders hereunder to make Committed Loans, to fund participations in Letters of
Credit and Swing Line Loans and to make payments pursuant to Section 10.04(c) are
several and not joint.  The failure of
any Lender to make any Committed Loan, to fund any such participation or to
make any payment under Section 10.04(c) on any date required
hereunder shall not relieve any other Lender of its corresponding obligation to
do so on such date, and no Lender shall be responsible for the failure of any
other Lender to so make its Committed Loan, to purchase its participation or to
make its payment under Section 10.04(c).


 


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


 


2.13        Sharing
of Payments by Lenders.  If any
Credit Party shall, by exercising any right of setoff or counterclaim or
otherwise, obtain payment in respect of any principal of, interest on, or other
amounts with respect to, any of the Obligations resulting in such Lender’s
receiving payment of a proportion of the aggregate amount of such Obligations
greater than its pro rata share thereof as provided herein
(including as in contravention of the priorities of payment set forth in Section 8.03),
then the Credit Party receiving such greater proportion shall (a) notify
the Administrative Agent of such fact, and (b) purchase (for cash at face
value) participations in the Obligations of the other Credit Parties, or make
such other adjustments as shall be equitable, so that the benefit of all such
payments shall be shared by the Credit Parties ratably and in the priorities
set forth in Section 8.03, provided that:


 


(i)            if any such participations or
subparticipations are purchased and all or any portion of the payment giving
rise thereto is recovered, such participations or subparticipations shall be
rescinded and the purchase price restored to the extent of such recovery,
without interest; and


 


(ii)           the provisions of this Section shall
not be construed to apply to (x) any payment made by the Loan Parties
pursuant to and in accordance with the express terms of this Agreement or (y) any
payment obtained by a Lender as consideration for the assignment of or sale of
a participation in any of its Committed Loans or subparticipations in L/C
Obligations or Swing Line Loans to any assignee or participant, other than to
the Borrowers or any Subsidiary thereof (as to which the provisions of this Section shall
apply).


 


Each Loan Party consents to the foregoing and agrees, to the extent it
may effectively do so under applicable Law, that any Lender acquiring a participation
pursuant to the foregoing arrangements may exercise against such Loan Party
rights of setoff and counterclaim with respect to such participation as fully
as if such Lender were a direct creditor of such Loan Party in the amount of
such participation.


 


2.14        Settlement
Amongst Lenders


 


(a)         The amount of each Lender’s
Applicable Percentage of outstanding Loans (including outstanding Swing Line
Loans) shall be computed weekly (or more frequently in the Administrative Agent’s
discretion) and shall be adjusted upward or downward based on all Loans
(including Swing Line Loans) and repayments of Loans (including Swing Line
Loans) received by the Administrative Agent as of 3:00 p.m. on the first
Business Day (such date, the “Settlement Date”) following the end of the
period specified by the Administrative Agent.


 


(b)         The Administrative Agent shall deliver to each of the
Lenders promptly after a Settlement Date a summary statement of the amount of
outstanding Committed Loans for the 


 


61

















 


period and the
amount of repayments received for the period. 
As reflected on the summary statement, (i) the Administrative Agent
shall transfer to each Lender its Applicable Percentage of repayments, and (ii) each
Lender shall transfer to the Administrative Agent (as provided below) or the
Administrative Agent shall transfer to each Lender, such amounts as are
necessary to insure that, after giving effect to all such transfers, the amount
of Committed Loans made by each Lender shall be equal to such Lender’s Applicable
Percentage of all Committed Loans outstanding as of such Settlement Date.  If the summary statement requires transfers
to be made to the Administrative Agent by the Lenders and is received prior to
1:00 p.m. on a Business Day, such transfers shall be made in immediately
available funds no later than 3:00 p.m. that day; and, if received after
1:00 p.m., then no later than 3:00 p.m. on the next Business Day. The
obligation of each Lender to transfer such funds is irrevocable, unconditional
and without recourse to or warranty by the Administrative Agent.  If and to the extent any Lender shall not
have so made its transfer to the Administrative Agent, such Lender agrees to
pay to the Administrative Agent, forthwith on demand such amount, together with
interest thereon, for each day from such date until the date such amount is
paid to the Administrative Agent, equal to the greater of the Federal Funds
Rate and a rate determined by the Administrative Agent in accordance with
banking industry rules on interbank compensation plus any administrative,
processing, or similar fees customarily charged by the Administrative Agent in
connection with the foregoing.


 


ARTICLE III

TAXES, YIELD PROTECTION AND ILLEGALITY;

APPOINTMENT OF LEAD BORROWER


 


3.01        Taxes.


 


(a)           Payments Free of
Taxes.  Any and all payments by or on
account of any obligation of the Borrowers hereunder or under any other Loan
Document shall be made free and clear of and without reduction or withholding
for any Indemnified Taxes or Other Taxes, provided that if the Borrowers
shall be required by applicable Laws to deduct any Indemnified Taxes (including
any Other Taxes) from such payments, then (i) the sum payable shall be
increased as necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section) the
Administrative Agent, Lender or L/C Issuer, as the case may be, receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) the Borrowers shall make such deductions and (iii) the Borrowers
shall timely pay the full amount deducted to the relevant Governmental
Authority in accordance with applicable Laws.


 


(b)           Payment of Other
Taxes by the Borrowers.  Without
limiting the provisions of subsection (a) above, the Borrowers
shall timely pay any Other Taxes to the relevant Governmental Authority in
accordance with applicable Laws.


 


(c)           Indemnification by
the Loan Parties.  The Loan Parties
shall indemnify the Administrative Agent, each Lender and the L/C Issuer,
within 10 days after demand therefor, for the full amount of any Indemnified
Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or
asserted on or attributable to amounts payable under this Section) paid by the
Administrative Agent, such Lender or the L/C Issuer, as the case may be, and
any penalties, interest, fees, and reasonable costs and expenses, arising
therefrom or with respect thereto, whether or not such Indemnified Taxes or
Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority.  A certificate as
to the amount of such payment or liability delivered to the Lead Borrower by a
Lender or the L/C Issuer (with a copy to the Administrative Agent), or by the
Administrative Agent on its own behalf or on behalf of a Lender or the L/C
Issuer, shall be conclusive absent manifest error.


 


(d)           Evidence of Payments.  If requested by the Administrative Agent, the
Lead Borrower shall deliver to the Administrative Agent, as soon as practicable
after any payment of Indemnified Taxes or Other Taxes by the Borrowers to a
Governmental Authority, the original or a certified copy of a receipt issued by
such Governmental Authority evidencing such payment, a copy of 


 


62

















 


the return reporting such
payment or other evidence of such payment reasonably satisfactory to the
Administrative Agent.


 


(e)           Status of Lenders.  Any Foreign Lender that is entitled to an
exemption from or reduction of withholding tax under the law of the
jurisdiction in which any Borrower is resident for tax purposes, or any treaty
to which such jurisdiction is a party, with respect to payments hereunder or
under any other Loan Document shall deliver to the Lead Borrower (with a copy
to the Administrative Agent), at the time or times prescribed by applicable law
or reasonably requested by the Lead Borrower or the Administrative Agent, such
properly completed and executed documentation prescribed by applicable law as
will permit such payments to be made without withholding or at a reduced rate
of withholding.  In addition, any Lender,
if requested by the Lead Borrower or the Administrative Agent, shall deliver
such other documentation prescribed by applicable law or reasonably requested
by the Lead Borrower or the Administrative Agent as will enable the Lead
Borrower or the Administrative Agent to determine whether or not such Lender is
subject to backup withholding or information reporting requirements. Without limiting
the generality of the foregoing, in the event that any Borrower is resident for
tax purposes in the United States, any Foreign Lender shall deliver to the Lead
Borrower and the Administrative Agent (in such number of copies as shall be
requested by the recipient) on or prior to the date on which such Foreign
Lender becomes a Lender under this Agreement (and from time to time thereafter
upon the request of the Lead Borrower or the Administrative Agent, but only if
such Foreign Lender is legally entitled to do so), whichever of the following
is applicable:


 


(i)            duly completed copies of
Internal Revenue Service Form W-8BEN claiming eligibility for benefits of
an income tax treaty to which the United States is a party,


 


(ii)           duly completed copies of Internal Revenue Service Form W-8ECI,


 


(iii)          in the case of a Foreign Lender claiming the benefits
of the exemption for portfolio interest under section 881(c) of the Code, (x) a
certificate to the effect that such Foreign Lender is not (A) a “bank”
within the meaning of section 881(c)(3)(A) of the Code, (B) a “10
percent shareholder” of the Borrowers within the meaning of section 881(c)(3)(B) of
the Code, or (C) a “controlled foreign corporation” described in section
881(c)(3)(C) of the Code and (y) duly completed copies of Internal
Revenue Service Form W-8BEN, or


 


(iv)          any other form prescribed by applicable law as a basis
for claiming exemption from or a reduction in United States Federal withholding
tax duly completed together with such supplementary documentation as may be
prescribed by applicable law to permit the Lead Borrower to determine the
withholding or deduction required to be made.


 


(f)            Treatment of
Certain Refunds.  If the
Administrative Agent, any Lender or the L/C Issuer determines that it has received
a refund of any Taxes or Other Taxes as to which it has been indemnified by the
Borrowers or with respect to which the Borrowers have paid additional amounts
pursuant to this Section, it shall pay to the Borrowers an amount equal to such
refund (but only to the extent of indemnity payments made, or additional
amounts paid, by the Borrowers under this Section with respect to the
Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket
expenses of the Administrative Agent, such Lender or the L/C Issuer, as the
case may be, and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund), provided that the
Borrowers, upon the request of the Administrative Agent, such Lender or the L/C
Issuer, agree to repay the amount paid over to the Borrowers (plus any
penalties, interest or other charges imposed by the relevant Governmental
Authority) to the Administrative Agent, such Lender or the L/C Issuer in the
event the Administrative Agent, such Lender or the L/C Issuer is required to
repay such refund to such Governmental Authority.  This subsection shall not be construed to
require the Administrative Agent, any Lender or the L/C Issuer to make available
its tax returns (or any other information relating to its taxes that it deems
confidential) to the Borrowers or any other Person.


 


3.02        Illegality.
 If any Lender determines that any
Law has made it unlawful, or that any Governmental Authority has asserted that
it is unlawful, for any Lender or its applicable 


 


63

















 


Lending Office to make,
maintain or fund LIBO Rate Loans, or to determine or charge interest rates
based upon the LIBO Rate, or any Governmental Authority has imposed material
restrictions on the authority of such Lender to purchase or sell, or to take
deposits of, Dollars in the London interbank market, then, on notice thereof by
such Lender to the Lead Borrower through the Administrative Agent, any
obligation of such Lender to make or continue LIBO Rate Loans or to convert
Base Rate Loans to LIBO Rate Loans shall be suspended until such Lender
notifies the Administrative Agent and the Lead Borrower that the circumstances
giving rise to such determination no longer exist.  Upon receipt of such notice, the Borrowers
shall, upon demand from such Lender (with a copy to the Administrative Agent),
prepay or, if applicable, convert all LIBO Rate Loans of such Lender to Base
Rate Loans, either on the last day of the Interest Period therefor, if such
Lender may lawfully continue to maintain such LIBO Rate Loans to such day, or
immediately, if such Lender may not lawfully continue to maintain such LIBO
Rate Loans.  Upon any such prepayment or
conversion, the Borrowers shall also pay accrued interest on the amount so
prepaid or converted.


 


3.03        Inability
to Determine Rates.  If the Required
Lenders determine that for any reason in connection with any request for a LIBO
Rate Loan or a conversion to or continuation thereof that (a) Dollar
deposits are not being offered to banks in the London interbank market for the
applicable amount and Interest Period of such LIBO Rate Loan, (b) adequate
and reasonable means do not exist for determining the LIBO Rate for any
requested Interest Period with respect to a proposed LIBO Rate Loan , or (c) the
LIBO Rate for any requested Interest Period with respect to a proposed LIBO
Rate Loan does not adequately and fairly reflect the cost to such Lenders of
funding such Loan, the Administrative Agent will promptly so notify the Lead
Borrower and each Lender.  Thereafter,
the obligation of the Lenders to make or maintain LIBO Rate Loans shall be
suspended until the Administrative Agent (upon the instruction of the Required
Lenders) revokes such notice.  Upon
receipt of such notice, the Lead Borrower may revoke any pending request for a
Borrowing of, conversion to or continuation of LIBO Rate Loans or, failing
that, will be deemed to have converted such request into a request for a
Committed Borrowing of Base Rate Loans in the amount specified therein.


 


3.04        Increased
Costs; Reserves on LIBO Rate Loans.


 


(a)           Increased Costs
Generally.  If any Change in Law
shall:


 


(i)            impose, modify or deem
applicable any reserve, special deposit, compulsory loan, insurance charge or
similar requirement against assets of, deposits with or for the account of, or
credit extended or participated in by, any Lender (except any reserve
requirement reflected in the LIBO Rate) or the L/C Issuer;


 


(ii)           subject any Lender or the L/C Issuer to any tax of any
kind whatsoever with respect to this Agreement, any Letter of Credit, any
participation in a Letter of Credit or any LIBO Rate Loan made by it, or change
the basis of taxation of payments to such Lender or the L/C Issuer in respect
thereof (except for Indemnified Taxes or Other Taxes covered by Section 3.01
and the imposition of, or any change in the rate of, any Excluded Tax payable
by such Lender or the L/C Issuer); or


 


(iii)          impose on any Lender or the L/C Issuer or the London
interbank market any other condition, cost or expense affecting this Agreement
or LIBO Rate Loans made by such Lender or any Letter of Credit or participation
therein;


 


and the result of any of the foregoing
shall be to increase the cost to such Lender of making or maintaining any LIBO
Rate Loan (or of maintaining its obligation to make any such Loan), or to
increase the cost to such Lender or the L/C Issuer of participating in, issuing
or maintaining any Letter of Credit (or of maintaining its obligation to
participate in or to issue any Letter of Credit), or to reduce the amount of
any sum received or receivable by such Lender or the L/C Issuer 


 


64

















 


hereunder (whether of principal,
interest or any other amount) then, upon request of such Lender or the L/C
Issuer, the Borrowers will pay to such Lender or the L/C Issuer, as the case
may be, such additional amount or amounts as will compensate such Lender or the
L/C Issuer, as the case may be, for such additional costs incurred or reduction
suffered.


 


(b)           Capital Requirements.  If any Lender or the L/C Issuer determines
that any Change in Law affecting such Lender or the L/C Issuer or any Lending
Office of such Lender or such Lender’s or the L/C Issuer’s holding company, if
any, regarding capital requirements has or would have the effect of reducing
the rate of return on such Lender’s or the L/C Issuer’s capital or on the
capital of such Lender’s or the L/C Issuer’s holding company, if any, as a
consequence of this Agreement, the Commitments of such Lender or the Loans made
by, or participations in Letters of Credit held by, such Lender, or the Letters
of Credit issued by the L/C Issuer, to a level below that which such Lender or
the L/C Issuer or such Lender’s or the L/C Issuer’s holding company could have
achieved but for such Change in Law (taking into consideration such Lender’s or
the L/C Issuer’s policies and the policies of such Lender’s or the L/C Issuer’s
holding company with respect to capital adequacy), then from time to time the
Borrowers will pay to such Lender or the L/C Issuer, as the case may be, such
additional amount or amounts as will compensate such Lender or the L/C Issuer
or such Lender’s or the L/C Issuer’s holding company for any such reduction
suffered.


 


(c)           Certificates for
Reimbursement.  A certificate of a
Lender or the L/C Issuer setting forth the amount or amounts necessary to
compensate such Lender or the L/C Issuer or its holding company, as the case
may be, as specified in subsection (a) or (b) of this
Section, as well as the basis for determining such amount or amounts, and
delivered to the Lead Borrower shall be conclusive absent manifest error.  The Borrowers shall pay such Lender or the
L/C Issuer, as the case may be, the amount shown as due on any such certificate
within 10 days after receipt thereof.


 


(d)           Delay in Requests.  Failure or delay on the part of any Lender or
the L/C Issuer to demand compensation pursuant to the foregoing provisions of
this Section shall not constitute a waiver of such Lender’s or the L/C
Issuer’s right to demand such compensation, provided that the Borrowers
shall not be required to compensate a Lender or the L/C Issuer pursuant to the
foregoing provisions of this Section for any increased costs incurred or
reductions suffered more than nine months prior to the date that such Lender or
the L/C Issuer, as the case may be, notifies the Lead Borrower of the Change in
Law giving rise to such increased costs or reductions and of such Lender’s or
the L/C Issuer’s intention to claim compensation therefor (except that, if the
Change in Law giving rise to such increased costs or reductions is retroactive,
then the nine-month period referred to above shall be extended to include the
period of retroactive effect thereof).


 


(e)           Reserves on LIBO
Rate Loans.  In addition to the
amounts paid by the Borrowers in respect of the Statutory Reserve Rate, the
Borrowers shall pay to each Lender, as long as such Lender shall be required to
maintain reserves (other than any reserve described in the definition of
Statutory Reserve Rate) with respect to liabilities or assets consisting of or
including Eurocurrency funds or deposits (currently known as “Eurocurrency
liabilities”), additional interest on the unpaid principal amount of each LIBO
Rate Loan equal to the actual costs of such reserves allocated to such Loan by
such Lender (as determined by such Lender in good faith, which determination
shall be conclusive), which shall be due and payable on each date on which
interest is payable on such Loan, provided the Lead Borrower shall have
received at least 10 days’ prior notice (with a copy to the Administrative
Agent) of such additional interest from such Lender.  If a Lender fails to give notice 10 days
prior to the relevant Interest Payment Date, such additional interest shall be
due and payable 10 days from receipt of such notice.


 


3.05        Compensation
for Losses.  Upon demand of any
Lender (with a copy to the Administrative Agent) from time to time, the
Borrowers shall promptly compensate such Lender for and hold such Lender
harmless from any loss, cost or expense incurred by it as a result of:


 


65

















 


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


 


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


 


(c)         any
assignment of a LIBO Rate Loan on a day other than the last day of the Interest
Period therefor as a result of a request by the Lead Borrower pursuant to Section 10.13;
including any loss of anticipated
profits and any loss or expense arising from the liquidation or reemployment of
funds obtained by it to maintain such Loan or from fees payable to terminate
the deposits from which such funds were obtained.  The Borrowers shall also pay any customary
administrative fees charged by such Lender in connection with the foregoing.


 


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


 


3.06        Mitigation
Obligations; Replacement of Lenders.


 


(a)           Designation of a
Different Lending Office.  If any
Lender requests compensation under Section 3.04, or the Borrowers
are required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 3.01,
or if any Lender gives a notice pursuant to Section 3.02, then such
Lender shall use reasonable efforts to designate a different Lending Office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the
reasonable judgment of such Lender, such designation or assignment (i) would
eliminate or reduce amounts payable pursuant to Section 3.01 or 3.04,
as the case may be, in the future, or eliminate the need for the notice
pursuant to Section 3.02, as applicable, and (ii) in each
case, would not subject such Lender to any unreimbursed cost or expense and
would not otherwise be disadvantageous to such Lender as reasonably determined
by such Lender.  The Borrowers hereby
agree to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.


 


(b)           Replacement of
Lenders.  Notwithstanding subsection
(a) above, if any Lender requests compensation under Section 3.04, or if the Borrowers are
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 3.01,
or if any Lender gives a notice pursuant to Section 3.02, the
Borrowers may replace such Lender in accordance with Section 10.13.


 


(c)           If the L/C Issuer
may not issue Letters of Credit as a result of the limitations set forth in Section 2.03(a)(iii)(A), then
Borrowers may, if no Default or Event of Default exists and with the prior
written consent of Administrative Agent (which consent shall not be
unreasonably withheld or delayed): (i) request a Lender (with such Lender’s
consent) to issue Letters of Credit; or (ii) designate a supplemental bank
or financial institution, which is an Eligible Assignee and otherwise
satisfactory to Administrative Agent, to issue Letters of Credit and become an
additional “L/C Issuer” hereunder.


 


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


 


3.08        Designation
of Lead Borrower as Borrowers’ Agent.


 


(a)           Each Borrower hereby
irrevocably designates and appoints the Lead Borrower as such Borrower’s agent
to obtain Credit Extensions, the proceeds of which shall be available to each
Borrower for such uses as are permitted under this Agreement.  As the disclosed principal for its agent,
each Borrower shall be obligated to each Credit Party on account of Credit
Extensions so made as if made directly by the applicable Credit Party to such
Borrower, notwithstanding the manner by which such Credit Extensions are
recorded on the books and records of the Lead Borrower and of any other 


 


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Borrower.  In addition, each Loan Party other than the
Borrowers hereby irrevocably designates and appoints the Lead Borrower as such
Loan Party’s agent to represent such Loan Party in all respects under this
Agreement and the other Loan Documents.


 


(b)           Each Borrower
recognizes that credit available to it hereunder is in excess of and on better
terms than it otherwise could obtain on and for its own account and that one of
the reasons therefor is its joining in the credit facility contemplated herein
with all other Borrowers.  Consequently,
each Borrower hereby assumes and agrees to discharge all Obligations of each of
the other Borrowers.


 


(c)           The Lead Borrower shall
act as a conduit for each Borrower (including itself, as a “Borrower”) on whose
behalf the Lead Borrower has requested a Credit Extension.  Neither the Administrative Agent nor any
other Credit Party shall have any obligation to see to the application of such
proceeds therefrom.


 


ARTICLE IV

CONDITIONS PRECEDENT TO CREDIT EXTENSIONS


 


4.01        Conditions
of Initial Credit Extension.  The
obligation of the L/C Issuer and each Lender to make its initial Credit
Extension hereunder is subject to satisfaction (or waiver in accordance with Section 10.01)
of the following conditions precedent:


 


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


 


(i)            executed counterparts of this Agreement
sufficient in number for distribution to the Administrative Agent, each Lender
and the Lead Borrower;


 


(ii)           (A) a Committed
Loan Note executed by the Borrowers in favor of each Lender requesting a
Committed Loan Note, and (B) a Swing Line Loan Note executed by the
Borrowers in favor of Wells Fargo Retail Finance, LLC;


 


(iii)          such certificates of
resolutions or other action, incumbency certificates and/or other certificates
of Responsible Officers of each Loan Party as the Administrative Agent may
require evidencing (A) the authority of each Loan Party to enter into this
Agreement and the other Loan Documents to which such Loan Party is a party or
is to be a party and (B) the identity, authority and capacity of each
Responsible Officer thereof authorized to act as a Responsible Officer in
connection with this Agreement and the other Loan Documents to which such Loan
Party is a party or is to be a party;


 


(iv)          copies of each Loan
Party’s Organization Documents and such other documents and certifications as
the Administrative Agent may reasonably require to evidence that each Loan
Party is duly organized or formed, and that each Loan Party is validly existing
and in good standing under the Laws of the jurisdiction of its incorporation or
organization, and in each jurisdiction where its ownership, lease or operation
of properties or the conduct of its business requires such qualification,
except to the extent that failure to do so could not reasonably be expected to
have a Material Adverse Effect;


 


(v)           a favorable opinion of Hogan &
Hartson LLP and Elsaesser
Jarzabek Anderson Marks & Elliott, Chtd., counsel to the Loan
Parties, addressed to the Administrative Agent and each Lender, as to such
matters concerning the Loan Parties and the Loan Documents as the
Administrative Agent may reasonably request;


 


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(vi)          a certificate signed by
a Responsible Officer of the Lead Borrower certifying (A) that the
conditions specified in Sections 4.01 and 4.02 have been
satisfied, (B) that there has been no event or circumstance since the date
of the Audited Financial Statements that has had or could be reasonably
expected to have, either individually or in the aggregate, a Material Adverse
Effect, (C) either that (1) no consents, licenses or approvals are
required in connection with the execution, delivery and performance by such
Loan Party and the validity against such Loan Party of the Loan Documents to
which it is a party, or (2) that all such consents, licenses and approvals
have been obtained and are in full force and effect, and (D) to the Solvency of the Loan Parties on a
Consolidated basis as of the Closing Date after giving effect to the
transactions contemplated hereby;


 


(vii)         a duly completed Compliance Certificate as of the last day of the
Fiscal Month of the Parent and its Subsidiaries most recently ended prior to
the Closing Date, signed by a Responsible Officer of the Lead Borrower;


 


(viii)        evidence that all insurance required to be maintained pursuant to the
Loan Documents and all endorsements in favor of the Agents required under the
Loan Documents have been obtained and are in effect;


 


(ix)           a payoff letter from the lenders under the Existing Credit Agreement
satisfactory in form and substance to the Administrative Agent evidencing that
the Existing Credit Agreement has been or concurrently with the Closing Date is
being terminated, all obligations and other indebtedness thereunder are being
paid in full, and all Liens securing obligations under the Existing Credit
Agreement have been or concurrently with the Closing Date are being released;


 


(x)            a certificate from the chief financial
officer of the Lead Borrower, satisfactory in form and substance to the
Administrative Agent, attesting to the Solvency of the Loan Parties as of the
Closing Date after giving effect to the transactions contemplated hereby;


 


(xi)           the Security Documents
and certificates evidencing any stock being pledged thereunder, together with
undated stock powers executed in blank (other than the certificate and stock
powers being delivered pursuant to Section 6.22), each duly
executed by the applicable Loan Parties;


 


(xii)          all other Loan
Documents, each duly executed by the applicable Loan Parties;


 


(xiii)         the Disbursement Letter, duly
executed by each of the parties thereto;


 


(xiv)        (A) appraisals (based
on net liquidation value) by a third party appraiser acceptable to the
Collateral Agent of all Inventory of the Borrowers, the results of which are
satisfactory to the Collateral Agent and (B) a written report regarding
the results of a commercial finance examination of the Loan Parties, which
shall be satisfactory to the Collateral Agent;


 


(xv)         results of searches or
other evidence reasonably satisfactory to the Collateral Agent (in each case
dated as of a date reasonably satisfactory to the Collateral Agent) indicating
the absence of Liens on the assets of the Loan Parties, except for Permitted
Encumbrances and Liens for which termination statements and releases,
satisfactions and discharges of any mortgages, and 


 


68

















 


releases or subordination
agreements satisfactory to the Collateral Agent are being tendered concurrently
with such extension of credit or other arrangements satisfactory to the
Collateral Agent for the delivery of such termination statements and releases,
satisfactions and discharges have been made;


 


(xvi)        (A)          all documents and instruments, including
Uniform Commercial Code financing statements, required by law or reasonably
requested by the Collateral Agent to be filed, registered or recorded to create
or perfect the first priority Liens intended to be created under the Loan
Documents and all such documents and instruments shall have been so filed,
registered or recorded to the satisfaction of the Collateral Agent, (B) the
DDA Notifications, Credit Card Notifications, and Blocked Account Agreements
required pursuant to Section 6.13 hereof, and (C) control
agreements with respect to the Loan Parties’ securities and investment
accounts;


 


(xvii)       Collateral Access
Agreement, as required by the Collateral Agent; and


 


(xviii)      such other assurances, certificates, documents, consents or opinions as
the Agents reasonably may require.


 


(b)         After giving effect to (i) the
first funding under the Loans, (ii) any charges to the Loan Account made
in connection with the establishment of the credit facility contemplated hereby
and (iii) all Letters of Credit to be issued at, or immediately subsequent
to such establishment, Availability shall be not less than $40,000,000.


 


(c)         The Administrative Agent shall have received a
Borrowing Base Certificate dated the Closing Date, relating to the month ended
on January 31, 2009, and executed by a Responsible Officer of the Lead
Borrower.


 


(d)         The Administrative Agent shall be reasonably satisfied
that any financial statements delivered to it fairly present the business and
financial condition of the Loan Parties and that there has been no Material
Adverse Effect since the date of the most recent financial information
delivered to the Administrative Agent.


 


(e)         The Administrative Agent shall have received and be
satisfied with (i) a detailed business plan and forecast for the period
commencing on the Closing Date and ending with the end of such Fiscal Year,
which shall include an Availability model, Consolidated income statement,
balance sheet, and statement of cash flow, by quarter, each prepared in
conformity with GAAP and consistent with the Loan Parties’ then current
practices and (b) such other information (financial or otherwise)
reasonably requested by the Administrative Agent.


 


(f)          There shall not be pending any litigation or other
proceeding, the result of which, either individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.


 


(g)         There shall not have occurred any default of any
Material Contract of any Loan Party which could reasonably be expected to have
a Material Adverse Effect.


 


(h)         The consummation of the transactions contemplated
hereby shall not violate any applicable Law or any Organization Document.


 


(i)          All fees and expenses required to be paid to the
Agents on or before the Closing Date shall have been paid in full, and all fees
required to be paid to the Lenders on or before the Closing Date shall have
been paid in full.


 


(j)          The Borrowers shall have paid all fees, charges and
disbursements of counsel to the Administrative Agent to the extent invoiced
prior to the Closing Date, plus such additional amounts of such fees, charges
and disbursements as shall constitute its reasonable estimate of such fees,
charges and disbursements incurred or to be incurred by it through the closing 


 


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proceedings
(provided that such estimate shall not thereafter preclude a final settling of
accounts between the Borrowers and the Administrative Agent).


 


(k)         The Administrative Agent shall have received all
documentation and other information required by regulatory authorities under
applicable “know your customer” and anti-money laundering rules and
regulations, including without limitation the USA PATRIOT Act, and shall be
satisfied that the Loan Parties are in compliance with all Laws.


 


(l)          No material changes in governmental regulations or
policies affecting any Loan Party or any Credit Party shall have occurred prior
to the Closing Date.


 


(m)        There shall not have occurred any disruption or
material adverse change in the United States financial or capital markets in
general that has had, in the reasonable opinion of the Administrative Agent, a
material adverse effect on the market for loan syndications or adversely
affecting the syndication of the Loans.


 


(n)         Each Lender shall have received final credit approval
to enter into the Agreement and the other Loan Documents (to which it is a
party) and for its applicable Commitment, and to perform its obligations
thereunder.


 


(o)         The Agents shall have
completed, and be
satisfied with, its corporate and legal due-diligence of each Loan Party
(including, but not limited to solvency), its examination of the Collateral,
the Stores and distribution centers of the Loan Parties, and the capital
structure of the Loan Parties.


 


Without limiting the generality of the
provisions of Section 9.04, for purposes of determining compliance
with the conditions specified in this Section 4.01, each 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
Lender unless the Administrative Agent shall have received notice from such
Lender prior to the proposed Closing Date specifying its objection thereto.


 


4.02        Conditions
to all Credit Extensions.  The
obligation of each Lender to honor any Request for Credit Extension (other than
a Committed Loan Notice requesting only a conversion of Committed Loans to the
other Type, or a continuation of LIBO Rate Loans) is subject to the following
conditions precedent:


 


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


 


(b)         No Default shall exist, or would result from such
proposed Credit Extension or from the application of the proceeds thereof.


 


(c)         The Administrative Agent and, if applicable, the L/C
Issuer or the Swing Line Lender shall have received a Request for Credit
Extension in accordance with the requirements hereof.


 


(d)         The Administrative Agent shall have received an
updated Borrowing Base Certificate reflecting the outstanding Credit Extensions
after giving effect to such request (it being agreed that except for Borrowing
Base Certificates furnished pursuant to Section 6.02(c), the values
for eligible assets will not be required to be updated).


 


(e)         No injunction, writ, restraining order, or other
order of any nature prohibiting, directly or indirectly, the extending of such
credit shall have been issued and remain in force by any Governmental Authority
against any Borrower, any Agent, any Lender or any of their Affiliate.


 


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(f)          The
aggregate amount of all requested Loans and/or Letters of Credit shall not
exceed Availability at such time.


 


(g)         No
event or circumstance which could reasonably be expected to result in a
Material Adverse Effect shall have occurred.


 


(h)         No
Loan Party shall have entered into any transaction, or made any payment, of the
type specified in Section 7.06(d) or (e), within ninety (90) days of the date of the
proposed Credit Extension, provided, however, this condition
shall not apply in connection with the issuance of any Letter of Credit, any
L/C Borrowing, or any other Loan for which 100% of the proceeds shall be used
to repay any outstanding fees, costs or expenses (including, without
limitation, the Commitment Fees, Early Termination Fees, and Letter of Credit
Fees), owed to any Credit Party under, or in connection with, this Agreement or
any other Loan Document.


 


Each Request for Credit Extension
(other than a Committed Loan Notice requesting only a conversion of Committed
Loans to the other Type or a continuation of LIBO Rate Loans) submitted by the
Borrower shall be deemed to be a representation and warranty by the Borrowers
that the conditions specified in this Section 4.02 have been
satisfied on and as of the date of the applicable Credit Extension.  The conditions set forth in this Section 4.02
are for the sole benefit of the Credit Parties but until the Required Lenders
otherwise direct the Administrative Agent to cease making Committed Loans, the
Lenders will fund their Applicable Percentage of all Committed Loans and L/C
Advances and participate in all Swing Line Loans and Letters of Credit whenever
made or issued, which are requested by the Lead Borrower and which,
notwithstanding the failure of the Loan Parties to comply with the provisions of
this Article IV, are agreed to by the Administrative Agent,
provided, however, the making of any such Loans or the issuance of any Letters
of Credit shall not be deemed a modification or waiver by any Credit Party of
the provisions of this Article IV on any future occasion or a
waiver of any rights or the Credit Parties as a result of any such failure to
comply.


 


ARTICLE V

REPRESENTATIONS AND WARRANTIES


 


To induce the Credit Parties to enter into this Agreement and to make
Loans and to issue Letters of Credit hereunder, each Loan Party represents and
warrants to the Administrative Agent and the other Credit Parties that:


 


5.01        Existence,
Qualification and Power.  Each Loan
Party and each Subsidiary thereof (a) is a corporation, limited liability
company, partnership or limited partnership, duly organized or formed, validly
existing and, where applicable, in good standing under the Laws of the
jurisdiction of its incorporation or organization, (b) has all requisite
power and authority and all requisite governmental licenses, permits,
authorizations, consents and approvals to (i) own or lease its assets and
carry on its business as currently
conducted, and (ii) execute, deliver and perform its obligations under the
Loan Documents to which it is a party, and (c) is duly qualified and is
licensed and, where applicable, in good standing under the Laws of each
jurisdiction where its ownership, lease or operation of properties or the
conduct of its business requires such qualification or license; except in each
case referred to in clause (b)(i) or (c), to the extent that
failure to do so could not reasonably be expected to have a Material Adverse
Effect.  Schedule 5.01 annexed
hereto sets forth, as of the Closing Date, each Loan Party’s name as it appears
in official filings in its state of incorporation or organization and the name
under which each Loan Party currently conducts its business (if different), its
state of incorporation or organization, organization type, organization number,
if any, issued by its state of incorporation or 


 


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organization, its federal employer
identification number, and the address of its chief executive office and
principal place of business.


 


5.02        Authorization;
No Contravention.  The execution,
delivery and performance by each Loan Party of each Loan Document to which such
Person is or is to be a party, has been duly authorized by all necessary
corporate or other organizational action, and does not and will not (a) contravene
the terms of any of such Person’s Organization Documents; (b) conflict
with or result in any breach, termination, or contravention of, or constitute a
default under, or require any payment to be made under (i) any Material
Contract or any Material Indebtedness to which such Person is a party or
affecting such Person or the properties of such Person or any of its
Subsidiaries, (ii) any order, injunction, writ or decree of any
Governmental Authority or any arbitral award to which such Person or its
property is subject or (iii) any governmental licenses, permits,
authorizations, consents and approvals; (c) result in or require the
creation of any Lien upon any asset of any Loan Party (other than Liens in
favor of the Collateral Agent under the Security Documents); or (d) violate
any Law.


 


5.03        Governmental
Authorization; Other Consents.  No
approval, consent, exemption, authorization, or other action by, or notice to,
or filing with, any Governmental Authority or any other Person is necessary or
required in connection with the execution, delivery or performance by, or
enforcement against, any Loan Party of this Agreement or any other Loan
Document, except for (a) the perfection or maintenance of the Liens
created under the Security Documents (including the first priority nature
thereof), or as otherwise expressly contemplated hereby in respect of the
protection and enforcement of such Liens or, (b) such as have been obtained or made and are in full
force and effect or (c) filings with the SEC in connection with the entry
into a material agreement.


 


5.04        Binding
Effect.  This Agreement has been, and
each other Loan Document, when delivered, will have been, duly executed and
delivered by each Loan Party that is party thereto.  This Agreement constitutes, and each other
Loan Document when so delivered will constitute, a legal, valid and binding
obligation of such Loan Party, enforceable against each Loan Party that is
party thereto in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors’
rights generally and subject to general principles of equity, regardless of
whether considered in a proceeding in equity or at law.


 


5.05        Financial
Statements; No Material Adverse Effect.


 


(a)           The Audited Financial Statements (i) were
prepared in accordance with GAAP consistently applied throughout the period
covered thereby, except as otherwise expressly noted therein; (ii) fairly
present in all material respects the financial condition of the Parent and its Subsidiaries as of the date
thereof and their results of operations for the period covered thereby in
accordance with GAAP consistently applied throughout the period covered
thereby, except as otherwise expressly noted therein; and (iii) show all
Material Indebtedness and other liabilities, direct or contingent, of the Parent and its Subsidiaries on a Consolidated
basis as of the date thereof, including liabilities for taxes, material
commitments and Indebtedness, in each case, in accordance with GAAP consistently
applied through the covered period.


 


(b)           The unaudited Consolidated
balance sheet of the Parent and its Subsidiaries dated November 1, 2008,
and the related Consolidated and consolidating statements of income or
operations, Shareholders’ Equity and cash flows for the Fiscal Quarter ended on
that date (i) were prepared in accordance with GAAP consistently applied
throughout the period covered thereby, except as otherwise expressly noted
therein, and (ii) fairly present in all material respects the financial
condition of the Parent and its Subsidiaries as of the date thereof and their
results of operations for the period covered thereby, subject, in the case of clauses
(i) and (ii), to the absence of footnotes and to normal
year-end audit adjustments.  As of the
Closing Date, Schedule 5.05 sets forth all Material Indebtedness and
other 


 


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liabilities, direct or
contingent, of the Loan Parties and their Subsidiaries on a Consolidated basis as of the date
of such financial statements, including liabilities for taxes, material
commitments and Material Indebtedness, in each case, in accordance with GAAP consistently
applied through the covered period.


 


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


 


(d)           To the best knowledge of the
Lead Borrower, no Internal Control Event exists or has occurred since the date
of the Audited Financial Statements that has resulted in or could reasonably be
expected to result in a misstatement in any material respect, in any financial
information delivered or to be delivered to the Administrative Agent or the
Lenders, of (i) covenant compliance calculations provided hereunder or (ii) the
assets, liabilities, financial condition or results of operations of the Parent
and its Subsidiaries on a Consolidated basis.


 


(e)           The Consolidated forecasted
balance sheet and statements of income and cash flows of the Parent and its
Subsidiaries delivered pursuant to Section 6.01(e) were
prepared in good faith on the basis of the assumptions stated therein, which
assumptions were fair in light of the conditions existing at the time of
delivery of such forecasts, and represented, at the time of delivery, the Loan
Parties’ best estimate of future financial performance.


 


5.06        Litigation.  There are no actions, suits,
proceedings, claims or disputes pending or, to the knowledge of the Loan
Parties after due and diligent investigation, threatened or contemplated, at
law, in equity, in arbitration or before any Governmental Authority, by or
against any Loan Party or any of its Subsidiaries or against any of its
properties or revenues that (a) purport to affect or pertain to this
Agreement or any other Loan Document, or any of the transactions contemplated
hereby, or (b) except as specifically disclosed on Schedule 5.06,
either individually or in the aggregate could reasonably be expected to have a
Material Adverse Effect, and there has been no adverse change in the status, or
financial effect on any Loan Party or Subsidiary thereof, of the matters
described on Schedule 5.06.


 


5.07        No
Default.            No Loan Party or any
Subsidiary is in default under or with respect to any Material Indebtedness
which could reasonably be expected to have a Material Adverse Effect.  No Default or Event of Default has occurred
and is continuing or would result from the consummation of the transactions
contemplated by this Agreement or any other Loan Document.


 


5.08        Ownership
of Property; Liens.


 


(a)           Each of the Loan Parties
thereof has good record and marketable title in fee simple to or valid
leasehold interests in, all real property necessary or used in the ordinary conduct
of its business, in each case free and clear of all Liens, other than Permitted
Encumbrances.  Each of the Loan Parties
has good and marketable title to, valid leasehold interests in, or valid
licenses to use all personal property (including Intellectual Property) and
assets material to the ordinary conduct of its business as currently conducted,
free and clear of all Liens, other than Permitted Encumbrances.


 


(b)           Schedule 5.08(b)(1) sets forth the address (including street
address, county and state) of all Real Estate that is owned by the Loan
Parties, together with a list of the holders of any mortgage or other Lien
thereon as of the Closing Date.  Each
Loan Party has good, marketable and insurable fee simple title to the real
property owned by such Loan Party or such Subsidiary, free and clear of all
Liens, other than Permitted Encumbrances. 
Schedule 5.08(b)(2) sets forth the address (including street
address, county and state) of all Leases of the Loan Parties, together with a
list of the lessor and its contact information with respect to each such Lease
as of the Closing Date.  Each of such
Leases is in full force and effect as of the Closing Date and the Loan Parties
are in compliance with the terms thereof to the extent required by Section 6.18.


 


(c)           The property of each Loan Party and each of its
Subsidiaries is subject to no Liens, other than Liens set forth on Schedule
7.01, and Permitted Encumbrances.


 


(d)           Schedule 7.02 sets forth a complete and accurate list of all
Investments other than Equity Interests disclosed pursuant to Schedule 5.13
held by any Loan Party or any Subsidiary of a Loan 


 


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Party on the Closing Date, showing as of the Closing
Date hereof the amount, obligor or issuer and maturity, if any, thereof.


 


(e)           Schedule 7.03 sets forth a complete and accurate list of all
Indebtedness of each Loan Party and any Subsidiary of each Loan Party as of the
Closing Date, showing as of the Closing Date the amount, obligor or issuer and
maturity thereof.


 


5.09        Environmental
Compliance.


 


(a)         Except
as specifically disclosed in Schedule 5.09, no Loan Party or any
Subsidiary thereof (i) has failed to comply with any Environmental Law or
to obtain, maintain or comply with any permit, license or other approval
required under any Environmental Law, (ii) has become subject to any
Environmental Liability, (iii) has received notice of any claim with
respect to any Environmental Liability or (iv) knows of any basis for any
Environmental Liability, except, in each case, as could not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.


 


(b)         Except
as otherwise set forth in Schedule 5.09, none of the properties
currently or formerly owned or operated by any Loan Party or any Subsidiary
thereof is listed or proposed for listing on the NPL or on the CERCLIS or any
analogous foreign, state or local list or is adjacent to any such property; to
the knowledge of the Loan Parties, there are no and never have been any
underground or above-ground storage tanks or any surface impoundments, septic
tanks, pits, sumps or lagoons in which Hazardous Materials are being or have
been treated, stored or disposed on any property currently owned or operated by
any Loan Party or any Subsidiary thereof or, to the best of the knowledge of
the Loan Parties, on any property formerly owned or operated by any Loan Party
or Subsidiary thereof; except as individually or in the aggregate could not
reasonably be expected to have a Material Adverse Effect, there is no asbestos
or asbestos-containing material on any property currently owned or operated by
any Loan Party or Subsidiary thereof; and except as individually or in the
aggregate could not reasonably be expected to have a Material Adverse Effect,
Hazardous Materials have not been released, discharged or disposed of on any
property currently or formerly owned or operated by any Loan Party or any
Subsidiary thereof.


 


(c)         Except
as otherwise set forth in Schedule 5.09, no Loan Party or any Subsidiary
thereof is undertaking, and no Loan Party or any Subsidiary thereof has
completed, either individually or together with other potentially responsible
parties, any investigation or assessment or remedial or response action
relating to any actual or threatened release, discharge or disposal of
Hazardous Materials at any site, location or operation, either voluntarily or
pursuant to the order of any Governmental Authority or the requirements of any
Environmental Law; and all Hazardous Materials generated, used, treated,
handled or stored at, or transported to or from, any property currently or
formerly owned or operated by any Loan Party or any Subsidiary thereof have
been disposed of in a manner not reasonably expected to result in material
liability to any Loan Party or any Subsidiary thereof.


 


5.10        Insurance.
 The properties of the Loan Parties
and their Subsidiaries are insured with financially sound and reputable
insurance companies which are not Affiliates of the Loan Parties, in such
amounts, with such deductibles and covering such risks (including, without
limitation, workmen’s compensation, public liability, business interruption and
property damage insurance) as are customarily carried by companies engaged in
similar businesses and owning similar properties in localities where the Loan
Parties or the applicable Subsidiary operates. 
Schedule 5.10 sets forth a description of all insurance
maintained by or on behalf of the Loan Parties as of the Closing Date. As of
the Closing Date, each insurance policy listed on Schedule 5.10 is in
full force and effect and all premiums in respect thereof that are due and
payable have been paid.


 


5.11        Taxes.
 The Loan Parties have filed all
Federal, state and other material tax returns and reports required to be filed,
and have paid all Federal, state and other material taxes, 


 


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assessments, fees and other
governmental charges levied or imposed upon them or their properties, income or
assets otherwise due and payable, except those which are being contested in
good faith by appropriate proceedings being diligently conducted, for which
adequate reserves have been provided in accordance with GAAP, as to which Taxes
no Lien has been filed and which contest effectively suspends the collection of
the contested obligation and the enforcement of any Lien securing such
obligation.  There is no proposed tax
assessment against any Loan Party or any Subsidiary that would, if made, have a
Material Adverse Effect.  No Loan Party
or any Subsidiary thereof is a party to any tax sharing agreement.


 


5.12        ERISA
Compliance.


 


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


 


(b)           There are no pending or, to the best knowledge of the
Lead Borrower, threatened claims, actions or lawsuits, or action by any
Governmental Authority, with respect to any Plan that could reasonably be
expected to have a Material Adverse Effect. 
There has been no prohibited transaction or violation of the fiduciary
responsibility rules with respect to any Plan that has resulted or could
reasonably be expected to result in a Material Adverse Effect.


 


(c)           (i)            No ERISA Event has occurred or is
reasonably expected to occur; (ii) no Pension Plan has any Unfunded Pension
Liability; (iii) neither any Loan Party nor any ERISA Affiliate has
incurred, or reasonably expects to incur, any liability under Title IV of ERISA
with respect to any Pension Plan (other than premiums due and not delinquent
under Section 4007 of ERISA); (iv) neither any Loan Party nor any
ERISA Affiliate has incurred, or reasonably expects to incur, any liability
(and no event has occurred which, with the giving of notice under Section 4219
of ERISA, would result in such liability) under Sections 4201 or 4243 of ERISA
with respect to a Multiemployer Plan; and (v) neither any Loan Party nor
any ERISA Affiliate has engaged in a transaction that could be subject to
Sections 4069 or 4212(c) of ERISA.


 


5.13        Subsidiaries;
Equity Interests.  As of the Closing Date,
the Loan Parties have no Subsidiaries other than those specifically disclosed
in Part (a) of Schedule 5.13, which Schedule sets forth the
legal name, jurisdiction of incorporation or formation and authorized Equity
Interests of each such Subsidiary, listed by class, and setting forth the
number and percentage of the outstanding Equity Interests of each such class
owned directly or indirectly by the applicable Loan Party.  All of the outstanding Equity Interests in
the Loan Parties and such Subsidiaries have been validly issued, are fully paid
and non-assessable and are owned by a Loan Party (or a Subsidiary of a Loan
Party) in the amounts specified on Part (a) of Schedule 5.13,
free and clear of all Liens except for those created under the Security Documents.  Except as specifically disclosed in Schedule
5.13, no Loan Party or any of its respective Subsidiaries is subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of any Loan Party’s Subsidiaries’ Equity Interests or any
security convertible into or exchangeable for any such Equity Interests.  As of the Closing Date, the Loan Parties have
no equity investments in any other corporation or entity other than those
specifically disclosed in Part (b) of Schedule 5.13.  Part (c) of Schedule 5.13 is
a complete and accurate description of the authorized Equity Interests of each
Loan Party as of the Closing Date, by class, and a description 


 


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of the number of shares of each
such class that are issued and outstanding. 
All of the outstanding Equity Interests in the Loan Parties have been
validly issued, and are fully paid and non-assessable and, other than with
respect to the Lead Borrower, are owned in the amounts specified on Part (c) of
Schedule 5.13, free and clear of all Liens except for those created
under the Security Documents.  Except as
set forth in Schedule 5.13, there are no subscriptions, options,
warrants, or calls relating to any shares of any Loan Party’s Equity Interests,
including any right of conversion or exchange under any outstanding security or
other instrument.  The copies of the
Organization Documents of each Loan Party and each amendment thereto provided pursuant
to Section 4.01 are true and correct copies of each such document,
each of which is valid and in full force and effect.


 


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


 


(a)           No Loan Party is engaged or
will be engaged, principally or as one of its important activities, in the
business of purchasing or carrying margin stock (within the meaning of
Regulation U issued by the FRB), or extending credit for the purpose of
purchasing or carrying margin stock. 
None of the proceeds of the Credit Extensions shall be used directly or
indirectly for the purpose of purchasing or carrying any margin stock, for the
purpose of reducing or retiring any Indebtedness that was originally incurred
to purchase or carry any margin stock or for any other purpose that might cause
any of the Credit Extensions to be considered a “purpose credit” within the
meaning of Regulations T, U, or X issued by the FRB.


 


(b)           None of the Loan Parties, any Person Controlling any
Loan Party, or any Subsidiary is or is required to be registered as an “investment
company” under the Investment Company Act of 1940.  None of the Loan Parties, any Person
Controlling any Loan Party, or any Subsidiary is a “holding company” or an “affiliate”
of a “holding company” or a “subsidiary company” of a “holding company”, as
each term is defined and used in the Public Utility Holding Company Act of 2005


 


5.15        Disclosure.
 Each Loan Party has disclosed to the
Administrative Agent and the Lenders all agreements, instruments and corporate
or other restrictions to which it or any of its Subsidiaries is subject, and
all other matters known to it, that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect.  No report, financial statement, certificate
or other information furnished (whether in writing or orally) by or on behalf
of any Loan Party to the Administrative
Agent or any Lender in connection with the transactions contemplated hereby and
the negotiation of this Agreement or delivered hereunder or under any other
Loan Document (in each case, as modified or supplemented by other information
so furnished) contains any material misstatement of fact or omits to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not materially misleading as of the
time when made or delivered; provided that, with respect to projected
financial information, the Loan Parties represent only that such information
was prepared in good faith based upon assumptions believed to be reasonable at
the time.


 


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


 


5.17        Intellectual
Property; Licenses, Etc.  Each Loan
Party owns, or holds licenses in, all Intellectual Property, trade names,
patent rights and other authorizations that are necessary to 


 


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the conduct of its business as
currently conducted and as proposed to be conducted, and attached hereto as Schedule
5.17 is a true, correct, and complete listing as of the Closing Date of all
material patents, patent applications, trademarks, trademark applications,
copyrights, and copyright registrations as to which a Loan Party is the owner
or is an exclusive licensee.  There is no
action, proceeding, claim or complaint pending or, threatened in writing to be
brought against any Loan Party which might jeopardize any of such Person’s
interest in any of the foregoing licenses, patents, copyrights, trademarks,
trade names, designs or applications, except those which, either individually
or in the aggregate, could reasonably be expected to have a Material Adverse
Effect, and no slogan or other advertising device, product, process, method,
substance, part or other material now employed, or now contemplated to be
employed, by any Loan Party or any Subsidiary infringes upon any rights held by
any other Person.


 


5.18        Labor
Matters.


 


There are no strikes, lockouts, slowdowns or other material labor
disputes against any Loan Party or any Subsidiary thereof pending or, to the
knowledge of any Loan Party, threatened. The hours worked by and payments made
to employees of the Loan Parties comply in all material respects with the Fair
Labor Standards Act and any other applicable federal, state, local or foreign
Law dealing with such matters. No Loan Party or any of its Subsidiaries has
incurred any material liability or obligation under the Worker Adjustment and
Retraining Act or similar state Law.  All
payments due from any Loan Party and its Subsidiaries, or for which any claim
may be made against any Loan Party, on account of wages and employee health and
welfare insurance and other benefits, have been paid or properly accrued in
accordance with GAAP as a liability on the books of such Loan Party, except as
could not reasonably be expected to have a Material Adverse Effect.  Except as set forth on Schedule 5.18
no Loan Party or any Subsidiary is a party to or bound by any collective
bargaining agreement, management agreement, employment agreement, bonus,
restricted stock, stock option, or stock appreciation plan or agreement or any
similar plan, agreement or arrangement. As of the Closing Date, there are no
representation proceedings pending or, to any Loan Party’s knowledge,
threatened to be filed with the National Labor Relations Board, and no labor
organization or group of employees of any Loan Party or any Subsidiary has made
a pending demand for recognition in any case, and at all times after the
Closing Date, there are no representation proceedings pending or, to any Loan
Party’s knowledge, threatened to be filed with the National Labor Relations
Board, and no labor organization or group of employees of any Loan Party or any
Subsidiary has made a pending demand for recognition in any case which, either
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect. There are no complaints, unfair labor practice
charges, grievances, arbitrations, unfair employment practices charges or any
other claims or complaints against any Loan Party or any Subsidiary pending or,
to the knowledge of any Loan Party, threatened to be filed with any
Governmental Authority or arbitrator based on, arising out of, in connection
with, or otherwise relating to the employment or termination of employment of
any employee of any Loan Party or any of its Subsidiaries. The consummation of
the transactions contemplated by the Loan Documents will not give rise to any
right of termination or right of renegotiation on the part of any union under
any collective bargaining agreement to which any Loan Party or any of its
Subsidiaries is bound.  Each Loan Party
and its Subsidiaries are in material compliance with all requirements pursuant
to employment standards, labor relations, health and safety, workers
compensation and human rights laws, immigration laws and other applicable
employment legislation, except as could not reasonably be expected to have a
Material Adverse Effect.  To the
knowledge of the Loan Parties, no officer or director of any Loan Party who is
party to an employment agreement with such Loan Party is in violation of 


 


77

















 


any term of any employment contract or proprietary information
agreement with such Loan Party, which could reasonably be expected to have a
Material Adverse Effect; and to the knowledge of the Loan Parties, the
execution of the employment agreements and the continued employment by the Loan
Parties of the such persons, will not result in any such violation, which could
reasonably be expected to have a Material Adverse Effect.


 


5.19        Security
Documents.


 


(a)         The
Pledge Agreement creates in favor of the Collateral Agent, for the benefit of
the Secured Parties referred to therein, a legal, valid, continuing and
enforceable security interest in the Collateral (as defined in the Pledge
Agreement), the enforceability of which is subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors’
rights generally and subject to general principles of equity, regardless of
whether considered in a proceeding in equity or at law, and the Pledged
Securities (as defined in the Pledge Agreement) have been delivered to the
Collateral Agent (together with stock powers or other appropriate instruments
of transfer executed in blank form).  The
Collateral Agent has a fully perfected first priority Lien on, and security
interest in, to and under all right, title and interest of each pledgor
thereunder in such Collateral, and such security interest is in each case prior
and superior in right and interest to any other Person, subject only to
Permitted Encumbrances.


 


(b)         The
Security Agreement creates in favor of the Collateral Agent, for the benefit of
the Secured Parties referred to therein, a legal, valid, continuing and
enforceable security interest in the Collateral (as defined in the Security
Agreement), the enforceability of which is subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors’
rights generally and subject to general principles of equity, regardless of
whether considered in a proceeding in equity or at law.  Upon the filing of the financing statements
approved by the Lead Borrower and/or the obtaining of “control” of such deposit
accounts in respect of which Blocked Account Agreements are required hereunder
the Collateral Agent will have a perfected Lien on, and security interest in,
to and under all right, title and interest of the grantors thereunder in all
Collateral that may be perfected by filing, recording or registering a financing
statement or analogous document (including without limitation the proceeds of
such Collateral subject to the limitations relating to such proceeds in the
UCC), in each case, to the extent required by the Security Agreement or (in the
case of such deposit accounts) by obtaining control, under the UCC (in effect
on the date this representation is made) in each case prior and superior in
right to any other Person, subject only
to Permitted Encumbrances.


 


(c)         When
the Security Agreement is filed in the United States Patent and Trademark
Office and the United States Copyright Office and when financing statements,
releases and other filings referenced in Section 5.19(c) are
filed, the Security Agreement shall constitute a fully perfected Lien on, and
security interest in, all right, title and interest of the applicable Loan
Parties in the Intellectual Property (as defined in the Security Agreement) in
which a security interest may be perfected by filing, recording or registering
a security agreement, financing statement or analogous document in the United
States Patent and Trademark Office or the United States Copyright Office, as
applicable, in each case prior and superior in right to any other Person, subject only to Permitted Encumbrances
(it being understood that subsequent recordings in the United States Patent and
Trademark Office and the United States Copyright Office may be necessary to
perfect a Lien on registered trademarks, trademark applications and copyrights
acquired by the Loan Parties after the date hereof).


 


(d)         Notwithstanding
anything to the contrary in this Section 5.19, in the case of any
Loan Parties not organized in a jurisdiction of the United States, no
representation is made in  this Section 5.19 as to any
security interest creation or perfection actions that may be required under the
laws of jurisdictions outside of the United States.


 


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5.20        Solvency


 


After giving effect to the transactions contemplated by this Agreement,
and before and after giving effect to each Credit Extension, the Loan Parties,
on a Consolidated basis, are Solvent. No transfer of property has been or will
be made by any Loan Party and no obligation has been or will be incurred by any
Loan Party in connection with the transactions contemplated by this Agreement
or the other Loan Documents with the intent to hinder, delay, or defraud either
present or future creditors of any Loan Party.


 


5.21        Deposit
Accounts; Credit Card Arrangements.


 


(a)           Annexed hereto as Schedule
5.21(a) is a list of all DDAs maintained by the Loan Parties as of the
Closing Date, which Schedule includes, with respect to each DDA (i) the
name and address of the depository; (ii) the account number(s) maintained
with such depository; (iii) a contact person at such depository, and (iv) the
identification of each Blocked Account Bank.


 


(b)           Annexed hereto as Schedule 5.21(b) is a
list describing all arrangements as of the Closing Date to which any Loan Party
is a party with respect to the processing and/or payment to such Loan Party of
the proceeds of any credit card charges and debit card charges for sales made
by such Loan Party.


 


5.22        Brokers.  No broker or finder brought about the
obtaining, making or closing of the Loans or transactions contemplated by the Loan
Documents, and no Loan Party or Affiliate thereof has any obligation to any
Person in respect of any finder’s or brokerage fees in connection
therewith.  Each Loan Party hereby jointly and severally indemnifies each Credit
Party against, and agrees that such Person will hold each such Credit Party
harmless from, any claim, demand or liability, including reasonable attorneys’
fees, for any broker’s, finder’s or placement fee or commission incurred by
such indemnifying party or the Lead Borrower or its Affiliates or a
representative of such Person.


 


5.23        Customer
and Trade Relations.  There exists no actual termination
or cancellation of, or any material adverse modification or change in, the
business relationship of any Loan Party with any supplier material to its
operations, unless the Administrative Agent has received evidence, in form and
substance reasonably satisfactory to it, that the applicable Loan Party has
replaced (or is replacing) any such supplier, and the terms governing such
business relationship are either (i) not be less favorable to such Loan
Party, in any material respect than those which governed the business
relationship with the replaced supplier prior to its threatened termination or
cancellation, or modification or change, as the case may be, or (ii) reasonably
acceptable to the Administrative Agent.


 


5.24        Material
Contracts.  Schedule 5.24 sets forth all
Material Contracts to which any Loan Party is a party or is bound as of the
Closing Date.  The Loan Parties have
delivered true, correct and complete copies of such Material Contracts to the
Administrative Agent on or before the date hereof.  The Loan Parties are in compliance with the
obligations specified in Section 6.19 in respect of their Material
Contacts.  The Loan Parties have not
received any notice of the intention of any Person to terminate any Material
Contract, which could reasonably be expected to result in the termination of a
Material Contract.


 


5.25        Casualty. 
Neither the businesses nor the properties of any Loan Party
or any of its Subsidiaries are affected by any fire, explosion, accident,
strike, lockout or other labor dispute, drought, storm, hail, earthquake,
embargo, act of God or of the public enemy or other casualty (whether or not
covered by insurance) that, either individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.


 


5.26        Anti-Terrorism
Laws.


 


(a)           General.  To the knowledge of the Loan Parties, after
reasonable inquiry, none of the Loan Parties nor any direct or indirect
investor in any Loan Party (other than the Lenders or any direct or indirect
investors in the Lenders), is in violation of any Anti-Terrorism Law or engages
in or conspires 


 


79

















 


to engage in any transaction
that evades or avoids, or has the purpose of evading or avoiding, or attempts
to violate, any of the prohibitions set forth in any Anti-Terrorism Law.


 


(b)           Executive Order No. 13224.  To the knowledge of the Loan Parties, after
reasonable inquiry, none of the Loan Parties nor any direct or indirect
investor in any Loan Party (other than the Lenders or any direct or indirect
investors in the Lenders), or their respective agents acting or benefiting in
any capacity in connection with the transactions hereunder, is any of the
following (each a “Blocked Person”):


 


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


 


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


 


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


 


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


 


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


 


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


 


(c)           To the best knowledge of the
Loan Parties, after reasonable inquiry, none of the Loan Parties nor, to the
knowledge of the Loan Parties, any of its or their agents acting in any
capacity in connection with the transactions hereunder (A) conducts any
business or engages in making or receiving any contribution of funds, goods or
services to or for the benefit of any Blocked Person, or (B) deals in, or
otherwise engages in any transaction relating to, any property or interests in
property blocked pursuant to the Executive Order No. 13224.


 


ARTICLE VI

AFFIRMATIVE COVENANTS


 


So long as any Lender shall have any Commitment hereunder, any Loan or
other Obligation hereunder shall remain unpaid or unsatisfied (other than
contingent indemnification obligations for which no claim has been asserted),
or any Letter of Credit shall remain outstanding, the Loan Parties shall, and
shall (except in the case of the covenants set forth in Sections 6.01, 6.02,
and 6.03) cause each Subsidiary to:


 


6.01        Financial
Statements.  Deliver to the
Administrative Agent, in form and detail reasonably satisfactory to the
Administrative Agent:


 


(a)         as
soon as available, but in any event within ninety (90) days after the end of
each Fiscal Year of the Parent (commencing with the Fiscal Year ended January 2009),
a Consolidated balance sheet of the Parent and its Subsidiaries as at the end
of such Fiscal Year, and the related Consolidated statements of income or
operations, Shareholders’ Equity and cash flows for such Fiscal Year, setting
forth in each case in comparative form the figures for the previous Fiscal
Year, all in reasonable detail and prepared in accordance with GAAP, such
Consolidated statements to be audited and accompanied by (i) a report and
unqualified opinion of a Registered Public Accounting Firm of nationally
recognized standing reasonably acceptable to the Administrative Agent, which
report and opinion shall be prepared in accordance with generally accepted
auditing standards and shall not be subject to any “going concern” or like
qualification or exception or any qualification or exception as to the scope of
such audit, and (ii) an opinion of such Registered Public Accounting Firm
independently assessing the Loan Parties’ 


 


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internal controls over financial reporting in accordance with Item 308
of SEC Regulation S-K, PCAOB Auditing Standard No. 5, and Section 404
of Sarbanes-Oxley expressing a conclusion that contains no statement that there
is a material weakness in such internal controls, except for such material
weaknesses as to which the Required Lenders do not object;


 


(b)         as
soon as available, but in any event within forty-five (45) days after the end
of each of the first three Fiscal Quarters of each Fiscal Year of the Parent (commencing with the fiscal
quarter ended May 1, 2009), a Consolidated balance sheet of the Parent and its Subsidiaries as at the
end of such Fiscal Quarter, and the related Consolidated statements of income or operations, Shareholders’
Equity and cash flows for such Fiscal Quarter and for the portion of the Parent’s Fiscal Year then ended,
setting forth in each case in comparative form the figures for (A) such
period set forth in the projections delivered pursuant to Section 5.01(d) hereof,
(B) the corresponding Fiscal Quarter of the previous Fiscal Year and (C) the
corresponding portion of the previous Fiscal Year, all in reasonable detail,
such Consolidated statements to be certified by a Responsible Officer of the
Lead Borrower as fairly presenting in all material respects the financial
condition, results of operations, Shareholders’ Equity and cash flows of the Parent and its Subsidiaries as of the
end of such Fiscal Quarter in accordance with GAAP, subject only to normal
year-end audit adjustments and the absence of footnotes;


 


(c)         as
soon as available, but in any event within 30 days after the end of each of the
Fiscal Months of each fiscal year of the Parent
(commencing with the Fiscal Month ended March 1, 2009) (i) a
statement as to the book value of the Inventory held by the Loan Parties as of
the end of such Fiscal Month for purposes of Section 7.16 hereof, and (ii) in
the event that a Usage Event Period is in effect, a Consolidated balance sheet of the Parent and its Subsidiaries as at the end of such Fiscal Month,
and the related Consolidated
statements of income or operations, Shareholders’ Equity for such Fiscal Month,
and for the portion of the Parent’s
Fiscal Year then ended, setting forth in each case in comparative form the
figures for (A) such period set forth in the projections delivered
pursuant to Section 6.01(e) hereof, (B) the corresponding
Fiscal Month of the previous Fiscal Year and (C) the corresponding portion
of the previous fiscal year, all in reasonable detail, such Consolidated statements to be
certified by a Responsible Officer of the Lead Borrower as having been prepared
in good faith and consistent with prior practices;


 


(d)         the
financial and collateral reports described on Schedule 6.02 hereto, at
the times set forth in such Schedule;


 


(e)         (A) as
soon as available, but in any event at least 30 days before the end of each
Fiscal Year of the Parent, a forecast (including projected new Store openings)
prepared by management of the Lead Borrower, for the immediately following
Fiscal Year (including the fiscal year in which the Maturity Date occurs), of (i) Consolidated
balance sheets and statements of income or operations and cash flows of the
Parent and its Subsidiaries on a quarterly basis (provided, that, with respect
to the projected Capital Expenditures set forth therein, such forecast shall be
reasonably satisfactory to the Administrative Agent, and in all other respects
shall be in form substantially similar to the forecast provided in connection
with this Agreement prior to the Closing Date), and (ii) Consolidated
working capital details (including, but not limited to, cash balance, Inventory
balance by month, accounts payable balance, Loan balances and Letter of Credit
forecasts), and summary income statements of the Parent and its Subsidiaries on
a monthly basis (in form substantially similar to the forecast provided in
connection with this Agreement prior to the Closing Date), and (B) a copy
of any and all significant revisions made to such forecast with respect to such
Fiscal Year, promptly upon request from the Administrative Agent.


 


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


 


(a)           [intentionally
omitted];


 


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(b)         concurrently
with the delivery of the financial statements referred to in Sections
6.01(a), (b) and (c)(ii), (i) a
duly completed Compliance Certificate signed by a Responsible Officer of the
Lead Borrower, which shall include (A) a
certification as to the amount, if any, of rent under any Leases, and any
obligations and liabilities with respect to Taxes, that have not been timely
paid, (B) a certification as to the receipt of notice, if any, as to any
material obligations or liabilities with respect to utilities that have not
been timely paid, (C) a certification as to the receipt of notice, if any,
as to any obligations or liabilities with respect to insurance premiums that
have not been timely paid, (D) a certification as to the acquisition, if
any, of any additional material Intellectual Property acquired since the date
of the last similar certification,
and (E) a report of any new Store openings or closings of any Store since
the date of the last similar certification and (ii) in the case of any
quarterly or annual financial statements, a copy of management’s discussion and
analysis with respect to such financial statements.  In the event of any change in generally
accepted accounting principles used in the preparation of such financial
statements, the Lead Borrower shall also provide a statement of reconciliation
conforming such financial statements to GAAP;


 


(c)         on
the fifth Business Day of each Fiscal Month, a Borrowing Base Certificate
(together with supporting source
documents) showing the Borrowing Base as of the close of business as of
the last day of the immediately preceding Fiscal Month, each Borrowing Base
Certificate to be certified as complete and correct by a Responsible Officer of
the Lead Borrower; provided that upon the occurrence and continuation of
a Cash Dominion Event, such Borrowing Base Certificate (together with supporting source documents) shall be
delivered on Wednesday of each week (or, if Wednesday is not a Business Day, on
the next succeeding Business Day), as of the close of business on the
immediately preceding Saturday;


 


(d)         upon
the request of the Administrative Agent or its auditors, appraisers,
accountants, consultants or other representatives, copies of each Loan Party’s
federal income tax returns, and any amendments thereto;


 


(e)         promptly
following the submission to the board of directors (but in no event later than
five (5) Business Days thereafter), copies of any detailed audit reports,
management letters or recommendations submitted to the board of directors (or
the audit committee of the board of directors) of any Loan Party by its
Registered Public Accounting Firm in connection with the accounts or books of
the Loan Parties or any Subsidiary, or any audit of any of them, including,
without limitation, specifying any Internal Control Event (as it relates only
to financial reporting);


 


(f)          promptly
after the same are available, and in no event later than ten (10) Business
Days after they are sent, made available, or publicly filed, notice of (and, at
the request of the Administrative Agent, copies of) annual report, proxy or
financial statement or other documents, report or communication sent to the
stockholders of the Loan Parties, and copies of all annual, regular, periodic
and special reports and registration statements which any Loan Party may file
or be required to file with the SEC under Section 13 or 15(d) of the
Securities Exchange Act of 1934 or with any national securities exchange, and
in any case not otherwise required to be delivered to the Administrative Agent
pursuant hereto;


 


(g)         [intentionally omitted];


 


(h)         promptly and in no event later than five (5) Business Days
after they are sent, notice of (and, at the request of the Administrative
Agent, copies of) any notice of default
or other material notice, statement, report or other communication (other than
periodic information and reports in the ordinary course) furnished to any
holder of debt securities of any Loan Party or any Subsidiary thereof pursuant
to the terms of any indenture, loan or credit or similar agreement, in each
case not otherwise required to be furnished to the Lenders pursuant to Section 6.01
or any other clause of this Section 6.02;


 


(i)          as
soon as available, but in any event within thirty (30) days after the end of
each Fiscal Year of any Loan Party (or upon the request of the Administrative
Agent or its auditors, 


 


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appraisers, accountants, consultants or other representatives), (i) a
certificate executed by an authorized officer of the Lead Borrower certifying
the existence and adequacy of the property and casualty insurance program
carried by the Loan Parties and their Subsidiaries, and (ii) a written
summary of said program identifying the name of each insurer, the number of
each policy and expiration date of each policy, the amounts and types of each
coverage, and a list of exclusions and deductibles for each policy, and
containing such additional information as the Administrative Agent, or any
Lender through the Administrative Agent, may reasonably specify;


 


(j)          promptly,
and in any event within five (5) Business Days after receipt thereof by
any Loan Party or any Subsidiary thereof, copies of each notice or other
correspondence received from any Governmental Authority (including, without
limitation, the SEC (or comparable agency in any applicable non-U.S.
jurisdiction)) concerning any proceeding with, or investigation or possible
investigation or other inquiry (other than routine and periodic inquiries
received in the ordinary course) by such Governmental Authority regarding
financial or other operational results of any Loan Party or any Subsidiary
thereof or any other matter which, in either case, could reasonably be expected
to have a Material Adverse Effect; and


 


(k)         promptly,
such additional information regarding the business affairs, financial condition
or operations of any Loan Party or any Subsidiary, or compliance with the terms
of the Loan Documents, as the Administrative Agent or any Lender may from time
to time reasonably request, including, without limitation, the income level for
each individual Store.


 


Financial statements and other
documents required to be delivered pursuant to Sections 6.01 and Section 6.02
shall be delivered in accordance with Section 10.02(a).  The Administrative Agent shall have no
obligation to request the delivery or to maintain copies of the documents
referred to above, and in any event shall have no responsibility to monitor
compliance by the Loan Parties with any such request for delivery, and each
Lender shall be solely responsible for requesting delivery to it or maintaining
its copies of such documents.


 


The Loan Parties hereby acknowledge
that the Administrative Agent will make available to the Lenders and the L/C
Issuer materials and/or information provided by or on behalf of the Loan
Parties hereunder.


 


6.03        Notices.
 Promptly notify the Administrative
Agent:


 


(a)         any
Responsible Officer of a Loan Party becomes aware of the occurrence of any
Default or Event of Default;


 


(b)         any Responsible Officer of a Loan Party
becomes aware of any matter that has resulted or could reasonably be
expected to result in a Material Adverse Effect, including any matter arising
from: (i) any breach or non-performance of, any default under, or
termination of, a Material Contract or with respect to Material Indebtedness of
any Loan Party or any Subsidiary thereof; (ii) any dispute, litigation,
investigation, proceeding or suspension between any Loan Party or any
Subsidiary thereof and any Governmental Authority; or (iii) the
commencement of, or any material development in, any litigation or any
administrative or arbitration proceeding affecting any Loan Party or any
Subsidiary thereof, including pursuant to any applicable Environmental Laws;


 


(c)         any Responsible Officer of a Loan Party
becomes aware of any undischarged or unpaid judgments or decrees;


 


(d)         any
Responsible Officer of a Loan Party becomes aware of the occurrence of any
ERISA Event;


 


(e)         of
any material change in accounting policies or financial reporting practices by
any Loan Party or any Subsidiary thereof;


 


(f)          of
any change in any Loan Party’s chief executive officer, chief financial officer
or chairman of the board of directors;


 


(g)         of
the discharge by any Loan Party of its present Registered Public Accounting
Firm or any withdrawal or resignation by such Registered Public Accounting
Firm;


 


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(h)                           of any collective bargaining agreement or
other labor contract to which a Loan Party becomes a party, or the application
for the certification of a collective bargaining agent, or any strike, lockout, slowdown or other
material labor dispute against any Loan Party or any Subsidiary pending or, to
the knowledge of any Loan Party, threatened;


 


(i)                               any Responsible
Officer of a Loan Party becomes aware of the filing of any Lien for unpaid Taxes against any
Loan Party;


 


(j)                               any Responsible
Officer of a Loan Party becomes aware of any casualty or other insured damage to any
material portion of the Collateral or the commencement of any action or
proceeding for the taking of any interest in a material portion of the
Collateral under power of eminent domain or by condemnation or similar
proceeding or if any material portion of the Collateral is damaged or
destroyed;


 


(k)                            [intentionally omitted]; and


 


(l)                               of any failure by any Loan
Party to pay rent (other than rent which is withheld in connection with a good
faith dispute arising in the ordinary course or business and for which appropriate reserves in conformity with
GAAP have been established on the books of the applicable Loan Party) at
any one or more of such Loan Party’s locations, if such failure continues for
more than ten (10) days following the day on which such rent first came
due.


 


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


 


6.04                            Payment of Obligations.
Pay and discharge in full as the same shall become due and payable (subject to
any applicable grace period, and ordinary and customary trade terms), all its
obligations and liabilities, including (a) all Federal, state and other
material tax liabilities, assessments and governmental charges or levies upon
it or its properties or assets, and (b) all lawful claims (including,
without limitation, claims for labor, materials, supplies and claims of
landlords, warehousemen, customs brokers, and carriers) which, if unpaid, would
by law become a Lien upon its property, except, in each case, where (i) the
validity or amount thereof (other than payroll taxes or taxes that are the
subject of a United States federal tax lien) is being contested in good faith
by appropriate proceedings diligently conducted, (ii) such Loan Party has
set aside on its books adequate reserves with respect thereto in accordance
with GAAP, (iii) such contest effectively suspends collection of the contested
obligation and enforcement of any Lien securing such obligation, (iv) no
Lien has been filed with respect thereto (other than any Lien being contested
in good faith with respect to labor, materials or supplies associated with any
Real Estate of the Loan Parties ), and (v) the failure to make payment
pending such contest could not reasonably be expected to result in a Material
Adverse Effect.  The Lead Borrower will,
upon request, furnish the Collateral Agent with proof satisfactory to the
Collateral Agent indicating that the Loan Parties and their Subsidiaries have
made the payments described in clause (a) above.  Each Loan Party shall, and shall cause each
of its Subsidiaries to, pay in full as the same shall become due and payable
(subject to any applicable grace period, and ordinary and customary trade
terms) all undisputed material accounts payable incident to the operations of
such Person not referred to in this Section 6.04, above.  Nothing contained herein shall be deemed to
limit the rights of the Agents with respect to determining Reserves pursuant to
this Agreement.


 


6.05                            Preservation
of Existence, Etc. (a)  Preserve,
renew and maintain in full force and effect its legal existence under the Laws
of the jurisdiction of its organization or formation except in a transaction
permitted by Section 7.04 or 7.05; (b) maintain its
good standing under 


 


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the Laws of the jurisdiction of
its organization or formation except in a transaction permitted by Section 7.04
or 7.05; and (c) take all reasonable action to maintain all rights,
privileges, permits, licenses and franchises necessary or desirable in the
normal conduct of its business, except to the extent that failure to do so
could not reasonably be expected to have a Material Adverse Effect.


 


6.06                        Maintenance
of Properties.


 


(a)                                  Keep its properties in such repair, working
order and condition, and shall from time to time make such repairs,
replacements, additions and improvements thereto, as are reasonably necessary
for the efficient operation of its business and shall comply at all times in
all material respects with all material franchises, licenses and leases to
which it is party so as to prevent any loss or forfeiture thereof or
thereunder, except where (i) compliance is at the time being contested in
good faith by appropriate proceedings and (ii) failure to comply with the
provisions being contested has not resulted, and which, in the aggregate, could
not reasonably be expected to have a Material Adverse Effect.


 


(b)                                 Take all reasonable
actions to possess and maintain all Intellectual Property material to the
conduct of their respective businesses and own all right, title and interest in
and to, or have a valid license for, all such Intellectual Property.  No Loan Party nor any of its Subsidiaries
shall take any action, or fail to take any action, that could reasonably be
expected to (i) result in the invalidity, abandonment, misuse, lapse, or
unenforceability of Intellectual Property which is material to the conduct of
the business of the Loan Parties, taken as a whole, or (ii) knowingly
infringe upon or misappropriate any rights of other Persons.


 


(c)                                  Do all things
reasonably necessary in order to comply with all Environmental Laws at any Real
Property or otherwise in connection with their operations except where the
noncompliance with which could not reasonably be expected to cause a Material
Adverse Effect, and obtain all permits and other governmental authorizations
for their operations under applicable Environmental Laws other than such
permits and other authorizations the failure of which to obtain could not,
individually or in the aggregate, reasonably be expected to cause a Material
Adverse Effect.


 


6.07                        Maintenance
of Insurance.


 


(a)                                  Maintain with
financially sound and reputable insurance companies reasonably acceptable to
the Administrative Agent and not Affiliates of the Loan Parties, insurance with
respect to its properties and business against loss or damage of the kinds
customarily insured against by Persons engaged in the same or similar business
and operating in the same or similar locations or as is required by applicable
Law, of such types and in such amounts as are customarily carried under similar
circumstances by such other Persons and as are reasonably acceptable to the
Administrative Agent.


 


(b)                                 Fire and
extended coverage policies maintained with respect to any Collateral shall be
endorsed or otherwise amended to include (i) lenders’ loss payable clause
(regarding personal property), in form and substance satisfactory to the
Collateral Agent, which endorsements or amendments shall provide that the
insurer shall pay all proceeds otherwise payable to the Loan Parties under the
policies directly to the Collateral Agent, (ii) a provision to the effect
that none of the Loan Parties, Credit Parties or any other Person shall be a
co-insurer and (iii) such other provisions as the Collateral Agent may
reasonably require from time to time to protect the interests of the Credit
Parties. Commercial general liability policies shall be endorsed to name the
Collateral Agent as an additional insured. Business interruption policies shall
name the Collateral Agent as a loss payee and shall be endorsed or amended to
include (i) a provision that, from and after the Closing Date, the insurer
shall pay all proceeds otherwise payable to the Loan Parties under the policies
directly to the Collateral Agent, and (ii) such other provisions as the
Collateral Agent may reasonably require from time to time to protect the
interests of the Credit Parties. Each such policy referred to in this Section 6.07(b) shall
also provide that it shall not be canceled, modified to reduce coverage or
increase deductibles, or not renewed (i) by reason of nonpayment of
premium except upon not less than ten (10) days’ prior written notice
thereof by the insurer to the Collateral Agent (giving the Collateral Agent the
right to cure defaults in the payment of premiums) or (ii) for any other
reason except upon not less than thirty (30) days’ prior written notice thereof
by the insurer to the Collateral Agent. The Lead Borrower shall deliver to the
Collateral Agent, 


 


85

















 


prior to the cancellation,
or non-renewal of any such policy of insurance, a copy of a renewal or
replacement policy (or other evidence of renewal of a policy previously
delivered to the Collateral Agent, including an insurance binder) together with
evidence satisfactory to the Collateral Agent of payment of the premium therefor.


 


(c)                                  None of the Credit Parties, or their
agents or employees shall be liable for any loss or damage insured by the
insurance policies required to be maintained under this Section 6.07.  Each Loan Party shall look solely to its
insurance companies or any other parties other than the Credit Parties for the
recovery of such loss or damage and such insurance companies shall have no
rights of subrogation against any Credit Party or its agents or employees.  If, however, the insurance policies do not
provide waiver of subrogation rights against such parties, as required above,
then the Loan Parties hereby agree, to the extent permitted by law, to waive
their right of recovery, if any, against the Credit Parties and their agents
and employees.  The designation of any
form, type or amount of insurance coverage by the any Credit Party under this Section 6.07
shall in no event be deemed a representation, warranty or advice by such Credit
Party that such insurance is adequate for the purposes of the business of the
Loan Parties or the protection of their properties.


 


(d)                                 Maintain for themselves and their
Subsidiaries, a Directors and Officers insurance policy, and a “Blanket Crime”
policy including employee dishonesty, forgery or alteration, theft,
disappearance and destruction, robbery and safe burglary, and computer fraud
coverage with responsible companies in such amounts as are customarily carried
by business entities engaged in similar businesses similarly situated, and will
upon request by the Administrative Agent furnish the Administrative Agent
certificates evidencing renewal of each such policy.


 


(e)                                  Permit any representatives that are
designated by the Collateral Agent to inspect the insurance policies maintained
by or on behalf of the Loan Parties and to inspect books and records related
thereto and any properties covered thereby. 
The Loan Parties shall pay the reasonable fees and expenses of any
representatives retained by the Collateral Agent to conduct any such inspection.


 


6.08                        Compliance
with Laws.  Comply in all material
respects with the requirements of all Laws and all orders, writs, injunctions
and decrees applicable to it or to its business or property, except in such
instances in which (a) such requirement of Law or order, writ, injunction
or decree is being contested in good faith by appropriate proceedings
diligently conducted, such contest effectively suspends enforcement of the
contested Laws, and adequate reserves have been set aside and maintained by the
Loan Parties in connection therewith and in accordance with GAAP, and (b) the
failure to comply therewith could not reasonably be expected to have a Material
Adverse Effect.


 


6.09                        Books
and Records; Accountants.


 


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


 


(b)                                 At all times retain a Registered Public
Accounting Firm which is reasonably satisfactory to the Administrative Agent
and shall instruct such Registered Public Accounting Firm to cooperate with,
and be available to, the Administrative Agent or its representatives to discuss
the Loan Parties’ financial performance, financial condition, operating
results, controls, and such other matters, within the scope of the retention of
such Registered Public Accounting Firm, as may be raised by the Administrative
Agent.  The Lead Borrower hereby irrevocably
authorizes and directs all auditors, accountants, or other third parties to
deliver to the Administrative Agent, at the Borrowers’ expense, copies of the
Borrowers’ financial statements, papers related thereto, and other accounting
records of any nature in their possession, and to disclose to the
Administrative Agent any information they may have regarding the Collateral or
the financial condition of the Borrowers.


 


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6.10                        Inspection
Rights.  (a) Permit
representatives and independent contractors of the Administrative Agent to
visit and inspect any of its properties, to examine its corporate, financial
and operating records, and make copies thereof or abstracts therefrom, and to
discuss its affairs, finances and accounts with its directors, officers, and
Registered Public Accounting Firm, all at the expense of the Loan Parties (such
expenses to be reasonable) and at such reasonable times during normal business
hours and as often as may be reasonably desired, upon reasonable advance notice
to the Lead Borrower; provided, however, that (i) so long as
no Event of Default shall have occurred and be continuing, the Loan Parties
shall not be obligated for expenses in connection with more than two (2) visits
per Fiscal Year and (ii) when an Event of Default has occurred and is
continuing, the Administrative Agent (or any of its representatives or
independent contractors) may do any of the foregoing at the expense of the Loan
Parties at any time during normal business hours and without advance notice.


 


(b)                                 Upon the request of the Administrative
Agent after reasonable prior notice, permit the Administrative Agent or
professionals (including investment bankers, consultants, accountants, lawyers
and appraisers) retained by the Administrative Agent to conduct appraisals,
commercial finance examinations and other evaluations, including, without
limitation, of (i) the Lead Borrower’s practices in the computation of the
Borrowing Base and (ii) the assets included in the Borrowing Base and
related financial information such as, but not limited to, sales, gross
margins, payables, accruals and reserves. 
Subject to the following sentences, the Loan Parties shall pay the fees
and expenses of the Administrative Agent or such professionals with respect to
such evaluations and appraisals.  Without
limiting the foregoing, the Loan Parties acknowledge that the Administrative
Agent may, in its discretion, undertake up to one (1) inventory appraisal
and one (1) commercial finance examination each Fiscal Year at the Loan Parties’
expense.  Notwithstanding anything to the
contrary contained herein, the Administrative Agent may cause additional
inventory appraisals and commercial finance examinations to be undertaken (x) as
it in its discretion deems necessary or appropriate, at its own expense, or (y) at
the expense of the Loan Parties, (A) at any time required by applicable
Law, (B) up to two (2) inventory appraisals and two (2) commercial
finance examinations each Fiscal Year, in any Fiscal Year when Excess
Availability  is at any time during such Fiscal
Year greater than or equal an amount equal to 20% of the then applicable
Borrowing Base and less than an amount equal to 50% of the then applicable
Borrowing Base, and (C) up to three (3) inventory appraisals and
three (3) commercial finance examinations each Fiscal Year, in any Fiscal
Year when Excess Availability  is at any time
during such Fiscal Year less than an amount equal to 20% of the then applicable
Borrowing Base, or an Event of Default shall have occurred.


 


6.11                        Use
of Proceeds.  Use the proceeds of the
Credit Extensions (a) to refinance all Indebtedness under the Existing
Credit Agreement, (b) to finance transaction fees and expenses related
hereto and the other Loan Documents, (c) to finance the working capital
needs of the Loan Parties, including the purchase of Inventory, in each case in
the ordinary course of business, (d) to finance Capital Expenditures of
the Loan Parties, and (e) for general corporate purposes of the Loan
Parties, in each case to the extent expressly permitted under applicable Law
and the Loan Documents.


 


6.12                        Additional
Loan Parties.  Notify the
Administrative Agent at the time that any Person becomes a Subsidiary (other
than an Immaterial Subsidiary), and promptly thereafter (and in any event
within fifteen (15) days), cause any such Person (a) which is not a CFC,
to (i) become a Loan Party by executing and delivering to the
Administrative Agent a Joinder Agreement or such other document as the
Administrative Agent shall reasonably request for such purpose, (ii) grant
a Lien to the Collateral Agent on such Person’s assets to secure the
Obligations, and (iii) deliver to the Administrative Agent documents of
the types referred to in clauses (iii) and (iv) of Section 4.01(a) and,
if requested by the Administrative Agent, favorable opinions of counsel to such
Person (which shall cover, among other things, the legality, validity, binding
effect and enforceability of the documentation referred to in this clause
(a)), and (b) if any Equity Interests or Indebtedness of such Person
are owned by or on behalf of any Loan 


 


87

















 


Party, to pledge such Equity
Interests and promissory notes evidencing such Indebtedness (except that, if
such Subsidiary is a CFC, the Equity Interests of such Subsidiary to be pledged
may be limited to 65% of the outstanding voting Equity Interests of such
Subsidiary and 100% of the non-voting Equity Interests of such Subsidiary and
such time period may be extended based on local law or practice), in each case
in form, content and scope reasonably satisfactory to the Administrative
Agent.  In no event shall compliance with
this Section 6.12 waive or be deemed a waiver or Consent to any
transaction giving rise to the need to comply with this Section 6.12
if such transaction was not otherwise expressly permitted by this Agreement or
constitute or be deemed to constitute, with respect to any Subsidiary, an
approval of such Person as a Borrower or permit the inclusion of any acquired
assets in the computation of the Borrowing Base.


 


6.13                        Cash
Management.


 


(a)                                  (i)  On or prior to March 13,
2009, deliver to the
Administrative Agent copies of notifications (each, a “DDA Notification”)
substantially in the form attached hereto as Exhibit H which have
been executed on behalf of such Loan Party and delivered to each depository
institution listed on Schedule 5.21(a);


 


(ii)                                  On or prior to March 13, 2009,
deliver to the Administrative Agent copies of notifications (each, a “Credit
Card Notification”), substantially in the form attached hereto as Exhibit G
which have been executed on behalf of such Loan Party and delivered to such
Loan Party’s credit card clearinghouses and processors listed on Schedule
5.21(b); and


 


(iii)                               On or prior to March 13, 2009, enter
into a Blocked Account Agreement satisfactory in form and substance to the
Agents with each Blocked Account Bank (collectively, the “Blocked Accounts”).


 


(b)                                 (i) Each
Credit Card Notification and DDA Notification shall require the ACH or wire
transfer no less frequently than daily (and whether or not there are then any
outstanding Obligations) to a Blocked Account of all payments due from credit
card processors, and (ii) the Borrowers shall cause each depository institution
listed on Schedule 5.21(a) to cause the ACH or wire transfer no
less frequently than daily (and whether or not there are then any outstanding
Obligations) to a Blocked Account of all amounts on deposit in each DDA in
excess of the minimum balance permitted in accordance with Section 6.13(c).


 


(c)                                  Each Blocked Account Agreement shall
require the ACH or wire transfer no less frequently than daily (and whether or
not there are then any outstanding Obligations) to the concentration account
maintained by the Collateral Agent at Wells Fargo Bank (the “Concentration
Account”), of all cash receipts and collections, including, without
limitation, the following:


 


(i)                                     all available
cash receipts from the sale of Inventory and other assets;


 


(ii)                                  all proceeds of collections of Accounts;


 


(iii)                               all Net Proceeds, and all other cash
payments received by a Loan Party from any Person or from any source or on
account of any sale or other transaction or event, including, without
limitation, any Prepayment Event;


 


(iv)                              the then contents of each DDA (net of any
minimum balance, not to exceed $2,500.00, as may be required to be kept in the
subject DDA by the depository institution at which such DDA is maintained);


 


(v)                                 the then entire ledger balance of each
Blocked Account (net of any minimum balance, not to exceed $2,500.00, as may be
required to be kept in the subject Blocked Account by the Blocked Account
Bank); and


 


(vi)                              the proceeds of all credit card charges.


 


(d)                                 [Intentionally Omitted].


 


(e)                                  The
Concentration Account shall at all times be under the sole dominion and control
of the Collateral Agent.  The Loan
Parties hereby acknowledge and agree that (i) without limiting the
provisions of Section 2.05(d), the Loan Parties have no right of
withdrawal from the Concentration Account, (ii) the funds on deposit in
the Concentration Account shall at all times be collateral security for 


 


88

















 


all of the Obligations and (iii) the
funds on deposit in the Concentration Account shall be applied as provided in Section 2.05(e).  In the event that, notwithstanding the
provisions of this Section 6.13, any Loan Party receives or
otherwise has dominion and control of any such proceeds or collections, such
proceeds and collections shall be held in trust by such Loan Party for the
Collateral Agent, shall not be commingled with any of such Loan Party’s other
funds or deposited in any account of such Loan Party and shall, not later than
the Business Day after receipt thereof, be deposited into the Concentration
Account or dealt with in such other fashion as such Loan Party may be
instructed by the Collateral Agent.


 


(f)                                    Upon the request of the Administrative
Agent, the Loan Parties shall cause bank statements and/or other reports to be
delivered to the Administrative Agent not less often than monthly, accurately
setting forth all amounts deposited in each Blocked Account to ensure the
proper transfer of funds as set forth above.


 


6.14                        Information
Regarding the Collateral.


 


(a)                                  Furnish to the
Administrative Agent at least thirty (30) days prior written notice of any
change in: (i) any Loan Party’s name as it appears in official filings in
the state of incorporation or other organization; (ii) the location of any
Loan Party’s chief executive office, its principal place of business, any
office in which it maintains books or records relating to Collateral owned by
it or any office or distribution center at which Collateral owned by it is
located (including the establishment of any such new office or distribution
center); (iii) any Loan Party’s type of entity or jurisdiction of
incorporation or formation; or (iv) any Loan Party’s Federal Taxpayer
Identification Number or organizational identification number assigned to it by
its state of organization. The Loan Parties agree not to effect or permit any
change referred to in the preceding sentence unless all filings have been made
under the UCC or otherwise that are required in order for the Collateral Agent
to continue at all times following such change to have a valid, legal and
perfected first priority security interest in all the Collateral for its own
benefit and the benefit of the other Credit Parties.


 


(b)                                 From time to time as may be reasonably
requested by the Administrative Agent, the Lead Borrower shall supplement each
Schedule to this Agreement and the other Loan Documents, or any representation
herein or in any other Loan Document, with respect to any matter arising after
the Closing Date that, if existing or occurring on the Closing Date, would have
been required to be set forth or described in such Schedule or as an exception
to such representation or that is necessary to correct any information in such
Schedule or representation which has been rendered inaccurate thereby (and, in
the case of any supplements to any Schedule, such Schedule shall be
appropriately marked to show the changes made therein).  Notwithstanding the foregoing, no supplement
or revision to any Schedule or representation shall be deemed the Credit
Parties’ consent to the matters reflected in such updated Schedules or revised
representations nor permit the Loan Parties to undertake any actions otherwise
prohibited hereunder or fail to undertake any action required hereunder from
the restrictions and requirements in existence prior to the delivery of such
updated Schedules or such revision of a representation; nor shall any such
supplement or revision to any Schedule or representation be deemed the Credit
Parties’ waiver of any Default resulting from the matters disclosed therein.


 


6.15                        Physical
Inventories.


 


(a)                                  Cause not less
than one (1) physical inventory of all the Stores to be undertaken in each
twelve (12) month period and cause periodic cycle counts to be taken at each
distribution center, in each case at the expense of the Loan Parties and
consistent with past practices and following such methodology as is consistent
with the methodology used in the immediately preceding inventory or cycle
count, as the case may be, provided, however, upon the occurrence
and during the continuation of a Cash Dominion Event (i) at the request of
the Collateral Agent, cause one (1) physical inventory to be taken at each
distribution center, at the expense of the Loan Parties, to be completed (with
final results) within 30 days following the end of the Fiscal Month in which
the Collateral Agent provided such request, or (ii) if the Collateral
Agent does not request a physical inventory of each distribution center
pursuant to the immediately preceding clause (i), cause a physical
inventory of each distribution center, at the expense of the Loan Parties, to
be performed concurrently with the next physical inventory taken of the Stores provided,
further, however, if the Collateral Agent should have a good
faith belief that the accuracy or 


 


89

















 


completeness of the
inventory or cycle count practices or methodology is unreliable, all such
inventory and cycle count shall be subsequently conducted by such inventory
takers and in accordance with such practices and methodology, as are reasonably
satisfactory to the Collateral Agent, in each case at the expense of the Loan
Parties. The Collateral Agent, at the expense of the Loan Parties, may
participate in and/or observe each scheduled physical count of Inventory which
is undertaken on behalf of any Loan Party. 
The Lead Borrower, within fifteen (15) Business Days following the
completion of each such inventory, shall provide the Collateral Agent with a
reconciliation of the results of such inventory (as well as of any other
physical inventory or cycle counts undertaken by a Loan Party) and shall post
such results to the Loan Parties’ stock ledgers and general ledgers, as
applicable.


 


(b)                                 The Collateral Agent, in its Permitted
Discretion, if any Default or Event of Default shall have occurred and be
continuing, may cause additional such inventories to be taken as the Collateral
Agent determines (each, at the expense of the Loan Parties).


 


6.16                        Environmental
Laws.


 


Except as could not
reasonably be expected to have a Material Adverse Effect (a) conduct its operations
and keep and maintain its Real Estate in material compliance with all
Environmental Laws; (b) obtain and renew all environmental permits
appropriate or necessary for its operations and properties; and (c) implement
any and all investigation, remediation, removal and response actions that are
appropriate or necessary to maintain the value and marketability of the Real
Estate or to otherwise comply with Environmental Laws pertaining to the
presence, generation, treatment, storage, use, disposal, transportation or
release of any Hazardous Materials on, at, in, under, above, to, from or about
any of its Real Estate, provided, however, that neither a Loan
Party nor any of its Subsidiaries shall be required to undertake any such
cleanup, removal, remedial or other action to the extent that its obligation to
do so is being contested in good faith and by proper proceedings and adequate
reserves have been set aside and are being maintained by the Loan Parties with
respect to such circumstances in accordance with GAAP.


 


6.17                        Further
Assurances.


 


(a)                                  Execute any and
all further documents, financing statements, agreements and instruments, and
take all such further actions (including the filing and recording of financing
statements and other documents), that may be required under any applicable Law,
or which any Agent may reasonably request, to effectuate the transactions
contemplated by the Loan Documents or to grant, preserve, protect or perfect
the Liens created or intended to be created by the Security Documents or the
validity or priority of any such Lien, all at the expense of the Loan Parties.
The Loan Parties also agree to provide to the Agents, from time to time upon
request, evidence satisfactory to the Agents as to the perfection and priority of
the Liens created or intended to be created by the Security Documents.


 


(b)                                 If any material personal property assets
are acquired by any Loan Party after the Closing Date (other than assets
constituting Collateral under the Security Documents that become subject to the
Lien of the Security Documents upon acquisition thereof), notify the Agents
thereof, and the Loan Parties will cause such assets to be subjected to a Lien
securing the Obligations and will take such actions as shall be necessary or
shall be requested by any Agent to grant and perfect such Liens, including
actions described in paragraph (a) of this Section 6.17, all
at the expense of the Loan Parties. In no event shall compliance with this Section 6.17(b) waive
or be deemed a waiver or consent to any transaction giving rise to the need to
comply with this Section 6.17(b) if such transaction was not
otherwise expressly permitted by this Agreement or constitute or be deemed to
constitute consent to the inclusion of any acquired assets in the computation
of the Borrowing Base.


 


(c)                                  [Intentionally Omitted].


 


(d)                                 To the extent
that the Administrative Agent agrees (subject to the proviso below), in its
sole discretion at the request of the Lead Borrower, to include in transit
Inventory in the Borrowing Base, upon the request of the Collateral Agent, use commercially
reasonable efforts to cause each of its customs brokers, freight forwarders and
other carriers to deliver an agreement (including, without limitation, a
Customs Broker Agreement) to the Collateral Agent covering such matters and in
such form as the Collateral Agent may reasonably require, provided, however,
notwithstanding anything to the contrary, unless and until the Administrative
Agent shall have received such an agreement (including, 


 


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without limitation, a Customs Broker Agreement)
covering such matters and in such form as the Collateral Agent may reasonably
require, no transit Inventory shall be included in the Borrowing Base.


 


(e)                                  Upon the request of the Collateral Agent,
made in its Permitted Discretion, the Loan Parties shall use commercially
reasonable efforts to cause the landlord of any such leased property to deliver
a Collateral Access Agreement to the Collateral Agent in such form as the
Collateral Agent may reasonably require.


 


6.18                        Compliance
with Terms of Leaseholds.


 


Except
as otherwise expressly permitted hereunder (including, without limitation, in
connection with Store closings permitted pursuant to clause (b) of
the definition of Permitted Dispositions), make all payments and otherwise
perform all obligations in respect of all Leases of real property to which any
Loan Party is a party, keep such Leases in full force and effect and not allow
such Leases to lapse or be terminated or any rights to renew such Leases to be
forfeited or cancelled, notify the Administrative Agent of any default by any
party with respect to such Leases and cooperate with the Administrative Agent
in all respects to cure any such default, and cause each of its Subsidiaries to
do so, except, in any case, where the failure to do so, either individually or
in the aggregate, could not be reasonably likely to have a Material Adverse
Effect.  In the event that the Borrowers
become delinquent in their rent payments, the Administrative Agent may
establish additional Reserves against the Borrowing Base for the amount of any
landlord liens arising from such delinquency.


 


6.19                        Material
Contracts. Perform and
observe all of the terms and provisions of each Material Contract to be
performed or observed by any Loan Party or any of its Subsidiaries, take all
such action required on the part of any Loan Party or any of its Subsidiaries
to maintain each such Material Contract in full force and effect, enforce each
such Material Contract in accordance with its terms, take all such action to
such end as may be from time to time requested by the Administrative Agent and,
upon request of the Administrative Agent, make to each other party to each such
Material Contract such demands and requests for information and reports or for
action as any Loan Party or any of its Subsidiaries is entitled to make under
such Material Contract, and cause each of its Subsidiaries to do so, except, in any case, where the failure to
do so, either individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.


 


6.20                        ERISA.


 


(a)                                  Comply in all material respects with the
applicable provisions of ERISA or any other applicable federal, state,
provincial, local or foreign law dealing with such matters, except where the
failure to comply could reasonably be expected to result in a claim or
liability against any Loan Party or its Affiliates of $1,000,000 or less.


 


(b)                                 Pay and discharge promptly any
liability imposed upon it pursuant to the provisions of Title IV of ERISA; provided,
however, that neither any Loan Party nor any ERISA Affiliate or any
other Subsidiary of the Loan Parties shall be required to pay any such
liability if (i) the amount, applicability or validity thereof shall be
diligently contested in good faith by appropriate proceedings, and (ii) such
Person shall have set aside on its books reserves, in the opinion of the
independent certified public accountants of such Person, adequate with respect
thereto.


 


(c)                                  Deliver to the
Collateral Agent, promptly, and in any event within 20 days, after (i) the
occurrence of any Reportable Event in respect of a Plan, a copy of the
materials that are filed with the PBGC, (ii) any Loan Party or any ERISA
Affiliate or an administrator of any Plan
files with participants, beneficiaries or the PBGC a notice of intent to
terminate any such Plan, a copy of any
such notice, (iii) the receipt of notice by any Loan Party or any ERISA
Affiliate or an administrator of any Plan
from the PBGC of the PBGC’s intention to terminate any Plan or to appoint a trustee to administer any such Plan, a copy of such notice, (iv) the
request by any Lender of copies of each annual report that is 


 


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filed on Treasury Form 5500
with respect to any Plan, together with
certified financial statements (if any) for the Plan and any actuarial statements on Schedule B to such Form 5500,
(v) any Loan Party or any ERISA Affiliate knows or has reason to know of
any event or condition which could reasonably be expected to constitute grounds
under the provisions of Section 4042 of ERISA for the termination of (or
the appointment of a trustee to administer) any Plan, an explanation of such event or condition, (vi) the
receipt by any Loan Party or any ERISA Affiliate of an assessment of withdrawal
liability under Section 4201 of ERISA from a Multiemployer Plan, a copy of
such assessment, (vii) any Loan Party or any ERISA Affiliate knows or has
reason to know of any event or condition which would reasonably be expected to
cause any one of them to incur a liability under Section 4062, 4063, 4064
or 4069 of ERISA or Section 412(n) or 4971 of the Code, an
explanation of such event or condition, or (viii) any Loan Party or any
ERISA Affiliate knows or has reason to know that an application is to be, or
has been, made to the Secretary of the Treasury for a waiver of the minimum
funding standard under the provisions of Section 412 of the Code, a copy
of such application, and in each case described in clauses (i) through
(iii) and (v) through (vii) together with a
statement signed by an officer setting forth details as to such Reportable
Event, notice, event or condition and the action which such Loan Party and any
ERISA Affiliate proposes to take with respect thereto.


 


6.21                        Insurance
and Condemnation Proceeds.


 


Prior to the occurrence of a Cash Dominion Event, the proceeds of any
casualty or other insured damage to, or any taking under power of eminent
domain or by condemnation or similar proceeding of, any property or asset of a
Loan Party, shall be utilized for purposes of replacing or repairing the assets
in respect of which such proceeds, awards or payments were received within 180
days of the occurrence of the damage to or loss of the assets being repaired or
replaced.


 


6.22                        Post-Closing
Covenants.


 


(a)                                  On or before February 20, 2009, the Lead
Borrower shall deliver to the Collateral Agent, a certificate evidencing
the stock of Coldwater Creek The Spa Inc., an Idaho corporation, being pledged
to the Collateral Agent under the Pledge Agreement, together with undated stock
powers executed in blank, in form and substance reasonably satisfactory to the
Administrative Agent.


 


(b)                                 On or before March 13, 2009,  the Lead Borrower shall deliver to the
Collateral Agent, an agreement, in form and substance reasonably
satisfactory to the Collateral Agent, establishing Control (as defined in the
Security Agreement) over Securities
Account #12309373, maintained in the name of the Parent at Wells Fargo
Brokerage Services, LLC.


 


(c)                                  On or before May 13, 2009, the Lead
Borrower shall provide the Administrative Agent with evidence, in form a
substance reasonably satisfactory to the Administrative Agent, that the legal
existence of CWC Sourcing CA Limitada, an entity formed under the laws of
Guatemala, has been terminated.


 


ARTICLE
VII


NEGATIVE COVENANTS


 


So long as any Lender shall have any Commitment hereunder, any Loan or
other Obligation hereunder shall remain unpaid or unsatisfied (other than
contingent indemnification obligations for which no claim has been asserted),
or any Letter of Credit shall remain outstanding, no Loan Party shall, nor
shall it permit any Subsidiary to, directly or indirectly:


 


7.01                        Liens.
 Create, incur, assume or suffer to
exist any Lien upon any of its property, assets or revenues, whether now owned
or hereafter acquired or sign or file or suffer to exist under the UCC or any
similar Law or statute of any jurisdiction a financing statement that names any
Loan Party or any Subsidiary thereof as debtor; sign or suffer to exist any
security agreement authorizing any Person thereunder to file such financing
statement; sell any of its property or 


 


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assets subject to an understanding
or agreement (contingent or otherwise) to repurchase such property or assets
with recourse to it or any of its Subsidiaries; or assign or otherwise transfer
any accounts or other rights to receive income, other than, as to all of the
above, Permitted Encumbrances.


 


7.02                        Investments.
 Have outstanding, make, acquire or
hold any Investment (or become contractually committed to do so), directly or
indirectly, or incur any liabilities (including contingent obligations) for or
in connection with any Investment, except Permitted
Investments.


 


7.03                        Indebtedness;
Disqualified Stock


 


Create,
incur, assume, guarantee, suffer to exist or otherwise become or remain liable
with respect to, any Indebtedness (except Permitted Indebtedness) or issue
Disqualified Stock.


 


7.04                        Fundamental Changes.  Merge, dissolve, liquidate, wind
up, consolidate with or into another Person, reorganize, enter into a plan of
reorganization, recapitalization or reclassify its Equity Interests (or agree
to do any of the foregoing, unless such agreement provides as a condition to
the consummation of the transaction that either (y) the Required Lenders
have consented in writing, or (z) (i) the Aggregate Commitments have
been terminated or will be terminated concurrently with such effectiveness, (ii) all
of the Secured Obligations (other than contingent indemnification
obligations for which no claim has been asserted) have been indefeasibly paid in
full in cash or will be indefeasibly paid in full in cash concurrently with
such effectiveness, (iii) all L/C Obligations have been, or will be
concurrently with such effectiveness, reduced to zero (or fully Cash
Collateralized or supported by another letter of credit in a manner reasonably
satisfactory to the L/C Issuer and the Administrative Agent, and (iv) the
Administrative Agent has, or will have concurrently with such effectiveness, no
further obligation to cause the L/C Issuer to issue Letters of Credit under the
Credit Agreement), except that, so long as no Default or Event
of Default shall have occurred and be continuing prior to or immediately after
giving effect to any action described below or would result therefrom:


 


(a)                            any Subsidiary
that is not a Loan Party may merge with (i) a Loan Party, provided
that the Loan Party shall be the continuing or surviving Person (or the
surviving Person shall become a Loan Party hereunder and otherwise satisfy the
requirements of Section 6.12 upon the consummation of such merger)
and if a Borrower is party to such merger, such Borrower shall be the continuing
or surviving Person, or (ii) any one or more other Subsidiaries other than
a Loan Party, provided that in each case, to the extent that any
wholly-owned Subsidiary is merging with another Subsidiary, a wholly-owned
Subsidiary shall be the continuing or surviving Person;


 


(b)                           any Loan Party
may merge into any other Loan Party; provided that in the case of any
merger involving a Borrower, such Borrower shall be the continuing or surviving
Person;


 


(c)                            any Borrower
may merge into any other Borrower;


 


(d)                           in connection with a Permitted
Acquisition, any Loan Party other than a Borrower may merge with or into or
consolidate with any other Person or permit any other Person to merge with or
into or consolidate with it; provided that the Person surviving such
merger shall be a Loan Party;


 


(e)                            any CFC that is not a Loan Party may
merge into any CFC that is not a Loan Party; and


 


(f)                              any Subsidiary or any Loan Party (other
than a Borrower) constituting an Immaterial Subsidiary may be dissolved.


 


7.05                        Dispositions.
 Make any Disposition or enter into any agreement to make any
Disposition (unless such agreement provides as a condition to the
consummation of the transaction that either (y) the Required Lenders have
consented in writing, or (z) (i) the Aggregate Commitments have been
terminated or will be terminated concurrently with such 


 


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effectiveness, (ii) all of
the Secured Obligations (other than contingent indemnification obligations for which no claim
has been asserted) have been indefeasibly paid in full in cash or will
be indefeasibly paid in full in cash concurrently with such effectiveness, (iii) all
L/C Obligations have been, or will be concurrently with such effectiveness,
reduced to zero (or fully Cash Collateralized or supported by another letter of
credit in a manner reasonably satisfactory to the L/C Issuer and the
Administrative Agent, and (iv) the Administrative Agent has, or will have
concurrently with such effectiveness, no further obligation to cause the L/C
Issuer to issue Letters of Credit under the Credit Agreement), except Permitted Dispositions.


 


7.06                        Restricted
Payments.  Declare or make, directly
or indirectly, any Restricted Payment, or incur any obligation (contingent or
otherwise) to do so, except that, so long as no Default or Event of Default
shall have occurred and be continuing prior to or immediately after giving
effect to any action described below or would result therefrom:


 


(a)                            each (i) Loan
Party may make Restricted Payments to any other Loan Party, and (ii) Subsidiary
of a Loan Party may make Restricted Payments to any other Loan Party;


 


(b)                           the Loan Parties and each Subsidiary may
declare and make dividend payments or other distributions payable solely in the
common stock or other common Equity Interests of such Person;


 


(c)                            if the Restricted Preferred Equity Dividend
Conditions are satisfied, the Parent may make cash dividend payments
to the holders of its Equity Interests (other than the holders of its common
stock),  issued after the Closing Date;


 


(d)                           if the Restricted Payment Conditions are
satisfied, the Parent and its Subsidiaries may purchase or redeem Equity
Interests issued by it;


 


(e)                            if the Restricted Payment Conditions are
satisfied, the Parent and its Subsidiaries may declare and pay cash dividends
to the holders of its common stock;


 


(f)                              the Parent my declare and make dividend payments or
other Distributions in preferred Equity Interests that is not redeemable for
cash in connection with a “poison pill” so long as no Change of Control could
reasonably be expected to occur as a result of the issuance of any such
preferred Equity Interests or the conversion of any thereof; and


 


(g)                           in connection with any stock split transaction
consummated by the Parent, the Parent may make cash payments for the retirement
of any fractional Equity Interests resulting therefrom; provided, however
that such cash payments shall not exceed $25,000 in the aggregate following the
Closing Date.


 


The Loan Parties
shall provide the Administrative Agent with written notice of any Restricted
Payment, in each case as otherwise permitted pursuant to Sections 7.06(c),
7.06(d), 7.06(e) or 7.06(f), no less than five (5) Business
Days prior to the making thereof.


 


7.07                        Prepayments
of Indebtedness.  Prepay, redeem, purchase,
defease or otherwise satisfy prior to the scheduled maturity thereof in any
manner any Indebtedness, or make any payment in violation of any subordination
terms of any Subordinated Indebtedness, except (a) as long as no Event of
Default then exists or would result therefrom, regularly scheduled or mandatory
repayments, repurchases, redemptions or defeasances of Permitted Indebtedness, (b) voluntary
prepayments, repurchases, redemptions or defeasances of Permitted Indebtedness
(but excluding on account of any Subordinated Indebtedness) as long as the
Payment Conditions are satisfied, and (c) refinancings and refundings of
such Indebtedness in compliance with Section 7.03.


 


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7.08                        Change
in Nature of Business.


 


Engage in any line of
business different from the business conducted by the Loan Parties and their
Subsidiaries on the date hereof or any business substantially related or
incidental thereto.


 


7.09                        Transactions
with Affiliates.  Enter into, renew,
extend or be a party to any transaction of any kind with any Affiliate of any
Loan Party, whether or not in the ordinary course of business, other than on
fair and reasonable terms that are fully disclosed to the Administrative Agent,
and that are no less favorable to the Loan Parties or such Subsidiary than
would be obtainable by the Loan Parties or such Subsidiary at the time in a comparable arm’s length transaction
with a Person other than an Affiliate, provided that the foregoing
restriction shall not apply to (i) a transaction between or among the Loan
Parties. (ii) transactions between or among any Subsidiaries that are not
Loan Parties, (iii) Permitted Investments of the type described in clause (l) of
the definition thereof, (iv) Restricted Payments permitted pursuant to Section 7.06,
(v) the payment of director and officer compensation (including bonuses)
and other benefits (including retirement, health, stock option and other
benefit plans) and indemnification arrangements, in each case under this clause
(v), made in the ordinary course of business and consistent with industry
practice, and (vi) Permitted Investments of the type described in clause
(g) of the definition thereof.


 


7.10                        Burdensome
Agreements.  Enter into or permit to
exist any Contractual Obligation (other than this Agreement or any other Loan
Document) that (a) limits the ability (i) of any Subsidiary to make
Restricted Payments or other distributions to any Loan Party or to otherwise
transfer property to or invest in a Loan Party, (ii) of any Subsidiary to
Guarantee the Obligations, (iii) of any Subsidiary to make or repay loans
to a Loan Party, or (iv) of the Loan Parties or any Subsidiary to create,
incur, assume or suffer to exist Liens on property of such Person in favor of
the Collateral Agent; provided, however, that this clause (iv) shall
not prohibit (I) any negative pledge incurred or provided in favor of any
holder of Indebtedness permitted under clauses (c) or (f) of
the definition of Permitted Indebtedness solely to the extent any such negative
pledge relates to the property financed by or the subject of such Indebtedness;
or (II) the existence of or entry into of licenses, leases or other
contracts entered into in the ordinary course of business containing customary
restrictions on the assignment of such license, lease or contract; or (b) requires
the grant of a Lien to secure an obligation of such Person if a Lien is granted
to secure another obligation of such Person.


 


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


 


7.12                        Amendment
of Material Documents.


 


Amend, modify or waive any of a Loan Party’s rights under (a) its
Organization Documents, or (b) any Material Contract or Material
Indebtedness (other than on account of any refinancing thereof otherwise
permitted hereunder), in each case to the extent that such amendment,
modification or waiver would be reasonably likely to have a Material Adverse
Effect.


 


7.13                        Fiscal
Year.


 


Change
the Fiscal Year of any Loan Party, or the accounting policies or reporting
practices of the Loan Parties, except as required by GAAP.


 


7.14                        Deposit
Accounts; Blocked Accounts; Credit Card Processors.


 


(a)                                  Permit any
funds to be deposited to new DDAs or Blocked Accounts unless the Loan Parties
shall have delivered to the Collateral Agent appropriate DDA Notifications or
Blocked Account Agreements consistent with the provisions of Section 6.13.


 


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(b)                                 Enter into new
agreements with credit card processors other than the ones expressly
contemplated herein or in Section 6.13 hereof unless the Loan
Parties shall have delivered to the Collateral Agent appropriate Credit Card
Notifications consistent with the provisions of Section 6.13.


 


7.15                        Consignments.
 Consign any Inventory or sell any
Inventory on bill and hold, sale or return, sale on approval, or other
conditional terms of sale (it being understood that customer return and
exchange policies relating to the sale of Inventory in the ordinary course of
business shall not be prohibited by this Section 7.15).


 


7.16                        Inventory
Book Value.  Permit the book value of
the Borrowers’ Inventory, as reported pursuant to Section 6.01(c),
at any time to be less than or equal to $95,000,000.


 


7.17                        Minimum
Availability.  Permit Excess
Availability at any time to be less than an amount equal to 15% of the then
applicable Loan Cap.


 


7.18                        Capital
Expenditures.  Make Capital
Expenditures in each of the following Fiscal Years in excess of the applicable
amount set forth below:


 




	
  Fiscal Year Ending

  On or About

  	
   

  	
  Maximum

  Capital Expenditures

  
	
  January 31, 2010

  	
   

  	
  $36,000,000

  
	
  January 31, 2011

  	
   

  	
  An amount which is equal to 120% of the projected Capital
  Expenditures for the Fiscal Year ending January 31, 2011, as set forth
  in the forecast delivered in accordance with Section 6.01(e), and as
  such projected Capital Expenditures are reasonably satisfactory to the
  Administrative Agent.

  
	
  January 31, 2012

  	
   

  	
  An amount which is equal to 120% of the projected Capital
  Expenditures for the Fiscal Year ending January 31, 2012, as set forth
  in the forecast delivered in accordance with Section 6.01(e), and as
  such projected Capital Expenditures are reasonably satisfactory to the
  Administrative Agent.

  






 


provided, however, the Loan
Parties shall not be subject to the restrictions of this Section 7.18 if
the Loan Parties maintain a Fixed Charge Coverage, calculated as of the last
day of each quarter on a trailing twelve (12) month Consolidated basis, during
the Fiscal Years set forth above, of greater than 1.00:1.00.


 


7.19                        Loan
Restriction.


 


Provide notice requesting, or otherwise incur, any Loan for a period of
ninety (90) consecutive days after the Parent or any of its Subsidiaries shall
have entered into any transaction, or made any Restricted Payment of the type
specified in Section 7.06(d) or (e).


 


ARTICLE
VIII


EVENTS OF DEFAULT AND REMEDIES


 


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


 


(a)                            Non-Payment.  The Borrowers or any other Loan Party fails
to pay when and as required to be paid herein, (i) any amount of principal
of any Loan or any L/C Obligation, or deposit any funds as Cash Collateral in
respect of L/C Obligations, or (ii) any interest on any 


 


96

















 


Loan or on any L/C Obligation, or any fee due hereunder, or (iii) any
other amount payable hereunder or under any other Loan Document; or


 


(b)                           Specific Covenants.  (i) Any
Loan Party fails to perform or observe any term, covenant or agreement
contained in any of Sections 6.01, 6.02(b), 6.02(c), 6.03,
6.05(a), 6.07 (other than in connection with the last sentence of
clause (b) thereof), 6.10, 6.11, 6.12, 6.13or
Article VII of this Agreement; or (ii) any of the Loan Parties
fails to perform or observe any term, covenant or agreement contained in Sections
4.04, 4.10(a) and 5.01 of the Security Agreement to
which it is a party; or


 


(c)                            Additional Covenants. 
Any Loan Party fails to perform or observe any term, covenant or agreement
contained in Sections 6.02 or 6.05 (not specified in subsection
(b) above) contained in this Agreement and such failure continues for
fifteen (15) days; or


 


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


 


(e)                            Material Impairment. 
Any material impairment of the priority of the Credit Parties’ security
interests in the Collateral; or


 


(f)                              Representations and Warranties. 
Any representation, warranty, certification or statement of fact made or
deemed made by or on behalf of any Borrower or any other Loan Party herein, in
any other Loan Document, or in any document delivered in connection herewith or
therewith (including, without limitation, any Borrowing Base Certificate) shall
be incorrect or misleading in any material respect when made or deemed made; or


 


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


 


(h)                           Insolvency Proceedings, Etc. 
Any Loan Party or any of its Subsidiaries institutes or consents to the
institution of any proceeding under any Debtor Relief Laws, or makes an
assignment for the benefit of creditors; or applies for or consents to the
appointment of any receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer for it or for all or any material part of its
property; or a proceeding shall be commenced or a petition filed, without the
application or consent of such Person, seeking or requesting the appointment of
any receiver, trustee, custodian, conservator, liquidator, rehabilitator or
similar officer is appointed and the appointment continues undischarged,
undismissed or unstayed for 30 calendar days 


 


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(provided, however,
that, during the pendency of such period, the Credit Parties shall be relieved
of their obligation to extend credit hereunder) or an order or decree approving
or ordering any of the foregoing shall be entered; or any proceeding under any
Debtor Relief Laws relating to any such Person or to all or any material part
of its property is instituted without the consent of such Person and continues
undismissed or unstayed for 30 calendar days (provided, however,
that, during the pendency of such period, the Credit Parties shall be relieved
of their obligation to extend credit hereunder), or an order for relief is
entered in any such proceeding; or


 


(i)                               Inability to Pay Debts; Attachment.  (i) Any
Loan Party becomes unable or admits in writing its inability or fails generally
to pay its debts as they become due in the ordinary course of business, or (ii) any
writ or warrant of attachment or execution or similar process is issued or
levied against all or any material part of the property of any such Person; or


 


(j)                               Judgments.  There is
entered against any Loan Party or any Subsidiary thereof (i) one or more
judgments or orders for the payment of money in an aggregate amount (as to all
such judgments and orders) exceeding $3,000,000 (to the extent not covered by
independent third-party insurance as to which the insurer is rated at least “A”
by A.M. Best Company, has been notified of the potential claim and does
not dispute coverage), or (ii) any one or more non-monetary judgments that
have, or could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect and, in either case, (A) enforcement
proceedings are commenced by any creditor upon such judgment or order, or (B) there
is a period of 30 consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, is not in
effect; or


 


(k)                            [Intentionally Omitted]; or


 


(l)                               ERISA.  (i) An
ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which
has resulted or could reasonably be expected to result in liability of any Loan
Party under Title IV of ERISA to the Pension Plan, Multiemployer Plan or
the PBGC in an aggregate amount in excess of $500,000 or which would reasonably
likely result in a Material Adverse Effect, or (ii) a Loan Party or any
ERISA Affiliate fails to pay when due, after the expiration of any applicable
grace period, any installment payment with respect to its withdrawal liability
under Section 4201 of ERISA under a Multiemployer Plan in an aggregate
amount in excess of $100,000 or which would reasonably likely result in a
Material Adverse Effect; or


 


(m)                         Invalidity of Loan Documents.  (i) Any
provision of any Loan Document, at any time after its execution and delivery
and for any reason other than as expressly permitted hereunder or thereunder or
satisfaction in full of all the Obligations, ceases to be in full force and
effect; or any Loan Party contests in any manner the validity or enforceability
of any provision of any Loan Document; or any Loan Party denies that it has any
or further liability or obligation under any provision of any Loan Document, or
purports to revoke, terminate or rescind any provision of any Loan Document or
seeks to avoid, limit or otherwise adversely affect any Lien purported to be
created under any Security Document; or (ii) any Lien purported to be
created under any Security Document shall cease to be, or shall be asserted by
any Loan Party or any other Person not to be, a valid and perfected Lien on any
Collateral to the extent required by the applicable Security Document, with the
priority required by the applicable Security Document; or


 


(n)                           Change of Control. 
There occurs any Change of Control; or


 


(o)                           Cessation of Business. 
Except as otherwise expressly permitted hereunder, the Loan Parties,
taken as a whole, shall take any action to suspend the operation of its
business in the ordinary course, liquidate all or a material portion of its
assets or Store locations, or employ an agent or other third party to conduct a
program of closings, liquidations or “Going-Out-Of-Business” sales of any
material portion of its business; or


 


(p)                           Loss of Collateral. 
There occurs any uninsured loss to any material portion of the
Collateral; or


 


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(q)                           Breach of Contractual Obligation. 
Any Loan Party or any Subsidiary thereof fails to make any undisputed
payment when due in respect of any Material Contract or fails to observe or
perform any other material agreement or condition relating to any such Material
Contract or contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event occurs, the effect of which default or
other event is to cause the counterparty to such Material Contract to terminate
such Material Contract in accordance with its terms; or


 


(r)                              Indictment.  The
indictment or institution of any legal process or proceeding against, any Loan
Party or any Subsidiary thereof, under any federal, state or municipal criminal
statute, rule, regulation, order, or other requirement having the force of law
for a felony;


 


(s)                            Guaranty.  The
termination or attempted termination of any Facility Guaranty other than in
accordance with the terms of the Loan Documents; or


 


(t)                              Subordination.  (i) 
The subordination provisions of the documents evidencing or governing any
Subordinated Indebtedness (the “Subordinated Provisions”) shall, in
whole or in part, terminate, cease to be effective or cease to be legally
valid, binding and enforceable against any holder of the applicable
Subordinated Indebtedness; or (ii) any Borrower or any other Loan Party
shall, directly or indirectly, (A) make any payment on account of any
Subordinated Indebtedness that has been contractually subordinated in right of
payment to the payment of the Obligations, except to the extent that such
payment is permitted by the terms of the Subordinated Provisions applicable to
such Subordinated Indebtedness or (B) disavow or contest in any manner (x) the
effectiveness, validity or enforceability of any of the Subordination
Provisions, (y) that the Subordination Provisions exist for the benefit of
the Credit Parties, or (z) that all payments of principal of or premium
and interest on the applicable Subordinated Indebtedness, or realized from the
liquidation of any property of any Loan Party, shall be subject to any of the
Subordination Provisions.


 


8.02                              Remedies
Upon Event of Default.  If any Event
of Default occurs and is continuing, the Administrative Agent may, or, at the
request of the Required Lenders shall, take any or all of the following
actions:


 


(a)                            declare the
Commitments of each Lender to make Loans and any obligation of the L/C Issuer
to make L/C Credit Extensions to be terminated, whereupon such Commitments and
obligation shall be terminated;


 


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


 


(c)                            require that the Loan Parties Cash
Collateralize the L/C Obligations; and


 


(d)                           whether or not the maturity of the
Obligations shall have been accelerated pursuant hereto, proceed to protect,
enforce and exercise all rights and remedies of the Credit Parties under this
Agreement, any of the other Loan Documents or applicable Law, including, but
not limited to, by suit in equity, action at law or other appropriate
proceeding, whether for the specific performance of any covenant or agreement
contained in this Agreement and the other Loan Documents or any instrument
pursuant to which the Obligations are evidenced, and, if such amount shall have
become due, by declaration or otherwise, proceed to enforce the payment thereof
or any other legal or equitable right of the Credit Parties;


 


provided, however, that upon the entry
of an order for relief with respect to any Loan Party or any Subsidiary thereof
under the Bankruptcy Code of the United States of America, the obligation of
each Lender to make Loans and any obligation of the L/C Issuer to make L/C
Credit Extensions shall automatically terminate, the unpaid principal amount of
all outstanding Loans and all interest and other amounts as aforesaid shall
automatically become due and payable, and the obligation of the Loan Parties to
Cash Collateralize the L/C Obligations as 


 


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aforesaid shall automatically become effective, in each case without
further act of the Administrative Agent or any Lender.


 


No remedy herein is intended to be exclusive of any other remedy and
each and every remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law or in equity
or by statute or any other provision of Law.


 


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


 


First, to payment of that portion of the
Obligations (excluding the Other Liabilities) constituting fees, indemnities,
Credit Party Expenses and other amounts (including fees, charges and
disbursements of counsel to the Administrative Agent and the Collateral Agent
and amounts payable under Article III) due and payable to the
Administrative Agent and the Collateral Agent, each in its capacity as such;


 


Second, to payment of that portion of the
Obligations (excluding the Other Liabilities) constituting indemnities, Credit
Party Expenses, and other amounts (other than principal, interest and fees)
payable to the Lenders and the L/C Issuer (including fees, charges and
disbursements of counsel to the respective Lenders and the L/C Issuer and
amounts payable under Article III), ratably among them in
proportion to the amounts described in this clause Second payable to
them;


 


Third, to the extent not previously reimbursed by
the Lenders, to payment to the Lenders of that portion of the Obligations
constituting principal and accrued and unpaid interest on any Permitted
Overadvances, ratably among the Lenders in proportion to the amounts described
in this clause Third payable to them;


 


Fourth, to the extent that Swing Line Loans have
not been refinanced by a Committed Loan, payment to the Swing Line Lender of
that portion of the Obligations constituting accrued and unpaid interest on the
Swing Line Loans;


 


Fifth, to payment of that portion of the
Obligations constituting accrued and unpaid interest on the Committed Loans,
L/C Borrowings and other Obligations, and fees (including Letter of Credit Fees
but excluding any Early Termination Fees), ratably among the Lenders and the
L/C Issuer in proportion to the respective amounts described in this clause Fifth
payable to them;


 


Sixth, to the extent that Swing Line Loans have
not been refinanced by a Committed Loan, to payment to the Swing Line Lender of
that portion of the Obligations constituting unpaid principal of the Swing Line
Loans;


 


Seventh, to payment of that portion of the
Obligations constituting unpaid principal of the Committed Loans and L/C
Borrowings, ratably among the Lenders and the L/C Issuer in proportion to the
respective amounts described in this clause Seventh held by them;


 


Eighth, to the Administrative Agent for the account
of the L/C Issuer, to Cash Collateralize that portion of L/C Obligations
comprised of the aggregate undrawn amount of Letters of Credit;


 


Ninth,
to payment of all
other Obligations (including without limitation the cash collateralization of
unliquidated indemnification obligations as provided in Section 10.04,
but excluding any Other Liabilities), ratably among the Credit Parties in
proportion to the respective amounts described in this clause Ninth held
by them;


 


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Tenth, to payment of that portion of the
Obligations arising from Cash Management Services to the extent secured under
the Security Documents, ratably among the Credit Parties in proportion to the
respective amounts described in this clause Tenth held by them;


 


Eleventh, to payment of all other Obligations arising
from Bank Products to the extent secured under the Security Documents, ratably
among the Credit Parties in proportion to the respective amounts described in
this clause Eleventh held by them; and


 


Last, the balance, if any, after all of the
Obligations have been indefeasibly paid in full, to the Loan Parties or as
otherwise required by Law.


 


Subject to Section 2.03(c),
amounts used to Cash Collateralize the aggregate undrawn amount of Letters of
Credit pursuant to clause Eighth above shall be applied to satisfy
drawings under such Letters of Credit as they occur.  If any amount remains on deposit as Cash
Collateral after all Letters of Credit have either been fully drawn or expired,
such remaining amount shall be applied to the other Obligations, if any, in the
order set forth above.


 


ARTICLE
IX


ADMINISTRATIVE AGENT


 


9.01                        Appointment
and Authority.


 


(a)                            Each of the
Lenders and the L/C Issuer hereby irrevocably appoints Wells Fargo Retail Finance, LLC to act on its
behalf as the Administrative Agent hereunder and under the other Loan Documents
and authorizes the Administrative Agent to take such actions on its behalf and
to exercise such powers as are delegated to the Administrative Agent by the
terms hereof or thereof, together with such actions and powers as are
reasonably incidental thereto.  Except as
provided in Section 9.06, the provisions of this Article are
solely for the benefit of the Administrative Agent, the Lenders and the L/C
Issuer, and no Loan Party or any Subsidiary thereof shall have rights as a
third party beneficiary of any of such provisions.


 


(b)                           Each of the Lenders (in its capacities as
a Lender), Swing Line Lender and the L/C Issuer hereby irrevocably appoints
Wells Fargo Retail Finance, LLC as Collateral Agent and authorizes the
Collateral Agent to act as the agent of such Lender and the L/C Issuer for
purposes of acquiring, holding and enforcing any and all Liens on Collateral
granted by any of the Loan Parties to secure any of the Obligations, together
with such powers and discretion as are reasonably incidental thereto.  In this connection, the Collateral Agent, as “collateral
agent” and any co-agents, sub-agents and attorneys-in-fact appointed by the
Collateral Agent pursuant to Section 9.05 for purposes of holding
or enforcing any Lien on the Collateral (or any portion thereof) granted under
the Collateral Documents, or for exercising any rights and remedies thereunder
at the direction of the Collateral Agent), shall be entitled to the benefits of
all provisions of this Article IX and Article X(including
Section 10.04(c)), as though such co-agents, sub-agents and
attorneys-in-fact were the “collateral agent” under the Loan Documents, as if
set forth in full herein with respect thereto.


 


9.02                        Rights
as a Lender.  The Persons serving as
the Agents hereunder shall have the same rights and powers in their capacity as
a Lender as any other Lender and may exercise the same as though they were not
the Administrative Agent or the Collateral Agent and the term “Lender” or “Lenders”
shall, unless otherwise expressly indicated or unless the context otherwise
requires, include the Person serving as the Administrative Agent or the
Collateral 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 Loan
Parties or any Subsidiary or other Affiliate thereof as if such Person were not
the Administrative Agent or the Collateral Agent hereunder and without any duty
to account therefor to the Lenders.


 


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9.03                        Exculpatory
Provisions.  The Agents shall not
have any duties or obligations except those expressly set forth herein and in
the other Loan Documents.  Without
limiting the generality of the foregoing, the Agents:


 


(a)                            shall not be
subject to any fiduciary or other implied duties, regardless of whether a
Default has occurred and is continuing;


 


(b)                           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 Administrative Agent or the Collateral Agent, as applicable, is
required to exercise as directed in writing by the Required 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 no Agent shall be
required to take any action that, in its respective opinion or the opinion of
its counsel, may expose such Agent to liability or that is contrary to any Loan
Document or applicable Law; and


 


(c)                            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 Loan
Parties or any of its Affiliates that is communicated to or obtained by the Person
serving as the Administrative Agent, the Collateral Agent or any of its
Affiliates in any capacity.


 


No Agent shall be liable for any action
taken or not taken by it (i) with the Consent or at the request of the
Required Lenders (or such other number or percentage of the Lenders as shall be
necessary, or as such Agent shall believe in good faith shall be necessary,
under the circumstances as provided in Sections 10.01 and 8.02) or (ii) in
the absence of its own gross negligence or willful misconduct as determined by
a final and non-appealable judgment of a court of competent jurisdiction.


 


The Agents shall not be deemed to have knowledge of any Default unless
and until notice describing such Default is given to such Agent by the Loan
Parties, a Lender or the L/C Issuer.  In
the event that the Agents obtains such actual knowledge or receives such a
notice, the Agents shall give prompt notice thereof to each of the other Credit
Parties.  Upon the occurrence and during
the continuance of an Event of Default, the Agents shall take such action with
respect to such Default or Event of Default as shall be reasonably directed by
the Required Lenders.  Unless and until
the Agents shall have received such direction, the Agents may (but shall not be
obligated to) take such action, or refrain from taking such action, with
respect to any such Default or Event of Default as it shall deem advisable in
the best interest of the Credit Parties. 
In no event shall the Agents be required to comply with any such
directions to the extent that any Agent believes that its compliance with such
directions would be unlawful.


 


The Agents 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 the
creation, perfection or priority of any Lien purported to be created by the
Security Documents, (v) the value or the sufficiency of any Collateral, or
(vi) the satisfaction of any condition set forth in Article IV or
elsewhere herein, other than to confirm receipt of items expressly required to
be delivered to the Agents.


 


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9.04                        Reliance
by Agents.


 


Each Agent shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing (including, but not limited
to, any electronic message, Internet or intranet website posting or other
distribution) believed by it to be genuine and to have been signed, sent or
otherwise authenticated by the proper Person. 
Each 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 Letter of Credit, that by its terms must be
fulfilled to the satisfaction of a Lender or the L/C Issuer, the Administrative
Agent may presume that such condition is satisfactory to such Lender or the L/C
Issuer unless the Administrative Agent shall have received written notice to
the contrary from such Lender or the L/C Issuer prior to the making of such
Loan or the issuance of such Letter of Credit. 
Each Agent may consult with legal counsel (who may be counsel for any
Loan Party), 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.


 


9.05                        Delegation
of Duties.  Each 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
such Agent.  Each 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 shall
apply to any such sub-agent and to the Related Parties of the Agents 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 such Agent.


 


9.06                        Resignation
of Agents.  Either Agent may at any
time give written notice of its resignation to the Lenders, the L/C Issuer and
the Lead Borrower.  Upon receipt of any
such notice of resignation, the Required Lenders shall have the right, with the
consent of the Lead Borrower (absent the existence of a Default or an Event of
Default), which consent shall not be unreasonably withheld or delayed, to
appoint a successor, which shall be a bank with an office in the United States,
or an Affiliate of any such bank with an office in the United States.  If no such successor shall have been so appointed
by the Required Lenders and shall have accepted such appointment within 30 days
after the retiring Agent gives notice of its resignation, then the retiring
Agent may, in consultation with the Lead Borrower (absent the existence of a
Default or an Event of Default), on behalf of the Lenders and the L/C Issuer,
appoint a successor Administrative Agent or Collateral Agent, as applicable,
meeting the qualifications set forth above; provided that if the
Administrative Agent or the Collateral Agent shall notify the Lead Borrower and
the Lenders that no qualifying Person has accepted such appointment, then the
resigning Agent may apply to a court of competent jurisdiction for the
appointment of a new Administrative Agent or Collateral Agent, as applicable, provided,
further, that such resignation shall not become effective until such
time as a successor Administrative Agent or the Collateral Agent, as
applicable, is appointed and has accepted such appointment.  Upon the acceptance of a successor’s
appointment as Administrative Agent or Collateral Agent, as applicable,
hereunder, such successor shall succeed to and become vested with all of the
rights, powers, privileges and duties of the retiring (or retired) Agent, and
the retiring Agent shall be discharged from all of its duties and obligations
hereunder or under the other Loan Documents (if not already discharged
therefrom as provided above in this Section). 
The fees payable by the Borrowers to a successor Administrative Agent
shall be the same as those payable to its predecessor unless otherwise 


 


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agreed
between the Lead Borrower and such successor. 
After the retiring Agent’s resignation hereunder and under the other
Loan Documents, the provisions of this Article and Section 10.04
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 Administrative
Agent or Collateral Agent hereunder.


 


Any resignation by Wells Fargo Retail
Finance, LLC as Administrative Agent pursuant to this Section shall also
constitute the resignation of Wells Fargo Retail Finance, LLC as Swing Line
Lender.  Upon the acceptance of a
successor’s appointment as Administrative Agent hereunder, (a) such
successor shall succeed to and become vested with all of the rights, powers,
privileges and duties of the retiring Swing Line Lender, and (b) the
retiring Swing Line Lender shall be discharged from all of its duties and
obligations hereunder or under the other Loan Documents.


 


9.07                        Non-Reliance
on Administrative Agent and Other Lenders.  Each Lender and the L/C Issuer
acknowledges that it has, independently and without reliance upon the Agents or
any other Lender or any of their Related Parties and based on such documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. 
Each Lender and the L/C Issuer also acknowledges that it will,
independently and without reliance upon the Agents or any other Lender or any
of their Related Parties and based on such documents and information as it
shall from time to time deem appropriate, continue to make its own decisions in
taking or not taking action under or based upon this Agreement, any other Loan
Document or any related agreement or any document furnished hereunder or
thereunder.  Except as provided in Section 9.12,
the Agents shall not have any duty or responsibility to provide any Credit
Party with any other credit or other information concerning the affairs,
financial condition or business of any Loan Party that may come into the
possession of the Agents.


 


9.08                        Administrative
Agent May File Proofs of Claim.  In
case of the pendency of any proceeding under any Debtor Relief Laws or any
other judicial proceeding relative to any Loan Party, the Administrative Agent
(irrespective of whether the principal of any Loan or L/C Obligation shall then
be due and payable as herein expressed or by declaration or otherwise and
irrespective of whether the Administrative Agent shall have made any demand on
the Loan Parties) shall be entitled and empowered, by intervention in such
proceeding or otherwise


 


(a)                            to file and
prove a claim for the whole amount of the principal and interest owing and
unpaid in respect of the Loans, L/C Obligations and all other Obligations that
are owing and unpaid and to file such other documents as may be necessary or
advisable in order to have the claims of the Lenders, the L/C Issuer, the
Administrative Agent and the other Credit Parties (including any claim for the
reasonable compensation, expenses, disbursements and advances of the Lenders,
the L/C Issuer, the Administrative Agent, such Credit Parties and their
respective agents and counsel and all other amounts due the Lenders, the L/C
Issuer the Administrative Agent and such Credit Parties under Sections
2.03(i), 2.03(j), 2.09 and 10.04) allowed in such judicial
proceeding; and


 


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


 


and any custodian, receiver, assignee,
trustee, liquidator, sequestrator or other similar official in any such
judicial proceeding is hereby authorized by each Lender and the L/C Issuer to
make such payments to the Administrative Agent and, if the Administrative Agent
shall consent to the making of such payments directly to the Lenders and the
L/C Issuer, to pay to the Administrative Agent any amount due for the
reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Sections 2.09 and 10.04.


 


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Nothing contained herein shall be deemed to authorize the
Administrative Agent to authorize or consent to or accept or adopt on behalf of
any Lender or the L/C Issuer any plan of reorganization, arrangement,
adjustment or composition affecting the Obligations or the rights of any Lender
or the L/C Issuer or to authorize the Administrative Agent to vote in respect
of the claim of any Lender or the L/C Issuer in any such proceeding.


 


9.09                        Collateral
and Guaranty Matters.  The Credit
Parties irrevocably authorize the Agents, at their option and in their
discretion,


 


(a)                            to release any
Lien on any property granted to or held by the Collateral Agent under any Loan
Document (i) upon termination of the Aggregate Commitments and payment in
full of all Obligations (other than contingent indemnification obligations for
which no claim has been asserted) and the expiration or termination of all
Letters of Credit (or
upon the Cash Collateralization of all Letters of Credit in the manner set forth in Section 2.03(g)), (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) if approved,
authorized or ratified in writing by the Required Lenders in accordance with Section 10.01;


 


(b)                           to subordinate any Lien on any property
granted to or held by the Collateral Agent under any Loan Document to the
holder of any Lien, or to release any Lien, on such property that is permitted
by the definition of Permitted Encumbrances; and


 


(c)                            to release any Guarantor from its
obligations under the Facility Guaranty if such Person ceases to be a
Subsidiary as a result of a transaction permitted hereunder.


 


Upon request by any Agent at any time,
the Required Lenders will confirm in writing such Agent’s authority to release
or subordinate its interest in particular types or items of property, or to
release any Guarantor from its obligations under the Facility Guaranty pursuant
to this Section 9.09. 
Notwithstanding the foregoing, in each case as specified above in clauses
(a)-(c) of this Section 9.09, the Agents will without
further confirmation from the Required Lenders, at the Loan Parties’ expense,
execute and deliver to the applicable Loan Party such documents as such Loan
Party may reasonably request to evidence the release of such item of Collateral
from the assignment and security interest granted under the Security Documents
or to subordinate its interest in such item, or to release such Guarantor from
its obligations under the Facility Guaranty, in each case in accordance with
the terms of the Loan Documents and this Section 9.09.


 


9.10                        Notice
of Transfer.


 


The Agents may deem and treat a Lender party to this Agreement as the
owner of such Lender’s portion of the Obligations for all purposes, unless and
until, and except to the extent, an Assignment and Acceptance shall have become
effective as set forth in Section 10.06.


 


9.11                        Reports
and Financial Statements.


 


By signing this Agreement, each Lender:


 


(a)                            agrees to
furnish the Administrative Agent on the first day of each month with a summary
of all Other Liabilities due or to become due to such Lender. In connection
with any distributions to be made hereunder, the Administrative Agent shall be
entitled to assume that no amounts are due to any Lender on account of Other
Liabilities unless the Administrative Agent has received written notice thereof
from such Lender;


 


(b)                           is deemed to have requested that the
Administrative Agent furnish such Lender, promptly after they become available,
copies of all financial statements required to be delivered by the Lead
Borrower hereunder and all commercial finance examinations and appraisals of
the Collateral received by the Agents (collectively, the “Reports”);


 


(c)                            expressly agrees and acknowledges that
the Administrative Agent makes no representation or warranty as to the accuracy
of the Reports, and shall not be liable for any information contained in any
Report;


 


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


 


(e)                            agrees to keep all Reports confidential
in accordance with the provisions of Section 10.07 hereof; and


 


(f)                              without limiting the generality of any
other indemnification provision contained in this Agreement, agrees: (i) to
hold the Agents and any such other Lender preparing a Report harmless from any
action the indemnifying Lender may take or conclusion the indemnifying Lender
may reach or draw from any Report in connection with any Credit Extensions that
the indemnifying Lender has made or may make to the Borrowers, or the
indemnifying Lender’s participation in, or the indemnifying Lender’s purchase
of, a Loan or Loans; and (ii) to pay and protect, and indemnify, defend,
and hold the Agents and any such other Lender preparing a Report harmless from
and against, the claims, actions, proceedings, damages, costs, expenses, and
other amounts (including attorney costs) incurred by the Agents and any such
other Lender preparing a Report as the direct or indirect result of any third
parties who might obtain all or part of any Report through the indemnifying
Lender.


 


9.12                        Agency
for Perfection.


 


Each Lender hereby appoints each other Lender as agent for the purpose
of perfecting Liens for the benefit of the Agents and the Lenders, in assets
which, in accordance with Article 9 of the UCC or any other applicable Law
of the United States can be perfected only by possession.  Should any Lender (other than the Agents)
obtain possession of any such Collateral, such Lender shall notify the Agents
thereof, and, promptly upon the Collateral Agent’s request therefor shall
deliver such Collateral to the Collateral Agent or otherwise deal with such
Collateral in accordance with the Collateral Agent’s instructions.


 


9.13                        Indemnification
of Agents.  The Lenders agree to indemnify the
Agents (to the extent not reimbursed by the Loan Parties and without limiting
the obligations of Loan Parties hereunder), ratably according to their
Applicable Percentages, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever that may be imposed on, incurred
by, or asserted against any Agent in any way relating to or arising out of this
Agreement or any other Loan Document or any action taken or omitted to be taken
by any Agent in connection therewith; provided, that no Lender shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from such Agent’s gross negligence or willful misconduct as
determined by a final and nonappealable judgment of a court of competent
jurisdiction.


 


9.14                        Relation
among Lenders.  The
Lenders are not partners or co-venturers, and no Lender shall be liable for the
acts or omissions of, or (except as otherwise set forth herein in case of the
Agents) authorized to act for, any other Lender.


 


9.15                        Defaulting
Lender.


 


(a)                            If for any reason any Lender shall fail
or refuse to abide by its obligations under this Agreement, including without
limitation its obligation to make available to Administrative Agent its
Applicable Percentage of any Loans, expenses or setoff or purchase its
Applicable Percentage of a participation interest in the Swing Line Loans or
L/C Borrowings and such failure is not cured within two (2) days of
receipt from the Administrative Agent of written notice thereof, then, in
addition to the rights and remedies that may be available to the other Credit
Parties, the Loan Parties or any other party at law or in equity, and not at
limitation thereof, (i) such Defaulting Lender’s right to participate in
the administration of, or decision-making rights related to, the Obligations,
this Agreement or the other Loan Documents shall be 


 


106

















 


suspended during
the pendency of such failure or refusal, and (ii) a Defaulting Lender
shall be deemed to have assigned any and all payments due to it from the Loan
Parties, whether on account of outstanding Loans, interest, fees or otherwise,
to the remaining non-Defaulting Lenders for application to, and reduction of,
their proportionate shares of all outstanding Obligations until, as a result of
application of such assigned payments the Lenders’ respective Applicable
Percentages of all outstanding Obligations shall have returned to those in
effect immediately prior to such delinquency and without giving effect to the
nonpayment causing such delinquency.  The
Defaulting Lender’s decision-making and participation rights and rights to
payments as set forth in clauses (i) and (ii) hereinabove
shall be restored only upon the payment by the Defaulting Lender of its
Applicable Percentage of any Obligations, any participation obligation, or
expenses as to which it is delinquent, together with interest thereon at the
Default Rate from the date when originally due until the date upon which any
such amounts are actually paid.


 


(b)                           The non-Defaulting Lenders shall also have
the right, but not the obligation, in their respective, sole and absolute
discretion, to cause the termination and assignment, without any further action
by the Defaulting Lender for no cash consideration (pro rata,
based on the respective Commitments of those Lenders electing to exercise such
right), of the Defaulting Lender’s Commitment to fund future Loans.  Upon any such purchase of the Applicable
Percentage of any Defaulting Lender, the Defaulting Lender’s share in future
Credit Extensions and its rights under the Loan Documents with respect thereto
shall terminate on the date of purchase, and the Defaulting Lender shall
promptly execute all documents reasonably requested to surrender and transfer
such interest, including, if so requested, an Assignment and Acceptance.


 


(c)                            Each Defaulting Lender shall indemnify
the Administrative Agent and each non-Defaulting Lender from and against any
and all loss, damage or expenses, including but not limited to reasonable
attorneys’ fees and funds advanced by the Administrative Agent or by any
non-Defaulting Lender, on account of a Defaulting Lender’s failure to timely
fund its Applicable Percentage of a Loan or to otherwise perform its
obligations under the Loan Documents.


 


ARTICLE
X


MISCELLANEOUS


 


10.01                 Amendments,
Etc.  No amendment or waiver of any
provision of this Agreement or any other Loan Document, and no Consent to any
departure by any Loan Party therefrom, shall be effective unless in writing
signed by the Administrative Agent, with the Consent of the Required Lenders,
and the Lead Borrower or the applicable Loan Party, as the case may be, and
acknowledged by the Administrative Agent, and each such waiver or Consent shall
be effective only in the specific instance and for the specific purpose for
which given; provided, however, that no such amendment, waiver or
consent shall:


 


(a)                            extend or,
increase the Commitment of any Lender (or reinstate any Commitment terminated
pursuant to Section 8.02) without the written Consent of such
Lender;


 


(b)                           postpone any date fixed by this Agreement
or any other Loan Document for (i) any payment or mandatory prepayment of
principal, interest, fees or other amounts due to the Lenders (or any of them)
hereunder or under any of the other Loan Documents without the written Consent
of each Lender entitled to such payment, or (ii) any scheduled or
mandatory reduction of the Aggregate Commitments hereunder or under any other
Loan Document without the written Consent of each Lender;


 


(c)                            reduce the principal of, or the rate of
interest specified herein on, any Loan or L/C Borrowing, or (subject to clause
(iv) of the second proviso to this Section 10.01) any fees
or other amounts payable hereunder or under any other Loan Document, without
the written Consent of each Lender entitled to such amount; provided, however,
that only the Consent of the Required Lenders shall be necessary (i) to
amend the definition of “Default Rate” or to waive 


 


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any obligation of
the Borrowers to pay interest or Letter of Credit Fees at the Default Rate or (ii) to
amend any financial covenant hereunder (or any defined term used therein);


 


(d)                           change Section 2.13 or Section 8.03
in a manner that would alter the pro rata sharing of payments required thereby
without the written Consent of each Lender;


 


(e)                            change any provision of this Section or
the definition of “Required Lenders”, or any other provision hereof specifying
the number or percentage of Lenders required to amend, waive or otherwise
modify any rights hereunder or make any determination or grant any consent
hereunder, without the written Consent of each Lender;


 


(f)                              except as expressly permitted hereunder
or under any other Loan Document, release, or limit the liability of, any Loan
Party without the written Consent of each Lender;


 


(g)                           except for Permitted Dispositions,
release all or substantially all of the Collateral from the Liens of the
Security Documents without the written Consent of each Lender;


 


(h)                           increase the Aggregate Commitments
without the written Consent of each Lender;


 


(i)                               change the definition of the term “Borrowing
Base” or any component definition thereof if as a result thereof the amounts
available to be borrowed by the Borrowers would be increased without the
written Consent of each Lender, provided
that the foregoing shall not limit the discretion of the
Administrative Agent to change, establish or eliminate any Reserves;


 


(j)                               modify the definition of Permitted
Overadvance so as to increase the amount thereof or, except as provided in such
definition, the time period for a Permitted Overadvance without the written
Consent of each Lender; and


 


(k)                            except as expressly permitted herein or
in any other Loan Document, subordinate the Obligations hereunder or the Liens
granted hereunder or under the other Loan Documents, to any other Indebtedness
or Lien, as the case may be without the written Consent of each Lender;


 


and, provided  further,
that (i) no amendment, waiver or Consent shall, unless in writing and
signed by the L/C Issuer in addition to the Lenders required above, affect the
rights or duties of the L/C Issuer under this Agreement or any Issuer Document
relating to any Letter of Credit issued or to be issued by it; (ii) no
amendment, waiver or Consent shall, unless in writing and signed by the Swing
Line Lender in addition to the Lenders required above, affect the rights or
duties of the Swing Line Lender under this Agreement; (iii) no amendment,
waiver or Consent shall, unless in writing and signed by the Administrative
Agent in addition to the Lenders required above, affect the rights or duties of
the Administrative Agent under this Agreement or any other Loan Document; (iv) no
amendment, waiver or Consent shall, unless in writing and signed by the
Collateral Agent in addition to the Lenders required above, affect the rights
or duties of the Collateral Agent under this Agreement or any other Loan
Document, and (v) the Fee Letter may be amended, or rights or privileges
thereunder waived, in a writing executed only by the parties thereto.  Notwithstanding anything to the contrary
herein, no Defaulting Lender shall have any right to approve or disapprove any
amendment, waiver or Consent hereunder, except that the Commitment of such
Lender may not be increased or extended without the consent of such Lender.


 


If any Lender does not Consent (a “Non-Consenting
Lender”) to a proposed amendment, waiver, consent or release with respect
to any Loan Document that requires the Consent of each Lender and that has been
approved by the Required Lenders, the Lead Borrower may replace such
Non-Consenting Lender in accordance with Section 10.13; provided
that such amendment, waiver, consent or release can be effected as a result of
the assignment contemplated by such Section (together with all other such
assignments required by the Lead Borrower to be made pursuant to this
paragraph).


 


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10.02                 Notices,
Financial Statements and Other Documents; Effectiveness; Electronic
Communications.


 


(a)                            Notices, Financial
Statements and Other Documents Generally.  Except in the case of notices and other
communications expressly permitted to be given by telephone (and except as
provided in subsection (b) below), all notices, financial
statements and other documents and communications provided for herein shall be
in writing and shall be delivered by hand or overnight courier service, mailed
by certified or registered mail or sent by telecopier as follows, and all
notices and other communications expressly permitted hereunder to be given by
telephone shall be made to the applicable telephone number, as follows:


 


(i)                                     if to the Loan
Parties, the Agents, the L/C Issuer or the Swing Line Lender, to the address,
telecopier number, electronic mail address or telephone number specified for
such Person on Schedule 10.02; and


 


(ii)                                  if to any other Lender, to the address,
telecopier number, electronic mail address or telephone number specified in its
Administrative Questionnaire.


 


Notices, financial statements and other
documents sent by hand or overnight courier service, or mailed by certified or
registered mail, shall be deemed to have been given when received; notices,
financial statements and other documents sent by telecopier shall be deemed to
have been given when sent (except that, if not given during normal business
hours for the recipient, shall be deemed to have been given at the opening of
business on the next Business Day for the recipient).  Notices, financial statements and other
documents delivered through electronic communications to the extent provided in
subsection (b) below, shall be effective as provided in such subsection
(b).


 


(b)                           Electronic
Communications.  Notices,
financial statements and other documents and communications to the Lenders and
the L/C Issuer hereunder may be delivered or furnished by electronic
communication (including e-mail and Internet or intranet websites) pursuant to
procedures approved by the Administrative Agent, provided that the
foregoing shall not apply to notices to any Lender or the L/C Issuer pursuant
to Article II if such Lender or the L/C Issuer, as applicable, has
notified the Administrative Agent that it is incapable of receiving notices
under such Article by electronic communication.  The Administrative Agent or the Lead Borrower
may, in its discretion, agree to accept notices and other communications to it
hereunder by electronic communications pursuant to procedures approved by it, provided
that approval of such procedures may be limited to particular notices or
communications.


 


Unless the Administrative Agent otherwise prescribes, (i) notices
and other communications sent to an e-mail address shall be deemed received
upon the sender’s receipt of an acknowledgement from the intended recipient
(such as by the “return receipt requested” function, as available, return
e-mail or other written acknowledgement), provided that if such notice or other
communication is not sent during the normal business hours of the recipient,
such notice or communication shall be deemed to have been sent at the opening
of business on the next Business Day for the recipient, and (ii) notices
or communications posted to an Internet or intranet website shall be deemed
received upon the deemed receipt by the intended recipient at its e-mail
address as described in the foregoing clause (i) of
notification that such notice or communication is available and identifying the
website address therefor.


 


(c)                            Change of Address, Etc. 
Each of the Loan Parties, the Agents, the L/C Issuer and the Swing Line
Lender may change its address, telecopier or telephone number for notices and
other communications hereunder by notice to the other parties hereto.  Each other Lender may change its address,
telecopier or telephone number for notices and other communications hereunder by
notice to the Lead Borrower, the Agents, the L/C Issuer and the Swing Line
Lender.  In addition, each Lender agrees
to notify the Administrative Agent from time to time to ensure that the
Administrative Agent has on record (i) an effective address, contact name,
telephone number, telecopier number and electronic mail address to which
notices and other communications may be sent and (ii) accurate wire
instructions for such Lender.


 


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(d)                           Reliance by Agents, L/C
Issuer and Lenders.  The Agents,
the L/C Issuer and the Lenders shall be entitled to rely and act upon any
notices (including telephonic Committed Loan Notices and Swing Line Loan
Notices) purportedly given by or on behalf of the Loan Parties 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 Loan Parties shall
indemnify the Agents, the L/C Issuer, each 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 Loan Parties.  All telephonic notices
to and other telephonic communications with the Agents may be recorded by the
Agents, and each of the parties hereto hereby consents to such recording.


 


10.03                 No
Waiver; Cumulative Remedies.  No
failure by any Credit Party to exercise, and no delay by any such Person in
exercising, any right, remedy, power or privilege hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder or under any other Loan Document preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege.  The rights,
remedies, powers and privileges provided herein and in the other Loan Documents
are cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.  Without limiting the
generality of the foregoing, the making of a Loan or issuance of a Letter of
Credit shall not be construed as a waiver of any Default, regardless of whether
any Credit Party may have had notice or knowledge of such Default at the time.


 


10.04                 Expenses;
Indemnity; Damage Waiver.


(a)                            Costs and Expenses.  The Borrowers shall pay all Credit Party
Expenses.


 


(b)                           Indemnification by the Loan
Parties.  The Loan Parties shall
indemnify the Agents (and any sub-agent thereof), each other Credit Party, and
each Related Party of any of the foregoing Persons (each such Person being
called an “Indemnitee”) against, and hold each Indemnitee harmless (on
an after tax basis) from, any and all losses, claims, causes of action,
damages, liabilities, settlement payments, costs, and related expenses
(including the reasonable fees, charges and disbursements of any counsel for
any Indemnitee), incurred by any Indemnitee or asserted against any Indemnitee
by any third party or by any 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 Agents (and any
sub-agents thereof) and their Related Parties only, the administration of this
Agreement and the other Loan Documents, (ii) any Loan or Letter of Credit
or the use or proposed use of the proceeds therefrom (including any refusal by
the L/C Issuer to honor a demand for payment under a Letter of Credit if the
documents presented in connection with such demand do not strictly comply with
the terms of such Letter of Credit), (iii) any actual or alleged presence
or release of Hazardous Materials on or from any property owned or operated by
any Loan Party or any of its Subsidiaries, or any Environmental Liability
related in any way to any Loan Party or any of its Subsidiaries, (iv) any
claims of, or amounts paid by any Credit Party to, a Blocked Account Bank or
other Person which has entered into a control agreement with any Credit Party
hereunder, or (v) 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 any
Borrower or any other Loan Party or any of the Loan Parties’ directors,
shareholders or creditors, and regardless of whether any Indemnitee 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
Indemnitee; provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,


 


110

















 


liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the
gross negligence or willful misconduct of such Indemnitee.


 


(c)                            Reimbursement by Lenders.  Without limiting their obligations under Section 9.13
hereof, to the extent that the Loan Parties for any reason fail to indefeasibly
pay any amount required under subsection (a) or (b) of
this Section to be paid by it, each Lender severally agrees to pay to the
Agents (or any such sub-agent), the L/C Issuer or such Related Party, as the
case may be, such Lender’s Applicable Percentage (determined as of the time
that the applicable unreimbursed expense or indemnity payment is sought) of
such unpaid amount, provided that the unreimbursed expense or
indemnified loss, claim, damage, liability or related expense, as the case may
be, was incurred by or asserted against the Agents (or any such sub-agent) or
the L/C Issuer in its capacity as such, or against any Related Party of any of
the foregoing acting for the Agents (or any such sub-agent) or L/C Issuer in
connection with such capacity.  The
obligations of the Lenders under this subsection (c) are
subject to the provisions of Section 2.12(d).


 


(d)                           Waiver of Consequential
Damages, Etc.  To the
fullest extent permitted by applicable Law, the Loan Parties shall not assert,
and hereby waive, any claim against any Indemnitee, 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 Letter of
Credit or the use of the proceeds thereof. 
No Indemnitee shall be liable for any damages arising from the use by
unintended recipients of any information or other materials distributed to such
unintended recipients by such Indemnitee 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
other than for direct or actual damages resulting from the gross negligence or
willful misconduct of such Indemnitee as determined by a final and
nonappealable judgment of a court of competent jurisdiction.


 


(e)                            Payments.  All amounts due under this Section shall
be payable on demand therefor.


 


(f)                              Survival.  The agreements in this Section shall
survive the resignation of any Agent and the L/C Issuer, the assignment of any
Commitment or Loan by any Lender, the replacement of any Lender, the
termination of the Aggregate Commitments and the repayment, satisfaction or
discharge of all the other Obligations.


 


10.05                 Payments
Set Aside.  To the extent that any
payment by or on behalf of the Loan Parties is made to any Credit Party, or any
Credit Party exercises its right of setoff, and such payment or the proceeds of
such setoff or any part thereof is subsequently invalidated, declared to be
fraudulent or preferential, set aside or required (including pursuant to any
settlement entered into by such Credit Party in its discretion) to be repaid to
a trustee, receiver or any other party, in connection with any proceeding under
any Debtor Relief Laws or otherwise, then (a) to the extent of such
recovery, the obligation or part thereof originally intended to be satisfied
shall be revived and continued in full force and effect as if such payment had
not been made or such setoff had not occurred, and (b) each Lender and the
L/C Issuer severally agrees to pay to the Agents upon demand its Applicable
Percentage (without duplication) of any amount so recovered from or repaid by
the Agents, plus interest thereon from the date of such demand to the date such
payment is made at a rate per annum equal to the Federal Funds Rate from time
to time in effect.  The obligations of
the Lenders and the L/C Issuer under clause (b) of the preceding
sentence shall survive the payment in full of the Obligations and the
termination of this Agreement.


 


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10.06                 Successors
and Assigns.


(a)                                  Successors and
Assigns Generally.  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 no Loan Party may assign or otherwise transfer any of its
rights or obligations hereunder or under any other Loan Document without the
prior written Consent of the Administrative Agent and each Lender and no Lender
may assign or otherwise transfer any of its rights or obligations hereunder
except (i) to an Eligible Assignee in accordance with the provisions of Section 10.06(b),
(ii) by way of participation in accordance with the provisions of Section 10.06(d),
or (iii) by way of pledge or assignment of a security interest subject to
the restrictions of Section 10.06(f) (and any other attempted
assignment or transfer by any party hereto shall be null and void).  Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby, Participants
to the extent provided in subsection (d) of this Section and,
to the extent expressly contemplated hereby, the Related Parties of each of the
Credit Parties) any legal or equitable right, remedy or claim under or by
reason of this Agreement.


 


(b)                                 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 Commitment(s) and
the Loans (including for purposes of this Section 10.06(b),
participations in L/C Obligations and in Swing Line Loans) at the time owing to
it); provided that any such assignment shall be subject to the following
conditions:


 


(i)                                     Minimum Amounts


 


(A)                              in
the case of an assignment of the entire remaining amount of the assigning
Lender’s 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 with
respect to a Lender, no minimum amount need be assigned; and


 


(B)                                in
any case not described in subsection (b)(i)(A)of this Section, the aggregate
amount of the Commitment (which for this purpose includes Loans outstanding
thereunder) or, if the Commitment is not then in effect, the principal
outstanding balance of the 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 Administrative Agent or, if the “Effective
Date” is specified in the Assignment and Assumption, as of the “Effective Date”,
shall not be less than $10,000,000 unless each of the Administrative Agent and,
so long as no Default or Event of Default has occurred and is continuing, the
Lead 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;


 


(ii)                                  Proportionate Amounts.  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 Commitment
assigned, except that this clause (ii) shall not apply to the Swing
Line Lender’s rights and obligations in respect of Swing Line Loans;


 


(iii)                               Required Consents.  No consent shall be required for any
assignment except to the extent required by subsection (b)(i)(B) of
this Section and, in addition:


 


(A)                              the
consent of the Lead Borrower (such consent not to be unreasonably withheld or
delayed) shall be required unless (1) a Default or Event of Default has
occurred and is continuing at the time of such assignment (2) such
assignment is in connection with any merger, consolidation, sale, transfer or
other disposition of all or any substantial portion of the business or loan
portfolio of the


 


112

















 


assigning Lender,
or (3) such assignment is to a Lender, an Affiliate of a Lender or an
Approved Fund; and


 


(B)                                the
consent of the Administrative Agent (such consent not to be unreasonably
withheld or delayed) shall be required for assignments in respect of any
Commitment if such assignment is to a Person that is not a Lender, an Affiliate
of such Lender or an Approved Fund with respect to such Lender; and


 


(C)                                the
consent of the L/C Issuer (such consent not to be unreasonably withheld or
delayed) shall be required for any assignment that increases the obligation of
the assignee to participate in exposure under one or more Letters of Credit
(whether or not then outstanding); and


 


(D)                               the
consent of the Swing Line Lender (such consent not to be unreasonably withheld
or delayed) shall be required for any assignment in respect of the assignment
of any Commitment.


 


(iv)                              Assignment and Assumption.  The parties to each assignment shall execute
and deliver to the Administrative Agent an Assignment and Assumption, together
with a processing and recordation fee of $3,500, provided, however,
that the Administrative Agent may, in its sole discretion, elect to waive such
processing and recordation fee in the case of any assignment. The assignee, if
it shall not be a Lender, shall deliver to the Administrative Agent an
Administrative Questionnaire.


 


Subject to acceptance and recording thereof by the Administrative Agent
pursuant to subsection (c) of this Section, from and after the
effective date specified in each Assignment and Assumption, the Eligible
Assignee thereunder shall be a party to this Agreement and, to the extent of
the interest assigned by such Assignment and Assumption, have the rights and
obligations of a Lender under this Agreement, and the assigning Lender
thereunder 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
3.01, 3.04, 3.05, and 10.04 with respect to facts and circumstances
occurring prior to the effective date of such assignment.  Upon request, the Borrowers (at their
expense) shall execute and deliver a Note to the assignee Lender.  Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this
subsection shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with Section 10.06(d).


 


(c)                                  Register.  The Administrative Agent, acting solely for
this purpose as an agent of the Borrowers, shall maintain at the Administrative
Agent’s Office a copy of each Assignment and Assumption delivered to it and a
register for the recordation of the names and addresses of the Lenders, and the
Commitments of, and principal amounts of the Loans and L/C Obligations owing
to, each Lender pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be
conclusive, absent manifest error, and the Loan Parties, the Administrative
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.  The Register shall be available for
inspection by the Lead Borrower and any Lender at any reasonable time and from
time to time upon reasonable prior notice.


 


(d)                                 Participations.  Any Lender may at any time, without the
consent of, or notice to, the Loan Parties or the Administrative Agent, sell
participations to any Person (other than a natural person or the Loan Parties
or any of the Loan Parties’ Affiliates or Subsidiaries) (each, a “Participant”)
in all or a portion of such Lender’s rights and/or obligations under this
Agreement (including all or a portion of its


 


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Commitment and/or the Loans
(including such Lender’s participations in L/C Obligations and/or Swing Line
Loans) owing to it); provided that (i) such Lender’s obligations
under this Agreement shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations and (iii) the Loan Parties, the Agents, the Lenders and the
L/C Issuer shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement.  Any Participant shall agree in writing to
comply with all confidentiality obligations set forth in Section 10.07
as if such Participant was a Lender hereunder.


 


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 and the other Loan Documents; 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 the first proviso to Section 10.01 that
affects such Participant.  Subject to subsection
(e) of this Section, the Loan Parties agree that each
Participant shall be entitled to the benefits of Sections 3.01, 3.04 and
3.05  to the same extent as
if it were a Lender and had acquired its interest by assignment pursuant to Section 10.06(b).  To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 10.08  as though it were a Lender, provided such
Participant agrees to be subject to Section 2.13 as though it were
a Lender.


 


(e)                                  Limitations
upon Participant Rights.  A
Participant shall not be entitled to receive any greater payment under Section 3.01
or 3.04  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 Lead 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 3.01
unless the Lead Borrower is notified of the participation sold to such
Participant and such Participant agrees, for the benefit of the Loan Parties,
to comply with Section 3.01(e) as though it were a Lender.


 


(f)                                    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 such pledgee or
assignee for such Lender as a party hereto.


 


(g)                                 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 may be, to the
extent and as provided for in any applicable Law, including the Federal
Electronic Signatures in Global and National Commerce Act, the New York State
Electronic Signatures and Records Act, or any other similar state laws based on
the Uniform Electronic Transactions Act.


 


(h)                                 Resignation as
L/C Issuer or Swing Line Lender after Assignment.  Notwithstanding anything to the contrary
contained herein, if at any time Wells Fargo Retail Finance, LLC assigns all of
its Commitment and Loans pursuant to subsection (b) above, (i) Wells
Fargo Bank may upon 30 days’ notice to the Lead Borrower and the Lenders,
resign as L/C Issuer (provided that such resignation shall not be effective
until a successor L/C Issuer has been appointed, which absent the occurrence
and continuation of an Event of Default, shall be reasonably acceptable to the
Lead Borrower), and/or (ii) Wells Fargo Retail Finance, LLC upon 30 days’
notice to the Lead Borrower, resign as Swing Line Lender.  In the event of any such resignation as L/C
Issuer or Swing Line Lender, the Lead Borrower shall be entitled to appoint
from among the Lenders a successor L/C Issuer or Swing Line Lender hereunder; provided,
however, that no failure by the Lead Borrower to appoint any such
successor shall affect the resignation of Wells Fargo Bank as L/C Issuer or
Wells Fargo Retail Finance, LLC as Swing Line Lender, as the case may be.  If Wells Fargo Bank resigns as L/C Issuer, it
shall retain 


 


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all the rights, powers,
privileges and duties of the L/C Issuer hereunder with respect to all Letters
of Credit outstanding as of the effective date of its resignation as L/C Issuer
and all L/C Obligations with respect thereto (including the right to require
the Lenders to make Base Rate Loans or fund risk participations in Unreimbursed
Amounts pursuant to Section 2.03(c)).  If Wells Fargo Retail Finance, LLC resigns as
Swing Line Lender, it shall retain all the rights of the Swing Line Lender
provided for hereunder with respect to Swing Line Loans made by it and
outstanding as of the effective date of such resignation, including the right
to require the Lenders to make Base Rate Loans or fund risk participations in
outstanding Swing Line Loans pursuant to Section 2.04(c).  Upon the appointment of a successor L/C
Issuer and/or Swing Line Lender, (a) such successor shall succeed to and
become vested with all of the rights, powers, privileges and duties of the
retiring L/C Issuer or Swing Line Lender, as the case may be, and (b) the
successor L/C 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 Wells Fargo Bank to effectively assume the
obligations of Wells Fargo Bank with respect to such Letters of Credit.


 


10.07                 Treatment
of Certain Information; Confidentiality. 
Each of the Credit Parties agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its Affiliates and to its and its Affiliates’ respective partners, directors,
officers, employees, agents, funding sources, attorneys, advisors and
representatives (it being understood that the Persons to whom such disclosure
is made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential on the same terms as provided
herein), (b) to the extent requested by any regulatory authority
purporting to have jurisdiction over it (including any self-regulatory
authority, such as the National Association of Insurance Commissioners), (c) to
the extent required by applicable Laws or regulations or by any subpoena or
similar legal process, (d) to any other party hereto, (e) in
connection with the exercise of any remedies hereunder or under any other Loan
Document or any action or proceeding relating to this Agreement or any other
Loan Document or the enforcement of rights hereunder or thereunder, (f) subject
to an agreement containing provisions substantially the same as those of this
Section, to (i) any assignee of or Participant in, or any prospective
assignee of or Participant in, any of its rights or obligations under this
Agreement or (ii) any actual or prospective counterparty (or its advisors)
to any swap or derivative transaction relating to any Loan Party and its
obligations, (g) with the consent of the Lead Borrower or (h) to the
extent such Information (x) becomes publicly available other than as a
result of a breach of this Section or (y) becomes available to any
Credit Party or any of their respective Affiliates on a non-confidential basis
from a source other than the Loan Parties; provided, however,
that in the case of any disclosure pursuant to clause (c) above,
the applicable Credit Party which is required to disclose confidential
Information agrees to give the Lead Borrower, to the extent practicable and not
otherwise prohibited by any such Law, regulation, subpoena, order or decree of
a court or similar legal process , prior notice of such disclosure (provided,
however, no Credit Party shall incur any liability to any Loan Party or other
Person for failing to provide the Lead Borrower with any such prior notice); provided,
further, however, that the Administrative Agent and such Lender
shall disclose only that portion of the confidential Information as is required
to be disclosed, in its sole judgment, pursuant to any such Law, regulation,
subpoena, order or decree of a court or similar legal process.  Any such required disclosure shall not, in
and of itself, change the status of the disclosed information as Information
under the terms of this Agreement.  For
purposes of this Section, “Information” means all information received from the
Loan Parties or any Subsidiary thereof relating to the Loan Parties or any
Subsidiary thereof or their respective businesses, other than any such
information that is available to any Credit Party on a non-confidential basis
prior to disclosure by the Loan Parties or any Subsidiary thereof.  Any Person required to maintain the
confidentiality of Information as provided in this Section shall be


 


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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 Credit Parties acknowledges that (a) the Information
may include material non-public information concerning the Loan Parties 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,
including Federal and state securities Laws.


 


10.08                 Right
of Setoff.  If an Event of Default
shall have occurred and be continuing or if any Lender shall have been served
with a trustee process or similar attachment relating to property of a Loan
Party, each Lender, the L/C Issuer and each of their respective Affiliates is
hereby authorized at any time and from time to time, after obtaining the prior
written consent of the Administrative Agent or the Required Lenders, to the
fullest extent permitted by applicable Law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final, in whatever
currency) at any time held and other obligations (in whatever currency) at any
time owing by such Lender, the L/C Issuer or any such Affiliate to or for the
credit or the account of the Borrowers or any other Loan Party against any and
all of the Obligations now or hereafter existing under this Agreement or any
other Loan Document to such Lender or the L/C Issuer, regardless of the adequacy
of the Collateral, and irrespective of whether or not such Lender or the L/C
Issuer shall have made any demand under this Agreement or any other Loan
Document and although such obligations of the Borrowers or such Loan Party may
be contingent or unmatured or are owed to a branch or office of such Lender or
the L/C Issuer different from the branch or office holding such deposit or
obligated on such indebtedness.  The
rights of each Lender, the L/C Issuer and their respective Affiliates under
this Section are in addition to other rights and remedies (including other
rights of setoff) that such Lender, the L/C Issuer or their respective
Affiliates may have.  Each Lender and the
L/C Issuer (through the Administrative Agent) agrees to notify the Lead
Borrower and the Administrative Agent promptly after any such setoff and
application, provided that the failure to give such notice shall not
affect the validity of such setoff and application.


 


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


 


10.10                 Counterparts;
Integration; Effectiveness.  This
Agreement may be executed in counterparts (and by different parties hereto in
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract.  This Agreement and the other Loan Documents
constitute the entire contract among the parties relating to the subject matter
hereof and supersede any and all previous agreements and


 


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understandings, oral or
written, relating to the subject matter hereof. 
Except as provided in Section 4.01, this Agreement shall
become effective when it shall have been executed by the Administrative Agent
and when the Administrative Agent shall have received counterparts hereof that,
when taken together, bear the signatures of each of the other parties
hereto.  Delivery of an executed
counterpart of a signature page of this Agreement by telecopy shall be as
effective as delivery of a manually executed counterpart of this Agreement.


 


10.11                 Survival.  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 Credit Parties, regardless of any investigation made by any Credit Party or
on their behalf and notwithstanding that any Credit Party may have had notice
or knowledge of any Default at the time of any Credit Extension, and shall
continue in full force and effect as long as any Loan or any other Obligation
hereunder shall remain unpaid or unsatisfied or any Letter of Credit shall
remain outstanding.  Further, the
provisions of Sections 3.01, 3.04, 3.05 and
10.04 and Article IX shall survive and remain in full force and
effect regardless of the repayment of the Obligations, the expiration or
termination of the Letters of Credit and the Commitments or the termination of
this Agreement or any provision hereof. 
In connection with the termination of this Agreement and the release and
termination of the security interests in the Collateral, the Agents may require
such indemnities and collateral security as they shall reasonably deem
necessary or appropriate to protect the Credit Parties against (x) loss on
account of credits previously applied to the Obligations that may subsequently
be reversed or revoked, and (y) any obligations that may thereafter arise
with respect to the Other Liabilities.


 


10.12                 Severability.  If any provision of this Agreement or the
other Loan Documents is held to be illegal, invalid or unenforceable, (a) the
legality, validity and enforceability of the remaining provisions of this
Agreement and the other Loan Documents shall not be affected or impaired
thereby and (b) the parties shall endeavor in good faith negotiations to
replace the illegal, invalid or unenforceable provisions with valid provisions
the economic effect of which comes as close as possible to that of the illegal,
invalid or unenforceable provisions.  The
invalidity of a provision in a particular jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.


 


10.13                 Replacement of Lenders.  If any Lender requests compensation under Section 3.04,
or if the Borrowers are required to pay any additional amount to any Lender or
any Governmental Authority for the account of any Lender pursuant to Section 3.01,
or if any Lender gives a notice pursuant to Section 3.02, or if any
Lender is a Defaulting Lender or a Non-Consenting Lender, then the Borrowers
may, at their sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in, and
consents required by, Section 10.06), all of its interests, rights
and obligations under this Agreement and the related Loan Documents to an
assignee that shall assume such obligations (which assignee may be another Lender,
if a Lender accepts such assignment), provided that:


 


(a)                            the Borrowers shall have
paid to the Administrative Agent the assignment fee specified in Section 10.06(b);


 


(b)                           such Lender shall have
received payment of an amount equal to the outstanding principal of its Loans
and L/C Advances, accrued interest thereon, accrued fees and all other amounts
payable to it hereunder and under the other Loan Documents (including any
amounts


 


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under Section 3.05) from the assignee (to the extent of
such outstanding principal and accrued interest and fees) or the Borrowers (in
the case of all other amounts);


 


(c)                            in the case of any such
assignment resulting from a claim for compensation under Section 3.04
or payments required to be made pursuant to Section 3.01, such
assignment will result in a reduction in such compensation or payments
thereafter; and


 


(d)                           such assignment does not
conflict with applicable Laws.


 


A Lender shall not be required to make any such assignment or
delegation if, prior thereto, as a result of a waiver by such Lender or
otherwise, the circumstances entitling the Borrowers to require such assignment
and delegation cease to apply.


 


10.14                 Governing Law; Jurisdiction;
Etc.


(a)                                  GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.


 


(b)                                 SUBMISSION TO
JURISDICTION.  EACH LOAN
PARTY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO
THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN
NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN
DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE
LOAN PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN
RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN
SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, IN SUCH FEDERAL COURT.  EACH OF THE
LOAN PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS
BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.  NOTHING IN THIS AGREEMENT OR IN ANY OTHER
LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT ANY CREDIT PARTY MAY OTHERWISE
HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT AGAINST ANY LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY
JURISDICTION.


 


(c)                                  WAIVER OF VENUE.  EACH LOAN PARTY IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS
SECTION.  EACH OF THE LOAN PARTIES HERETO
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT.


 


(d)                                 SERVICE OF
PROCESS.  EACH PARTY HERETO IRREVOCABLY
CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02.  NOTHING IN THIS AGREEMENT WILL AFFECT THE
RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
APPLICABLE LAW.


 


(e)                                  ACTIONS
COMMENCED BY LOAN PARTIES. EACH LOAN PARTY AGREES THAT ANY ACTION
COMMENCED BY ANY LOAN PARTY ASSERTING ANY CLAIM OR COUNTERCLAIM ARISING UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL BE
BROUGHT SOLELY IN A COURT OF THE STATE OF NEW YORK SITTING IN NEW YORK OR ANY
FEDERAL COURT SITTING THEREIN AS


 


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THE ADMINISTRATIVE AGENT MAY ELECT
IN ITS SOLE DISCRETION AND CONSENTS TO THE EXCLUSIVE JURISDICTION OF SUCH
COURTS WITH RESPECT TO ANY SUCH ACTION.


 


10.15                 Waiver of Jury Trial.  EACH PARTY HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY). 
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO
HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.


 


10.16                 No Advisory or Fiduciary
Responsibility.  In connection
with all aspects of each transaction contemplated hereby, the Loan Parties each
acknowledge and agree that: (i) the credit facility provided for hereunder
and any related arranging or other services in connection therewith (including
in connection with any amendment, waiver or other modification hereof or of any
other Loan Document) are an arm’s-length commercial transaction between the
Loan Parties, on the one hand, and the Credit Parties, on the other hand, and
each of the Loan Parties is capable of evaluating and understanding and
understands and accepts the terms, risks and conditions of the transactions
contemplated hereby and by the other Loan Documents (including any amendment,
waiver or other modification hereof or thereof); (ii) in connection with
the process leading to such transaction, each Credit Party is and has been
acting solely as a principal and is not the financial advisor, agent or
fiduciary, for the Loan Parties or any of their respective Affiliates,
stockholders, creditors or employees or any other Person; (iii) none of
the Credit Parties has assumed or will assume an advisory, agency or fiduciary
responsibility in favor of the Loan Parties with respect to any of the
transactions contemplated hereby or the process leading thereto, including with
respect to any amendment, waiver or other modification hereof or of any other
Loan Document (irrespective of whether any of the Credit Parties has advised or
is currently advising any Loan Party or any of its Affiliates on other matters)
and none of the Credit Parties has any obligation to any Loan Party or any of
its Affiliates with respect to the transactions contemplated hereby except
those obligations expressly set forth herein and in the other Loan Documents; (iv) the
Credit Parties and their respective Affiliates may be engaged in a broad range
of transactions that involve interests that differ from those of the Loan
Parties and their respective Affiliates, and none of the Credit Parties has any
obligation to disclose any of such interests by virtue of any advisory, agency
or fiduciary relationship; and (v) the Credit Parties have not provided
and will not provide any legal, accounting, regulatory or tax advice with
respect to any of the transactions contemplated hereby (including any
amendment, waiver or other modification hereof or of any other Loan Document)
and each of the Loan Parties has consulted its own legal, accounting,
regulatory and tax advisors to the extent it has deemed appropriate.  Each of the Loan Parties hereby waives and
releases, to the fullest extent permitted by law, any claims that it may have
against each of the Credit Parties with respect to any breach or alleged breach
of agency or fiduciary duty.


 


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10.17                 USA
PATRIOT Act Notice.  Each Lender that
is subject to the Act (as hereinafter defined) and the Administrative Agent
(for itself and not on behalf of any Lender) hereby notifies the Loan Parties
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 each Loan
Party, which information includes the name and address of each Loan Party and
other information that will allow such Lender or the Administrative Agent, as
applicable, to identify each Loan Party in accordance with the Act.  Each Loan Party is in compliance, in all
material respects, with the Patriot Act. 
No part of the proceeds of the Loans will be used by the Loan Parties,
directly or indirectly, for any payments to any governmental official or
employee, political party, official of a political party, candidate for
political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in
violation of the United States Foreign Corrupt Practices Act of 1977, as
amended.


 


10.18                 Foreign Asset Control
Regulations.  Neither of the
advance of the Loans nor the use of the proceeds of any thereof will violate
the Trading With the Enemy Act (50 U.S.C. § 1 et seq., as amended) (the “Trading
With the Enemy Act”) or any of the foreign assets control regulations of
the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as
amended) (the “Foreign Assets Control Regulations”) or any enabling
legislation or executive order relating thereto (which for the avoidance of
doubt shall include, but shall not be limited to (a) Executive Order 13224
of September 21, 2001 Blocking Property and Prohibiting Transactions With
Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg.
49079 (2001)) (the “Executive Order”) and (b) the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001 (Public Law 107-56)).  Furthermore, none of the Borrowers or their
Affiliates (a) is or will become a “blocked person” as described in the
Executive Order, the Trading With the Enemy Act or the Foreign Assets Control
Regulations or (b) engages or will engage in any dealings or transactions,
or be otherwise associated, with any such “blocked person” or in any manner
violative of any such order.


 


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


 


10.20                 Press Releases.


(a)                            Each Credit Party executing
this Agreement agrees that neither it nor its Affiliates will in the future
issue any press releases or other public disclosure using the name of Administrative
Agent or its Affiliates or referring to this Agreement or the other Loan
Documents without at least two (2) Business Days’ prior notice to
Administrative Agent and without the prior written consent of Administrative
Agent unless (and only to the extent that) such Credit Party or Affiliate is
required to do so under applicable Law and then, in any event, such Credit
Party or Affiliate will consult with Administrative Agent before issuing such
press release or other public disclosure.


 


(b)                           Each Loan Party consents to
the publication by Administrative Agent or any Lender of advertising material
relating to the financing transactions contemplated by this Agreement using any
Loan Party’s name, product photographs, logo or trademark.  Administrative Agent or such Lender shall
provide a draft reasonably in advance of any advertising material to the Lead
Borrower for review and comment prior to the publication thereof.  Administrative Agent reserves the right to
provide to industry trade organizations information necessary and customary for
inclusion in league table measurements.


 


10.21                 Additional Waivers.


(a)                                  The Obligations
are the joint and several obligation of each Loan Party. To the fullest extent
permitted by applicable Law, the obligations of each Loan Party shall not be
affected by


 


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(i) the failure of any
Credit Party to assert any claim or demand or to enforce or exercise any right
or remedy against any other Loan Party under the provisions of this Agreement,
any other Loan Document or otherwise, (ii) any rescission, waiver,
amendment or modification of, or any release from any of the terms or
provisions of, this Agreement or any other Loan Document, or (iii) the
failure to perfect any security interest in, or the release of, any of the
Collateral or other security held by or on behalf of the Collateral Agent or
any other Credit Party.


 


(b)                                 The obligations
of each Loan Party shall not be subject to any reduction, limitation,
impairment or termination for any reason (other than the indefeasible payment
in full in cash of the Obligations after the termination of the Commitments),
including any claim of waiver, release, surrender, alteration or compromise of
any of the Obligations, and shall not be subject to any defense or setoff,
counterclaim, recoupment or termination whatsoever by reason of the invalidity,
illegality or unenforceability of any of the Obligations or otherwise. Without
limiting the generality of the foregoing, the obligations of each Loan Party
hereunder shall not be discharged or impaired or otherwise affected by the
failure of any Agent or any other Credit Party to assert any claim or demand or
to enforce any remedy under this Agreement, any other Loan Document or any
other agreement, by any waiver or modification of any provision of any thereof,
any default, failure or delay, willful or otherwise, in the performance of any
of the Obligations, or by any other act or omission that may or might in any
manner or to any extent vary the risk of any Loan Party or that would otherwise
operate as a discharge of any Loan Party as a matter of law or equity (other
than the indefeasible payment in full in cash of all the Obligations after the
termination of the Commitments).


 


(c)                                  To the fullest
extent permitted by applicable Law, each Loan Party waives any defense based on
or arising out of any defense of any other Loan Party or the unenforceability
of the Obligations or any part thereof from any cause, or the cessation from
any cause of the liability of any other Loan Party, other than the indefeasible
payment in full in cash of all the Obligations and the termination of the
Commitments. The Collateral Agent and the other Credit Parties may, at their
election, foreclose on any security held by one or more of them by one or more
judicial or non-judicial sales, accept an assignment of any such security in
lieu of foreclosure, compromise or adjust any part of the Obligations, make any
other accommodation with any other Loan Party, or exercise any other right or
remedy available to them against any other Loan Party, without affecting or
impairing in any way the liability of any Loan Party hereunder except to the
extent that all the Obligations have been indefeasibly paid in full in cash and
the Commitments have been terminated. 
Each Loan Party waives any defense arising out of any such election even
though such election operates, pursuant to applicable Law, to impair or to
extinguish any right of reimbursement or subrogation or other right or remedy
of such Loan Party against any other Loan Party, as the case may be, or any
security.


 


(d)                                 Each Borrower
is obligated to repay the Obligations as joint and several obligors under this
Agreement.  Upon payment by any Loan
Party of any Obligations, all rights of such Loan Party against any other Loan
Party arising as a result thereof by way of right of subrogation, contribution,
reimbursement, indemnity or otherwise shall in all respects be subordinate and
junior in right of payment to the prior indefeasible payment in full in cash of
all the Obligations and the termination of the Commitments. In addition, any
indebtedness of any Loan Party now or hereafter held by any other Loan Party is
hereby subordinated in right of payment to the prior indefeasible payment in full
of the Obligations and no Loan Party will demand, sue for or otherwise attempt
to collect any such indebtedness.  If any
amount shall erroneously be paid to any Loan Party on account of (i) such
subrogation, contribution, reimbursement, indemnity or similar right or (ii) any
such indebtedness of any Loan Party, such amount shall be held in trust for the
benefit of the Credit Parties and shall forthwith be paid to the Administrative
Agent to be credited against the payment of the Obligations, whether matured or
unmatured, in accordance with the terms of this Agreement and the other Loan
Documents.  Subject to the foregoing, to
the extent that any Borrower shall, under this Agreement as a joint and several
obligor, repay any of the Obligations constituting Revolving Loans made to
another Borrower hereunder or other Obligations incurred directly and primarily
by any other Borrower (an “Accommodation Payment”), then the Borrower
making such Accommodation Payment shall upon request be entitled to
contribution and


 


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indemnification from, and be
reimbursed by, each of the other Borrowers in an amount, for each of such other
Borrowers, equal to a fraction of such Accommodation Payment, the numerator of
which fraction is such other Borrower’s Allocable Amount and the denominator of
which is the sum of the Allocable Amounts of all of the Borrowers.  As of any date of determination, the “Allocable
Amount” of each Borrower shall be equal to the maximum amount of liability
for Accommodation Payments which could be asserted against such Borrower
hereunder without (a) rendering such Borrower “insolvent” within the
meaning of Section 101 (31) of the Bankruptcy Code, Section 2 of the
Uniform Fraudulent Transfer Act (“UFTA”) or Section 2 of the
Uniform Fraudulent Conveyance Act (“UFCA”), (b) leaving such
Borrower with unreasonably small capital or assets, within the meaning of Section 548
of the Bankruptcy Code, Section 4 of the UFTA, or Section 5 of the
UFCA, or (c) leaving such Borrower unable to pay its debts as they become
due within the meaning of Section 548 of the Bankruptcy Code or Section 4
of the UFTA, or Section 5 of the UFCA.


 


10.22                 No Strict Construction.


The parties hereto have participated jointly in the negotiation and
drafting of this Agreement.  In the event
an ambiguity or question of intent or interpretation arises, this Agreement
shall be construed as if drafted jointly by the parties hereto and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement.


 


10.23                 Attachments.


The exhibits, schedules and annexes attached to this Agreement are
incorporated herein and shall be considered a part of this Agreement for the
purposes stated herein, except that in the event of any conflict between any of
the provisions of such exhibits and the provisions of this Agreement, the
provisions of this Agreement shall prevail.


 


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


 


	
   

  	
  Borrowers:

  
	
   

  	
   

  
	
   

  	
  COLDWATER CREEK U.S. INC.

  
	
   

  	
  as Lead Borrower and a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Timothy O. Martin

  
	
   

  	
  Name:

  	
  Timothy O. Martin

  
	
   

  	
  Title:

  	
  Treasurer & Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  COLDWATER CREEK THE SPA INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ L. Michelle Carlone

  
	
   

  	
  Name:

  	
  L. Michelle Carlone

  
	
   

  	
  Title:

  	
  Treasurer & Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  COLDWATER CREEK MERCHANDISING &

  LOGISTICS INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ L. Michelle Carlone

  
	
   

  	
  Name:

  	
  L. Michelle Carlone

  
	
   

  	
  Title:

  	
  Treasurer & Secretary

  



 


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  Guarantors:

  
	
   

  	
   

  	
   

  
	
   

  	
  COLDWATER CREEK INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Timothy O. Martin

  
	
   

  	
  Name:

  	
  Timothy O. Martin

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  C SQUARED LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Timothy O. Martin

  
	
   

  	
  Name:

  	
  Timothy O. Martin

  
	
   

  	
  Title:

  	
  Manager

  
	
   

  	
   

  	
   

  
	
   

  	
  ASPENWOOD ADVERTISING, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter Prandato

  
	
   

  	
  Name:

  	
  Peter Prandato

  
	
   

  	
  Title:

  	
  Treasurer & Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  CWC WORLDWIDE SERVICES INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Timothy O. Martin

  
	
   

  	
  Name:

  	
  Timothy O. Martin

  
	
   

  	
  Title:

  	
  Treasurer & Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  COLDWATER CREEK SOURCING INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John K. Leary

  
	
   

  	
  Name:

  	
  John K. Leary

  
	
   

  	
  Title:

  	
  Treasurer & Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  CWC SOURCING LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John K. Leary

  
	
   

  	
  Name:

  	
  John K. Leary

  
	
   

  	
  Title:

  	
  Manager

  



 


124

















 


	
   

  	
  Agents:

  
	
   

  	
   

  
	
   

  	
  WELLS FARGO RETAIL FINANCE, LLC,

  
	
   

  	
  as Administrative Agent and Collateral Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Cory Loftus

  
	
   

  	
  Name:

  	
    Cory Loftus

  
	
   

  	
  Title:

  	
    Vice President

  



 


125

















 


	
   

  	
  Lenders:

  
	
   

  	
   

  	
   

  
	
   

  	
  WELLS FARGO RETAIL FINANCE, LLC,

  
	
   

  	
  as Lender and Swing Line Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Cory Loftus

  
	
   

  	
  Name:

  	
    Cory Loftus

  
	
   

  	
  Title:

  	
     Vice President

  



 


126