Filed by Bowne Pure Compliance





Exhibit 10.1




 





EXECUTION COPY




CREDIT AGREEMENT




Dated as of January 15, 2009




among




A.C. MOORE INCORPORATED,

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
	 	 	42	 
	1.03 Accounting Terms
	 	 	43	 
	1.04 Rounding
	 	 	43	 
	1.05 Times of Day
	 	 	43	 
	1.06 Letter of Credit Amounts
	 	 	43	 
	1.07 Currency Equivalents Generally
	 	 	44	 
	 
	 	 	 	 
	ARTICLE II THE COMMITMENTS AND CREDIT EXTENSIONS
	 	 	44	 
	 
	 	 	 	 
	2.01 Committed Loans; Reserves
	 	 	44	 
	2.02 Borrowings, Conversions and Continuations of Committed Loans
	 	 	46	 
	2.03 Letters of Credit
	 	 	48	 
	2.04 Swing Line Loans
	 	 	55	 
	2.05 Prepayments
	 	 	58	 
	2.06 Termination or Reduction of Commitments
	 	 	59	 
	2.07 Repayment of Loans
	 	 	60	 
	2.08 Interest
	 	 	60	 
	2.09 Fees
	 	 	60	 
	2.10 Computation of Interest and Fees
	 	 	61	 
	2.11 Evidence of Debt
	 	 	61	 
	2.12 Payments Generally; Administrative Agent’s Clawback
	 	 	62	 
	2.13 Sharing of Payments by Lenders
	 	 	63	 
	2.14 Settlement Amongst Lenders
	 	 	64	 
	 
	 	 	 	 
	ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY; APPOINTMENT OF LEAD BORROWER
	 	 	64	 
	 
	 	 	 	 
	3.01 Taxes
	 	 	64	 
	3.02 Illegality
	 	 	66	 
	3.03 Inability to Determine Rates
	 	 	66	 
	3.04 Increased Costs; Reserves on LIBO Rate Loans
	 	 	67	 
	3.05 Compensation for Losses
	 	 	68	 
	3.06 Mitigation Obligations; Replacement of Lenders
	 	 	69	 
	3.07 Survival
	 	 	69	 
	3.08 Designation of Lead Borrower as Borrowers’ Agent
	 	 	69	 
	 
	 	 	 	 
	ARTICLE IV CONDITIONS PRECEDENT TO CREDIT EXTENSIONS
	 	 	70	 
	 
	 	 	 	 
	4.01 Conditions of Initial Credit Extension
	 	 	70	 
	4.02 Conditions to all Credit Extensions
	 	 	73	 
	 
	 	 	 	 
	ARTICLE V REPRESENTATIONS AND WARRANTIES
	 	 	74	 
	 
	 	 	 	 
	5.01 Existence, Qualification and Power
	 	 	74	 
	5.02 Authorization; No Contravention
	 	 	74	 
	5.03 Governmental Authorization; Other Consents
	 	 	75	 
	5.04 Binding Effect
	 	 	75	 






 


(i)









 





	 	 	 	 	 
	Section	 	Page	 
	 
	 	 	 	 
	5.05 Financial Statements; No Material Adverse Effect
	 	 	75	 
	5.06 Litigation
	 	 	76	 
	5.07 No Default
	 	 	76	 
	5.08 Ownership of Property; Liens
	 	 	76	 
	5.09 Environmental Compliance
	 	 	77	 
	5.10 Insurance
	 	 	78	 
	5.11 Taxes
	 	 	78	 
	5.12 ERISA Compliance
	 	 	78	 
	5.13 Subsidiaries; Equity Interests
	 	 	79	 
	5.14 Margin Regulations; Investment Company Act
	 	 	79	 
	5.15 Disclosure
	 	 	79	 
	5.16 Compliance with Laws
	 	 	80	 
	5.17
Intellectual Property; Licenses, Etc.
	 	 	80	 
	5.18 Labor Matters
	 	 	80	 
	5.19 Security Documents
	 	 	81	 
	5.20 Solvency
	 	 	82	 
	5.21 Deposit Accounts; Credit Card Arrangements
	 	 	82	 
	5.22 Brokers
	 	 	82	 
	5.23 Customer and Trade Relations
	 	 	82	 
	5.24 Material Contracts
	 	 	82	 
	5.25 Casualty
	 	 	82	 
	5.26 Anti-Terrorism Laws
	 	 	83	 
	 
	 	 	 	 
	ARTICLE VI AFFIRMATIVE COVENANTS
	 	 	84	 
	 
	 	 	 	 
	6.01 Financial Statements
	 	 	84	 
	6.02 Certificates; Other Information
	 	 	85	 
	6.03 Notices
	 	 	87	 
	6.04 Payment of Obligations
	 	 	88	 
	6.05
Preservation of Existence, Etc.
	 	 	88	 
	6.06 Maintenance of Properties
	 	 	89	 
	6.07 Maintenance of Insurance
	 	 	89	 
	6.08 Compliance with Laws
	 	 	90	 
	6.09 Books and Records; Accountants
	 	 	90	 
	6.10 Inspection Rights
	 	 	91	 
	6.11 Use of Proceeds
	 	 	92	 
	6.12 Additional Loan Parties
	 	 	92	 
	6.13 Cash Management
	 	 	92	 
	6.14 Information Regarding the Collateral
	 	 	94	 
	6.15 Physical Inventories
	 	 	95	 
	6.16 Environmental Laws
	 	 	95	 
	6.17 Further Assurances
	 	 	96	 
	6.18 Compliance with Terms of Leaseholds
	 	 	96	 
	6.19 Material Contracts
	 	 	97	 
	6.20 ERISA
	 	 	97	 
	6.21 Stock Ledger System
	 	 	98	 
	6.22 Urban Renewal
	 	 	98	 
	6.23 Post-Closing
	 	 	98	 






 


(ii)









 





	 	 	 	 	 
	Section	 	Page	 
	 
	 	 	 	 
	ARTICLE VII NEGATIVE COVENANTS
	 	 	99	 
	 
	 	 	 	 
	7.01 Liens
	 	 	99	 
	7.02 Investments
	 	 	99	 
	7.03 Indebtedness; Disqualified Stock
	 	 	99	 
	7.04 Fundamental Changes
	 	 	99	 
	7.05 Dispositions
	 	 	100	 
	7.06 Restricted Payments
	 	 	101	 
	7.07 Prepayments of Indebtedness
	 	 	102	 
	7.08 Change in Nature of Business
	 	 	102	 
	7.09 Transactions with Affiliates
	 	 	102	 
	7.10 Burdensome Agreements
	 	 	102	 
	7.11 Use of Proceeds
	 	 	103	 
	7.12 Amendment of Material Documents
	 	 	103	 
	7.13 Corporate Name; Fiscal Year
	 	 	103	 
	7.14 Deposit Accounts; Blocked Accounts; Credit Card Processors
	 	 	103	 
	7.15 Consignments
	 	 	103	 
	7.16 Inventory Book Value
	 	 	104	 
	7.17 Minimum Availability. Permit Availability at any time to be less than an
amount equal to 10% of the then applicable Loan Cap
	 	 	104	 
	 
	 	 	 	 
	ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES
	 	 	104	 
	 
	 	 	 	 
	8.01 Events of Default
	 	 	104	 
	8.02 Remedies Upon Event of Default
	 	 	107	 
	8.03 Application of Funds
	 	 	108	 
	 
	 	 	 	 
	ARTICLE IX ADMINISTRATIVE AGENT
	 	 	109	 
	 
	 	 	 	 
	9.01 Appointment and Authority
	 	 	109	 
	9.02 Rights as a Lender
	 	 	109	 
	9.03 Exculpatory Provisions
	 	 	110	 
	9.04 Reliance by Agents
	 	 	111	 
	9.05 Delegation of Duties
	 	 	111	 
	9.06 Resignation of Agents
	 	 	111	 
	9.07 Non-Reliance on Administrative Agent and Other Lenders
	 	 	112	 
	9.08 Administrative Agent May File Proofs of Claim
	 	 	112	 
	9.09 Collateral and Guaranty Matters
	 	 	113	 
	9.10 Notice of Transfer
	 	 	113	 
	9.11 Reports and Financial Statements
	 	 	114	 
	9.12 Agency for Perfection
	 	 	114	 
	9.13 Indemnification of Agents
	 	 	114	 
	9.14 Relation among Lenders
	 	 	115	 
	9.15 Defaulting Lender
	 	 	115	 
	 
	 	 	 	 
	ARTICLE X MISCELLANEOUS
	 	 	116	 
	 
	 	 	 	 
	10.01
Amendments, Etc.
	 	 	116	 
	10.02 Notices; Effectiveness; Electronic Communications
	 	 	117	 
	10.03 No Waiver; Cumulative Remedies
	 	 	118	 
	10.04 Expenses; Indemnity; Damage Waiver
	 	 	119	 
	10.05 Payments Set Aside
	 	 	120	 
	10.06 Successors and Assigns
	 	 	120	 
	10.07 Treatment of Certain Information; Confidentiality
	 	 	124	 
	10.08 Right of Setoff
	 	 	125	 
	10.09 Interest Rate Limitation
	 	 	125	 
	10.10 Counterparts; Integration; Effectiveness
	 	 	125	 
	10.11 Survival
	 	 	125	 






 


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	Section	 	Page	 
	 
	 	 	 	 
	10.12 Severability
	 	 	126	 
	10.13 Replacement of Lenders
	 	 	126	 
	10.14
Governing Law; Jurisdiction; Etc.
	 	 	127	 
	10.15 Waiver of Jury Trial
	 	 	128	 
	10.16 No Advisory or Fiduciary Responsibility
	 	 	128	 
	10.17 USA PATRIOT Act Notice
	 	 	128	 
	10.18 Foreign Asset Control Regulations
	 	 	129	 
	10.19 Time of the Essence
	 	 	129	 
	10.20 [Intentionally Omitted]
	 	 	129	 
	10.21 Press Releases
	 	 	129	 
	10.22 Additional Waivers
	 	 	129	 
	10.23 No Strict Construction
	 	 	131	 
	10.24 Attachments
	 	 	131	 
	 
	 	 	 	 
	SIGNATURES

	 	 	S-132	 






 


(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 January 15, 2009, among



(i) A.C. MOORE INCORPORATED, a Virginia 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 10.22(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 by such Person of any Store locations of any other Person, provided,
however, any acquisition by the Borrowers of twenty (20) or less retail store leases (with
or without related trade fixtures), in any Fiscal Year, in any transaction or group of
transactions, shall not be deemed an “Acquisition”, provided, further,
that notwithstanding the foregoing proviso, the acquisition by the Borrowers of more than
fifty (50) retail store leases (with or without related trade fixtures) of any Person(s) in the
aggregate following the Closing Date, in any transaction or group of transactions, shall constitute
an “Acquisition”.


 


S-1









 






“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 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 April 5,
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 other Person directly or indirectly holding 25% or more
of any class of the Equity Interests of that Person, and (iii) any other Person 25% 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 10.22(d).



 


S-2









 






“Applicable Margin” means:




(a) From and after the Closing Date until the first Adjustment Date, the percentages
set forth in Level II 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 Excess 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 continuance 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 IV (even if the
Average Excess 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.



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	LIBOR	 	 	Base Rate	 	 	Commitment	 
	Level	 	 	Average Excess Availability	 	Margin	 	 	Margin	 	 	Fee Margin	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	I		 	 	Greater than or equal to 75%
of the Loan Cap
	 	 	1.75	%	 	 	1.75	%	 	 	0.50	%
	 
	II	 	Less than 75% of the Loan
Cap but greater than or equal to 50% of the Loan Cap
	 	 	2.00	%	 	 	2.00	%	 	 	0.375	%
	 
	III	 	Less than 50% of the Loan
Cap but greater than or
equal to 25% of the Loan Cap
	 	 	2.25	%	 	 	2.25	%	 	 	0.30	%
	 
	IV	 	Less than 25% of the Loan Cap
	 	 	2.50	%	 	 	2.50	%	 	 	0.25	%






“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 90%.


 


S-3









 





“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 December 31, 2007, 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




Minus



(b) the aggregate unpaid balance of Credit Extensions to, or for the account of, the
Borrowers.



“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.



 


S-4









 





“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 Permitted 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 reasonably 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, (d) to reflect that a Default or an
Event of Default then exists, or (e) to reflect past due trade accounts payable by Borrower which
are past due more than sixty (60) days after the applicable due date (other than amounts that are
subject to a good faith dispute and appropriate reserves in conformity with GAAP have been
established on the books of the Borrower) and past due Taxes. 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 with respect to any location of Collateral located
in Landlord Lien States (unless a Collateral Access Agreement has been received by the Collateral
Agent); (ii) to the extent that the Administrative Agent agrees, in its sole discretion, to include
in transit Inventory in the Borrowing Base, customs duties, and other costs to release Inventory
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 the Administrative Agent determines could reasonably be expected to have priority
over the interests of the Collateral Agent in the Collateral; (iv) salaries, wages and benefits due
to employees of any Borrower, (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 (unless a Collateral Access Agreement has been received by the
Collateral Agent), (vii) amounts due to vendors on account of consigned goods, (viii) Cash
Management Reserves, and (ix) Bank Products Reserves.



“Average Excess 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 Permitted 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, 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 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 reasonably satisfactory to the Collateral Agent,
establishing Control (as defined in the Security Agreement) of such account by the Collateral Agent
and whereby the Blocked Account Bank maintaining such account agrees, among other things, that upon
the occurrence
and during the continuance of a Cash Dominion Event, to comply only with the instructions
originated by the Collateral Agent without the further consent of any Loan Party.


 


S-5









 





“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;




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
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.


 


S-6









 





“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 an Event of
Default, or (ii) the failure of the Borrowers to maintain Availability in an amount equal to at
least 40% of the then applicable Loan Cap for a period in excess of five (5) consecutive days, or
(iii) the failure of the Borrowers, at any time, to maintain Availability in an amount equal to at
least 30% 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 achieve Availability as required hereunder, until the Borrowers
maintain Availability in an amount equal to at least 40% of the then applicable Loan Cap for
forty-five (45) consecutive days, in which case such 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) previous occasion(s) after the
Closing Date.



“Cash Management Reserves” means such reserves as the Administrative Agent, from time
to time, determines in its Permitted 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.


 


S-7









 





“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) 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
fifty percent (50%) 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 12 consecutive months, a majority of the members of the board
of directors or other equivalent governing body of the Parent cease to be composed of
individuals (i) who were members of that board or equivalent governing body on the first day
of such period, (ii) whose election or nomination to that board or equivalent governing body
was approved by individuals referred to in clause (i) above constituting at the time of such
election or nomination at least a majority of that board or equivalent governing body or
(iii) whose election or nomination to that board or other equivalent governing body was
approved by individuals referred to in clauses (i) and (ii) above constituting at the time
of such election or nomination at least a majority of that board or equivalent governing
body (excluding, in the case of both clause (ii) and clause (iii), any individual whose
initial nomination for, or assumption of office as, a member of that board or equivalent
governing body occurs as a result of an actual or threatened solicitation of proxies or
consents for the election or removal of one or more directors by any person or group other
than a solicitation for the election of one or more directors by or on behalf of the board
of directors); or




(c) any Person or two or more Persons 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 fifty percent (50%) or more of the combined
voting power of such securities; or




(d) (i) the Parent fails at any time to own, directly or indirectly, 100% of the Equity
Interests of the Lead Borrower and Moorestown Financial, Inc., a Delaware corporation
(“Moorestown Financial”), or (ii) Moorestown Financial fails at any time to own,
directly or indirectly, 100% of the Equity Interests of Blackwood Assets, Inc. a Delaware
corporation, 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) of the
definition of Permitted Encumbrances), in each case except where such failure is as a result
of a transaction permitted by the Loan Documents.


 


S-8









 





“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.



“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 included in the Borrowing Base, and (b) a landlord of Real Estate leased by any Loan
Party at which Collateral included in the Borrowing Base is located, in each case, 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, or remove, 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.


 


S-9









 






“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 90%.




“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 and American Express and such other issuers approved by the
Administrative Agent in its Permitted Discretion) 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 permitted assigns of each of the foregoing, and (b) collectively, all of the
foregoing.


 


S-10









 





“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) one primary counsel and one local counsel in each applicable jurisdiction 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 provisions thereof (whether or not the transactions contemplated
hereby or thereby shall be consummated) (it being agreed that any such expenses incurred in
connection with the syndication of the credit facilities provided for herein shall not constitute
Credit Party Expenses unless the Lead Borrower otherwise agrees in writing), (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 Borrowers.



“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 Borrower, 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 Section 6.13(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 and Other Liabilities, 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.


 


S-11









 





“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
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 similar 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; provided, however, that “Disposition” and “Dispose”
shall not be deemed to include the issuance by the Parent of any of its Equity Interests to another
Person.



“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, 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, in any case on or prior to the date that is 91 days after the
date on which the Loans mature; 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 and (ii) with respect to any Equity Interests issued to any
employee or to any plan for the benefit of employees of the Lead Borrower 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 Lead Borrower 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 if any class of Equity Interest of
such Person that 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 Lead
Borrower 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.


 


S-12









 






“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.



“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 Borrower from a credit
card payment processor and/or credit card issuer, and in each case originated in the ordinary
course of business of such Borrower, and (ii) in each case is acceptable to the Administrative
Agent in its Permitted 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
Borrower 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 Borrower 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 unless otherwise agreed to in writing by the Administrative Agent:




(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;




(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, those Liens specified in clauses (a), (e) and (i) of the definition of
Permitted Encumbrances and Permitted Encumbrances having priority by operation of applicable
Law over the Lien of the Collateral Agent) (the foregoing not being intended to limit the
discretion of the Administrative Agent to change, establish or eliminate any Reserves on
account of any such Lien));


 


S-13









 






(d) Credit Card Receivables that are not subject to a first priority (except as
permitted in clause (c) above) 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 Permitted
Discretion to be uncertain of collection.



“Eligible Inventory” means, as of the date of determination thereof, without
duplication, items of Inventory of a Borrower that are finished goods, merchantable and readily
saleable to the public in the ordinary course deemed by the Administrative Agent in its Permitted
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 Borrowers 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 Borrower or a Borrower does not have good
and valid title thereto;




(b) Inventory that is leased by or is on consignment to a Borrower or which is
consigned by a Borrower 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
Borrower, except to the extent that the Borrowers 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 (it being understood
that Inventory located in the United
States of America, which is in transit from one location of a Borrower to another,
shall not be excluded from Eligible Inventory solely as a result of such Inventory being in
transit);


 


S-14









 






(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
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 Borrower’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 (subject only to Permitted Encumbrances having priority by
operation of applicable Law);




(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 Borrower 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 Borrower 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 in its Permitted Discretion that such Inventory shall be
deemed Eligible Inventory, and (B) such other due diligence as the Agents may reasonably
require, all of the results of the foregoing to be reasonably satisfactory to the Agents.



“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.


 


S-15









 






“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 a Loan Party 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) the incurrence by a Loan Party or any ERISA Affiliate of any liability in connection
with a withdrawal from, reorganization of (within the meaning of Section 421 of ERISA), or
insolvency (within the meaning of Section 4245 of ERISA) of, a Multiemployer Plan; (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 upon a Loan Party or any ERISA Affiliate
of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under
Section 4007 of ERISA.



“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 10.01 or Section 10.03 hereof.



“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 or overall gross
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 successor administrative agent that is organized under the laws of a jurisdiction other
than that in which any Borrower is a resident for tax purposes or 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 successor administrative agent or Foreign Lender at
the time such successor administrative agent or Foreign Lender becomes a party hereto (or
designates a new Lending Office) or is attributable to such successor administrative agent’s or
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).


 


S-16









 





“Excluded Real Estate” means the Real Estate generally known as 130 A.C. Moore Drive,
Berlin, New Jersey.



“Excluded Subsidiaries” means, collectively, Urban Renewal and Industrial Center
Management Association, LLC, a New Jersey limited liability company.




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



“Existing Credit Agreement” means that certain Amended and Restated Loan Agreement,
dated as of May 31, 2008, among (i) Wachovia Bank, National Association, as lender, and (ii) the
Parent, the Lead Borrower, Moorestown Finance, Inc., Blackwood Assets, Inc. and Urban Renewal, as
borrowers, as amended from time to time.



“Existing Facilities” means, collectively, the Existing Credit Agreement, Existing
Mortgage and the Existing ISDA.



“Existing ISDA” means that certain ISDA Master Agreement dated as of October 18, 2006
by and between Wachovia Bank, National Association and the Parent, the Lead Borrower, Moorestown
Finance, Inc., Blackwood Assets, Inc. and Urban Renewal, as amended from time to time.



“Existing Letters of Credit” means, collectively, each of the letters of credit
existing on the Closing Date and listed on Schedule 2.03.



“Existing Mortgage” means that certain Mortgage, Assignment of Rents and Security
Agreement and Financing Statement dated as of October 28, 2003 by and between Urban Renewal and
Wachovia Bank, National Association (as amended by that certain Amendment to Loan Documents dated
as of May 31, 2008 by and among Wachovia Bank, National Association and the Parent, the Lead
Borrower, Moorestown Finance, Inc., Blackwood Assets, Inc. and Urban Renewal), in each case as
amended from time to time.



“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.



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


 


S-17









 





“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 month shall generally
end on the Saturday closest to the last day of the corresponding 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 shall
generally end on the Saturday closest to the last day of each March, June, September and December
of such Fiscal Year in accordance with the fiscal accounting calendar of the Loan Parties.



“Fiscal Year” means the fiscal year of the Parent and its Subsidiaries, which fiscal
year shall generally end on the Saturday closest to the last day of December of the corresponding
calendar year in accordance with the fiscal accounting calendar of the Parent and its Subsidiaries.



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


 


S-18









 





“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 the Administrative Agent deems appropriate 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).



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




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




(b) 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 due date, or if past due for more than 60
days, as to which a good faith dispute exists and appropriate reserves in conformity with
GAAP have been established on the books of such Person);




(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;


 


S-19









 






(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. The amount of Indebtedness of any Person for purposes of clause (e) shall be deemed to be
equal to the amount of such Indebtedness, provided, however, if recourse of such
Indebtedness is limited to the property in accordance with clause (e), the amount of such
Indebtedness shall be deemed to be equal to the lesser of (i) the aggregate unpaid amount of such
Indebtedness and (ii) the fair market value of the property encumbered thereby, as determined by
such Person in good faith.




“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.



“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.


 


S-20









 





“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 fraud relating to internal controls over
financial and/or collateral reporting that involves management or other employees who have a
significant role in, the Parent’s and/or its Subsidiaries’ internal controls over financial and/or
collateral reporting, in each case as described in the Securities Laws.



“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, without duplication of any factors considered in the
Appraised Value of Inventory and without duplication of any other Reserves or items that are
otherwise addressed or excluded through eligibility criteria, such reserves as may be established
from time to time by the Administrative Agent in the Administrative Agent’s Permitted Discretion
with respect to the determination 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 Permitted
Discretion, include (but are not limited to) reserves based on:




(a) obsolescence;




(b) seasonality;




(c) Shrink;


 


S-21









 






(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. 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 reasonably 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.



“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, license, authorization and permit of, and agreement with, any Governmental
Authority, in each case whether or not having the force of law.



“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.


 


S-22









 





“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 Wells Fargo Bank in its capacity as issuer of Letters of Credit
hereunder, or any successor issuer of Letters of Credit hereunder (which successor may only be a
Lender selected by the Administrative Agent in its discretion and, so long as no Event of Defaults
exists, shall be reasonably acceptable 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,
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.



“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 $15,000,000. The Letter of
Credit Sublimit is part of, and not in addition to, the Aggregate Commitments. A permanent
reduction of the Aggregate Commitments shall not require a corresponding pro rata reduction in the
Letter of Credit Sublimit; provided, however, that if the Aggregate Commitments are reduced to an
amount less than the Letter of Credit Sublimit, then the Letter of Credit Sublimit shall be reduced
to an amount equal to (or, at Lead Borrower’s option, less than) the Aggregate Commitments.


 


S-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, other than in connection
with Permitted Dispositions.



“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, the Urban Renewal
Subordination Agreement, and any other instrument or agreement now or hereafter executed and
delivered in connection herewith, or in 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.


 


S-24









 






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



“Master Lease” means that certain Agreement of Lease dated as of
 _____, between
Urban Renewal and the Lead Borrower, relating to the premises commonly known as Block 2601, Lot
21.04, Winslow Township, New Jersey, as amended, supplemented and restated from time to time.



“Material Adverse Effect” means (a) a material adverse change in, or a material
adverse effect upon, the operations, business, properties (including, but not limited to, the
Collateral), liabilities (actual or contingent), condition (financial or otherwise) or prospects,
of the Loan Parties taken as a whole, or the Lead Borrower, or the Liens of the Collateral Agent in
the Collateral or the priority thereof; (b) a material impairment of the ability of the Loan
Parties (taken as a whole) or the Lead Borrower to perform their obligations under any Loan
Document to which they are parties; or (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. 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 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. Without limiting the foregoing, the Master Lease shall be deemed a
Material Contract.



“Material Indebtedness” means Indebtedness (other than the Obligations) of the Loan
Parties in an aggregate principal amount exceeding $3,000,000. 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 January 15, 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 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 or taxes due as a result of such transaction) paid by any Loan Party to third
parties (other than Affiliates)); and


 


S-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.



“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.



“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.


 


S-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 A.C. Moore Arts & Crafts, Inc., a Pennsylvania 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, on the date of such transaction or payment, the
applicable 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 assumption 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;


 


S-27









 






(c) The Lead Borrower shall have furnished the Administrative Agent with fifteen (15)
days’ prior written notice (or such shorter period of time as to which the Administrative
Agent may agree in writing) 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 (including balance
sheets, cash flows and income statements by month 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, and if the proceeds of any Credit Extension are
being used to finance all or any portion of such Acquisition then all of foregoing shall be
subject to the reasonable satisfaction of the Administrative Agent;




(d) If the proceeds of any Credit Extension are being used to finance all or any
portion of such Acquisition, the legal structure of the Acquisition shall be acceptable to
the Administrative Agent in its reasonable discretion;




(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, the Administrative Agent shall have received (prior to or following the consummation
of the Acquisition, but in any event prior to such inclusion) (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 Loan Party under
this Agreement;




(h) If (i) the Person which is the subject of such Acquisition will be maintained as a
Subsidiary of a Loan Party and will own assets of the type included in the Borrowing Base or
(ii) the assets acquired in such Acquisition are of the type included in the Borrowing Base
and will be transferred to a Subsidiary which is not then a Loan Party, such Subsidiary
shall have been joined as a “Borrower” hereunder (unless the Administrative Agent and the
Lead Borrower otherwise agree that such Subsidiary shall be joined as a “Guarantor”
hereunder), and, except as otherwise expressly provided herein, 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 (subject only to Permitted Encumbrances having priority by operation
of applicable Law);




(i) The total consideration paid for all such Acquisitions (whether in cash, tangible
property, notes or other property) after the Closing Date shall not exceed, in the
aggregate, the sum of $20,000,000; and




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


 


S-28









 





“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 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 or Eligible Credit Card 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. Notwithstanding the foregoing, it
shall not be within Permitted Discretion for the Administrative Agent to establish Reserves or
eligibility criteria which are duplicative of each other regardless of whether such items fall
under more than one category.




“Permitted Disposition” means any of the following:




(a) Dispositions of Inventory in the ordinary course of business;




(b) bulk sales or other Dispositions of the Inventory of a Loan Party not in the
ordinary course of business 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, fifteen percent
(15%) 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; 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;


 


S-29









 






(f) sales, transfers and Dispositions among the Loan Parties or by any Subsidiary to a
Loan Party;




(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;




(h) 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) any such sale is made for fair market value, (B) as long as a Cash
Dominion Event shall have occurred and be continuing, all 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 Agents shall have received from each such purchaser or transferee a
Collateral Access Agreement on terms and conditions reasonably satisfactory to the Agents;




(i) to the extent constituting a Disposition, Dispositions permitted pursuant to
Section 7.04;




(j) Dispositions of cash, cash equivalents and Permitted Investments described in
clauses (a) through (e) of the definition thereof, in each case on ordinary business terms;




(k) Dispositions consisting of the compromise, settlement or collection of accounts
receivable in the ordinary course of business, consistent with past practices; and




(l) other Dispositions by a Loan Party or any of its Subsidiaries not otherwise
expressly permitted pursuant to Section 7.05, provided that (i) no
Default or Event of Default then exists or would arise therefrom, (ii) the aggregate fair
market value of all assets Disposed of in reliance upon this clause (l) shall not exceed
$1,000,000 in any Fiscal Year, and (iii) as long as a Cash Dominion Event shall have
occurred and be continuing, all Net Proceeds received in connection with any such
Disposition are applied to the Obligations if then required in accordance with Section
2.05 hereof.




“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 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;




(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;


 


S-30









 






(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 are disclosed by current surveys that, in
each case, 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 (other than with respect to after-acquired property that is affixed thereto or
incorporated therein and the proceeds thereof), (ii) 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) or (f) 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
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 the Collateral Agent;




(j) landlords’ and lessors’ Liens in respect of rent not overdue for more than thirty
(30) days (other than overdue rent that is subject to a good faith dispute and which
appropriate reserves in conformity with GAAP have been established on the books of the
applicable Loan Party);




(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 precautionary UCC filings regarding “true” operating leases or,
to the extent permitted under the Loan Documents, the consignment of goods to a Loan Party;




(n) Liens on property 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;


 


S-31









 






(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 during the pendency of such
contest;




(p) any interest or title of a licensor, sublicensor, lessor or sublessor under
licenses, sublicenses, leases or subleases entered into by the Loan Parties in the ordinary
course of business and not interfering in any material respect with the business of the Loan
Parties and which would not interfere with Lenders’ rights to exercise its rights to the
Collateral;




(q) Liens (i) on cash advances in favor of the seller of any property to be acquired in
an Investment permitted pursuant to clauses (m) of the definition of Permitted Investments
to be applied against the purchase price for such Investment, (ii) consisting of an
agreement to Dispose of any property in a Permitted Disposition, in each case, solely to the
extent such Investment or Disposition, as the case may be, would have been permitted on the
date of the creation of such Lien;




(r) any subordination of the interest of any Loan Party or any Subsidiary, as lessee
under any Lease, to the Lien of any mortgage or deed of trust encumbering the interest or
title of the lessor under such Lease; and




(s) other Liens on assets other than those of the type included in the Borrowing Base
in an aggregate amount not to exceed $1,000,000 outstanding at any time;



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




“Permitted Indebtedness” means each of the following:




(a) Indebtedness outstanding on the date hereof and listed on Schedule 7.03 and
any Permitted Refinancing Indebtedness in respect thereof;




(b) Indebtedness of (i) any Loan Party to any other Loan Party, and (ii) any Subsidiary
of the Parent that is not a Loan Party owed to (A) any other Subsidiary of the Parent that
is not a Loan Party or (B) the Parent or any other Loan Party in respect of an Investment
permitted pursuant to clause (g) of the definition of Permitted Investments;
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, repair or
improvement 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 any Permitted Refinancing Indebtedness in respect thereof, provided,
however, that the aggregate principal amount of Indebtedness permitted by this
clause (c) shall not exceed $3,000,000 at any time outstanding, 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;


 


S-32









 






(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 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 in connection with the construction or improvement of Stores;




(f) [intentionally omitted];




(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 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);




(i) the Obligations;




(j) Subordinated Indebtedness;




(k) Indebtedness of the Lead Borrower or its Subsidiaries constituting obligations in
respect of purchase price or other similar adjustments in connection with Permitted
Dispositions;




(l) Indebtedness in respect of netting services, overdraft protections and similar
arrangements, in each case in connection with deposit accounts;




(m) Guarantees by any Loan Party and its Subsidiaries of any Indebtedness of any other
Loan Party permitted hereunder;




(n) Indebtedness of the Parent, consisting of the type described in clause (g) of the
definition of Indebtedness, in each case incurred in connection with the preferred stock of
the Parent which is not Disqualified Stock;




(o) unsecured Indebtedness of any Loan Party to Urban Renewal in an aggregate amount
not to exceed $30,000,000 at any time, provided, that (i) the terms and
conditions of such Indebtedness (including without limitation, the applicable interest rate,
repayment schedule and maturity date) are reasonably satisfactory to the Administrative
Agent, (ii) any such Indebtedness shall be incurred solely in connection with the mortgage
or Disposition of any Real Estate owned by Urban Renewal, (iii) the principal amount of any
such Indebtedness shall be limited to the amount of the advanced made by Urban Renewal to
such Loan Party, (iv) the repayment of any such Indebtedness shall be subject to a subordination agreement in favor of the Credit
Parties, in form and substance reasonably satisfactory to the Administrative Agent, and (v)
as long as a Cash Dominion Event shall have occurred and be continuing, all Real Estate Net
Proceeds received in connection therewith are applied to the Obligations, in accordance with
Section 2.05 hereof; and


 


S-33









 






(p) other unsecured Indebtedness of any Loan Party in an aggregate principal amount not
to exceed $1,000,000 outstanding at any time, provided, that no Event of
Default shall have occurred and be continuing at the time of the incurrence of any such
unsecured Indebtedness.




“Permitted Investments” means each of the following:




(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;




(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 (b) of this definition and (iii) has combined capital and surplus of at
least $500,000,000, 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;




(g) (i) Investments by any Loan Party and its Subsidiaries in their respective
Subsidiaries outstanding on the date hereof, (ii) additional Investments by the Parent and
its Subsidiaries (including Subsidiaries that are not Loan Parties) in Loan Parties (other
than the Parent), and (iii) additional Investments by Subsidiaries of the Loan Parties that are
not Loan Parties in other Subsidiaries that are not Loan Parties;


 


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(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 $250,000 to any individual at
any time or in an aggregate amount not to exceed $250,000 at any time outstanding, for
travel, entertainment, relocation and other 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, Investments arising out of transactions
permitted pursuant to Sections 7.01, 7.05 and 7.06;




(p) Investments in the ordinary course of business consisting of endorsements for
collection or deposit;




(q) Investments made in Urban Renewal, for ordinary course operating expenses and
capital improvements, in an aggregate amount not to exceed $500,000 at any time,
provided, that the Loan Parties shall have satisfied the Payment Conditions;




(r) Investments in the form of promissory notes or other non-cash consideration
received by any Loan Party or any of its Subsidiaries from the purchasers of assets in
connection with Permitted Dispositions; and




(s) as long as no Default or Event of Default has occurred and is continuing at the
time of the making of such Investment or would arise therefrom, other Investments in an
aggregate amount not to exceed $1,000,000 at any time outstanding.



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) and (s) 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.


 


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“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).



“Permitted Refinancing Indebtedness” means, with respect to any Person, any
refinancing, refunding, renewal or extension of any Indebtedness of such Person (or any successor
of such Person); provided that (i) the amount of such Indebtedness is not increased
at the time of such refinancing, refunding, renewal or extension except by an amount equal to a
reasonable premium or other reasonable amount paid, and fees and expenses reasonably incurred, in
connection with such refinancing and by an amount equal to any existing commitments unutilized
thereunder, and the direct or contingent obligors 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 and the interest rate
applicable to any such refinancing, refunding, renewing or extending Indebtedness does not exceed
the then applicable market interest rate.



“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.


 


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“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:




(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 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;




(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;




(e) any Disposition (including, without limitation, pursuant to any sale-leaseback
transaction) of any Real Estate owned by Urban Renewal;




(f) any mortgage financing or mortgage refinancing by Urban Renewal entered into in
connection with any Real Estate owned by Urban Renewal;




(g) the receipt by any Loan Party of any Extraordinary Receipts, without duplication of
any event set forth in clauses (a) through (f) of this definition.



“Pro Forma Availability Condition” shall mean, for any date of calculation with
respect to any transaction or payment, on the date of such transaction or payment, the Pro Forma
Availability following, and after giving effect to, such transaction or payment, will be (i) with
respect to the Payment Conditions, equal to or greater than thirty percent (30%) of the Loan Cap,
and (ii) with respect to the Restricted Payment Conditions, equal to or greater than fifty percent
(50%) of the Loan Cap.



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




“Public Lender” has the meaning specified in Section 6.02.



“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.



“Real Estate Net Proceeds” means, in connection with (i) the Disposition of any real
estate, Net Proceeds, and (ii) the mortgage of any real estate or the refinancing thereof, the
amount of such mortgage or refinancing, as the case may be, net of all payments made to release
Liens on the applicable property and all reasonable costs and expenses customary for such a
transaction.


 


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“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, (a) if there are two or
fewer Lenders, all Lenders, or (b) if there are three or more Lenders, 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
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 and Availability Reserves.



“Responsible Officer” means the chief executive officer, president, chief financial
officer or controller 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 to the extent not otherwise expressly permitted
hereunder.


 


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“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 the making such payment, and (b)
after giving effect to such transaction or payment, on the date of such transaction or payment, the
applicable Pro Forma Availability Condition has been satisfied. Prior to undertaking any
transaction or payment which is subject to the Restricted 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 assumption reasonably satisfactory to the Administrative Agent.



“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, each 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 Parent and its Subsidiaries as of that date determined in accordance
with GAAP.



“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 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. 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.


 


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“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 (including in
respect of leases or other
contracts) 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 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
reasonably satisfactory to, and 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. Notwithstanding anything to the contrary contained in the Loan
Documents, the Excluded Subsidiaries shall not constitute
Subsidiaries of the Loan Parties.



“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 similar master agreement (any
such master agreement, together with any related schedules, a “Master Agreement”), including any
such obligations or liabilities under any Master Agreement.


 


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“Swap Termination Value” means, in respect of any one or more Swap Contracts, after
taking into account the effect of any legally enforceable netting agreement relating to such Swap
Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and
termination value(s) determined in accordance therewith, such termination value(s), and (b) for any
date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market
value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily
available quotations provided by any recognized dealer in such Swap Contracts (which may include 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) $7,500,000, and (b)
the Aggregate Commitments. The Swing Line Sublimit is part of, and not in addition to, the
Aggregate Commitments.



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



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


 


S-41









 





“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 10.22(d).




“UFTA” has the meaning specified in Section 10.22(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).



“Urban Renewal” means A.C. Moore Urban Renewal, LLC, a New Jersey limited liability
company.



“Urban Renewal Subordination Agreement” means that certain Subordination Agreement,
dated as of the date hereof, among Urban Renewal, as subordinated creditor, the Loan Parties, and
the Administrative Agent, as amended or modified from time to time.




“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 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.


 


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(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.




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
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.


 


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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.


 


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(b) The following are 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): An amount equal to the sum
of (A) seventy-five percent (75%) of the remaining value of that portion of Customer Credit
Liabilities which constitutes Gift Cards that have been outstanding for less than 18 months,
and (B) one hundred percent (100%) of the remaining value of that portion of Customer Credit
Liabilities which constitutes Customer Deposits, in each case as reflected in the Borrowers’
books and records;




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




(iv) past due trade accounts (an Availability Reserve): An amount equal to one hundred
percent (100%) of the aggregate unpaid balance of all trade accounts of the Borrowers, which
are past due for more than sixty (60) days after the due date thereof (other than amounts
that are subject to a good faith dispute and appropriate reserves in conformity with GAAP
have been established on the books of Borrower), in each case as reflected in the Borrowers’
books and records;




(v) past due Taxes (an Availability Reserve): An amount equal to one hundred percent
(100%) of the aggregate unpaid balance of all Taxes of the Borrowers which are past due, in
each case as reflected in the Borrowers’ books and records;




(vi) Shrink (an Inventory Reserve);




(vii) supply Inventory (an Inventory Reserve);




(viii) plan-o-gram Inventory (an Inventory Reserve);




(ix) e-commerce Inventory (an Inventory Reserve);




(x) closing Store Inventory (an Inventory Reserve);




(xi) aged Inventory (an Inventory Reserve);




(xii) custom framing (an Inventory Reserve);




(xiii) classroom sales (an Inventory Reserve); and




(xiv) damages (an Inventory Reserve).



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


 


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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 (except that the Administrative Agent may in its sole discretion
accept later notice in respect of the initial Credit Extension on the Closing Date). 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 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.


 


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(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, 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 a 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 endeavor 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).


 


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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 endeavor
to 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 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.




(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 (x) such Letter of Credit is Cash Collateralized or
otherwise secured by back-to-back letters of credit from an issuing bank reasonably
acceptable to the L/C Issuer and the Administrative Agent and upon terms and conditions
reasonably acceptable to the L/C Issuer and the Administrative Agent on or prior to the
Letter of Credit Expiration Date or (y) 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 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;


 


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(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 $25,000, in the case of a
Commercial Letter of Credit, or $50,000, 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 received Cash Collateral or 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 Application shall specify in form and detail reasonably 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 reasonably 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 reasonably 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 reasonably 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 reasonably require.


 


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(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, endeavor to 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 endeavor to cause or have
the L/C Issuer issue 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.


 


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(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. If the Borrowers fail to so 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 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.


 


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(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 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.



(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;


 


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(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 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.


 


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(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, 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 Administrative
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 one hundred five percent (105%) of the
Outstanding Amount of all L/C Obligations, pursuant to documentation in form and substance
reasonably satisfactory to the Administrative 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 Administrative Agent determines that any funds held as
Cash Collateral are subject to any right or claim of any Person other than the Administrative 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 Administrative Agent, pay to the
Administrative 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 Administrative 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, 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 Letters 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 (whether or not such maximum
amount is then in effect under such Letter of Credit. 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 day of each month (or if such day is not a Business Day, on the next
succeeding Business Day), 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 during the existence of such Event of Default such Letter of Credit
Fees shall accrue at the Default Rate to the fullest extent permitted by applicable Laws.


 


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(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 quarterly basis in
arrears. Such fronting fees described in clause (iii) of the preceding sentence shall be due and
payable on the first day of each month (or if such day is not a Business Day, on the next
succeeding Business Day), 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. To the extent that the Administrative Agent
agrees, in its sole discretion, to include in transit Inventory in the Borrowing Base, the
Borrowers shall, upon the request of the Administrative Agent, consign to the Collateral Agent 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
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.


 


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(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
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.


 


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(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 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.


 


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(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. Notwithstanding anything to the contrary
contained herein, the Borrowers may rescind any notice of prepayment provided pursuant to this
Section 2.05(a) if such prepayment would have resulted from a refinancing of all of the
Loans hereunder, which refinancing shall not have been consummated or shall otherwise have been
delayed.



(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.
Notwithstanding anything to the contrary contained herein, the Borrowers may rescind any notice of
prepayment provided pursuant to this Section 2.05(b) if such prepayment would have resulted
from a refinancing of all of the Loans hereunder, which refinancing shall not have been consummated
or shall otherwise have been delayed.



(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.


 


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(d) After the occurrence and during the continuance of a Cash Dominion Event, the Borrowers
shall prepay the Loans in accordance with the provisions of Section 6.13. In addition,
after the occurrence and during the continuance of a Cash Dominion Event, any Net Proceeds received
by a Loan Party upon the occurrence of a Prepayment Event shall be paid over to the Administrative
Agent on receipt by the Loan Parties and shall be utilized to prepay the Loans in the order of
priority set forth in Section 2.05(e). The application of such Net Proceeds to the Loans
shall not reduce the Commitments. If no Cash Dominion Event exists (or if all Obligations then due
are paid in full during the existence of a Cash Dominion Event), then any Net Proceeds (or excess
Net Proceeds, as the case may be) shall be remitted to the operating account of the Borrowers
designated by the Lead Borrower.



(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(without any reduction in the Commitments), third, shall be
used to Cash Collateralize the remaining L/C Obligations to the extent required pursuant to
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
$5,000,000 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. Notwithstanding anything to the contrary contained herein, the Borrowers may rescind any
notice of termination or reduction provided pursuant to this Section 2.06(a) if such
termination or reduction would have resulted from a refinancing of all of the Loans hereunder,
which refinancing shall not have been consummated or shall otherwise have been delayed.



(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, 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.


 


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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.



(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 (other than any Other Liabilities) 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 the Applicable Margin 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; provided, however, that no
Commitment Fee shall accrue on the Commitment of a Defaulting Lender so long as such Lender shall
be a Defaulting Lender. 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.


 


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(b) No Early Termination Fee. In the event that (i) the Termination Date occurs, for
any reason, or (ii) the Lead Borrower elects to terminate or permanently reduce the Commitments
pursuant to Section 2.06 hereof, then in each case there shall be no prepayment or early
termination fees in connection therewith.



(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 for Base Rate Loans shall
be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed.
All other computations of fees and interest shall be made on the basis of a 360-day year and actual
days elapsed. 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.


 


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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 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.


 


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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 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).




 


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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
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.


 


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(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 out of pocket 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. As soon as practicable after any payment of Indemnified
Taxes or Other Taxes by the Borrowers to a Governmental Authority, the Lead Borrower shall deliver
to the Administrative Agent the original or a certified copy of a receipt issued by such
Governmental Authority evidencing such payment, a copy of 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.


 


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(f) Treatment of Certain Refunds. If the Administrative Agent, any Lender or the L/C
Issuer determines, in its sole reasonable discretion, 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 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.


 


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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
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 a calculation in reasonable detail of 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 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.


 


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(d) Delay in Requests. Failure or delay on the part of any Lender or the L/C Issuer
to demand compensation pursuant to 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 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. The Borrowers shall pay to each Lender, as long as
such Lender shall be required to maintain reserves 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, and provided, further, that the actual costs of such reserves
allocated to such Loan are not already included within the definition of Statutory Reserve Rate.
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:




(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.


 


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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. 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. 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, the
Borrowers may replace such Lender in accordance with Section 10.13.



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 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.




 


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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 electronic copies 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 Blank Rome LLP, 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;




(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 November 30, 2008, 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;


 


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(ix) a payoff letter from Wachovia Bank, National Association, the Parent, the
Lead Borrower, Moorestown Finance, Inc., Blackwood Assets, Inc. and Urban Renewal,
satisfactory in form and substance to the Administrative Agent, evidencing that the
Existing Facilities have been or concurrently with the Closing Date are being
terminated, all indebtedness thereunder are being paid in full (or, in the case of
obligations related to the Existing Letters of Credit, supported by a Letter of
Credit), all commitments to make advances thereunder have been terminated, and all
Liens securing obligations under the Existing Facilities have been or concurrently
with the Closing Date are being released;




(x) [intentionally omitted];




(xi) [intentionally omitted];




(xii) 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 on a Consolidated basis as of the Closing Date after
giving effect to the transactions contemplated hereby (which certificate may be
included in the certificate described in clause (vi)(D) above);




(xiii) the Security Documents, each duly executed by the applicable Loan
Parties;




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




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




(xvi) (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;




(xvii) 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 releases or
subordination agreements reasonably 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;




(xviii) (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 (subject only to Permitted
Encumbrances) 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;




(xix) Collateral Access Agreement covering all Real Estate owned by Urban
Renewal, duly executed by Urban Renewal and the applicable Loan Parties; and




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




 


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(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 $25,000,000.




(c) The Administrative Agent shall have received a Borrowing Base Certificate dated
the Closing Date, relating to the month ended on January 3, 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 in all material respects 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 month, 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 reasonable fees, charges and disbursements of
counsel to the Administrative Agent to the extent invoiced prior to or on 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 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.




 


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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 (other than copies of documents with
third-parties supplied from time to time by any Loan Party as due-diligence materials, and
not otherwise constituting Loan Documents), 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 in all material respects 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) and
(c), 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.




(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.


 


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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 Sections 4.02(a), 4.02(b), 4.02(d), 4.02(e), and
4.02(g) 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 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.


 


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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 (b) such as have been obtained or made and are in full force and
effect.



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
on a Consolidated basis 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 the Material Indebtedness and other
material liabilities, direct or contingent, of the Parent and its Subsidiaries as of the date
thereof, including liabilities for taxes, material commitments and Indebtedness, to the extent
required by GAAP.



(b) The unaudited Consolidated balance sheet of the Parent and its Subsidiaries dated November
30, 2008, and the related Consolidated statements of income or operations, Shareholders’ Equity and
cash flows for the Fiscal Month 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 on a Consolidated basis 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. Schedule 5.05 sets forth all Material
Indebtedness and other material liabilities, direct or contingent, of the Parent and their
Subsidiaries as of the date of such financial statements, including liabilities for taxes, material
commitments and Material Indebtedness, but excluding liabilities under operating leases.



(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.


 


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(e) The Consolidated balance sheet of the Parent and its Subsidiaries as at September 30,
2008, and the related Consolidated statements of income and cash flows of the Parent and its
Subsidiaries for the nine months then ended, certified by the chief financial officer of the Lead
Borrower, copies of which have been furnished to each Lender, fairly present in all material
respects the Consolidated financial condition of the Parent and its Subsidiaries as at such date
and the Consolidated results of operations of the Parent and its Subsidiaries for the period ended
on such date, all in accordance with GAAP.



(f) The Consolidated forecasted balance sheet and statements of income and cash flows of the
Parent and its Subsidiaries delivered pursuant to Section 6.01(d) 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 its future financial performance (it being understood
that actual results may vary from such forecasts and that such variations may be significant).



5.06 Litigation. There are no actions, suits, proceedings, claims or disputes pending or, to
the knowledge of the Loan Parties 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) 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, if determined
adversely, 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 Contract or any Material Indebtedness, nor, as of the Closing Date, is any other Person
that is party to any Material Contract or any Material Indebtedness in default under or with
respect thereto. No Default has occurred and is continuing or would result from the consummation
of the transactions contemplated by this Agreement or any other Loan Document.




5.08 Ownership of Property; Liens.



(a) Each of the Loan Parties and each Subsidiary 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 and each Subsidiary 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 and each of its
Subsidiaries 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
and the Loan Parties are not in default of the terms thereof except, in each case, as could not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.


 


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(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 other Permitted Encumbrances.



(d) The Loan Parties have no Investments other than Permitted Investments.



(e) The Loan Parties have no Indebtedness other than Permitted Indebtedness.




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, or as could not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect,
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; 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 knowledge of the Loan Parties, on any
property formerly owned or operated by any Loan Party or Subsidiary thereof; there is no
asbestos or asbestos-containing material on any property currently owned or operated by any
Loan Party or Subsidiary thereof; and 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, or as could not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect,
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 owned or operated by a Loan Party, 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, at all times during which such property was owned
by any Loan Party or any Subsidiary thereof, in a manner that could not reasonably be
expected to result in material liability to any Loan Party or any Subsidiary thereof.


 


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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. 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 and their Subsidiaries 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, 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 either (i) has been determined by the IRS to be qualified under Section
401(a) of the Code or (ii) has an applicable remedial amendment period that will not have ended
before the Closing Date, and, to the knowledge of the Lead Borrower, nothing has occurred which, if
known by the IRS, could reasonably be expected to prevent, or cause the loss of, such
qualification. The Loan Parties and each ERISA Affiliate have made all required contributions to
each Pension 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 Pension 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 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.


 


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5.13 Subsidiaries; Equity Interests. The Loan Parties have no Subsidiaries as of the Closing
Date 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 and Liens specified in clauses (a), (e), (i) and (l) of the
definition of Permitted Encumbrances. Except as specifically disclosed in Schedule 5.13,
as of the Closing Date 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
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 and Liens specified in clauses (a), (e), (i) and (l) of the
definition of Permitted Encumbrances. Except as set forth in Schedule 5.13, as of the
Closing Date 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 as of the Closing Date, each of which is valid and in full force and effect.




5.14 Margin Regulations; Investment 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.



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; 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 (it being understood that actual results may vary from such
projected financial information and that such variations may be significant).


 


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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 reasonably
necessary to 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 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, except for such infringement which,
either individually or in the aggregate, could not reasonably be expected to have a Material
Adverse Effect.




5.18
Labor Matters.



As of the Closing Date, 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, and at all times thereafter, there are no strikes, lockouts, slowdowns or other
labor disputes against any Loan Party or any Subsidiary thereof pending or, to the knowledge of any
Loan Party, threatened, which either individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect. The hours worked by and payments made to employees of the Loan
Parties comply with the Fair Labor Standards Act and comply in all material respect with any other
applicable federal, state, local or foreign Law dealing with such matters. No Loan Party or any of
its Subsidiaries has incurred any 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 set forth on Schedule 5.18, as of
the Closing Date no Loan Party or any Subsidiary is a party to or bound by (i) any collective
bargaining agreement, or (ii) management agreement, employment agreement, bonus, restricted stock,
stock option, or stock appreciation plan or agreement or any similar plan, agreement or
arrangement, with or for the benefit of any Person required to be named as an executive officer in
the Parent’s annual report on Form 10-K. 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 which, either individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect. 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.
No officer or director of any Loan Party who is party to an employment agreement with such Loan
Party is in violation of any term of any employment contract or proprietary information agreement
with such Loan Party which, either individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect; and 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.


 


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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. The financing statements, releases and other filings are in
appropriate form and have been or will be filed in the offices specified in the Perfection
Certificate. Upon such filings and/or the obtaining of “control,” 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) or 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 in
appropriate form are filed in the offices specified on the Perfection Certificate, 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).


 


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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 or, to the knowledge of any Loan
Party, threatened, 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 shall 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.



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 not in breach or in default in any material respect of or under
any Material Contract and have not received any notice of the intention of any other party thereto
to terminate any 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.


 


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5.26 Anti-Terrorism Laws.



(a) General. To the knowledge of the Loan Parties, none of the Loan Parties is in
violation of any Anti-Terrorism Law or engages in or conspires to engage in any transaction that
evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the
prohibitions set forth in any Anti-Terrorism Law.



(b) Executive Order No. 13224. To the knowledge of the Loan Parties, none of the Loan
Parties 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 knowledge of the Loan Parties, none of the Loan Parties or any of their respective
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.



 


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ARTICLE VI

AFFIRMATIVE COVENANTS




So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation (other
than (i) contingent indemnification obligations for which no claim has been asserted, and (ii) the
Other Liabilities) hereunder shall remain unpaid or unsatisfied, or any Letter of Credit shall
remain outstanding (except to the extent fully Cash Collateralized or supported by another letter
of credit in a manner reasonably satisfactory to the L/C Issuer and the Administrative Agent), 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 reasonably
satisfactory to the Administrative Agent:




(a) as soon as available, but in any event within ninety-five (95) days after the end
of each Fiscal Year of the Parent (commencing with the Fiscal Year ended December 2008), 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 or otherwise 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, (ii) an opinion of such
Registered Public Accounting Firm independently assessing the Loan Parties’ internal
controls over financial reporting in accordance with Item 308 of SEC Regulation S-K, PCAOB
Auditing Standard No. 2, and Section 404 of Sarbanes-Oxley, and (iii) a certification by a
Responsible Officer of the Lead Borrower to the effect that such statements fairly present
in all material respects the financial condition, results of operation, Shareholders’
Equity and cash flow of the Parent and its Subsidiaries, as of the end of such Fiscal Year,
in accordance with GAAP consistently applied throughout the period covered thereby.




(b) as soon as available, but in any event within fifty (50) days after the end of
each of the Fiscal Quarters of each Fiscal Year of the Parent (commencing with the fiscal
quarter ended December 31, 2008), 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 35 days after the end of each of the
Fiscal Months (other than the third Fiscal Month of each Fiscal Quarter) of each fiscal
year of the Parent (commencing with the Fiscal Month ending January 31, 2009), 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 and cash flows 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(d) 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 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 Month in
accordance with GAAP, subject only to normal year-end audit adjustments and the absence of
footnotes;


 


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(d) (A) as soon as available, but in any event at least 30 days before the end of each
Fiscal Year of the Parent, a draft copy of the forecast (including projected new Store
openings) prepared by management of the Lead Borrower, in form reasonably satisfactory to
the Administrative Agent, of Consolidated balance sheets and statements of income or
operations and cash flows of the Parent and its Subsidiaries on a monthly basis for the
immediately following Fiscal Year (including the fiscal year in which the Maturity Date
occurs), (B) as soon as available, but in any no later than January 31 of each Fiscal Year
of the Parent, a final version of such forecast, and (C) thereafter, a copy of any and all
revisions made to the final version of such forecast, promptly after 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 and the Required Lenders:




(a) [intentionally omitted];




(b) concurrently with the delivery of the financial statements referred to in
Sections 6.01(a) and (b) and (c) (commencing with the delivery of the financial
statements for the Fiscal Quarter ended January 3, 2009), (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 the Leases (other than common area or
other charges not constituting base rent that are the subject of a good faith dispute or
are under review by the Loan Parties), 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, and (D) a certification as to the acquisition, if any, of any additional
Intellectual Property acquired since the date of the last similar certification, and (ii)
in case of the financial statements referred to in Sections 6.01(a) and
(b), a copy of management’s discussion and analysis with respect to such financial
statements. In the event of any change in GAAP 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 (or, if such day is not a Business
Day, on the next succeeding Business Day), a Borrowing Base Certificate 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 during the continuation of a Cash Dominion Event, such Borrowing Base
Certificate 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) concurrently with the filing thereof (or 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 upon receipt, copies of any detailed audit reports, management letters or
any written 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;




(f) promptly after the same are available, copies of each annual, regular, periodic
and special reports, proxy statements, registration statements and other materials 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;



 


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




(h) [intentionally omitted];




(i) as soon as available, but in any event within 30 days after the end of each Fiscal
Year of any Loan Party (or upon the request of the Administrative Agent or its auditors,
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 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 by such Governmental Authority
regarding financial or other operational results of any Loan Party or any Subsidiary
thereof or any other matter which, if adversely determined, could reasonably 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(a), (b), or (c) or Section 6.02(e) may be delivered electronically
and if so delivered, shall be deemed to have been delivered on the date (i) on which the Lead
Borrower posts such documents, or provides a link thereto on the Lead Borrower’s website on the
Internet at the website address listed on Schedule 10.02; or (ii) on which such documents
are posted on the Lead Borrower’s behalf on an Internet or intranet website, if any, to which each
Lender and the Administrative Agent have access (whether a commercial, third-party website or
whether sponsored by the Administrative Agent); provided that: (i) the Lead Borrower shall
deliver paper copies of such documents to the Administrative Agent or any Lender that requests the
Lead Borrower to deliver such paper copies until a written request to cease delivering paper copies
is given by the Administrative Agent or such Lender and (ii) the Lead Borrower shall notify the
Administrative Agent and each Lender (by telecopier or electronic mail) of the posting of any such
documents and provide to the Administrative Agent by electronic mail electronic versions
(i.e., soft copies) of such documents. Notwithstanding anything contained herein, in every
instance the Lead Borrower shall be required to provide paper copies of the Compliance Certificates
required by Section 6.02(b) to the Administrative Agent. 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.




 


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The Loan Parties hereby acknowledge that (a) 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 (collectively, “Borrower Materials”), and (b) certain of the Lenders may
be “public-side” Lenders (i.e., Lenders that do not wish to receive material non-public
information with respect to the Loan Parties or their securities) (each, a “Public
Lender”). The Loan Parties hereby agree that so long as any Loan Party is the issuer of any
outstanding debt or equity securities that are registered or issued pursuant to a private offering
or is actively contemplating issuing any such securities they will use commercially reasonable
efforts to identify that portion of the Borrower Materials that may be distributed to the Public
Lenders and that (w) all such Borrower Materials shall be clearly and conspicuously marked “PUBLIC”
which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page
thereof; (x) by marking Borrower Materials “PUBLIC,” the Loan Parties shall be deemed to have
authorized the Administrative Agent, the L/C Issuer and the Lenders to treat such Borrower
Materials as not containing any material non-public information (although it may be sensitive and
proprietary) with respect to the Loan Parties or their securities for purposes of United States
Federal and state securities laws (provided, however, that to the extent such
Borrower Materials constitute Information, they shall be treated as set forth in Section
10.07); (y) all Borrower Materials marked “PUBLIC” are permitted to be made available through a
portion of the Platform designated “Public Investor”; and (z) the Administrative Agent shall be
entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for
posting on a portion of the Platform not designated “Public Investor.”




6.03 Notices. Promptly notify the Administrative Agent:




(a) of the occurrence of any Default or Event of Default;




(b) of any matter that has resulted or could reasonably be expected to result in a
Material Adverse Effect, including (i) 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) of any undischarged or unpaid judgments or decrees;




(d) 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 at the time of delivery of any Compliance
Certificate;




(f) of any change in the Parent’s or the Lead Borrower’s chief executive officer or
chief financial officer;




(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;




(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;


 


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(i) of the filing of any Lien for unpaid Taxes against any Loan Party;




(j) 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];




(l) of any failure by any Loan Party to pay rent 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 and such failure, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect; and




(m) of the formation or acquisition of any Subsidiary.


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 (a) all tax liabilities, assessments and governmental charges or levies upon it or its
properties or assets, (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; and (c) all Material Indebtedness, as and
when due and payable, but subject to any
subordination provisions contained in any instrument or agreement evidencing such
Indebtedness, 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, and (iv) no Lien has been filed with respect thereto, 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 within sixty (60) days after the due date thereof all trade accounts
payable incident to the operations of such Person not referred to in this Section 6.04,
above (other than amounts that are subject to a good faith dispute and appropriate reserves in
conformity with GAAP have been established on the books of Borrower). 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 and good standing under the Laws of the jurisdiction of its organization or
formation except in a transaction permitted by Section 7.04 or 7.05; (b) take all
reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary or
desirable in the normal conduct of its business, except to the extent that failure to do so could
not reasonably be expected to have a Material Adverse Effect; and (c) preserve or renew all of its
Intellectual Property, except to the extent such Intellectual Property is no longer used or useful
in the conduct of the business of the Loan Parties or the failure to do so could not reasonably be
expected to result in a Material Adverse Effect.


 


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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, except where failure to do so could not
reasonably be expected to have a Material Adverse Effect. Except where the same could not
reasonably be expected to result in a Material Adverse Effect, 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 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 noncompliance with which could
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) a non-contributing mortgage clause (regarding
improvements to real property) and lenders’ loss payable clause (regarding personal property), in
form and substance reasonably 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 (provided that, unless the applicable
Prepayment Event has occurred during the existence of a Cash Dominion Event, the Collateral Agent
shall promptly endorse over such proceeds to the Lead Borrower or as the Lead Borrower may
otherwise direct), (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, (ii) a provision to the effect that none of the Loan Parties, the Administrative
Agent, the Collateral Agent or any other party 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. Each such policy referred to in this Section 6.07(b) shall
also provide that it shall not be canceled, modified or not renewed (i) by reason of nonpayment of
premium except upon not less than thirty (30) 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, prior to the cancellation, modification or non-renewal of any such policy of
insurance, a certificate of insurance in form and substance reasonably satisfactory to the
Collateral Agent which evidences the modification, renewal or replacement of any such policy of
insurance, together with evidence reasonably satisfactory to the Collateral Agent of payment of the
premium therefor.


 


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(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, property, 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, provided, however, that so long as no Event of Default exists, the Loan
Parties shall only be required to pay or reimburse such fees and expenses for one (1) such
inspection in any twelve (12) month period.



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 and with respect
to which adequate reserves have been set aside and maintained by the Loan Parties in accordance
with GAAP; (b) such contest effectively suspends enforcement of the contested Laws, and (c) the
failure to comply therewith could not reasonably be expected to have a Material Adverse Effect.




6.09 Books and Records; Accountants.



(a) Maintain proper books of record and account (with full, true and correct entries in
accordance with GAAP 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), sufficient to allow the
preparation of financial statements in accordance with GAAP consistently applied; and 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.


 


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(b) At all times retain a Registered Public Accounting Firm which is reasonably satisfactory
to the Administrative Agent (it being agreed that PriceWaterhouseCoopers is acceptable) and
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;
provided that the Lead Borrower shall have the opportunity, upon reasonable advance
notice, to participate in any such discussions with the Loan Parties’ accountants. 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, in each case to the extent permitted by the
policies of such auditors, accountants or other third parties at such
time; provided that the Lead Borrower shall be entitled to be provided with
copies of any such financial statements, papers, accounting records or disclosures
contemporaneously therewith.



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 (each an
“Inspection”), and to discuss its affairs, finances and accounts with its directors,
officers, and Registered Public Accounting Firm (provided that the Lead Borrower shall have the
opportunity, upon reasonable advance notice, to participate in any such discussions with the Loan
Parties’ accountants), all at the expense of the Loan Parties 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 so long as no Event of Default
exists, the Loan Parties shall only be required to pay or reimburse the Administrative Agent for
fees and expenses for two (2) such Inspections in any twelve (12) month period; provided
further, however, that 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 as often as it deems necessary in its Permitted Discretion 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. The Loan Parties shall pay the fees and expenses of the
Administrative Agent or such professionals with respect to such evaluations and appraisals;
provided, however, other than as set forth in clause (y) of the following
sentences, the Loan Parties shall only be required to pay or reimburse the Administrative Agent for
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) once the Oracle “Retek” store level perpetual stock
ledger system is fully operational at all Store and warehouse locations of the Borrowers, to the
reasonable satisfaction of the Administrative Agent, the Administrative Agent my thereafter conduct
one (1) commercial finance examination, which shall be in additional to, and not a substitution
for, any other examination that the Loan Parties are required to pay or reimburse the
Administrative Agent for in accordance with this Section, (B) at any time a Default or Event of
Default shall have occurred and be continuing, (C) at any time required by applicable Law, (D) up
to two (2) inventory appraisals and two (2) commercial finance examinations each Fiscal Year, when
Availability is less than an amount equal to 40% of the Loan Cap, and (D) up to three (3) inventory
appraisals and three (3) commercial finance examinations each Fiscal Year, when Availability is
less than an amount equal to 20% of the Loan Cap.


 


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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
Borrowers, including the purchase of Inventory, in each case in the ordinary course of business,
(d) to finance Capital Expenditures of the
Borrowers, and (e) for general corporate purposes of the Loan Parties, in each case to the
extent not prohibited 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, and promptly thereafter (and in any event within fifteen (15) days) or such
longer period of time as to which the Administrative Agent may agree in writing), 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
deem appropriate for such purpose, (ii) grant a Lien to the Collateral Agent on such Person’s
assets to secure the Obligations (subject to any applicable exclusions contained in the Security
Documents), and (iii deliver to the Administrative Agent documents of the types referred to in
clauses (iii) and (iv) of Section 4.01(a) and favorable opinions of counsel to such Person
(which shall cover, among other things, the legality, validity, binding effect and enforceability
of the documentation referred to in clause (a)), and (b) if any Equity Interests or Indebtedness of
such Person are owned by or on behalf of any Loan 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) On or prior to the Closing Date:




(i) 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 which shall on, or immediately after, the
Closing Date be delivered to each depository institution listed on Schedule 5.21(a);




(ii) 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 which shall on, or immediately
after, the Closing Date be delivered to such Loan Party’s credit card clearinghouses and
processors listed on Schedule 5.21(b); and




(iii) enter into a Blocked Account Agreement reasonably satisfactory in form and
substance to the Agents with each Blocked Account Bank (collectively, the “Blocked
Accounts”).


 


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(b) Each Credit Card Notification and DDA Notification shall require (i) the ACH or wire
transfer no less frequently than daily (and whether or not there are then any outstanding
Obligations) to a Blocked Account (or a DDA approved in writing by the Administrative Agent) of
all payments due from credit card processors, and (ii) 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 after the occurrence and during the
continuance of a Cash Dominion Event 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
$10,000.00;




(v) the then entire ledger balance of each Blocked Account (net of any minimum balance,
not to exceed $10,000.00; 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) 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 all of the Obligations and (iii) the funds on
deposit in the Concentration Account shall be applied as provided in Sections 2.05(f) or
8.03, as applicable, of this Agreement; provided that, upon the termination
or expiration of a Cash Dominion Event, the Collateral Agent shall direct each Blocked Account Bank
to cease transferring funds to the Concentration Account, and all funds on deposit in the
Concentration Account (if any) shall be remitted to the Loan Parties for deposit in one or more
Blocked Accounts as instructed by the Lead Borrower. 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.


 


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(f) The Loan Parties may maintain one or more deposit accounts (the “Exempt Accounts”)
in the ordinary course of business to be used by the Loan Parties for the sole purpose of funding
payroll obligations and tax obligations and for holding funds owned by Persons other than Loan
Parties and amounts on deposit constituting tax obligations, provided, however, at
no time shall any other funds, cash, securities, property, revenue or other amounts be deposited or
held in any such Exempt Accounts. Notwithstanding anything in any Loan Document to the contrary, so
long as no Event of Default has occurred and is continuing, no Exempt Accounts shall be subject to
a Blocked Account Agreement or subject to the dominion and control of the Administrative Agent.



(g) Upon the request of the Administrative Agent during the existence of a Cash Dominion
Event, 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 (or
such shorter period as may be agreed to by the Administrative Agent in its sole discretion) of any
change in: (i) any Loan Party’s name or in any trade name used to identify it in the conduct of its
business or in the ownership of its properties; (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 facility at which Collateral owned by
it is located (including the establishment of any such new office or facility) other than a new
Store; (iii) any Loan Party’s organizational structure 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, subject only
to Permitted Encumbrances having priority by operation of applicable Law.



(b) Should any of the information on any of the Schedules hereto become inaccurate or
misleading in any material respect as a result of changes after the Closing Date, the Lead Borrower
shall advise the Administrative Agent in writing of such revisions or updates as may be necessary
or appropriate to update or correct the same. From time to time as may be reasonably requested by
the Administrative Agent, and not less than one time per Fiscal Year, the Lead Borrower shall
supplement each Schedule hereto, 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.


 


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6.15 Physical Inventories.



(a) Cause not less than one (1) physical inventory of the Stores and the distribution centers
to be conducted by the Borrowers or by a third party inventory taker(s) selected by Borrowers that
are reasonably satisfactory to the Administrative Agent (or, during an Event of Default, such third
party inventory takers as are satisfactory to the Collateral Agent) in each Fiscal Year, in each
case at the expense of the Borrowers; provided, however, that, if any
physical inventory is conducted during the last Fiscal Quarter of any Fiscal Year and no Event of
Default then exists, such physical inventory need not include inventory located at any Stores
opened during such Fiscal Quarter. Each such physical inventory shall be performed in accordance
with such methodology as is consistent with the methodology used in the immediately preceding
inventory or as otherwise may be reasonably satisfactory to the Collateral
Agent. The Collateral Agent, at the expense of the Borrowers, may observe each scheduled
physical inventory which is undertaken by or on behalf of any Borrower. The Lead Borrower, within
thirty (30) days following the completion of each such physical inventory, shall provide the
Collateral Agent with a reconciliation of the results of such inventory (as well as of any other
physical inventory undertaken by a Loan Party) and shall post such results to the Loan Parties’
stock ledgers and general ledgers, as applicable.



(b) Cause periodic cycle counts to be conducted by the Borrowers, in each case at the expense
of the Borrowers. With respect to each Store or distribution center, solely in the event that a
third party inventory taker is not being used to conduct the annual physical inventory for such
location, then (i) the Borrowers shall conduct periodic cycle counts in accordance with such
methodology as is developed by the Borrowers and reasonably acceptable to the Administrative Agent,
(ii) if the Collateral Agent so elects in the exercise of its Permitted Discretion, the Collateral
Agent, at the expense of the Borrowers, may observe each periodic cycle count, and (iii) the Lead
Borrower, within thirty (30) days following the completion of each such cycle count, shall provide
the Collateral Agent with a reconciliation of the results of such cycle count, and shall post such
results to the Loan Parties’ stock ledgers and general ledgers, as applicable.



(c) The Collateral Agent, in its discretion, if any Event of Default shall have occurred and
be continuing, may cause additional such physical inventories and periodic cycle counts 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.


 


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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 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) To the extent that the Administrative Agent agrees, in its sole discretion, to include in
transit Inventory in the Borrowing Base, upon the request of the Collateral Agent, 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.



(d) For avoidance of doubt, no Excluded Subsidiary shall be required to become a Loan Party
and none of the Equity Interests in Industrial Center Management Association, LLC, a New Jersey
limited liability company shall constitute part of the Collateral. Notwithstanding anything to the
contrary contained in the Loan Documents, the Credit Parties agree that if in connection with the
incurrence by Urban Renewal of any mortgage financing or mortgage refinancing, the proposed
mortgagee of the Real Estate owned by Urban Renewal is unwilling to enter into such mortgage
financing or mortgage refinancing unless and until the Parent’s and the Lead Borrower’s pledge to
the Collateral Agent of their Equity Interests in Urban Renewal is terminated (notwithstanding that
the Parent and the Lead Borrower used their commercially reasonable best effort to cause such
mortgagee to enter into the mortgage financing or mortgage refinancing without terminating the
Parent’s and the Lead Borrower’s pledge to the Collateral Agent), upon receipt by the Collateral
Agent from Lead Borrower and the Parent of written notice requesting that the Collateral Agent
release its pledge on the Equity Interest of Urban Renewal (including certification that they used
their commercially reasonable best effort to cause such mortgagee to enter into such mortgage
financing or mortgage refinancing without terminating the Parent’s and the Lead Borrower’s pledge
to the Collateral Agent), the Collateral Agent shall take all steps (at the cost of the Borrowers)
reasonable necessary and appropriate to terminate each such pledge.




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 to
which any Loan Party or any of its Subsidiaries is a party, keep such Leases in full force and
effect and not allow such Leases to lapse or be terminated (other than upon any stated expiration
date) or any rights to renew such Leases to be forfeited or cancelled except pursuant to an express
termination right (other than in connection with any default by a Loan Party) set forth in such
Lease or in connection with a default on the part of the landlord thereunder, 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.


 


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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 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.


 


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6.21 Stock Ledger System.



Within 90 days of the Closing Date, the Oracle “Retek” store level perpetual stock ledger
system shall be fully operational at all Store and warehouse locations of the Borrowers, to the
reasonable satisfaction of the Administrative Agent.




6.22 Urban Renewal.



Upon (i) any Disposition (including, without limitation, pursuant to any sale-leaseback
transaction) of any Real Estate owned by Urban Renewal, or (ii) the incurrence by Urban Renewal of
any mortgage financing or mortgage refinancing in connection with any Real Estate owned by Urban
Renewal, provided, that, a Cash Dominion Event shall have occurred and be
continuing, the Parent shall cause Urban Renewal to extend to one or more of the Loan Parties an
intercompany loan in an amount equal to all the Real Estate Net Proceeds received in connection
therewith, the proceeds of which shall be promptly delivered to the Administrative Agent to be
applied to the Obligations in accordance with Section 2.05 hereof.




6.23 Post-Closing.



(a) Control Agreements. On or before January 22, 2009, the Collateral Agent shall
have received a fully executed copy of (i) a securities account control agreement for account
number 496-1009375236 owned by Blackwood Assets, Inc. and maintained at Evergreen Service Company,
LLC (“Evergreen”), (ii) a securities account control agreement for account number
496-1009375240 owned by Moorestown Finance, Inc. and maintained at Evergreen, (iii) a deposit
account control agreement for account number 2000011397917 owned by the Lead Borrower and
maintained at Wachovia Bank, National Association (“Wachovia”), and (iv) a deposit account
control agreement for account number 2000037713708 owned by the Lead Borrower and maintained at
Wachovia, each in form and substance reasonably satisfactory to the Collateral Agent.



(b) Loss Payee Endorsement. On or before February 5, 2009, the Collateral Agent shall
have received a Lender’s Certificate of Insurance — Form A, for policy number
Y-630-5072A968-TIL-08, containing terms which are consistent with the ACORD — Evidence of
Commercial Property Insurance for policy number Y-630-5072A968-TIL-08, delivered to the Collateral
Agent on the Closing Date, duly executed by Travelers Property Casualty Company of America.



(c) Stock Certificates. On or before February 5, 2009, the Collateral Agent shall
have received the original certificates evidencing any stock being pledged pursuant to each Pledge
Agreement, together with undated stock powers executed in blank, in form and substance reasonably
satisfactory to the Administrative Agent, each duly executed by the applicable Loan Parties.



(d) Evidence of Account Closing. On or before February 13, 2009, the Collateral Agent
shall have received evidence, in form and substance reasonably satisfactory to the Administrative
Agent, that each of the following accounts have been terminated: (i) account number 6590000406
maintained by Blackwood Assets, Inc. at U.S. Bank Trust National Association; (ii) account number
6590000415 maintained by Moorestown Finance, Inc. at U.S. Bank Trust National Association; and
(iii) account number 6725000444 maintained by Moorestown Finance, Inc. maintained at U.S. Bank
Trust National Association.


 


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ARTICLE VII

NEGATIVE COVENANTS




So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation (other
than (i) contingent indemnification obligations for which no claim has been asserted, and (ii) the
Other Liabilities) hereunder shall remain unpaid or unsatisfied, or any Letter of Credit shall
remain outstanding (except to the extent fully Cash Collateralized or supported by another letter
of credit in a manner reasonably satisfactory to the L/C Issuer and the Administrative Agent), 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 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 any security agreement authorizing any Person thereunder to file
such financing statement; sell any of its property or 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, unless such contract provides as a condition to its effectiveness
that either (y) the Required Lenders have consented in writing or will consent in writing
concurrently with such effectiveness, 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 and any Other
Liabilities which are not by their terms then due and payable provided that the Agents
shall have received such indemnities and collateral security as they shall have required in
accordance with the terms of Section 10.11 of the Credit Agreement) 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 endeavor to cause the L/C Issuer to issue Letters of Credit under the Credit
Agreement), directly or indirectly, 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 its effectiveness that either (y) the Required Lenders have consented in writing or
will consent in writing concurrently with such effectiveness, 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 and any Other Liabilities which are not by their terms then due and payable
provided that the Agents shall have received such indemnities and collateral security as
they shall have required in accordance with the terms of Section 10.11 of the Credit
Agreement) 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 endeavor 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 of the Parent may merge or consolidate with, or dissolve or
liquidate into, a Loan Party, provided that the Loan Party shall be the
continuing or surviving Person, and provided further that if a
Borrower is party to any such merger or consolidation, such Borrower shall be the
continuing or surviving Person;



 


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(b) any Subsidiary of the Parent (other than a Borrower) may merge or consolidate
with, or dissolve or liquidate into any other Subsidiary of the Parent (other than a Loan
Party), provided that if a Loan Party is party to any such merger or
consolidation, the surviving Person shall upon the effectiveness of any such merger or
consolidation, expressly assume all the duties, liabilities and Obligations of such Loan
Party under this Agreement and the other Loan Documents pursuant to documentation in form
and substance reasonably acceptable to the Administrative Agent, and provided
further that in each case when any wholly-owned Subsidiary is merging or
consolidating with another Subsidiary, the wholly-owned Subsidiary shall be the continuing
or surviving Person;




(c) in connection with a Permitted Acquisition, any Subsidiary of a 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
(i) the Person surviving such merger or consolidation shall be a wholly-owned Subsidiary of
a Loan Party, and (ii) if a Loan Party is party to any such merger or consolidation, (A)
such Loan Party is the surviving Person or (B) the surviving Person shall upon the
effectiveness of any such merger or consolidation, expressly assume all the duties,
liabilities and Obligations of such Loan Party under this Agreement and the other Loan
Documents pursuant to documentation in form and substance reasonably acceptable to the
Administrative Agent;




(d) (i) any Subsidiary of the Parent (other than a Loan Party) may Dispose of all or
substantially all of its assets (upon voluntary liquidation or otherwise) to a Loan Party
or any one or more other Subsidiaries, (ii) any Loan Party (other than a Borrower) may
Dispose of all or substantially all of its assets (upon voluntary liquidation or otherwise)
to a Loan Party, and (iii) any Borrower may Dispose of all or substantially all of its
assets (upon voluntary liquidation or otherwise) to any other Borrower; and




(e) any Loan Party and any Subsidiary of a Loan Party may merge, dissolve, liquidate
or consolidate with any other Person in connection with a Disposition permitted pursuant to
clauses (b), (f), (g), (h) or (l) of the definition of Permitted Dispositions.



7.05 Dispositions. Make any Disposition (or enter into any agreement to make any Disposition,
unless such agreement provides as a condition to its effectiveness that either (y) the Required
Lenders have consented in writing or will consent in writing concurrently with such effectiveness,
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 and any Other Liabilities which are not by their
terms then due and payable provided that the
Agents shall have received such indemnities and collateral security as they shall have
required in accordance with the terms of Section 10.11 of the Credit Agreement) 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 endeavor to cause the L/C Issuer to issue Letters of Credit under the Credit
Agreement), except Permitted Dispositions.


 


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7.06
Restricted Payments. Declare or make, directly or indirectly, any Restricted Payment, or
incur any obligation (contingent or otherwise) to do so, or issue or sell any Equity Interests or
accept any capital contribution, 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 Subsidiary of a Loan Party may make Restricted Payments to any Loan Party
(other than Parent, unless either (i) the Restricted Payment Conditions are satisfied, or
(ii) such Restricted Payments are made to pay or reimburse the Parent for expenses incurred
in the ordinary course of the Parent’s business, as conducted on the date hereof);




(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) the Loan Parties may issue and sell Equity Interests provided (and the Loan
Parties may accept any capital contribution made in connection with any such issuance and
sale) that (i) (A) with respect to any Equity Interests, all dividends in respect of which
are to be paid (and all other payments in respect of which are to be made) shall be in
additional shares of such Equity Interests, in lieu of cash, (B) such Equity Interests
shall not be subject to redemption other than redemption at the option of the Loan Party
issuing such Equity Interests, and (C) all payments in respect of such Equity Interests are
expressly subordinated to the Obligations, and (ii) no Loan Party shall issue any
additional Equity Interests in a Subsidiary;




(d) the Loan Parties may issue and sell Equity Interests (other than Disqualified
Stock), and the Loan Parties may accept any capital contribution made in connection with
any such issuance and sale, provided that no Subsidiary of any Loan Party shall
issue any additional Equity Interests except to a Loan Party;




(e) if the Restricted Payment Conditions are satisfied, (i) the Loan Parties and each
Subsidiary may purchase, redeem or otherwise acquire Equity Interests issued by it, and
(ii) the Parent may declare or pay cash dividends to its shareholders; and




(f) to the extent constituting Restricted Payments, the Loan Parties and their
Subsidiaries may enter into transactions expressly permitted pursuant to Section
7.04.


The Loan Parties shall provide the Collateral Agent (i) with written notice of any Restricted
Payment, in each case as otherwise permitted pursuant to this Section 7.06(e), no less than
five (5) days prior to the making thereof and (ii) with written confirmation (which shall include a
fed reference number, if applicable) on the date of the making of any such Restricted Payment.




 


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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, (c)
refinancings and refundings of such Indebtedness in compliance with Section 7.03, and (d)
prepayment of intercompany Indebtedness among Loan Parties.




7.08
Change in Nature of Business.



(a) In the case of the Parent, engage in any business or activity other than (a) the direct or
indirect ownership of all outstanding Equity Interests in the other Loan Parties, (b) maintaining
its corporate existence, (c) participating in tax, accounting and other administrative activities
as the parent of the consolidated group of companies, including the Loan Parties, (d) the execution
and delivery of the Loan Documents to which it is a party and the performance of its obligations
thereunder, (e) the execution and delivery of Guarantees of the Indebtedness and other obligations
of its Subsidiaries in the ordinary course of business and the performance of its obligations
thereunder, provided that in the case of any such Guarantees of the Indebtedness, any such
Guarantee would constitute Permitted Indebtedness, and (f) activities incidental to the businesses
or activities described in clauses (a) through (e) of this Section 7.08(a).



(b) In the case of each of the Loan Parties, 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 ancillary or incidental thereto.



7.09 Transactions with Affiliates. Enter into 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 t the Administrative Agent, and that are substantially as
favorable to the Loan Parties or such Subsidiary as 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 a transaction
between or among the Loan Parties and their Subsidiaries not prohibited hereunder.



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
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 (b)
requires the grant of a Lien to secure an obligation of such Person (other than a Permitted
Encumbrance); except, in the case of each of clauses (a) and (b), for any agreement (i) in effect
at the time any Subsidiary becomes a Subsidiary of a Loan Party so long as the agreement was not
entered into solely in contemplation of such Person
becoming a Subsidiary of a Loan Party, (ii) representing Permitted Indebtedness of a
Subsidiary which is a Loan Party, and (iii) containing customary restrictions on assignments,
leases, subleases, licenses or joint venture agreements so long as such restrictions relate solely
to the assets subject thereto.


 


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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.



Subject to the proviso below, 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 could reasonably be expected to have a Material Adverse
Effect; provided, however, notwithstanding anything to the contrary contained
herein, in no event shall any Loan Party enter into or permit any material amendment or
modification or waiver to the Master Lease without the prior written consent of the Administrative
Agent, except that the Loan Parties may enter into any commercially reasonable amendment or
modification to the Master Lease in connection with any mortgage financing or mortgage refinancing
entered in to by Urban Renewal without obtaining any such consent.




7.13
Corporate Name; Fiscal Year.




(a) Change the Fiscal Year of any Loan Party, or the accounting policies or reporting
practices of the Loan Parties, except in accordance with GAAP.




(b) (i) Change its name as it appears in official filings in the state of its
incorporation or other organization (ii) change its chief executive office, principal place
of business, corporate offices or warehouses or locations at which Collateral is held or
stored (but excluding the establishment of new Store locations), or the location of its
records concerning the Collateral, (iii) change the type of entity that it is, (iv) change
its organization identification number, if any, issued by its state of incorporation or
other organization, or (e) change its state of incorporation or organization, in each case
without at least thirty (30) days prior written notice (or such shorter period as may be
agreed to by the Administrative Agent in its sole discretion) to the Collateral Agent,
provided that any such new location shall be in the continental United
States. The Loan Parties agree not to effect or permit any change referred to in this
Section 7.13(b) unless all filings have been made (or will be made concurrently
with such change) 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, subject only to Permitted Encumbrances having priority by
operation of applicable Law.




7.14
Deposit Accounts; Blocked Accounts; Credit Card Processors.




(a) Open 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 and otherwise reasonably satisfactory to the
Collateral Agent.




(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 and otherwise reasonably satisfactory to the Collateral
Agent.



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.


 


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7.16
Inventory Book Value. Permit the book value of the Borrowers’ Inventory, as specified in
the most recent balance sheet prepared and delivered to the Administrative Agent in accordance
with Section 6.01(c), at any time to be less than or equal to $90,000,000.



7.17
Minimum Availability. Permit Availability at any time to be less than an amount equal to
10% of the then applicable Loan Cap.



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 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 5.01, 6.01,
6.02(a), 6.02(b), 6.02(c), 6.03, 6.05, 6.07, 6.10,
6.11, 6.12, 6.13, 6.14, 6.21 or 6.22 or
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
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 Section 6.02 (not specified in
subsection (a) 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 (b)
above) contained in any Loan Document on its part to be performed or observed and such
failure continues for thirty (30) days; or




(e) [Intentionally Omitted]; 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 (x) any Material Indebtedness, or (y) any
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


 


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(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 (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 45
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 or any Subsidiary
thereof 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 $1,000,000 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 $250,000 or which would reasonably likely result
in a Material Adverse Effect; or


 


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(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 or any other Person contests in writing 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 (other than an immaterial portion of the
Collateral not of the type included in the Borrowing Base, as determined by the
Administrative Agent in its Permitted Discretion), 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,
any Loan Party 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




(q) Breach of Contractual Obligation. Any Loan Party or any Subsidiary
thereof fails to make any payment when due (whether by scheduled maturity, required
prepayment, acceleration, demand, or otherwise) in respect of any Material Contract or
fails to observe or perform any other 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, or to permit the counterparty
to such Material Contract to terminate such Material Contract; or




(r) Indictment. The indictment of any Loan Party or any Subsidiary thereof,
under any federal, state, municipal, and other 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; 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.


 


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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 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.


 


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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 payable pursuant to Section 10.04 and amounts payable under
Article III) 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 payable
pursuant to Section 10.04 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), 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;




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;



 


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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. 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 obtain such actual knowledge or receive 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 fifteen (15) days prior 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, in consultation with the
Lead Borrower, 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, and shall, unless an Event of
Default has occurred and is continuing at the time of such appointment, be reasonably acceptable to
the Lead Borrower (whose consent shall not be unreasonably withheld or delayed). 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 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 such resignation shall nonetheless become effective in accordance with such
notice and (1) the retiring Agent shall be discharged from its duties and obligations hereunder and
under the other Loan Documents (except that in the case of any Collateral held by the Collateral
Agent on behalf of the Lenders or the L/C Issuer under any of the Loan Documents, the retiring
Collateral Agent shall continue to hold such collateral security until such time as a successor
Collateral Agent is appointed) and (2) all payments, communications and determinations provided to
be made by, to or through the Administrative Agent shall instead be made by or to each Lender and
the L/C Issuer directly, until such time as the Required Lenders appoint a successor Administrative
Agent as provided for above in this Section. 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 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.


 


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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 and Wells Fargo Bank as L/C Issuer. 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 L/C Issuer and Swing Line Lender, (b) the
retiring L/C Issuer and Swing Line Lender shall be discharged from all of its duties and
obligations hereunder or under the other Loan Documents, and (c) 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 the retiring L/C Issuer to
effectively assume the obligations of the retiring L/C Issuer with respect to such Letters of
Credit.



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(h), 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 any Other Liabilities which are not by their terms then due and
payable provided that the Agents shall have received such indemnities and
collateral security as they shall have required in accordance with the terms of Section
10.11 to protect the Credit Parties against any obligations that may thereafter arise
with respect to such Other Liabilities) and the expiration or termination of all Letters of
Credit (except to the extent fully Cash Collateralized or supported by another letter of
credit in a manner reasonably satisfactory to the L/C Issuer and the Administrative Agent),
(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 on such property that is permitted by
clause (h) of 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. In each case as specified in this Section 9.09, the Agents will, 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.



 


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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;




(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.


 


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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
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.




 


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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 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;


 


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(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).




10.02
Notices; Effectiveness; Electronic Communications.




(a) Notices 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 and other 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 sent by hand or overnight courier service, or mailed by certified or registered mail, shall
be deemed to have been given when received; notices 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 delivered through electronic communications to the extent provided in subsection (b) below, shall be
effective as provided in such subsection (b).


 


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(b) Electronic Communications. Notices and other 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.




(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.


 


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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 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, liabilities or related expenses
(x) are determined by a court of competent jurisdiction by final and nonappealable judgment
to have resulted from the gross negligence or willful misconduct of such Indemnitee or
(y) result from a claim brought by a Borrower or any other Loan Party against an Indemnitee
for breach in bad faith of such Indemnitee’s obligations hereunder or under any other Loan
Document, if the Borrowers or such Loan Party has obtained a final and nonappealable
judgment in its favor on such claim as determined by a court of competent jurisdiction.




(c) 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).


 


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(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.




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 subsection 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.


 


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(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) an 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 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


 


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(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 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.


 


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Any agreement or instrument pursuant to which a Lender sells such a participation shall
provide that such Lender shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement; provided that such agreement
or instrument may provide that such Lender will not, without the consent of the Participant, agree
to any amendment, waiver or other modification described in 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 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
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.


 


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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), (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.



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, provided
that, in the case of information received from any Loan Party or any Subsidiary after the date
hereof, such information will be deemed confidential unless clearly identified at the time of
delivery as non-confidential. Any Person required to maintain the confidentiality of Information
as provided in this Section shall be considered to have complied with its obligation to do so if
such Person has exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.



Each of the 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.


 


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10.08 Right of Setoff. If an Event of Default shall have occurred and be continuing, 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 or any such Affiliate, regardless of the
adequacy of the Collateral, and irrespective of whether or not such Lender or the L/C Issuer or any
such Affiliate 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 or any such Affiliate 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 obtaining knowledge
of 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
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 or electronic transmission
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 (other than any Obligation in respect
of the Other Liabilities) 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.


 


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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 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 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.



Any Lender being replaced pursuant to this Section 10.13 shall (i) execute and deliver an
Assignment and Assumption with respect to such Lender’s Commitment and outstanding Loans and
participations in L/C Obligations and (ii) deliver any Notes issued to it which evidence such Loans
to the Lead Borrower or the Administrative Agent. Each Lender hereby grants to the Administrative
Agent an irrevocable power of attorney (which power is coupled with an interest) to execute and
deliver, on behalf of such Lender as assignor, any Assignment and Assumption necessary to
effectuate any assignment of such Lender’s interests hereunder in respect of circumstances
contemplated by this Section 10.13.


 


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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 PARTY HERETO HEREBY 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 PARTY HERETO HEREBY 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 IT WILL BRING ANY
ACTION ASSERTING ANY CLAIM OR COUNTERCLAIM AGAINST ANY CREDIT PARTY ARISING UNDER OR IN CONNECTION
WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SOLELY IN A COURT OF THE STATE OF NEW YORK SITTING
IN NEW YORK COUNTY OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE EXCLUSIVE JURISDICTION
OF SUCH COURTS WITH RESPECT TO ANY SUCH ACTION; PROVIDED, HOWEVER, THAT, IN THE
EVENT THAT ANY CREDIT PARTY BRINGS AN ACTION ASSERTING A CLAIM AGAINST ANY LOAN PARTY ARISING UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN A COURT OF COMPETENT
JURISDICTION OTHER THAN ONE OF THOSE REFERENCED HEREIN, SUCH LOAN PARTY SHALL BE ENTITLED TO ASSERT
ANY COMPULSORY COUNTERCLAIM RELATED THERETO IN THE SAME COURT.


 


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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.



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.


 


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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 [Intentionally Omitted].  



10.21 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.




10.22
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
(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 (except as
expressly set forth in such recission, waiver, amendment or modification), 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.


 


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(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. Notwithstanding the foregoing, so long as no Event of
Default exists, any Loan Party may make payments to any other Loan Party on account of 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


 


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 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 be entitled to contribution and indemnification from, and be reimbursed by, each of
the other Borrowers in an amount, for each of such other Borrowers, equal to a fraction of such
Accommodation Payment, the numerator of which fraction is such other Borrower’s Allocable Amount
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.




10.23 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.



10.24 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.



[Remainder of page intentionally left blank]





 


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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:



A.C. MOORE INCORPORATED

as Lead Borrower and a Borrower

 	 
	 	By:  	/s/ Rodney B. Schriver
 	 
	 	 	Name:  	Rodney B. Schriver 	 
	 	 	Title:  	Vice President 	 



 


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Guarantors:




A.C. MOORE ARTS & CRAFTS, INC.

 	 
	 	By:  	/s/ Rodney B. Schriver
 	 
	 	 	Name:  	Rodney B. Schriver 	 
	 	 	Title:  	Vice President 	 
	 	

MOORESTOWN FINANCE, INC.

 	 
	 	By:  	/s/ Rodney B. Schriver
 	 
	 	 	Name:  	Rodney B. Schriver 	 
	 	 	Title:  	Vice President 	 
	 	

BLACKWOOD ASSETS, INC.

 	 
	 	By:  	/s/ Rodney B. Schriver
 	 
	 	 	Name:  	Rodney B. Schriver 	 
	 	 	Title:  	Vice President 	 



 


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	 	Agents:



WELLS FARGO RETAIL FINANCE, LLC,

as Administrative Agent and Collateral Agent

 	 
	 	By:  	/s/ Cory Loftus
 	 
	 	 	Name:  	Cory Loftus 	 
	 	 	Title:  	Vice President 	 



 


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	 	Lenders:




WELLS FARGO RETAIL FINANCE, LLC,

as Lender and Swing Line Lender

 	 
	 	By:  	/s/ Cory Loftus
 	 
	 	 	Name:  	Cory Loftus 	 
	 	 	Title:  	Vice President 	 



 


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