Exhibit 10.1








CREDIT AGREEMENT


Dated as of August 27, 2009


among


Syms
Corp,

as the Lead Borrower


For


The Borrowers Named Herein


The Facility Guarantors


Bank
of America, N.A.

as Administrative Agent and Collateral Agent

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

	
 

	
44


	
 

	
1.06

	
 

	
Letter of Credit
 Amounts

	
 

	
44


	
 

	
 

	
 

	
 

	
 

	
 


	
ARTICLE II
 THE COMMITMENTS AND CREDIT EXTENSIONS

	
 

	
44


	
 

	
 

	
 


	
 

	
2.01

	
 

	
Committed
 Loans; Reserves

	
 

	
44


	
 

	
2.02

	
 

	
Committed
 Borrowings, Conversions and Continuations of Committed Loans

	
 

	
45


	
 

	
2.03

	
 

	
Letters of
 Credit

	
 

	
47


	
 

	
2.04

	
 

	
Intentionally
 Omitted

	
 

	
54


	
 

	
2.05

	
 

	
Prepayments

	
 

	
54


	
 

	
2.06

	
 

	
Termination
 or Reduction of Commitments

	
 

	
55


	
 

	
2.07

	
 

	
Repayment of
 Committed Loans

	
 

	
56


	
 

	
2.08

	
 

	
Interest

	
 

	
56


	
 

	
2.09

	
 

	
Fees

	
 

	
56


	
 

	
2.10

	
 

	
Computation
 of Interest and Fees

	
 

	
57


	
 

	
2.11

	
 

	
Evidence of
 Debt

	
 

	
57


	
 

	
2.12

	
 

	
Payments
 Generally; Administrative Agent’s Clawback

	
 

	
57


	
 

	
2.13

	
 

	
Sharing of
 Payments by Lenders

	
 

	
59


	
 

	
2.14

	
 

	
Settlement
 Amongst Lenders

	
 

	
59


	
 

	
 

	
 

	
 

	
 

	
 


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

	
 

	
60


	
 

	
 

	
 


	
 

	
3.01

	
 

	
Taxes

	
 

	
60


	
 

	
3.02

	
 

	
Illegality

	
 

	
62


	
 

	
3.03

	
 

	
Inability to
 Determine Rates

	
 

	
62


	
 

	
3.04

	
 

	
Increased
 Costs; Reserves on LIBO Rate Loans

	
 

	
62


	
 

	
3.05

	
 

	
Compensation
 for Losses

	
 

	
64


	
 

	
3.06

	
 

	
Mitigation
 Obligations; Replacement of Lenders

	
 

	
64


	
 

	
3.07

	
 

	
Survival

	
 

	
65


	
 

	
3.08

	
 

	
Designation
 of Lead Borrower as Borrowers’ Agent

	
 

	
65


	
 

	
 

	
 

	
 

	
 

	
 


	
ARTICLE IV
 CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

	
 

	
65


	
 

	
 

	
 


	
 

	
4.01

	
 

	
Conditions
 of Initial Credit Extension

	
 

	
65


	
 

	
4.02

	
 

	
Conditions
 to all Credit Extensions

	
 

	
69


	
 

	
 

	
 

	
 

	
 

	
 


	
ARTICLE V
 REPRESENTATIONS AND WARRANTIES

	
 

	
70


	
 

	
 

	
 


	
 

	
5.01

	
 

	
Existence,
 Qualification and Power

	
 

	
70


	
 

	
5.02

	
 

	
Authorization;
 No Contravention

	
 

	
70


	
 

	
5.03

	
 

	
Governmental
 Authorization; Other Consents

	
 

	
70


	
 

	
5.04

	
 

	
Binding
 Effect

	
 

	
70


	
 

	
5.05

	
 

	
Financial
 Statements; No Material Adverse Effect

	
 

	
71


	
 

	
5.06

	
 

	
Litigation

	
 

	
71





(i)







	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
5.07

	
 

	
No Default

	
 

	
71


	
 

	
5.08

	
 

	
Ownership of
 Property; Liens

	
 

	
72


	
 

	
5.09

	
 

	
Environmental
 Compliance

	
 

	
72


	
 

	
5.10

	
 

	
Insurance

	
 

	
73


	
 

	
5.11

	
 

	
Taxes

	
 

	
73


	
 

	
5.12

	
 

	
ERISA
 Compliance

	
 

	
73


	
 

	
5.13

	
 

	
Subsidiaries;
 Equity Interests

	
 

	
74


	
 

	
5.14

	
 

	
Margin
 Regulations; Investment Company Act

	
 

	
74


	
 

	
5.15

	
 

	
Disclosure

	
 

	
74


	
 

	
5.16

	
 

	
Compliance
 with Laws

	
 

	
75


	
 

	
5.17

	
 

	
Intellectual
 Property; Licenses, Etc.

	
 

	
75


	
 

	
5.18

	
 

	
Labor
 Matters

	
 

	
75


	
 

	
5.19

	
 

	
Security
 Documents

	
 

	
75


	
 

	
5.20

	
 

	
Solvency

	
 

	
76


	
 

	
5.21

	
 

	
Deposit
 Accounts; Credit Card Arrangements

	
 

	
76


	
 

	
5.22

	
 

	
Brokers

	
 

	
77


	
 

	
5.23

	
 

	
Customer and
 Trade Relations

	
 

	
77


	
 

	
5.24

	
 

	
Material
 Contracts

	
 

	
77


	
 

	
5.25

	
 

	
Casualty

	
 

	
77


	
 

	
 

	
 

	
 

	
 

	
 


	
ARTICLE VI
 AFFIRMATIVE COVENANTS

	
 

	
77


	
 

	
 

	
 


	
 

	
6.01

	
 

	
Financial
 Statements

	
 

	
77


	
 

	
6.02

	
 

	
Certificates;
 Other Information

	
 

	
78


	
 

	
6.03

	
 

	
Notices

	
 

	
81


	
 

	
6.04

	
 

	
Payment of
 Obligations

	
 

	
82


	
 

	
6.05

	
 

	
Preservation
 of Existence, Etc.

	
 

	
82


	
 

	
6.06

	
 

	
Maintenance
 of Properties

	
 

	
82


	
 

	
6.07

	
 

	
Maintenance
 of Insurance

	
 

	
82


	
 

	
6.08

	
 

	
Compliance
 with Laws

	
 

	
83


	
 

	
6.09

	
 

	
Books and
 Records; Accountants

	
 

	
84


	
 

	
6.10

	
 

	
Inspection
 Rights

	
 

	
84


	
 

	
6.11

	
 

	
Use of
 Proceeds

	
 

	
85


	
 

	
6.12

	
 

	
Additional
 Loan Parties

	
 

	
85


	
 

	
6.13

	
 

	
Cash
 Management

	
 

	
85


	
 

	
6.14

	
 

	
Information
 Regarding the Collateral

	
 

	
87


	
 

	
6.15

	
 

	
Physical
 Inventories

	
 

	
87


	
 

	
6.16

	
 

	
Environmental
 Laws

	
 

	
88


	
 

	
6.17

	
 

	
Further
 Assurances

	
 

	
88


	
 

	
 

	
 

	
Compliance
 with Terms of Leaseholds

	
 

	
88


	
 

	
6.19

	
 

	
Material
 Contracts

	
 

	
89


	
 

	
 

	
 

	
 

	
 

	
 


	
ARTICLE VII
 NEGATIVE COVENANTS

	
 

	
89


	
 

	
 

	
 


	
 

	
7.01

	
 

	
Liens

	
 

	
89


	
 

	
7.02

	
 

	
Investments

	
 

	
89


	
 

	
7.03

	
 

	
Indebtedness;
 Disqualified Stock

	
 

	
89


	
 

	
7.04

	
 

	
Fundamental
 Changes

	
 

	
89


	
 

	
7.05

	
 

	
Dispositions

	
 

	
90


	
 

	
7.06

	
 

	
Restricted
 Payments

	
 

	
90


	
 

	
7.07

	
 

	
Prepayments
 of Indebtedness

	
 

	
90


	
 

	
7.08

	
 

	
Change in
 Nature of Business

	
 

	
90


	
 

	
7.09

	
 

	
Transactions
 with Affiliates

	
 

	
90





(ii)







	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
7.10

	
 

	
Burdensome
 Agreements

	
 

	
91


	
 

	
7.11

	
 

	
Use of
 Proceeds

	
 

	
91


	
 

	
7.12

	
 

	
Amendment of
 Material Documents

	
 

	
91


	
 

	
7.13

	
 

	
Fiscal Year

	
 

	
91


	
 

	
7.14

	
 

	
Deposit
 Accounts; Credit Card Processors

	
 

	
91


	
 

	
7.15

	
 

	
Financial
 Covenant

	
 

	
91


	
 

	
 

	
 

	
 

	
 

	
 


	
ARTICLE VIII
 EVENTS OF DEFAULT AND REMEDIES

	
 

	
91


	
 

	
 

	
 


	
 

	
8.01

	
 

	
Events of
 Default

	
 

	
91


	
 

	
8.02

	
 

	
Remedies
 Upon Event of Default

	
 

	
94


	
 

	
8.03

	
 

	
Application
 of Funds

	
 

	
95


	
 

	
 

	
 

	
 

	
 

	
 


	
ARTICLE IX
 ADMINISTRATIVE AGENT

	
 

	
96


	
 

	
 

	
 


	
 

	
9.01

	
 

	
Appointment
 and Authority

	
 

	
96


	
 

	
9.02

	
 

	
Rights as a
 Lender

	
 

	
96


	
 

	
9.03

	
 

	
Exculpatory
 Provisions

	
 

	
97


	
 

	
9.04

	
 

	
Reliance by
 Agents

	
 

	
98


	
 

	
9.05

	
 

	
Delegation
 of Duties

	
 

	
98


	
 

	
9.06

	
 

	
Resignation
 of Agents

	
 

	
98


	
 

	
9.07

	
 

	
Non-Reliance
 on Administrative Agent and Other Lenders

	
 

	
99


	
 

	
9.08

	
 

	
Intentionally
 Omitted

	
 

	
99


	
 

	
9.09

	
 

	
Administrative
 Agent May File Proofs of Claim

	
 

	
99


	
 

	
9.10

	
 

	
Collateral
 and Guaranty Matters

	
 

	
100


	
 

	
9.11

	
 

	
Notice of
 Transfer

	
 

	
100


	
 

	
9.12

	
 

	
Reports and
 Financial Statements

	
 

	
100


	
 

	
9.13

	
 

	
Agency for
 Perfection

	
 

	
101


	
 

	
9.14

	
 

	
Indemnification
 of Agents

	
 

	
101


	
 

	
9.15

	
 

	
Relation
 among Lenders

	
 

	
102


	
 

	
9.16

	
 

	
Defaulting
 Lender

	
 

	
102


	
 

	
 

	
 

	
 

	
 

	
 


	
ARTICLE X
 MISCELLANEOUS

	
 

	
103


	
 

	
 

	
 


	
 

	
10.01

	
 

	
Amendments,
 Etc.

	
 

	
103


	
 

	
10.02

	
 

	
Notices;
 Effectiveness; Electronic Communications

	
 

	
104


	
 

	
10.03

	
 

	
No Waiver;
 Cumulative Remedies

	
 

	
106


	
 

	
10.04

	
 

	
Expenses;
 Indemnity; Damage Waiver

	
 

	
106


	
 

	
10.05

	
 

	
Payments Set
 Aside

	
 

	
107


	
 

	
10.06

	
 

	
Successors
 and Assigns

	
 

	
108


	
 

	
10.07

	
 

	
Treatment of
 Certain Information; Confidentiality

	
 

	
111


	
 

	
10.08

	
 

	
Right of
 Setoff

	
 

	
112


	
 

	
10.09

	
 

	
Interest Rate Limitation

	
 

	
112


	
 

	
10.10

	
 

	
Counterparts;
 Integration; Effectiveness

	
 

	
112


	
 

	
10.11

	
 

	
Survival

	
 

	
112


	
 

	
10.12

	
 

	
Severability

	
 

	
113


	
 

	
10.13

	
 

	
Replacement
 of Lenders

	
 

	
113


	
 

	
10.14

	
 

	
Governing
 Law; Jurisdiction; Etc.

	
 

	
113


	
 

	
10.15

	
 

	
Waiver of
 Jury Trial

	
 

	
114


	
 

	
10.16

	
 

	
No Advisory
 or Fiduciary Responsibility

	
 

	
115


	
 

	
10.17

	
 

	
USA PATRIOT
 Act Notice

	
 

	
115


	
 

	
10.18

	
 

	
Foreign
 Asset Control Regulations

	
 

	
115


	
 

	
10.19

	
 

	
Time of the
 Essence

	
 

	
116


	
 

	
10.20

	
 

	
Intentionally
 Omitted

	
 

	
116





(iii)







	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
10.21

	
 

	
Press
 Releases

	
 

	
116


	
 

	
10.22

	
 

	
Additional
 Waivers

	
 

	
116


	
 

	
10.23

	
 

	
No Strict
 Construction

	
 

	
118


	
 

	
10.24

	
 

	
Attachments

	
 

	
118


	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
SIGNATURES

	
 

	
S-119





(iv)







SCHEDULES


	
  

 	
  

 	
  

 	
  

 
	
  

 	
 1.01

 	
 Borrowers

 
	
  

 	
 1.02

 	
 Guarantors

 
	
  

 	
 2.01

 	
 Commitments
 and Applicable Percentages

 
	
  

 	
 5.01

 	
 Loan Parties
 Organizational Information

 
	
  

 	
 5.05

 	
 Supplement
 to Interim Financial Statements

 
	
  

 	
 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

 
	
  

 	
 5.18

 	
 Collective
 Bargaining Agreements

 
	
  

 	
 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

 	
 Note

 
	
  

 	
 C

 	
 Compliance
 Certificate

 
	
  

 	
 D

 	
 Assignment
 and Assumption

 
	
  

 	
 E

 	
 Borrowing
 Base Certificate

 
	
  

 	
 F

 	
 Credit Card
 Notification

 


(v)






CREDIT AGREEMENT


          This
CREDIT AGREEMENT (“Agreement”) is entered into as of August 27, 2009 among 


          Syms
Corp, a New Jersey corporation (the “Lead Borrower”), 


          the
Persons named on Schedule 1.01 hereto (collectively, the “Borrowers”),


          the
Facility Guarantors;


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


          Bank
of America, N.A., as Administrative Agent and Collateral Agent. 


          The
Borrowers have requested that the Lenders provide a revolving credit facility,
and the Lenders have indicated their willingness to lend and the L/C Issuer has
indicated its willingness to issue Letters of Credit, 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:


          “Accelerated
Borrowing Base Delivery Event” means either (i) the occurrence and continuance
of any Event of Default, or (ii) the failure of the Borrowers to maintain
Availability at least equal to twenty percent (20%) of the Loan Cap. For
purposes of this Agreement, the occurrence of an Accelerated Borrowing Base
Delivery Event shall be deemed continuing at the Administrative Agent’s option
(i) so long as such Event of Default has not been waived, and/or (ii) if the
Accelerated Borrowing Base Delivery Event arises as a result of the Borrowers’
failure to achieve Availability as required hereunder, until Availability has
exceeded twenty percent (20%) of the Loan Cap for sixty (60) consecutive
calendar days, in which case an Accelerated Borrowing Base Delivery Event shall
no longer be deemed to be continuing for purposes of this Agreement.


          “Acceptable
Document of Title” means, with respect to any Inventory, a tangible, negotiable
bill of lading, airway bill or other Document (as defined in the UCC) that (a)
is issued by a common carrier (i) which is not an Affiliate of the Approved
Foreign Vendor or any Loan Party and (ii) which is in actual possession of such
Inventory, (b) is issued to the order of the Borrower or, if so requested by
the Collateral Agent, to the order of the Collateral Agent, (c) names the
Collateral Agent as a notify party and bears a conspicuous notation on its face
of the Collateral Agent’s security interest therein, (d) is not subject to any
Lien (other than in favor of the Collateral Agent), and (e) is on terms
otherwise reasonably acceptable to the Collateral Agent.


          “ACH”
means automated clearing house transfers.


          “Accommodation
Payment” as defined in Section 10.22(d). 


-1-





          “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 secondary
obligation incurred or to be incurred, or (d) arising out of the use of a credit
or charge card or information contained on or for use with the card.


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


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


          “Adjusted
LIBO Rate” means, with respect to any LIBO Borrowing for any Interest Period,
an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of
one percent (1%)) equal to (a) the LIBO Rate for such Interest Period
multiplied by (b) the Statutory Reserve Rate. The Adjusted LIBO Rate will be
adjusted automatically as to all LIBO Borrowings then outstanding as of the
effective date of any change in the Statutory Reserve Rate.


          “Adjustment
Date” means the first day of each Fiscal Quarter, commencing November 29, 2009.


          “Administrative
Agent” means Bank of America in its capacity as administrative agent under any
of the Loan Documents, or any successor administrative agent.


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


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


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


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


          “Agent
Parties” shall have the meaning specified in Section 10.02(c).


          “Aggregate
Commitments” means the Commitments of all the Lenders which, on the Closing
Date, is an aggregate of $75,000,000.


          “Agreement”
means this Credit Agreement.


-2-





          “Allocable
Amount” has the meaning specified in Section 10.22(d).


          “Applicable
Lenders” means the Required Lenders, all affected Lenders, or all Lenders, as
the context may require.


          “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)
 From and after 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 Daily Availability during the Fiscal
 Quarter ended immediately preceding such Adjustment Date; provided,
 however, that notwithstanding anything to the contrary set forth herein, if
 Availability is at any time less than the amount calculated pursuant to
 clause (e) of the Borrowing Base, then the Applicable Margin otherwise in
 effect shall immediately increase by 0.50% and shall remain increased until
 the subsequent Adjustment Date; provided, further that upon the
 occurrence of an Event of Default, interest shall accrue at the Default Rate;
 provided further if any financial statement required to be delivered
 pursuant to Section 6.01 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 statement or Borrowing Base
 Certificate otherwise proves to be false or incorrect such that the
 Applicable Margin would have been higher than was in effect during any
 period, without constituting a waiver of any Default or Event of Default
 arising as a result thereof, interest due under this Agreement shall be
 immediately recalculated at such higher rate for any applicable periods and
 shall be due and payable on demand.

 






	
  

 	
  

 	
  

 	
  

 
	
 Level

 	
 Average Daily 

 Availability

 	
 LIBOR

 Margin

 	
 Base Rate Margin

 
	
 I

 	
 Less than $25,000,000

 	
 3.50%

 	
 2.50%

 
	
 II

 	
 Equal to or greater than $25,000,000 but less than or equal to
 $50,000,000

 	
 3.25%

 	
 2.25%

 
	
 III

 	
 Greater than $50,000,000

 	
 3.00%

 	
 2.00%

 



          “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 Committed Loans and the obligation of the L/C Issuer to make L/C
Credit Extensions have been terminated pursuant to Section 2.06 or 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.


-3-





          “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 Committed Loans
which are LIBOR Rate Loans minus 0.75%, and (b) with respect to Standby
Letters of Credit, a per annum rate equal to the Applicable Margin for
Committed Loans which are LIBOR Rate Loans.


          “Appraisal
Percentage” means 85%.


          “Appraised
Value” means at any time (a) 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, or (b) with respect to the Borrowers’
Eligible Real Estate, the fair market value of the Borrowers’ Eligible Real
Estate as set forth in the most recent appraisal of the Borrowers’ Eligible
Real Estate by an independent appraiser engaged by the Administrative Agent,
which appraisal shall assume, among other things, a marketing time of not
greater than twelve (12) months or less than three (3) months; provided that
the Appraised Value of Eligible Real Estate shall in no event exceed the
maximum amount of the Obligations at any time specified to be secured by a
Mortgage thereon.


          “Approved
Foreign Vendor” means a foreign vendor of a Loan Party which (a) is located in
any country acceptable to the Collateral Agent in its discretion, (b) has
received timely payment or performance of all obligations owed to it by the
Loan Parties, (c) has not asserted and has no right to assert any reclamation,
repossession, diversion, stoppage in transit, Lien or title retention rights in
respect of such Inventory, and (d), if so requested by the Collateral Agent,
has entered into and is in full compliance with the terms of an agreement with
the Collateral Agent in form and substance satisfactory to the Collateral
Agent.


          “Approved
Fund” means any Fund that is administered or managed by (a) a Lender, (b) an
Affiliate of a Lender (c) an entity or an Affiliate of an entity that
administers or manages a Lender, or (d) the same investment advisor or an
advisor under common control with such Lender, Affiliate or advisor, as
applicable.


          “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 D 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 Lead
Borrower and its Subsidiaries for the fiscal year ended February 28, 2009, and
the related consolidated statements of income or operations, Shareholders’
Equity and cash flows for such fiscal year of the Lead Borrower and its
Subsidiaries, including the notes thereto.


-4-





          “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 the Committed Loans and the L/C Obligations to,
or for the account of, the Borrowers.


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


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


          “Availability
Reserves” means, without duplication of any other Reserves or items that are
otherwise addressed or excluded through eligibility criteria, such reserves as
the Administrative Agent from time to time determines in its reasonable discretion
as being appropriate (a) to reflect the impediments to the Agents’ ability to
realize upon the Collateral, (b) to reflect claims and liabilities that the
Administrative Agent determines will need to be satisfied in connection with
the realization upon the Collateral, (c) to reflect criteria, events,
conditions, contingencies or risks which adversely affect any component of the
Borrowing Base, or the assets, business, financial performance or financial
condition of any Loan Party, or (d) to reflect that a Default or an Event of
Default then exists. Without limiting the generality of the foregoing,
Availability Reserves may include, in the Administrative Agent’s reasonable
discretion, (but are not limited to) reserves based on: (i) rent; (ii) 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, claims of the PBGC and other Taxes which may have priority over the
interests of the Collateral Agent in the Collateral; (iv) salaries, wages and
benefits due to employees of any Borrower, (v) Customer Credit Liabilities,
(vi) reserves for reasonably anticipated changes in the Appraised Value of
Eligible Inventory between appraisals, (vii) amounts due to vendors on account
of consigned goods, (ix) warehousemen’s or bailee’s charges and other Permitted
Encumbrances which may have priority over the interests of the Collateral Agent
in the Collateral, (x) Cash Management Reserves, (xi) Bank Products Reserves,
(xii) Realty Reserves, and (xiiii) royalties payable in respect of licensed
merchandise.


          “Average
Daily Availability” shall mean the average daily Availability for the immediately
preceding Fiscal Quarter (based on Availability at the close of business on
each day during such Fiscal Quarter).


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


          “Bank
Products” means any services or facilities provided to any Loan Party by the
Administrative Agent, any Lender, or any of their respective Affiliates,
including, without limitation, on account of (a) Swap Contracts and (b)
leasing, but excluding Cash Management Services.


-5-





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


          “Banker’s
Acceptance” means a time draft or bill of exchange or other deferred payment
obligation relating to a Commercial Letter of Credit which has been accepted by
the Issuing Lender.


          “Base
Rate” means for any day a fluctuating rate per annum equal to the highest of
(a) the rate of interest in effect for such day as publicly announced from time
to time by Bank of America as its “prime rate”; (b) the Federal Funds Rate for
such day, plus 0.50%; and (c) the LIBO Rate for a one-month interest period as
determined on such day, plus 1.0%. The “prime rate” is a rate set by Bank of
America based upon various factors including Bank of America’s costs and
desired return, general economic conditions and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above, or below
such announced rate. Any change in the Base Rate due to a change in Bank of
America’s “prime rate”, the Federal Funds Rate or the LIBO Rate shall be
effective on the effective date of such change in Bank of America’s prime rate,
the Federal Funds Rate or the LIBO Rate, respectively.


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


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


          “Blocked
Account Agreement” means with respect to an account established by a Loan
Party, an agreement, in form and substance satisfactory to the Collateral
Agent, establishing control (as defined in Section 9-104 of the UCC) of such
account by the Collateral Agent and whereby the bank maintaining such account
agrees, 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.


          “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.


          “Borrower
Materials” has the meaning specified in Section 6.02.


          “Borrowers”
has the meaning specified in the introductory paragraph hereto.


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


	
  

 	
  

 
	
  

 	
           (a)
 the face amount of Eligible Credit Card Receivables multiplied by 85%;

 
	
  

 	
  

 
	
  

 	
           plus

 
	
  

 	
  

 
	
  

 	
           (b)
 the Cost of Eligible Inventory, net of Inventory Reserves, multiplied by the
 Appraisal Percentage of the Appraised Value of Eligible Inventory;

 
	
  

 	
  

 
	
  

 	
           plus

 
	
  

 	
  

 
	
  

 	
           (c)
 with respect to any Eligible Letter of Credit, the Appraisal Percentage of
 the Appraised Value of the Inventory supported by such Eligible Letter of
 Credit, multiplied by the Cost of such Inventory when completed, net of
 Inventory Reserves;

 


-6-









	
  

 	
  

 
	
  

 	
           plus

 
	
  

 	
  

 
	
  

 	
           (d)
 100% of all Eligible Cash on Hand, provided that Eligible Cash on Hand
 included in the Borrowing Base may not be withdrawn from the deposit account
 at Administrative Agent, thereby reducing the Borrowing Base, unless and
 until the Lead Borrower furnishes the Administrative Agent with (i) notice of
 such intended withdrawal and (ii) a Borrowing Base Certificate as of the date
 of such proposed withdrawal reflecting that, after giving effect to such
 withdrawal, no Overadvance or Default or Event of Default will result;

 
	
  

 	
  

 
	
  

 	
           plus

 
	
  

 	
  

 
	
  

 	
           (e)
 the least of (i) $18,750,000, (ii) the Real Estate Advance Rate multiplied by
 the Appraised Value of Eligible Real Estate, and (iii) the Real Estate Cap;

 
	
  

 	
  

 
	
  

 	
           minus

 
	
  

 	
  

 
	
  

 	
           (f)
 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 such Person during such period.


          “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 Bank of America, 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).


-7-








          “Cash
Dominion Event” means either (i) the occurrence and continuance of any Event of
Default, or (ii) the failure of the Borrowers to maintain Availability of at
least twenty percent (20%) of the Loan Cap. For purposes of this Agreement, the
occurrence of a Cash Dominion Event shall be deemed continuing (i) so long as
such Event of Default has not been waived, and/or (ii) if the Cash Dominion
Event arises as a result of the Borrowers’ failure to achieve Availability as
required hereunder, until Availability has exceeded twenty percent (20%) of the
Loan Cap for sixty (60) consecutive days, in which case a Cash Dominion Event
shall no longer be deemed to be continuing for purposes of this Agreement; provided that a Cash Dominion Event shall
be deemed continuing (even if an Event of Default is no longer continuing
and/or Availability exceeds the required amount for sixty (60) consecutive
days) at all times after a Cash Dominion Event has occurred and been
discontinued on two (2) occasions after the Closing Date. The termination of a
Cash Dominion Event as provided herein shall in no way limit, waive or delay
the occurrence of a subsequent Cash Dominion Event in the event that the
conditions set forth in this definition again arise. 


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


          “Cash
Management Services” means any one or more of the following types or services
or facilities provided to any Loan Party by the Administrative Agent or any
Lender or any of their respective 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 card processing services,
(e) purchase cards, and (f) credit or debit cards. 


          “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. 


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


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


	
 

	
 


	
 

	
          (a)
any “person” or “group” (as such terms are used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, but excluding any employee benefit
plan of such person or its subsidiaries, and any person or entity acting in
its capacity as trustee, agent or other fiduciary or administrator of any
such plan) other than Marcy Syms 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 25% or more of the
Equity Interests of the Lead Borrower entitled to vote for members of the
board of directors or equivalent governing body of the Lead Borrower on a
fully-diluted basis (and taking into account  





-8-







	
 

	
 


	
 

	
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 Lead Borrower
 cease to be composed of individuals (i) who were members of that board or
 equivalent governing body on the first day of such period, (ii) whose
 election or nomination to that board or equivalent governing body was
 approved by individuals referred to in clause (i) above constituting at the
 time of such election or nomination at least a majority of that board or
 equivalent governing 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 (other than Marcy Syms)
 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 Lead Borrower,
 or control over the Equity Interests of the Lead Borrower entitled to vote
 for members of the board of directors or equivalent governing body of the
 Lead Borrower 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 25% or more of the combined voting power of
 such securities; or 


	
 

	
 


	
 

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


	
 

	
 


	
 

	
          (e)
 the Lead Borrower fails at any time to own, directly or indirectly, 100% of
 the Equity Interests of each other Loan Party free and clear of all Liens
 (other than the Liens in favor of the Collateral Agent), except where such
 failure is as a result of a transaction permitted by the Loan Documents. 


	
 

	
 


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





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


          “Collateral”
means any and all “Collateral” or “Mortgaged Property” 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 Agents executed by (a) a bailee or other Person in possession
of Collateral, and (b) any landlord of Real Estate leased by any Loan Party,
pursuant to which such Person (i) acknowledges the Collateral Agent’s Lien on
the Collateral, (ii) releases such Person’s Liens on the Collateral held by
such


-9-






Person or
located on such Real Estate, (iii) provides the Collateral Agent with access to
the Collateral held by such bailee or other Person or located in or on such Real
Estate, (iv) as to any landlord, provides the Collateral Agent with a
reasonable time to sell and dispose of the Collateral from such Real Estate,
and (v) makes such other agreements with the Collateral Agent as the Agents may
reasonably require. 


          “Collateral
Agent” means Bank of America, acting in such capacity for its own benefit and
the ratable benefit of the other Credit Parties. 


          “Commercial
Letter of Credit” means any letter of credit or similar instrument (including,
without limitation, banker’s acceptances) 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 and (b) purchase participations in L/C
Obligations, 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. 


          “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 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 2.01(a), which, if in writing, shall be substantially in the
form of Exhibit A. 


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


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


          “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. 


          “Consolidated
EBITDA” means, at any date of determination, an amount equal to Consolidated
Net Income of the Lead Borrower and its Subsidiaries on a Consolidated basis
for the most recently completed Measurement Period, plus (a) the following to
the extent deducted in calculating such Consolidated Net Income: (i)
Consolidated Interest Charges, (ii) the provision for Federal, state, local and
foreign income Taxes, (iii) depreciation and amortization expense and (iv)
other non-recurring expenses reducing such Consolidated Net Income which do not
represent a cash item in such period or any future period (in each case of or
by the Lead Borrower and its Subsidiaries for such Measurement Period), minus 


-10-






(b) the
following to the extent included in calculating such Consolidated Net Income:
(i) Federal, state, local and foreign income tax credits and (ii) all non-cash
items increasing Consolidated Net Income (in each case of or by the Lead
Borrower and its Subsidiaries for such Measurement Period), all as determined
on a Consolidated basis in accordance with GAAP. 


          “Consolidated
Fixed Charge Coverage Ratio” means, at any date of determination, the ratio of
(a) (i) Consolidated EBITDA for such period minus (ii) Capital Expenditures
made during such period, minus (iii) the aggregate amount of Federal, state,
local and foreign income taxes paid in cash during such period to (b) the sum
of (i) Debt Service Charges plus (ii) the aggregate amount of all Restricted
Payments, in each case, of or by the Lead Borrower and its Subsidiaries for the
most recently completed Measurement Period, all as determined on a Consolidated
basis in accordance with GAAP. 


          “Consolidated
Interest Charges” means, for any Measurement Period, the sum of (a) all
interest, premium payments, debt discount, fees, charges and related expenses
in connection with borrowed money (including capitalized interest) or in
connection with the deferred purchase price of assets, in each case to the
extent treated as interest in accordance with GAAP, including, without
limitation, all commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers’ acceptance financing and net costs
under Swap Contracts, but excluding any non-cash or deferred interest financing
costs, (b) all interest paid or payable with respect to discontinued operations
and (c) the portion of rent expense with respect to such period under Capital
Lease Obligations that is treated as interest in accordance with GAAP minus (d)
interest income during such period (excluding any portion of interest income
representing accruals of amounts received in a previous period), in each case
of or by the Lead Borrower and its Subsidiaries for the most recently completed
Measurement Period, all as determined on a Consolidated basis in accordance
with GAAP. 


          “Consolidated
Net Income” means, as of any date of determination, the net income of the Lead
Borrower and its Subsidiaries for the most recently completed Measurement
Period, all as determined on a Consolidated basis in accordance with GAAP,
provided, however, that there shall be excluded (a) extraordinary gains and
extraordinary losses for such Measurement Period, (b) the income (or loss) of
such Person during such Measurement Period in which any other Person has a
joint interest, except to the extent of the amount of cash dividends or other
distributions actually paid in cash to such Person during such period, (c) the
income (or loss) during such Measurement Period of any Subsidiary of such
Person accrued prior to the date (i) it becomes a Subsidiary of such Person,
(ii) it is merged into or consolidated with such Person or any of its
Subsidiaries or (iii) its assets are acquired by such Person or any of its
Subsidiaries, and (d) the income of any direct or indirect Subsidiary of a Person
to the extent that the declaration or payment of dividends or similar
distributions by that Subsidiary of that income is not at the time permitted by
operation of the terms of its Organization Documents or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary, except that the Lead Borrower’s equity in any
net loss of any such Subsidiary for such Measurement Period shall be included
in determining Consolidated Net Income. 


          
“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. 


          “Convert”,
“Conversion” and “Converted” each refer to a conversion of
Committed Loans of one Type into Committed Loans of the other Type. 


-11-






          “Cost”
means the lower of cost or market value of Inventory on a first-in, first-out
basis based on the inventory retail method, 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 and/or the
Borrowers’ stock ledger. 


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


          “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) 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 Committed Borrowing and (b) an
L/C Credit Extension. 


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


          “Credit
Party Expenses” means, without limitation, (a) all reasonable out-of-pocket
expenses incurred by the Agents and their respective Affiliates, in connection
with this Agreement and the other Loan Documents, including without limitation
(i) the reasonable fees, charges and disbursements of (A) one primary counsel
for the Agents and one local counsel in each applicable jurisdiction, (B)
outside consultants for the Agents, (C) appraisers, (D) commercial finance
examinations, and (E) all such reasonable out-of-pocket expenses incurred
during any workout, restructuring or negotiations in respect of the
Obligations, (ii) in connection with (A) the syndication of the credit
facilities provided for herein, (B) 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), (C) 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 (D) 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 in connection with
the enforcement or protection of its rights under the Loan Documents, or in
connection with the Credit Extensions made hereunder, including all such
out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Credit Extensions, 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 (absent a conflict of
interest in which case the Credit Parties may engage and be reimbursed for
additional counsel), one outside consultant and one financial advisor, in each
case representing or advising all such Credit Parties.  


          “Customer
Credit Liabilities” means at any time, the aggregate remaining value at such
time of (a) outstanding gift certificates and gift cards of the Borrowers
entitling the holder thereof to use all or a 


-12-






portion of the
certificate or gift card to pay all or a portion of the purchase price for any
Inventory, and (b) outstanding merchandise credits of the Borrowers. 


          “Customs
Broker Agreement” means an agreement in form and substance satisfactory to the
Agents among a Borrower, a customs broker or other carrier, and the Collateral
Agent, in which the customs broker 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. 


          “Debt
Service Charges” means for any Measurement Period, the sum of (a) Consolidated
Interest Charges paid or required to be paid for such Measurement Period, plus
(b) principal payments made or required to be made on account of Indebtedness
(excluding the Obligations and any Synthetic Lease Obligations but including,
without limitation, Capital Lease Obligations) for such Measurement Period, in
each case determined on a Consolidated basis in accordance with GAAP. 


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


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


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


          “Defaulting
Lender” means any Lender that (a) has failed to fund any portion of the
Committed Loans or participations in L/C Obligations 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, 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 L/C
Issuer has a good faith belief 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 or become the
subject of a bankruptcy, insolvency or similar proceeding. 


          “Disposition”
or “Dispose” means the sale, transfer, license, lease or other disposition
(including any sale and leaseback transaction and any sale, transfer, license
or other disposition of (whether in one 


-13-






transaction or
in a series of transactions) of any property (including, without limitation,
any Equity Interests) by any Person (or the granting of any option or other
right to do any of the foregoing), including any sale, assignment, transfer or
other disposal, with or without recourse, of any notes or accounts receivable
or any rights and claims associated therewith (other than an assignment for
purposes of collection). 


          “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, on or prior to the date that is 91 days after the date on which the
Committed 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. 


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


          “Domestic
Subsidiary” means any Subsidiary that is organized under the laws of the United
States of America, any State thereof or the District of Columbia (excluding,
for the avoidance of doubt, any Subsidiary organized under the laws of Puerto
Rico or any other territory). 


          “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 and the L/C Issuer, 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, (i) “Eligible Assignee” shall not include a Loan Party or any of the
Loan Parties’ Affiliates or Subsidiaries, (ii) a competitor of a Loan Party or
any of its Subsidiaries shall not be deemed an “Eligible Assignee” under any
circumstances except after the occurrence of an Event of Default under Section
8.01(a) or (f) and (iii) a Loan Party’s decision not to consent to an
assignment to a Person all or substantially all of whose investments consist of
distressed debt shall not be deemed unreasonable. 


          “Eligible
Cash on Hand” means cash of a Borrower from time to time deposited in a DDA or
investment or securities account in the name of a Loan Party maintained with
Bank of America 


-14-






(excluding any
amounts on deposit in the Cash Collateral Account or in any other escrow,
special purpose or restricted account, such as an account specifically designated
for payroll or sales taxes), which DDA is subject to a first priority perfected
security interest in favor of the Collateral Agent. 


          “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 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. Except as otherwise agreed by the Administrative Agent, any Credit
Card Receivable included within any of the following categories shall not
constitute an Eligible Credit Card Receivable: 


	
 

	
 


	
 

	
          (a)
 any Credit Card Receivable which does 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); 


	
 

	
 


	
 

	
          (d)
 Credit Card Receivables that are not subject to a first priority security
 interest in favor of the Collateral Agent (it being the intent that
 chargebacks in the ordinary course by such 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 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; 





-15-







	
 

	
 


	
 

	
          (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
 reasonable 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, that in each case,
except as otherwise agreed by the Administrative Agent, comply with each of the
representations and warranties respecting Inventory made by the Borrowers in
the Loan Documents, and that are 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 as to which a Borrower
 does not have good and valid title; 


	
 

	
 


	
 

	
          (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 (i) Inventory in transit between such owned
 or leased locations, or (ii) Inventory with respect to which the Borrowers
 have furnished to the Administrative Agent (A) 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 (B)
 a Collateral Access Agreement executed by the Person owning any such location
 on terms reasonably acceptable to the Administrative Agent; 


	
 

	
 


	
 

	
          (d)
 Inventory that is located in a distribution center leased by a Borrower
 unless the applicable lessor has delivered to the Collateral Agent a
 Collateral Access Agreement; 


	
 

	
 


	
 

	
          (e)
 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 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 not in compliance with all standards imposed by any
 Governmental Authority having regulatory authority over such Inventory, its
 use or sale, or (v) are bill-and-hold goods; 


	
 

	
 


	
 

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


	
 

	
 


	
 

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





-16-







	
 

	
 


	
 

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


	
 

	
 


	
 

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





          “Eligible
Letter of Credit” means, as of any date of determination thereof, a Commercial
Letter of Credit which supports the purchase of Inventory, (i) for which
Inventory no documents of title have then been issued; (ii) which Inventory
otherwise would constitute Eligible Inventory, (iii) which Commercial Letter of
Credit has an expiry within sixty (60) days of the date of initial issuance of
such Commercial Letter of Credit, and (iv) which Commercial Letter of Credit
provides that it may be drawn only after the Inventory is completed and after an
Acceptable Document of Title has been issued for such Inventory reflecting a
Borrower or the Collateral Agent as consignee of such Inventory; provided that
the Administrative Agent may, in its discretion, exclude any particular
Inventory from the definition of “Eligible Letter of Credit” in the event the
Administrative Agent determines that such Inventory is subject to any Person’s
right or claim which is (or is capable of being) senior to, or pari passu with,
the Lien of the Collateral Agent (such as, without limitation, a right of
stoppage in transit) or may otherwise adversely impact the ability of the
Collateral Agent to realize upon such Inventory. 


          “Eligible
Real Estate” means Real Estate which, except as otherwise agreed by the
Administrative Agent, satisfies all of the following conditions: 


	
 

	
 


	
 

	
          (a)
 A Loan Party owns such Real Estate in fee simple absolute; 


	
 

	
 


	
 

	
          (b)
 The Administrative Agent shall have received evidence that all actions that
 the Administrative Agent may reasonably deem necessary or appropriate in
 order to create valid first and subsisting Liens (subject only to those Liens
 permitted by Section 6.02 hereof which have priority over the Lien of the
 Collateral Agent by operation of Law or otherwise reasonably acceptable to
 the Administrative Agent) on the property described in the Mortgages have
 been taken. 


	
 

	
 


	
 

	
          (c)
 The Administrative Agent shall have received an appraisal (based upon
 Appraised Value) of such Real Estate complying with the requirements of
 FIRREA by a third- party appraiser reasonably acceptable to the
 Administrative Agent and otherwise in form and substance reasonably
 satisfactory to the Administrative Agent; and 


	
 

	
 


	
 

	
          (d)
 The Real Estate Eligibility Requirements have been satisfied. 





          “Environmental
Compliance Reserve” means, with respect to Eligible Real Estate, any reserve
which the Agents, from time to time in their discretion establish as estimates
of amounts that are 


-17-







reasonably
likely to be expended by any Loan Party in order for such Loan Party and its
operations and property (a) to comply with any notice from a Governmental
Authority asserting non-compliance with Environmental Laws, or (b) to correct
any such non-compliance with Environmental Laws or to provide for any
Environmental Liability. 


          “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 or disposal or presence of any Hazardous
Materials, (c) exposure to any Hazardous Materials, (d) the release or
threatened release of any Hazardous Materials into the environment or (e) any
contract, agreement or other consensual arrangement pursuant to which liability
is assumed or imposed with respect to any of the foregoing. 


          “Equipment”
has the meaning set forth in the Security Agreement. 


          “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 any
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 Borrower within the meaning of Section 414(b) or (c) of
the Code (and Sections 414(m) and (o) of the Code for purposes of provisions
relating to Section 412 of the Code). 


          “ERISA
Event” means (a) a Reportable Event with respect to a Pension Plan; (b) a
withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan subject
to Section 4063 of ERISA during a plan year in which it was a substantial
employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations
that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a
complete or partial withdrawal by the Borrower or any ERISA Affiliate from a
Multiemployer Plan or notification that a Multiemployer Plan is in
reorganization; (d) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Sections 4041 or 4041A of
ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the
imposition of any liability under Title IV of ERISA, other than for PBGC
premiums due but not delinquent under 


-18-





Section 4007
of ERISA and other than periodic contribution requirements, upon the Borrower
or any ERISA Affiliate. 


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


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


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


          “Existing
Credit Agreement” means that certain Amended and Restated Loan and Security
Agreement dated as of June 5, 2009, as amended and in effect, among the Lead
Borrower, SYL, LLC and Israel Discount Bank of New York, as lender. 


          “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 other Credit Parties, in form 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 Bank of America on such day on such
transactions as determined by the Administrative Agent. 


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


-19-





          “FIRREA”
means the Financial Institutions Reform, Recovery and Enforcement Act of 1989,
as amended from time to time. 


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


          “Fiscal
Quarter” means any fiscal quarter of any Fiscal Year, which quarters shall
generally end on the Saturday closest to the last day of each May, August,
November and February of such Fiscal Year in accordance with the fiscal
accounting calendar of the Loan Parties. 


          “Fiscal
Year” means any period of twelve consecutive months ending on the Saturday
closest to the last day of February of any fiscal year. 


          “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. 


          “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 supranational bodies such as the European Union or the European Central Bank).



          “Guarantee”
means, as to any Person, any (a) any obligation, contingent or otherwise, of
such Person guaranteeing or having the economic effect of guaranteeing any
Indebtedness or other obligation payable or performable by another Person (the
“primary obligor”) in any manner, whether directly or indirectly, and including
any obligation of such Person, direct or indirect, (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or
other obligation, (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 


-20-





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), or (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); provided, however, that the term “Guarantee shall not include the
endorsement of instruments for deposit or collection in the ordinary course of
business. 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 each Subsidiary of the Lead Borrower (other than any CFC) set forth on
Schedule 1.02 hereto and each other Subsidiary of the Lead Borrower that shall
be required to execute and deliver a Facility Guaranty pursuant to 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), banker’s
 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); 

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

 	
           (f)
 All Attributable Indebtedness of such Person; 

 
	
  

 	
  

 
	
  

 	
           (g)
all obligations of such Person to purchase, redeem, retire, defease or
otherwise make any payment in respect of any Equity Interest in such Person
or any other Person (including, without limitation, Disqualified Stock), 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  

 


-21-









	
  

 	
  

 
	
  

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

 



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


          “Indemnified
Taxes” means Taxes other than Excluded Taxes.


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


          “Information”
has the meaning specified in Section 10.07. 


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


          “Interest
Payment Date” means, (a) as to any Committed Loan other than a Base Rate Loan,
the last day of each Interest Period applicable to such Committed Loan and the
Maturity Date; provided, however, that if any Interest Period for a LIBO Rate
Loan exceeds three months, the respective dates that fall every three months
after the beginning of such Interest Period shall also be Interest Payment
Dates; and (b) as to any Base Rate Loan, the first Business Day of each month
and the Maturity Date. 


          “Interest
Period” means, as to each LIBO Rate Loan, the period commencing on the date
such LIBO Rate Loan is disbursed or Converted to or continued as a LIBO Rate
Loan and ending on the date one, two, three or six 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 

 


-22-









	
  

 	
  

 
	
  

 	
           (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 Committed Borrowing initially shall be the date on which
such Committed Borrowing is made and thereafter shall be the effective date of
the most recent Conversion or continuation of such Committed Borrowing. 


          “Internal
Control Event” means a material weakness in, or fraud that involves management
or other employees who have a significant role in, the Lead Borrower’s and/or
its Subsidiaries’ internal controls over financial 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 Reserves”
means such reserves as may be established from time to time by the
Administrative Agent in the Administrative Agent’s discretion with respect to
the determination of the salability, at retail, of the Eligible Inventory or
which reflect such other factors as affect the market value of the Eligible
Inventory. Without limiting the generality of the foregoing, Inventory Reserves
may, in the Administrative Agent’s discretion, include (but are not limited to)
reserves based on: 


	
  

 	
  

 
	
  

 	
           (a)
 Obsolescence;

 
	
  

 	
  

 
	
  

 	
           (b)
 Seasonality;

 
	
  

 	
  

 
	
  

 	
           (c)
 Shrink;

 
	
  

 	
  

 
	
  

 	
           (d)
 Imbalance; 

 
	
  

 	
  

 
	
  

 	
           (e)
 Change in Inventory character;

 
	
  

 	
  

 
	
  

 	
           (f)
 Change in Inventory composition;

 
	
  

 	
  

 
	
  

 	
           (g)
 Change in Inventory mix; 

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

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

 



          “Investment”
means, as to any Person, any direct or indirect acquisition or investment by
such Person, whether by means of (a) the purchase or other acquisition of
Equity Interests of another Person, (b) a loan, advance or capital contribution
to, Guarantee or assumption of debt of, or purchase or other acquisition of any
other debt or interest in, another Person, or (c) any Acquisition, or (d) any
other 


-23-





investment of
money or capital in order to obtain a profitable return. For purposes of
covenant compliance, the amount of any Investment shall be the amount actually
invested, without adjustment for subsequent increases or decreases in the value
of such Investment. 


          “IRS”
means the United States Internal Revenue Service. 


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


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


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


          “Landlord
Lien State” means such state(s) in which a landlord’s claim for rent may have
priority over the lien of the Collateral Agent in any of the Collateral. 


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


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


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


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


          “L/C
Issuer” means Bank of America in its capacity as issuer of Letters of Credit
hereunder. 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. 


-24-






          “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 not owned by it for any period of time. 


          “Lender”
has the meaning specified in the introductory paragraph hereto. 


          “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 Banker’s Acceptance, each Standby Letter of Credit and
each Commercial Letter of Credit issued hereunder. 


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


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


          “Letter
of Credit Fee” has the meaning specified in Section 2.03(i). 


          “Letter
of Credit Sublimit” means an amount equal to $10,000,000. 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. 


          “LIBO
Borrowing” means a Committed 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
Bank of America and with a term equivalent to such Interest Period would be
offered by Bank of America’s London Branch to major banks in the London
interbank eurodollar market 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 


-25-





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.



          “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 Laws as a creditor of the Loan Parties with respect to the
realization on the Collateral, including (after the occurrence and during the
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
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
and (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
Credit Card Notifications, the Security Documents, the Facility Guaranty, and
any other instrument or agreement now or hereafter executed and delivered in
connection herewith, or in connection with any transaction arising out of any
Cash Management Services and Bank Products provided by any Lender or any of its
Affiliates, each as amended and in effect from time to time. 


          “Loan
Parties” means, collectively, each Borrower and each Guarantor. 


          “Material
Adverse Effect” means (a) a material adverse change in, or a material adverse
effect on, the operations, business, assets, properties, liabilities (actual or
contingent) or condition (financial or otherwise) of the Borrowers and their
Subsidiaries, taken as a whole; (b) a material impairment of the rights and
remedies of the Agents under any Loan Documents, or of the ability of any Loan
Party to perform its obligations under any Loan Document to which it is a
party; or (c) 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 contract to which such Person
is a party material to the business, condition (financial or otherwise),
operations, performance or properties of such Person. 


          “Material
Indebtedness” means Indebtedness (other than the Obligations) of the Loan
Parties in an aggregate principal amount exceeding $5,000,000. 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 August 27, 2012. 


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


-26-





          “Measurement
Period” means, at any date of determination, the most recently completed twelve
(12) Fiscal Months of the Lead Borrower. 


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


          “Mortgages”
means each and every fee mortgage or deed of trust, security agreement and
assignment by and between the Loan Party owning the Real Estate encumbered
thereby in favor of the Collateral Agent. 


          “Mortgage
Policy” has the meaning specified in the definition of Real Estate Eligibility
Requirements. 


          “Multiemployer
Plan” means any employee benefit plan of the type described in Section
4001(a)(3) of ERISA, to which the 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), plus (B) the reasonable and customary out-of-pocket expenses
incurred by such Loan Party or such Subsidiary in connection with such
transaction (including, without limitation, appraisals, and brokerage, legal,
title and recording or transfer tax expenses and commissions) paid by any Loan
Party to third parties (other than Affiliates)); and 


          (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 fees, discounts and commissions, legal fees and expenses
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 promissory note made by the Borrower in favor of a Lender evidencing
Committed Loans made by such Lender, substantially in the form of Exhibit B, 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 Committed 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 


-27-






contingent,
due or to become due, now existing or hereafter arising and including interest,
fees, costs, expenses and indemnities 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, fees, costs, expenses and indemnities 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 and all other
arrangements relating to the Control or management of such Person. 


          “Other
Liabilities” means any obligation on account of (a) any Cash Management
Services furnished to any of the Loan Parties or any of their Subsidiaries
and/or (b) any Bank Product furnished to any of the Loan Parties and/or any of
their Subsidiaries, 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. 


          “Outstanding
Amount” means (i) with respect to Committed Loans on any date, the aggregate
outstanding principal amount thereof after giving effect to any borrowings and
prepayments or repayments of Committed 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. 


          “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 then exists or
would arise as a result of entering into such transaction or the making such
payment, and (b) after giving effect to such transaction or payment, the Pro
Forma Availability Condition has been satisfied and the Consolidated Fixed
Charge Coverage Ratio, on a pro-forma basis for the twelve months preceding
such transaction or payment, will be equal to or greater than 1.2:1.0. 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
(including, without limitation, giving due consideration to results for prior
periods) reasonably satisfactory to the Administrative Agent. 


          “PBGC”
means the Pension Benefit Guaranty Corporation. 


-28-






          “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 the Borrower or any ERISA
Affiliate or to which the 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 then exists or would arise 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 neither have
 announced that it will oppose such Acquisition nor commenced any action which
 alleges that such Acquisition shall violate applicable Law; 


	
 

	
 


	
 

	
          (c)
 The Lead Borrower shall have furnished the Administrative Agent with thirty
 (30) days’ prior written notice of such intended Acquisition and shall have
 furnished the Administrative Agent with a current draft of the Acquisition
 documents (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, all of which shall be reasonably satisfactory
 to the Administrative Agent; 


	
 

	
 


	
 

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


	
 

	
 


	
 

	
          (f)
 After giving effect to the Acquisition, if the Acquisition is an Acquisition of
 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; 


	
 

	
 


	
 

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


	
 

	
 


	
 

	
          (h)
 If the Person which is the subject of such Acquisition will be maintained as
 a Subsidiary of a Loan Party, or if the assets acquired in an Acquisition
 will be transferred to a Subsidiary which is not then a Loan Party, such
 Subsidiary shall have been joined as a “Borrower” hereunder or as a Facility
 Guarantor, as the Administrative Agent shall determine, 





-29-







	
 

	
 


	
 

	
and the
 Collateral Agent shall have received a first priority security and/or
 mortgage interest in such Subsidiary’s property of the same nature as
 constitutes Collateral under the Security Documents; and 


	
 

	
 


	
 

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

 “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 Lead Borrower and
 its Subsidiaries, ten percent (10%) 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, twenty-five percent (25%)
 of the number of the Loan Parties’ Stores in existence as of the Closing Date
 (net of new Store openings), provided, that all sales of Inventory in
 connection with Store closings (in a single or series of related
 transactions) shall be in accordance with liquidation agreements and with
 professional liquidators reasonably acceptable to the Agents; provided,
 further that all Net Proceeds received in connection therewith are
 applied to the Obligations if then required 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 and is
 replaced with similar property having at least equivalent utility; 


	
 

	
 


	
 

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


	
 

	
 


	
 

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


	
 

	
 


	
 

	
          (h)
 as long as no Default then exists or would arise therefrom, sales of Real
 Estate of any Loan Party (or sales of any Person or Persons created to hold
 such Real Estate or the equity interests in such Person or Persons),
 including sale-leaseback transactions involving any such Real Estate pursuant
 to leases on market terms, as long as, (A) such sale is made for fair market
 value, (B) with respect to any Eligible Real Estate, the Net Proceeds paid in
 cash are in an amount at least equal to the greater of the amounts advanced
 or available to be advanced against such Eligible Real Estate under the
 Borrowing Base, (C) the Net Proceeds of such sale are utilized to repay the
 Obligations, and (D) in the case of any sale-leaseback transaction permitted
 hereunder, the Agents shall have received from such each purchaser or transferee
 a Collateral Access Agreement on terms and conditions reasonably satisfactory
 to the Agents. 





-30-







	
 

	
 


	
 

	
 “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 Laws, 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; 


	
 

	
 


	
 

	
          (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 detract from the value of the
 affected property or 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, (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) 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 of the Collateral Agent; 


	
 

	
 


	
 

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


	
 

	
 


	
 

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





-31-







	
 

	
 


	
 

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


	
 

	
 


	
 

	
          (o)
 Liens in favor of customs and revenues authorities imposed by applicable Laws
 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; and 


	
 

	
 


	
 

	
          (p)
 encumbrances referred to in Schedule B of the Mortgage Policies insuring the
 Mortgages. 





          “Permitted Indebtedness” means each of the
following as long as no Default or Event of Default exists or would arise from
the incurrence thereof: 


	
 

	
 


	
 

	
          (a)
 Indebtedness outstanding on the date hereof and listed on Schedule 7.03
 and any refinancings, refundings, renewals or extensions thereof; provided
 that (i) the amount of such Indebtedness is not increased at the time of such
 refinancing, refunding, renewal or extension except by an amount equal to a
 reasonable premium or other reasonable amount paid, and fees and expenses
 reasonably incurred, in connection with such refinancing and by an amount
 equal to any existing commitments unutilized thereunder, and the direct or
 contingent obligor with respect thereto is not changed as a result of or in
 connection with such refinancing, refunding, renewal or extension, (ii) the
 result of such extension, renewal or replacement shall not be an earlier
 maturity date or decreased weighted average life of such Indebtedness, and
 (iii) the terms relating to principal amount, amortization, maturity,
 collateral (if any), 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; 


	
 

	
 


	
 

	
          (b)
 Indebtedness of any Loan Party to any other Loan Party; 


	
 

	
 


	
 

	
          (c)
 Without duplication of Indebtedness described in clause (f) of this
 definition, purchase money Indebtedness of any Loan Party to finance the
 acquisition of any fixed or capital assets, including Capital Lease
 Obligations and Synthetic Lease Obligations, and any 





-32-







	
 

	
 


	
 

	
Indebtedness
 assumed in connection with the acquisition of any such assets or secured by a
 Lien on any such assets prior to the acquisition thereof, and extensions,
 renewals and replacements of any such Indebtedness that do not increase the
 outstanding principal amount thereof or result in an earlier maturity date or
 decreased weighted average life thereof provided that the terms relating to
 principal amount, amortization, maturity, collateral (if any), subordination
 (if any), and other material terms taken as a whole, of any such refinancing,
 refunding, renewing or extending Indebtedness, and of any agreement entered
 into and of any instrument issued in connection therewith, are no less
 favorable in any material respect to the Loan Parties or the Lenders than the
 terms of any agreement or instrument governing the Indebtedness being
 refinanced, refunded, renewed or extended and the interest rate applicable to
 any such refinancing, refunding, renewing or extending Indebtedness does not exceed
 the then applicable market interest rate, provided, however, that the
 aggregate principal amount of Indebtedness permitted by this clause (b) shall
 not exceed $5,000,000 at any time outstanding and further provided
 that, if requested by the Collateral Agent, the Loan Parties shall cause the
 holders of such Indebtedness to enter into an agreement with respect to the
 use of such fixed or capital assets in connection with the realization on any
 Collateral by the Collateral Agent, on terms reasonably satisfactory to the
 Collateral Agent; 


	
 

	
 


	
 

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


	
 

	
 


	
 

	
          (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)
 Indebtedness incurred for the construction or acquisition or improvement of,
 or to finance or to refinance, any Real Estate owned or to be acquired by any
 Loan Party (including therein any Indebtedness incurred in connection with
 sale-leaseback transactions permitted hereunder), provided that, (A)
 with respect to any Eligible Real Estate, the Net Proceeds paid in cash are
 in an amount at least equal to the greater of the amounts advanced or
 available to be advanced against such Eligible Real Estate under the
 Borrowing Base and (B) all Net Proceeds received in connection with any such
 Indebtedness are applied to the Obligations, and (C) in the case of a
 sale-leaseback transaction, the Loan Parties shall cause the holders of such
 Indebtedness to enter into a Collateral Access Agreement on terms reasonably
 satisfactory to the Collateral Agent; 


	
 

	
 


	
 

	
          (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)
 Indebtedness of the Lead Borrower consisting of Guarantees executed by the
 Lead Borrower in favor of (i) suppliers of Inventory to SYL, LLC in support
 of trade credit 





-33-







	
 

	
 


	
 

	
extended to
 SYL, LLC relating to such Inventory and/or (ii) factors extending credit to suppliers
 of Inventory to SYL, LLC in order to induce such factors to permit such
 suppliers to extend trade credit to SYL, LLC and/or to accept assignments
 from such suppliers of accounts receivable with respect to which SYL, LLC is
 the account debtor; and 


	
 

	
 


	
 

	
          (j)
 The Obligations. 





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


	
 

	
 


	
 

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


	
 

	
 


	
 

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


	
 

	
 


	
 

	
          (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 $1,000,000,000, in each case with maturities
 of not more than 180 days from the date of acquisition thereof; 


	
 

	
 


	
 

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


	
 

	
 


	
 

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


	
 

	
 


	
 

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


	
 

	
 


	
 

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





-34-







	
 

	
 


	
 

	
          (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
 $5,000 to any individual at any time or in an aggregate amount not to exceed
 $50,000 at any time outstanding, for travel, entertainment, relocation and
 analogous ordinary business purposes; 


	
 

	
 


	
 

	
          (m)
 Investments constituting Permitted Acquisitions; and 


	
 

	
 


	
 

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





provided, however, that notwithstanding
the foregoing, (i) after the occurrence and during the continuance of a Cash
Dominion Event, no further Investments of the types specified in clauses (a)
through (e) shall be permitted unless either (A) no Committed 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 shall be pledged to the Collateral Agent as
additional collateral for the Obligations pursuant to such agreements as may be
reasonably required by the Collateral Agent. 


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


	
 

	
 


	
 

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


	
 

	
 


	
 

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


	
 

	
 


	
 

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


	
 

	
 


	
 

	
          (d)
 Together with all other Permitted Overadvances then outstanding, shall not
 (i) exceed five percent (5%) of the Borrowing Base 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 Lenders’ 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” 


-35-






shall not
reduce the amount of Permitted Overadvances allowed hereunder, and further
provided that in no event shall the Administrative Agent make an
Overadvance, if after giving effect thereto, the principal amount of the Credit
Extensions would exceed the Aggregate Commitments (as in effect prior to any
termination of the Commitments pursuant to Section 2.06 hereof). 


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


          “Plan”
means any “employee benefit plan” (as such term is defined in Section 3(3) of
ERISA) established by the Lead 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. 


	
 

	
 


	
 

	
“Platform”
 has the meaning specified in Section 6.02. 


	
 

	
 


	
 

	
“Prepayment
 Event” means: 


	
 

	
 


	
 

	
          (a)
 Any Disposition (including pursuant to a sale and 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; or 


	
 

	
 


	
 

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





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


          
“Pro Forma Excess Availability” shall mean, for any date of calculation, after
giving pro forma effect to the transaction then to be consummated, the
projected Average Daily Availability for each Fiscal Month during the
subsequent 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 Advance Rate” means the following percentages during each of the
following three- month periods: 


-36-







	
 

	
 

	
 


	
Period

	
 

	
Real Estate
 Advance Rate


	
 
	
 
	
 

	
Closing Date through November 9, 2009

	
 

	
50%


	
 

	
 

	
 


	
 
	
 
	
 

	
November 10, 2009 through February 9, 2010

	
 

	
45%


	
 

	
 

	
 


	
 
	
 
	
 

	
February 10, 2010 through May 9, 2010

	
 

	
40%


	
 

	
 

	
 


	
 
	
 
	
 

	
May 10, 2010 through August 9, 2010

	
 

	
35%


	
 

	
 

	
 


	
 
	
 
	
 

	
August 10, 2010 through November 9, 2010

	
 

	
30%


	
 

	
 

	
 


	
 
	
 
	
 

	
November 10, 2010 through February 9, 2011

	
 

	
25%


	
 

	
 

	
 


	
 
	
 
	
 

	
February 10, 2011 through May 9, 2011

	
 

	
20%


	
 

	
 

	
 


	
 
	
 
	
 

	
May 10, 2011 through August 9, 2011

	
 

	
15%


	
 

	
 

	
 


	
 
	
 
	
 

	
August 10, 2011 through November 9, 2011

	
 

	
10%


	
 

	
 

	
 


	
 
	
 
	
 

	
November 10, 2011 through February 9, 2012

	
 

	
5%


	
 

	
 

	
 


	
 
	
 
	
 

	
Thereafter



	
 

	
0%







          “Real
Estate Cap” means, at any time of calculation, twenty-five percent (25%) of the
Loan Cap after giving effect to any advances made based on the amounts
available to be borrowed under clause (e) of the Borrowing Base. 


          “Real
Estate Eligibility Requirements: means collectively, each of the following: 


	
 

	
 


	
 

	
          (a)
 The applicable Loan Party has executed and delivered to the Collateral Agent
 a Mortgage with respect to any Real Estate intended, by such Loan Party, to
 be included in Eligible Real Estate; 


	
 

	
 


	
 

	
          (b)
 Such Real Estate is used by a Loan Party for offices or as a store or
 distribution center; 


	
 

	
 


	
 

	
          (c)
 As to any particular property, the Loan Party is in compliance in all
 material respects with the representations, warranties and covenants set
 forth in the Mortgage relating to such Real Estate; 





-37-







	
 

	
 


	
 

	
          (d)
 The Collateral Agent shall have received fully paid American Land Title
 Association Lender’s Extended Coverage title insurance policies or marked-up
 title insurance commitments having the effect of a policy of title insurance)
 (the “Mortgage Policies”) in form and substance, with the endorsements
 reasonably required by the Agents (to the extent available at commercially
 reasonable rates) and in amounts reasonably acceptable to the Collateral
 Agent (provided that such amounts shall not exceed the Appraised Value of the
 applicable Mortgaged Property), issued, coinsured and reinsured (to the
 extent required by the Collateral Agent) by title insurers reasonably
 acceptable to the Collateral Agent, insuring the Mortgages to be valid first
 and subsisting Liens on the property or leasehold interests described
 therein, free and clear of all defects (including, but not limited to,
 mechanics’ and materialmen’s Liens) and encumbrances, excepting only those
 Liens permitted by Section 7.01 having priority over the Lien of the
 Collateral Agent under Law or otherwise reasonably acceptable to the
 Collateral Agent; 


	
 

	
 


	
 

	
          (e)
 With respect to any Real Estate intended by any Borrower or other Loan Party
 to be included in Eligible Real Estate, the Collateral Agent shall have
 received (i) a Phase I Environmental Site Assessment in accordance with ASTM
 Standard E1527-05, in form and substance reasonably satisfactory to the
 Collateral Agent, from an environmental consulting firm reasonably acceptable
 to the Collateral Agent, which report shall identify recognized environmental
 conditions and shall to the extent possible quantify any related costs and
 liabilities, associated with such conditions and the Collateral Agent shall
 be satisfied with the nature and amount of any such matters, and (ii) if
 required by the Collateral Agent, further environmental assessments or
 reports to the extent such further assessments or reports are recommended in
 the Phase I Environmental Site Assessment; 


	
 

	
 


	
 

	
          (f)
 With respect to Real Estate located in an area identified by the Secretary of
 Housing and Urban Development as an area having special flood hazards, the
 applicable Loan Party shall have delivered to the Collateral Agent evidence
 of flood insurance naming the Collateral Agent as mortgagee as required by
 the National Flood Insurance Program as set forth in the Flood Disaster
 Protection Act of 1973, as amended and in effect, which shall be reasonably
 satisfactory in form and substance to the Collateral Agent; and 


	
 

	
 


	
 

	
          (g)
 The applicable Loan Party shall have delivered such other information and
 documents as may be reasonably requested by the Agents, including, without
 limitation, such as may be necessary to comply with FIRREA. 





          “Realty
Reserves” means such reserves as the Administrative Agent from time to time
determines in the Administrative Agent’s discretion as being appropriate to
reflect the impediments to the Agents’ ability to realize upon any Eligible
Real Estate. Without limiting the generality of the foregoing, Realty Reserves
may include (but are not limited to) (i) Environmental Compliance Reserves,
(ii) reserves for (A) municipal taxes and assessments, (B) repairs and (C)
remediation of title defects, and (iii) reserves for Indebtedness secured by
Liens having priority over the Lien of the Collateral Agent. 


          “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 Lead Borrower 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 and advisors of such Person
and of such Person’s Affiliates. 


-38-







          “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 9.12(a). 


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


          “Required
Lenders” means, as of any date of determination, Lenders holding more than 50%
of the Aggregate Commitments or, if the commitment of each Lender to make
Committed Loans and the obligation of the L/C Issuer to make L/C Credit
Extensions have been terminated pursuant to Section 8.02, 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 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 or Deteriorating
Lender shall be excluded for purposes of making a determination of Required
Lenders. 


          “Required
Supermajority Lenders” means, as of any date of determination, Lenders
holding more than 66 2/3% 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, Lenders
holding in the aggregate more than 66 2/3% of the Total Outstandings (with the
aggregate amount of each Lender’s risk participation and funded participation
in L/C Obligations 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 and any
Deteriorating Lender shall be excluded for purposes of making a determination
of Required Supermajority Lenders. 


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


          “Responsible
Officer” means the chief executive officer, president, chief financial officer,
treasurer or assistant treasurer 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 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. 


          
“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. 


-39-






          “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, as amended, the Securities Exchange Act
of 1934, as amended, Sarbanes-Oxley, and the applicable accounting and auditing
principles, rules, standards and practices promulgated, approved or
incorporated by the SEC or the PCAOB, all as in effect from time to time. 


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


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


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


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


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


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


          “Standby
Letter of Credit” means any Letter of Credit that is not a Commercial Letter of
Credit and that (a) is used in lieu or in support of performance guaranties or
performance, surety or similar bonds (excluding appeal bonds) arising in the
ordinary course of business, (b) is used in lieu or in support of stay or
appeal bonds, (c) supports the payment of insurance premiums for reasonably
necessary casualty insurance carried by any of the Loan Parties, (d) supports
payment or performance for identified purchases or exchanges of products or
services in the ordinary course of business or (e) is issued for the benefit of
a landlord in lieu of a security deposit in respect of a lease of real
property. 


          “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 


-40-






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


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


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


          “Subsidiary”
of a Person means a corporation, partnership, joint venture, limited liability
company or other business entity of which a majority of the shares Equity
Interests having ordinary voting power for the election of directors or other
governing body are at the time beneficially owned, or the management of which
is otherwise controlled, directly, or indirectly through one or more
intermediaries, or both, by such Person. Unless otherwise specified, all
references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a
Subsidiary or Subsidiaries of a Loan Party. 


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


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


          “Synthetic
Lease Obligation” means the monetary obligations 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 and leaseback
transactions), in each case, creating obligations that do not appear on the
balance sheet of such Person but which, upon the application of any Debtor
Relief Laws to such 


-41-






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, and (iii) the termination of the Commitments in
accordance with the provisions of Section 2.06 hereof. 


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


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


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


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


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


          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 





-42-







	
 

	
 


	
 

	
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. 


	
 

	
 


	
 

	
          (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 





-43-






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 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. With respect to the
computation of the Letter of Credit Fee pursuant to Sections 2.03(i) and (j),
the Stated Amount for any day shall be determined based on the average amount
of all Letters of Credit for such day. 


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 Borrower 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 and (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 Loan Cap, 


	
 

	
 


	
 

	

                    (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, shall not exceed
such Lender’s Commitment, and  


	
 

	
 


	
 

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





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


                    (b)
The following are the Inventory Reserves and Availability Reserves as of the
Closing Date: 


	
 

	
 


	
 

	
                    (i)
 Shrink (an Inventory Reserve): An amount equal to one-half of one percent
 (0.50%) of the Inventory of SYL, LLC; 


	
 

	
 


	
 

	
                    (ii)
 Damages/Return to Vendor (an Inventory Reserve): An amount equal to one
 percent (1.0%) of the Inventory of the Borrowers; 





-44-







	
 

	
 


	
 

	
                    (iii)
 Customer Deposits (an Availability Reserve): An amount equal to one hundred
 percent (100%) of the customer deposits held by the Borrowers as reflected in
 the Borrowers’ books and records; 


	
 

	
 


	
 

	
                    (iv)
 Customer Credit Liabilities (an Availability Reserve): An amount equal to
 fifty percent (50%) of the Customer Credit Liabilities as reflected in the
 Borrowers’ books and records; 


	
 

	
 


	
 

	
                    (v)
 Rent (an Availability Reserve): An amount equal to two (2) months’ rent for
 all of the Borrowers’ leased locations in each Landlord Lien State (which, as
 of the Closing Date consists solely of the Syms Corp location in Falls
 Church, Virginia), 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; and 


	
 

	
 


	
 

	
                    (vi)
 Taxes (an Availability Reserve): An amount equal to the ad valorem taxes then
 due and owing by the Borrowers to any Texas taxing authority. 





                    (c)
The Administrative Agent shall have the right, at any time and from time to
time after the Closing Date in its discretion to establish, modify or eliminate
Reserves and shall provide the Lead Borrower with notice of same. 


          2.02
Committed Borrowings, Conversions and Continuations of Committed Loans.


                    (a)
Committed Loans shall be either Base Rate Loans or LIBO Rate Loans as the Lead
Borrower may request subject to and in accordance with this Section 2.02.
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 Committed Borrowing of, Conversion to or continuation of LIBO Rate Loans,
and (ii) on the Business Day of the requested date of any Committed Borrowing
of Base Rate Loans. Each telephonic notice by the Lead Borrower pursuant to
this Section 2.02(b) must be confirmed promptly by delivery to the
Administrative Agent of a written Committed Loan Notice, appropriately
completed and signed by a Responsible Officer of the Lead Borrower. Each
Committed Borrowing of, Conversion to or continuation of LIBO Rate Loans shall
be in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in
excess thereof. Except as provided in Section 2.03(c), each Committed
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 Committed 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 


-45-






Lead Borrower
requests a Committed 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. 


                    (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 Committed 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 Bank of America 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 Committed Borrowing is given by the Lead
Borrower, there are L/C Borrowings outstanding, then the proceeds of such
Committed Borrowing, first, shall be applied to the payment in full of
any such L/C Borrowings, and second, shall be made available to the
Borrowers as provided above. 


                    (d)
The Administrative Agent, without the request of the Lead Borrower, may advance
any interest, fee, service charge, expenses, or other payment then due and
payable and to which any Credit Party is entitled from the Loan Parties
pursuant hereto or any other Loan Document 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(b). 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.
During the existence of a Default, no Committed Loans may be requested as,
Converted to or continued as LIBO Rate Loans without the Consent of the
Required Lenders. 


                    (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 Bank of America’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 seven (7) Interest Periods in
effect with respect to LIBO Rate Loans. 


                    (h)
The Administrative Agent, the Lenders, and the L/C Issuer shall have no
obligation to make any Committed Loan or to provide any Letter of Credit if an
Overadvance would result. The Administrative Agent may, in its discretion, make
Permitted Overadvances without the 


-46-






consent of the
Lenders and the L/C Issuer and each Lender shall be bound thereby. A Permitted
Overadvance is for the account of the Borrowers and shall constitute a Base
Rate Loan and an Obligation and shall be repaid by the Borrowers in accordance
with the provisions of Section 2.05(b). 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 Letter of Credits. The
Administrative Agent shall have no liability for, and no Loan Party or Credit
Party shall have the right to, or shall, bring any claim of any kind whatsoever
against the Administrative Agent with respect to “inadvertent Overadvances”
(i.e. where an Overadvance results from changed circumstances beyond the
control of the Administrative Agent (such as a reduction in the collateral
value)) regardless of the amount of any such Overadvance(s). 


          2.03 Letters of
Credit.


                    (a)
The Letter of Credit Commitment. 


                              (i)
Subject to the terms and conditions set forth herein, (A) the L/C Issuer
agrees, in reliance upon the agreements of the Lenders set forth in this Section
2.03, (1) 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 it, in accordance with Section 2.03(b) below, and
(2) to honor drawings under the Letters of Credit; 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 Loan Cap, (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, 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. 


                              (ii)
The L/C Issuer shall not issue any Letter of Credit, if: 


	
 

	
 


	
 

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


	
 

	
 


	
 

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


	
 

	
 


	
 

	
                              (C)
 the expiry date of such requested Letter of Credit would occur after the
 Letter of Credit Expiration Date, unless either such Letter of Credit is Cash
 Collateralized on or prior to the date of issuance of such Letter of Credit
 (or such later date as the L/C Issuer and the Administrative Agent may agree)
 or all the Lenders have approved such expiry date. 





-47-






                              (iii)
The L/C Issuer shall not issue any Letter of Credit 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; 


	
 

	
 


	
 

	
                              (C)
 such Letter of Credit is to be denominated in a currency other than Dollars; provided
 that if the L/C Issuer, in its discretion, issues a Letter of Credit
 denominated in a currency other than Dollars, all reimbursements by the
 Borrowers of the honoring of any drawing under such Letter of Credit shall be
 paid in the currency in which such Letter of Credit was denominated; or 


	
 

	
 


	
 

	
                              (D)
 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 L/C Issuer has entered into satisfactory
 arrangements with the Borrowers or such Lender to eliminate the L/C Issuer’s
 risk with respect to such Lender. 





                              (iv)
The L/C Issuer shall not amend any Letter of Credit if 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 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. Such Letter of Credit Application must be received by the L/C Issuer
and the Administrative Agent 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. In the 


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case of a
request for an initial issuance of a Letter of Credit, such Letter of Credit
Application shall specify in form and detail satisfactory to 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 L/C Issuer may require.
In the case of a request for an amendment of any outstanding Letter of Credit,
such Letter of Credit Application shall specify in form and detail satisfactory
to the 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 L/C Issuer may require.
Additionally, the Lead Borrower shall furnish to the L/C Issuer and the
Administrative Agent such other documents and information pertaining to such
requested Letter of Credit issuance or amendment, including any Issuer
Documents, as the L/C Issuer or the Administrative Agent may require. 


                              (ii)
Promptly after receipt of any Letter of Credit Application, the L/C Issuer will
confirm with the Administrative Agent (by telephone or in writing) that the
Administrative Agent has received a copy of such Letter of Credit Application
from the Lead Borrower and, if not, the L/C Issuer will provide the
Administrative Agent with a copy thereof. 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 Loan Party 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 Stated 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 L/C Issuer may, in its sole and absolute discretion, agree 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 L/C Issuer, the
Lead Borrower shall not be required to make a specific request to 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 L/C Issuer shall not permit any such extension if (A)
the L/C Issuer has determined that it would not be permitted, or would have no
obligation, at such time to 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) it 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 


-49-







Borrower that
one or more of the applicable conditions specified in Section 4.02 is
not then satisfied, and in each such case directing the L/C Issuer not to
permit such extension. 


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


                    (c)
Drawings and Reimbursements; Funding of Participations. 


                              (i)
Upon receipt from the beneficiary of any Letter of Credit of any notice of a
drawing under such Letter of Credit, the L/C Issuer shall notify the Lead
Borrower and the Administrative Agent thereof not less than two (2) Business
Days prior to the Honor Date (as defined below); 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. 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 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 amount of such
payment, 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). In the event that such Committed Borrowing cannot be made pursuant to
the terms hereof, then not later than 11:00 a.m. on such Honor Date, the
Borrowers shall reimburse the L/C Issuer through the Administrative Agent 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. 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 if immediately confirmed in writing; provided that the lack of
such an immediate confirmation shall not affect the conclusiveness or binding
effect of such notice. 


                              (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 


-50-






in respect of
such Lender’s Applicable Percentage of such amount shall be solely for the
account of the L/C Issuer. 


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


                              (vi)
If any Lender fails to make available to the Administrative Agent for the
account of the L/C Issuer any amount required to be paid by such Lender
pursuant to the foregoing provisions of this Section 2.03(c) by the time
specified in Section 2.03(c)(ii), the L/C Issuer shall be entitled to
recover from such Lender (acting through the Administrative Agent), on demand,
such amount with interest thereon for the period from the date such payment is
required to the date on which such payment is immediately available to the L/C
Issuer at a rate per annum equal to the greater of the Federal Funds Rate and a
rate determined by the L/C Issuer in accordance with banking industry rules on
interbank compensation plus any administrative, processing or similar fees
customarily charged by the L/C Issuer in connection with the foregoing. If such
Lender pays such amount (with interest and fees as aforesaid), the 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, 


-51-






unconditional
and irrevocable, and shall be paid strictly in accordance with the terms of
this Agreement under all circumstances, including the following: 


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


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


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


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


                              (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 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, 


-52-






preclude the
Borrowers’ pursuing such rights and remedies as it may have against the
beneficiary or transferee at law or under any other agreement. None of the L/C
Issuer, the Administrative Agent, any of their respective Related Parties nor
any correspondent, participant or assignee of the L/C Issuer shall be liable or
responsible for any of the matters described in clauses (i) through (v) of Section
2.03(e); provided, however, that anything in such clauses to
the contrary notwithstanding, the Borrowers may have a claim against the L/C
Issuer, and the L/C Issuer may be liable to the Borrowers, to the extent, but
only to the extent, of any direct, as opposed to consequential or exemplary,
damages suffered by the Borrowers which the Borrowers prove were caused by the
L/C Issuer’s willful misconduct or gross negligence or the L/C Issuer’s willful
failure to pay under any Letter of Credit after the presentation to it by the
beneficiary of a sight draft and certificate(s) strictly complying with the
terms and conditions of a Letter of Credit. In furtherance and not in
limitation of the foregoing, the L/C Issuer may accept documents that appear on
their face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary (or the L/C Issuer may
refuse to accept and make payment upon such documents if such documents are not
in strict compliance with the terms of such Letter of Credit), and the L/C
Issuer shall not be responsible for the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign a
Letter of Credit or the rights or benefits thereunder or proceeds thereof, in
whole or in part, which may prove to be invalid or ineffective for any reason. 


                    (g)
Cash Collateral. Upon the request of the Administrative Agent, 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 105% of the Outstanding Amount of all L/C
Obligations, pursuant to documentation in form and substance 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 blocked,
non-interest bearing deposit accounts at Bank of America except that Permitted
Investments of the type listed in clauses (a) through (f) of the definition
thereof may be made at the request of the Lead Borrower at the option and in the
sole discretion of the Collateral Agent (and at the Borrowers’ risk and
expense); interest or profits, if any, on such investments shall accumulate in
such 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 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, (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. 


-53-






                    (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 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. Letter of
Credit Fees shall be (i) due and payable on the first Business Day after the
end of each calendar quarter, 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 quarterly basis in
arrears. If there is any change in the Applicable Rate during any quarter, 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 quarter that such Applicable Rate was in effect. Notwithstanding
anything to the contrary contained herein, while any Event of Default exists,
all Letter of Credit Fees shall accrue at the Default Rate as provided in
Section 2.12(b) hereof. 


                    (j)
Fronting Fee and Documentary and Processing Charges Payable to L/C Issuer.
The Borrowers shall pay directly to the L/C Issuer for its own account a
fronting fee (i) with respect to each Commercial Letter of Credit, at a rate
equal to 0.125% per annum, computed on the amount of such Letter of Credit, and
payable upon the issuance or amendment thereof, and (ii) with respect to each
Standby Letter of Credit, at a rate equal to 0.125% 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 shall be due and payable on the
tenth Business Day after the end of each calendar quarter, 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 directly to the L/C Issuer for
its own account 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)
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
Intentionally Omitted.


          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 $5,000,000 or a
whole multiple of $1,000,000 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 


-54-






accompanied by
all accrued interest on the amount prepaid, together with any additional
amounts required pursuant to Section 3.05. Each such prepayment shall be
applied to the Committed Loans of the Lenders in accordance with their
respective Applicable Percentages. 


                    (b)
If for any reason the Total Outstandings at any time exceed the Loan Cap, the
Borrowers shall immediately prepay Committed 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(b) unless after the prepayment in full of
the Committed Loans the Total Outstandings exceed the Loan Cap. 


                    (c)
The Borrower shall prepay the Committed Loans and Cash Collateralize the L/C
Obligations in accordance with the provisions of Section 6.13 hereof. 


                    (d)
The Borrowers shall prepay the Loans and Cash Collateralize the L/C Obligations
in an amount equal to the Net Proceeds received by a Loan Party on account of
any Permitted Disposition arising under clause (b) of the definition thereof in
excess of the sale of five percent (5%) of the number of the Loan Parties’
Stores in any Fiscal Year. 


                    (e)
Prepayments made pursuant to Section 2.05(b), (c) and (d) above, first,
shall be applied ratably to the L/C Borrowings, second, shall be applied
ratably to the outstanding Committed Loans which are Base Rate Loans, third,
shall be applied ratably to the outstanding Committed Loans which are LIBO Rate
Loans, fourth, shall be used to Cash Collateralize the remaining L/C
Obligations; and, fifth, the amount remaining, if any, after the
prepayment in full of all L/C Borrowings 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 or the Letter of
 Credit Sublimit or from time to time permanently reduce the Aggregate
 Commitments or the Letter of Credit 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 termination or reduction,
 (ii) any such partial reduction shall be in an aggregate amount of
 $10,000,000 or any whole multiple of $1,000,000 in excess thereof, (iii) the
 Borrowers shall not terminate or reduce (A) the Aggregate Commitments if,
 after giving effect thereto and to any concurrent prepayments hereunder, the
 Total Outstandings would exceed the Aggregate Commitments, and (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 as so reduced. 


	
 

	
 


	
 

	
          (b)
 If, after giving effect to any reduction of the Aggregate Commitments, the
 Letter of Credit Sublimit exceeds the amount of the Aggregate Commitments,
 such Letter of Credit 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 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, 





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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. 





          2.07
Repayment of Committed Loans.


          The
Borrower shall repay to the Lenders on the Termination Date the aggregate
principal amount of Committed Loans outstanding on such 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 LIBO Rate for such Interest
Period plus the Applicable Margin; and (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. 


                    (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 Laws. 


                              (ii)
If any other Event of Default exists, then the Administrative Agent may, and
upon the request of the Required Lenders shall, notify the Lead Borrower that
all outstanding Obligations shall thereafter bear interest at a fluctuating
interest rate per annum at all times equal to the Default Rate and thereafter
such Obligations shall bear interest at the Default Rate to the fullest extent
permitted by 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 Committed 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 Law. 


          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 equal to the 0.50% times the actual daily amount by which
the Aggregate Commitments exceed the sum of (i) the Outstanding Amount of
Committed 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 quarterly on the first Business
Day after the end of each calendar quarter, commencing with the first such date
to occur after the Closing Date, and on the last day of the Availability
Period. The commitment fee shall be calculated quarterly in arrears. 


                    (b)
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. 


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          2.10
Computation of Interest and Fees. All computations of
interest for Base Rate Loans when the Base Rate is determined by Bank of
America’s “prime rate” 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
(which results in more fees or interest, as applicable, being paid than if computed
on the basis of a 365-day year). Interest shall accrue on each Committed Loan
for the day on which the Committed Loan is made, and shall not accrue on a
Committed Loan, or any portion thereof, for the day on which the Committed Loan
or such portion is paid, provided that any Committed Loan that is repaid on the
same day on which it is made shall, subject to Section 2.12(a), 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 Committed Loan from such Lender, each payment and
prepayment of principal of any such Committed 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
Committed 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 Committed Loans and payments with respect thereto. Upon
receipt of an affidavit of and indemnity from 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. In the event of any conflict between
the accounts and records maintained by the Administrative Agent and the
accounts and records of any Lender in respect of such matters, the accounts and
records of the Administrative Agent shall control in the absence of manifest
error. 


          2.12
Payments Generally; Administrative Agent’s Clawback.


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


-57-






wire transfer
to such Lender’s Lending Office. All payments received by the Administrative
Agent after 2:00 p.m. shall, at the option of the Administrative Agent, be
deemed received on the next succeeding Business Day and any applicable interest
or fee shall continue to accrue. If any payment (other than with respect to
payment of a LIBO Rate Loan) 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 Committed Borrowing of LIBO Rate Loans (or in the case of
any Committed Borrowing of Base Rate Loans, prior to 12:00 noon on the date of
such Committed Borrowing) that such Lender will not make available to the
Administrative Agent such Lender’s share of such Committed 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
Committed 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 amount so paid shall constitute such Lender’s
Committed Loan included in such Committed Borrowing. Any payment by the
Borrowers shall be without prejudice to any claim the Borrowers may have
against a Lender that shall have failed to make such payment to the
Administrative Agent. 


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


          A
notice of the Administrative Agent to any Lender or the Lead Borrower with
respect to any amount owing under this subsection (b) shall be conclusive,
absent manifest error. 


                    (c)
Failure to Satisfy Conditions Precedent. If any Lender makes available
to the Administrative Agent funds for any Committed Loan to be made by such
Lender as provided in the 


-58-






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 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 Committed 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 Committed 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 to any assignee or
 participant, other than to the Borrowers or any Subsidiary thereof (as to
 which the provisions of this Section shall apply). 





          Each
Loan Party consents to the foregoing and agrees, to the extent it may
effectively do so under 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 Committed
 Loans shall be computed weekly (or more frequently in the Administrative
 Agent’s discretion) and shall be adjusted upward or downward based on all
 Committed Loans and repayments of 





-59-







	
 

	
 


	
 

	
Committed
 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 Law 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 Law. 


                    (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 Law. 


                    (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 and reasonable expenses 


-60-






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 Law or reasonably
requested by the Lead Borrower or the Administrative Agent, such properly
completed and executed documentation prescribed by 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 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 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 Law to permit
 the Lead Borrower to determine the withholding or deduction required to be
 made. 





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


-61-







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. If the commitment of any Lender with respect to LIBO Rate Loans is
suspended pursuant to this Section and such Lender shall have obtained actual
knowledge that it is once again legal for it to make or maintain LIBO Rate
Loans, such Lender shall promptly notify the Administrative Agent and the Lead
Borrower thereof and, upon receipt of such notice by the Lead Borrower, such
Lender’s commitment to make or maintain LIBO Rate Loans shall be reinstated. 


          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
Committed 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 (which
revocation shall be made promptly upon the cessation of the circumstances which
gave rise to such notice). Upon receipt of such notice, the Lead Borrower may
revoke any pending request for a Committed Borrowing of, Conversion to or
continuation of LIBO Rate Loans (without incurring costs pursuant to Section
3.05(b)) or, failing that, will be deemed to have Converted such request into a
request for a Committed Borrowing of Base Rate Loans in the amount specified
therein. 


          3.04
Increased Costs; Reserves on LIBO Rate Loans. 


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                    (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 Committed 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 Committed 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 in reasonable detail the calculation 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. 


                    (d)
Delay in Requests. Failure or delay on the part of any Lender or the L/C
Issuer to demand compensation pursuant to the foregoing provisions of this Section
shall not constitute a waiver 


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



                    (e)
Reserves on LIBO Rate Loans. Without duplication of any additional
amounts payable under the definition of “Adjusted LIBO Rate”, 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 Committed 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 Committed Loan, provided the Lead Borrower shall have
received at least 10 days’ prior notice (with a copy to the Administrative
Agent) of such additional interest from such Lender. If a Lender fails to give
notice 10 days prior to the relevant Interest Payment Date, such additional
interest shall be due and payable 10 days from receipt of such notice.  


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


	
 

	
 


	
 

	
          (a)
 any continuation, Conversion, payment or prepayment of any Committed Loan
 other than a Base Rate Loan on a day other than the last day of the Interest
 Period for such Committed 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 Committed Loan) to prepay, borrow, continue or Convert any
 Committed 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 Committed
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 Committed Loan by a matching deposit
or other borrowing in the London interbank market for a comparable amount and
for a comparable period, whether or not such LIBO Rate Loan was in fact so
funded. 


          3.06
Mitigation Obligations; Replacement of Lenders. 


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                    (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 Committed Loans hereunder or to
assign its rights and obligations hereunder to another of its offices, branches
or affiliates, if, in the 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. 


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 of the following conditions precedent: 


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          (a) The
 Administrative Agent’s receipt of the following, each of which shall be
 originals, telecopies, or documents transmitted by electronic mail (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 Note executed by the Borrowers in favor of each Lender requesting a Note; 


	
 

	
 


	
 

	
                    (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, in good standing and qualified to engage in
 business 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 so qualify in such jurisdiction could not
 reasonably be expected to have a Material Adverse Effect;


	
 

	
 


	
 

	
                    (v)
 a favorable opinion of Lowenstein Sandler PC, 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 4.02(a) and (b) 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 reasonably be expected
to have, either individually or in the aggregate, a Material Adverse Effect,
(C) to the Solvency of the Loan Parties as of the Closing Date after giving
effect to the transactions contemplated hereby, and (D) 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; 


	
 

	
 


	
 

	
                    (vii)
 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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                    (viii)
 a payoff letter from Israel Discount Bank of New York, as lender under the
 Existing Credit Agreement satisfactory in form and substance to the
 Administrative Agent evidencing that the Existing Credit Agreement has been
 or concurrently with the Closing Date is being terminated, all obligations
 thereunder are being paid in full, and all Liens securing obligations under
 the Existing Credit Agreement have been or concurrently with the Closing Date
 are being released;


	
 

	
 


	
 

	
                    (ix)
 the Security Documents (including, without limitation, the Mortgages and
 certificates evidencing any stock being pledged thereunder, together with
 undated stock powers executed in blank, each duly executed by the applicable
 Loan Parties;


	
 

	
 


	
 

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


	
 

	
 


	
 

	
                    (xi)
 (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, the results of which shall be satisfactory to the Collateral Agent; 


	
 

	
 


	
 

	
                    (xii)
 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 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;


	
 

	
 


	
 

	
                    (xiii)
 (A) all documents and instruments, including Uniform Commercial Code
 financing statements, required by law or reasonably requested by the
 Collateral Agent to be filed, registered or recorded to create or perfect the
 first priority Liens intended to be created under the Loan Documents and all
 such documents and instruments shall have been so filed, registered or
 recorded to the satisfaction of the Collateral Agent, (B) the 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;


	
 

	
 


	
 

	
                    (xiv)
 evidence that all other actions that the Collateral Agent may deem necessary
 or desirable in order to create valid first and subsisting Liens on the
 property described in the Mortgages has been taken;


	
 

	
 


	
 

	
                    (xv)
 an appraisal of each of the properties described in the Mortgages complying
 with the requirements of FIRREA by a third-party appraiser acceptable to the
 Collateral Agent and otherwise in form and substance satisfactory to the
 Collateral Agent; and


	
 

	
 


	
 

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





-67-







	
 

	
 


	
 

	
          (b)
 After giving effect to (i) the first funding under the Committed Loans and
 (ii) all Letters of Credit to be issued at, or immediately subsequent to,
 such establishment, Availability shall be not less than $20,000,000. 


	
 

	
 


	
 

	
          (c)
 The Administrative Agent shall have received a Borrowing Base Certificate
 dated the Closing Date, relating to the month ended on August 1, 2009, and
 executed by a Responsible Officer of the Lead Borrower, which Borrowing Base
 Certificate shall be acceptable to the Administrative Agent in all respects. 


	
 

	
 


	
 

	
          (d)
 The Administrative Agent shall be reasonably satisfied that any financial
 statements delivered to it fairly present the business and financial
 condition of the Loan Parties and that there has not occurred since February
 28, 2009 (i) any event or condition that has had or could be reasonably
 expected, either individually or in the aggregate, to have a Material Adverse
 Effect or (ii) any action, suit, investigation or proceeding pending or, to
 the knowledge of the Borrowers, threatened in any court or before any
 arbitrator or governmental authority that could reasonably be expected to
 have a Material Adverse Effect. 


	
 

	
 


	
 

	
          (e)
 The Administrative Agent shall be reasonably satisfied that the Real Estate
 Eligibility Conditions have been satisfied. 


	
 

	
 


	
 

	
          (f)
 The Administrative Agent shall have received and be satisfied with (i) a
 detailed forecast (x) on a monthly basis for the twelve-month period
 following the Closing Date and (y) on an annual basis, for each Fiscal Year
 thereafter through the Maturity Date, including, in each case, 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 (ii) such other
 information (financial or otherwise) reasonably requested by the
 Administrative Agent. 


	
 

	
 


	
 

	
          (g)
 All of the information (other than any projections delivered to the
 Administrative Agent) shall be complete and correct in all material respects and no changes or developments shall
 have occurred, and no new or additional information, shall have been received
 or discovered by the Administrative Agent regarding the Lead Borrower or its
 Subsidiaries or the transactions contemplated hereby that, individually or in
 the aggregate, could reasonably be expected to have a Material Adverse
 Effect. All Projections prepared by the Lead Borrower or at its direction and
 delivered to the Administrative Agent will represent, at the time of delivery
 to the Administrative Agent, the Lead Borrower’s good-faith estimate of the
 future financial performance of the Lead Borrower and its Subsidiaries and
 will be based upon assumptions which are believed by the Lead Borrower to be
 reasonable in light of the past performance of the Lead Borrower and its
 Subsidiaries and then current business conditions. 


	
 

	
 


	
 

	
          (h)
 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. 


	
 

	
 


	
 

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


	
 

	
 


	
 

	
          (j)
 All fees 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. 





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          (k)
 The Borrowers shall have paid all 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). 


	
 

	
 


	
 

	
          (l)
 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. 


	
 

	
 


	
 

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


	
 

	
 


	
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) and of each L/C Issuer to issue each
Letter of Credit is subject to the following conditions precedent: 


	
 

	
 


	
 

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


	
 

	
 


	
 

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


	
 

	
 


	
 

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





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 Lead Borrower shall be deemed to be a representation
and warranty by the Borrowers that the conditions specified in Sections
4.02(a) and (b) 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 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, agreed to by
the Administrative Agent, provided, however, the making of any such Committed
Loans or 


-69-







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 Committed
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
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, its state of
incorporation or organization, organization type, organization number, if any,
issued by its state of incorporation or organization, and its federal employer
identification number. 


          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 or (ii) any order, injunction, writ or decree of any Governmental
Authority or any arbitral award to which such Person or its property is
subject; (c) result in or require the creation of any Lien upon any asset of
any Loan Party (other than Liens in favor of the Collateral Agent under the
Security Documents); or (d) violate any Law. 


          5.03 Governmental Authorization; Other Consents. No
approval, consent, exemption, authorization, or other action by, or notice to,
or filing with, any Governmental Authority or any other Person is necessary or
required in connection with the execution, delivery or performance by, or
enforcement against, any Loan Party of this Agreement or any other Loan
Document, except for (a) the perfection or maintenance of the Liens created
under the Security Documents (including the first priority nature thereof) or
(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. 


-70-





          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 the financial condition of the
Lead Borrower and its Subsidiaries as of the date thereof and their results of
operations for the period covered thereby in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise expressly
noted therein; and (iii) show all Material Indebtedness and other liabilities,
direct or contingent, of the Lead Borrower and its Subsidiaries as of the date
thereof, including liabilities for taxes, material commitments and
Indebtedness. 


                    (b)
The unaudited Consolidated balance sheet of the Lead Borrower and its
Subsidiaries dated May 30, 2009, and the related Consolidated statements of
income or operations, Shareholders’ Equity and cash flows for the Fiscal
Quarter ended on that date (i) were prepared in accordance with GAAP
consistently applied throughout the period covered thereby, except as otherwise
expressly noted therein, and (ii) fairly present the financial condition of the
Lead Borrower and its Subsidiaries as of the date thereof and their results of
operations for the period covered thereby, subject, in the case of clauses (i)
and (ii), to the absence of footnotes and to normal year-end audit adjustments.
Schedule 5.05 sets forth all Material Indebtedness and other
liabilities, direct or contingent, of the Loan Parties and their Consolidated
Subsidiaries as of the date of such financial statements, including liabilities
for taxes and material commitments. 


                    (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 Lead Borrower and its Subsidiaries on
a Consolidated basis. 


                    (e)
The Consolidated forecasted balance sheet and statements of income and cash
flows of the Lead Borrower 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. 


          5.06 Litigation. There are no actions,
suits, proceedings, claims or disputes pending or, to the knowledge of the Loan
Parties after due and diligent investigation, threatened or contemplated, at
law, in equity, in arbitration or before any Governmental Authority, by or
against any Loan Party or any of its Subsidiaries or against any of its
properties or revenues that (a) purport to affect or pertain to this Agreement
or any other Loan Document, or any of the transactions contemplated hereby, or
(b) either individually or in the aggregate, if determined adversely, could
reasonably be expected to have a Material Adverse Effect. 


          5.07 No Default. No Loan Party or
Subsidiary is in default under or with respect to any Material Contract or any
Material Indebtedness. 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. 


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          5.08 Ownership of Property; Liens. 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, except for such
defects in title as could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. 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 and assets material to the ordinary
conduct of its business. 


                    (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. 


                    (c)
Schedule 7.01 sets forth a complete and accurate list of all Liens on
the property or assets of each Loan Party and each of its Subsidiaries, showing
as of the Closing Date the lienholder thereof, the principal amount of the
obligations secured thereby and the property or assets of such Loan Party or
such Subsidiary subject thereto. The property of each Loan Party and each of
its Subsidiaries is subject to no Liens, other than Permitted Encumbrances. 


                    (d)
Schedule 7.02 sets forth a complete and accurate list of all Investments
held by any Loan Party or any Subsidiary of a Loan Party on the Closing Date,
showing as of the date hereof the amount, obligor or issuer and maturity, if
any, thereof. 


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


	
 

	
 


	
 

	
5.09 Environmental Compliance. (a) No Loan
Party or any Subsidiary thereof (i) to the knowledge of the Loan Parties, 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) to the knowledge of the Loan Parties, 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, to the knowledge of
the Loan Parties, 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, to the knowledge of any Loan Party, is adjacent to any such
property; except for underground storage tanks currently in use and operated
in compliance with Environmental Laws, there are no underground or
above-ground storage tanks or surface impoundments, septic tanks, pits, sumps
or lagoons in which Hazardous Materials are being or have been treated, stored
or disposed on any property currently owned or operated by any Loan Party or
any Subsidiary thereof or, to the best of the knowledge of the Loan Parties,
on any property formerly owned or operated by any Loan Party or Subsidiary
thereof except such as have been decommissioned in accordance with
Environmental Laws in effect at the time of such decommissioning; 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 




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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 on Schedule 5,09, no Loan Party or any
Subsidiary thereof is undertaking, and no Loan Party or any Subsidiary
thereof has completed, either individually or together with other potentially
responsible parties, any investigation or assessment or remedial or response
action relating to any actual or threatened release, discharge or disposal of
Hazardous Materials at any site, location or operation, either voluntarily or
pursuant to the order of any Governmental Authority or the requirements of
any Environmental Law; and all Hazardous Materials generated, used, treated,
handled or stored at, or transported to or from, any property currently or
formerly owned or operated by any Loan Party or any Subsidiary thereof have
been disposed of in a manner not reasonably expected to result in material
liability to any Loan Party or any Subsidiary thereof. 





          5.10 Insurance. The properties of the Loan
Parties and their Subsidiaries are insured with financially sound and reputable
insurance companies which are not Affiliates of the Loan Parties, in such
amounts, with such deductibles and covering such risks (including, without
limitation, workers’ 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 has received a
favorable determination letter from the IRS or an application for such a letter
is currently being processed by the IRS with respect thereto and, to the best
knowledge of the Lead Borrower, nothing has occurred which would prevent, or
cause the loss of, such qualification. The Loan Parties and each ERISA
Affiliate have made all required contributions to each Plan subject to Section
412 of the Code, and no application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Code has been made with
respect to any Plan. No Lien imposed under the Code or ERISA exists or is
likely to arise on account of any Plan. 


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


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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 and other than
periodic contribution requirements); (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, which in each case could reasonably be expected to
have a Material Adverse Effect. 


          5.13 Subsidiaries; Equity Interests. The
Loan Parties have no Subsidiaries other than those specifically disclosed in
Part (a) of Schedule 5.13, which Schedule sets forth the legal name,
jurisdiction of incorporation or formation and authorized Equity Interests of
each such Subsidiary. All of the outstanding Equity Interests in such
Subsidiaries have been validly issued, are fully paid and non-assessable and
are owned by a Loan Party (or a Subsidiary of a Loan Party) in the amounts
specified on Part (a) of Schedule 5.13 free and clear of all Liens
except for those created under the Security Documents. Except as set forth in Schedule
5.13, there are no outstanding rights to purchase any Equity Interests in
any Subsidiary. 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. All of the outstanding Equity Interests in the Loan Parties have been
validly issued, and are fully paid and non-assessable and all of the
outstanding Equity Interests in the Subsidiaries of the Loan Parties 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. 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, as amended. 


          5.15 Disclosure. Each Loan Party has
disclosed to the Administrative Agent and the Lenders all material 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 


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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 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.  


          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. The
Loan Parties and their Subsidiaries own, or possess the right to use, all of
the Intellectual Property, licenses, permits and other authorizations that are
reasonably necessary for the operation of their respective businesses, without
conflict with the rights of any other Person. To the best knowledge of the Lead
Borrower, 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. No claim or litigation regarding any of the foregoing is
pending or, to the best knowledge of the Lead Borrower, threatened, which,
either individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect. 


          5.18 Labor Matters.


          There
are no strikes, lockouts, slowdowns or other material labor disputes against
any Loan Party or any Subsidiary thereof pending or, to the knowledge of any
Loan Party, threatened. The hours worked by and payments made to employees of
the Loan Parties comply with the Fair Labor Standards Act and any other
applicable federal, state, local or foreign Law dealing with such matters
except to the extent that any such violation could not reasonably be expected
to have a Material Adverse Effect. 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 no
Loan Party or any Subsidiary is a party to or bound by any collective bargaining
agreement, management agreement, employment agreement, bonus, restricted stock,
stock option, or stock appreciation plan or agreement or any similar plan,
agreement or arrangement. 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. There are no
complaints, unfair labor practice charges, grievances, arbitrations, unfair
employment practices charges or any other claims or complaints against any Loan
Party or any Subsidiary pending or, to the knowledge of any Loan Party,
threatened to be filed with any Governmental Authority or arbitrator based on,
arising out of, in connection with, or otherwise relating to the employment or
termination of employment of any employee of any Loan Party or any of its
Subsidiaries. The consummation of the transactions contemplated by the Loan
Documents will not give rise to any right of termination or right of
renegotiation on the part of any union under any collective bargaining
agreement to which any Loan Party or any of its Subsidiaries is bound. 


          5.19 Security Documents.


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          (a)
The Security Agreement creates in favor of the Collateral Agent, for the
benefit of the Secured Parties referred to therein, a legal, valid and
enforceable security interest in the Collateral (as defined in the Security
Agreement), the enforceability of which is subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors’
rights generally and subject to general principles of equity, regardless of
whether considered in a proceeding in equity or at law. Upon the filing of
financing statements and/or the obtaining of “control”, in each case with
respect to the relevant Collateral as required under the applicable UCC, 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, except for Permitted Encumbrances having priority under
applicable Law. 


	
 

	
 


	
 

	
          (b)
When appropriate documentation is recorded in the United States Patent and
Trademark Office and the United States Copyright Office and when financing
statements in appropriate form are filed in the appropriate office in the
jurisdiction of formation of the appropriate Loan Party, the Collateral Agent
will have 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 (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). 


	
 

	
 


	
 

	
          (c)
The Mortgages create in favor of the Collateral Agent, for the benefit of the
Secured Parties referred to therein, a legal, valid, continuing and
enforceable Lien on the Mortgaged Property (as defined in the Mortgages), the
enforceability of which is subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors’ rights
generally and subject to general principles of equity, regardless of whether
considered in a proceeding in equity or at law. Upon the recording of each
Mortgage with the appropriate Governmental Authority, the Collateral Agent
will have a valid mortgage Lien on, and security interest in, to and under
all right, title and interest of the grantor thereunder in all Mortgaged
Property covered by such Mortgage, having the priority and subject to the
exceptions set forth in the Mortgage Policy relating to such Mortgage. 





          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  


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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 Committed 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. 


          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. 


          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. 


ARTICLE VI

AFFIRMATIVE COVENANTS


          So
long as any Lender shall have any Commitment hereunder, any Committed Loan or
other Obligation hereunder shall remain unpaid or unsatisfied, or any Letter of
Credit shall remain outstanding, the Loan Parties shall, and shall (except in
the case of the covenants set forth in Sections 6.01, 6.02, and 6.03) cause
each Subsidiary to: 


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


	
 

	
 


	
 

	
          (a)
as soon as available, but in any event within 90 days after the end of each
Fiscal Year of the Lead Borrower (or, in the event the Lead Borrower timely
files a Form 12b-25 under the Exchange Act, such longer period allowed under
Rule 12b-25 of the rules and regulations promulgated under the Exchange Act),
a Consolidated balance sheet of the Lead Borrower 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, audited and accompanied by (i) a report and unqualified opinion of a
Registered Public Accounting Firm of nationally recognized standing
reasonably acceptable to the Administrative Agent (and the Administrative
Agent hereby agrees that BDO Seidman, LLP is reasonably acceptable to the
Administrative Agent), which report and opinion shall be prepared 




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in
accordance with generally accepted auditing standards and shall not be
subject to any “going concern” or like qualification or exception or any
qualification or exception as to the scope of such audit and (ii) an opinion
of such Registered Public Accounting Firm independently assessing 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 expressing a conclusion that contains no statement that there
is a material weakness in such internal controls, except for such material
weaknesses as to which the Required Lenders do not object; 


	
 

	
 


	
 

	
          (b)
as soon as available, but in any event within 45 days after the end of each
Fiscal Quarter of each Fiscal Year of the Lead Borrower (or, in the event the
Lead Borrower timely files a Form 12b-25 under the Exchange Act, such longer
period allowed under Rule 12b-25 of the rules and regulations promulgated
under the Exchange Act), a Consolidated balance sheet of the Lead Borrower
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 Lead Borrower’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 Quarter of the
previous Fiscal Year and (C) the corresponding portion of the previous Fiscal
Year, all in reasonable detail, certified by a Responsible Officer of the
Lead Borrower as fairly presenting the financial condition, results of
operations, Shareholders’ Equity and cash flows of the Lead Borrower and its
Subsidiaries as of the end of such Fiscal Quarter in accordance with GAAP,
subject only to normal year-end audit adjustments and the absence of
footnotes; 


	
 

	
 


	
 

	
          (c)
as soon as available, but in any event within 30 days after the end of each
Fiscal Month of each Fiscal Year of the Lead Borrower, a Consolidated balance
sheet of the Lead Borrower 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 Lead Borrower’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,
certified by a Responsible Officer of the Lead Borrower as fairly presenting
the financial condition, results of operations, Shareholders’ Equity and cash
flows of the Lead Borrower 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; 


	
 

	
 


	
 

	
          (d)
as soon as available, but in any event at least 30 days before the end of
each Fiscal Year of the Lead Borrower, forecasts prepared by management of
the Lead Borrower, in form satisfactory to the Administrative Agent, which
shall include an Availability model, Consolidated balance sheets and
statements of income or operations and cash flows of the Lead Borrower and
its Subsidiaries on a monthly basis for the immediately following Fiscal Year
(including the fiscal year in which the Maturity Date occurs), and as soon as
available, any significant revisions to such forecast with respect to such
Fiscal Year. 





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


	
 

	
 


	
 

	
          (a)
concurrently with the delivery of the financial statements referred to in Section
6.01(a), a certificate of its Registered Public Accounting Firm
certifying such financial statements and stating that in making the
examination necessary for their certification of such financial 




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statements,
such Registered Public Accounting Firm has not obtained any knowledge of the
existence of any Default or, if any such Default shall exist, stating the
nature and status of such event; 


	
 

	
 


	
 

	
          (b)
concurrently with the delivery of the financial statements referred to in Sections
6.01(a), (b) and (c), (i) a duly completed Compliance Certificate signed
by a Responsible Officer of the Lead Borrower, and in the event of any change
in generally accepted accounting principles used in the preparation of such
financial statements, the Lead Borrower shall also provide a statement of reconciliation
conforming such financial statements to GAAP and (ii) a copy of management’s
discussion and analysis with respect to such financial statements; 


	
 

	
 


	
 

	
          (c)
on the tenth (10th) day of each Fiscal Month (or, if such day is
not a Business Day, on the next succeeding Business Day), a certificate in
the form of Exhibit E (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 at any time that an Accelerated Borrowing Base
Delivery Event has occurred and is continuing, 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), showing the
Borrowing Base as of the close of business on the immediately preceding
Saturday, and no additional Borrowing Base Certificate need be provided on
the tenth (10th) day of any Fiscal Month with respect to which a
Borrowing Base Certificate has been delivered weekly; 


	
 

	
 


	
 

	
          (d)
promptly upon receipt, copies of any detailed audit reports, management
letters or recommendations submitted to the board of directors (or the audit
committee of the board of directors) of any Loan Party by its Registered
Public Accounting Firm in connection with the accounts or books of the Loan
Parties or any Subsidiary, or any audit of any of them, including, without
limitation, specifying any Internal Control Event; 


	
 

	
 


	
 

	
          (e)
promptly after the same are available, copies of each annual report, proxy or
financial statement or other report or communication sent to the stockholders
of the Loan Parties, and copies of all annual, regular, periodic and special
reports and registration statements which any Loan Party may file or be
required to file with the SEC under Section 13 or 15(d) of the Securities
Exchange Act of 1934 or with any national securities exchange, and in any
case not otherwise required to be delivered to the Administrative Agent
pursuant hereto; 


	
 

	
 


	
 

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


	
 

	
 


	
 

	
          (g)
promptly after the furnishing thereof, copies of any statement or report
furnished to any holder of debt securities of any Loan Party or any
Subsidiary thereof pursuant to the terms of any indenture, loan or credit or
similar agreement and not otherwise required to be furnished to the Lenders
pursuant to Section 6.01 or any other clause of this Section 6.02; 


	
 

	
 


	
 

	
          (h)
as soon as available, but in any event within 30 days after the end of each
Fiscal Year of the Loan Parties, a report summarizing the insurance coverage
(specifying type, amount and carrier) in effect for each Loan Party and its
Subsidiaries and containing such additional information as the Administrative
Agent, or any Lender through the Administrative Agent, may reasonably specify;





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          (i)
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 


	
 

	
 


	
 

	
          (j)
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. 





Documents
required to be delivered pursuant to Section 6.01(a), (b), or (c) or Section
6.02(d) (to the extent any such documents are included in materials
otherwise filed with the SEC) 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 same 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.  


          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”) by posting the Borrower Materials on IntraLinks or another
similar electronic system (the “Platform”) 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 (i) has outstanding any securities
registered pursuant to the Securities Act of 1933, as amended (the “Securities
Act”), and/or subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), or (ii) 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
(other than any Borrower Materials consisting of reports or registration
statements filed with the SEC pursuant to the Securities Act or the Exchange
Act) 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, 


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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” and all Borrower
Materials consisting of reports or registration statements filed with the SEC
pursuant to the Securities Act or the Exchange Act 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; 


          (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, or any
default under, a Material Contract or with respect to Material Indebtedness of
any Loan Party or any Subsidiary thereof; (ii) any dispute, litigation or
proceeding between any Loan Party or any Subsidiary thereof and any
Governmental Authority, any investigation of any Loan Party or any Subsidiary
thereof by any Governmental Authority or suspension from trading by any
Governmental Authority of the common stock of the Lead Borrower; or (iii) the
commencement of, or any material development in, any material litigation or
proceeding affecting any Loan Party or any Subsidiary thereof, including pursuant
to any applicable Environmental Laws; 


          (c)
of the occurrence of any ERISA Event; 


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


          (e)
of any change in any Loan Party’s senior executive officers; 


          (f)
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; 


          (g)
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 to represent employees of any Loan Party; 


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


          (i)
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; and 


          (j)
of any failure by any Loan Party to pay rent at (i) five (5%) or more of such
Loan Party’s locations or (ii) any 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 would be reasonably likely to result in a
Material Adverse Effect. 





Each notice
pursuant to this Section 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)


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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 as the same shall become due and payable, all its obligations and
liabilities, including (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 of landlords, warehousemen, customs
brokers, and carriers) which, if unpaid, would by law become a Lien upon its
property; and (c) all 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 (a) the validity or
amount thereof is being contested in good faith by appropriate proceedings, (b)
such Loan Party has set aside on its books adequate reserves with respect
thereto in accordance with GAAP, (c) such contest effectively suspends
collection of the contested obligation and enforcement of any Lien securing
such obligation, (d) no Lien has been filed with respect thereto and (e) the
failure to make payment pending such contest could not reasonably be expected
to result in a Material Adverse Effect. 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. 


          6.06 Maintenance of
Properties. (a)
Maintain, preserve and protect all of its material properties and equipment
necessary in the operation of its business in good working order and condition,
ordinary wear and tear excepted; and (b) make all necessary repairs thereto and
renewals and replacements thereof except where the failure to do so could not
reasonably be expected to have 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
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 satisfactory to the
Collateral Agent, which endorsements or amendments shall provide that the
insurer shall pay all proceeds otherwise payable to the Loan Parties under the
policies directly to the Collateral Agent, (ii) a provision to the effect that
none of the Loan Parties, Credit Parties or any other Person shall be a
co-insurer and (iii) such other provisions as the Collateral Agent may
reasonably require from time to time to protect the interests of the Credit
Parties. Commercial general liability policies shall be endorsed to name the
Collateral Agent as an additional insured. Business interruption policies shall
name the Collateral Agent as a loss payee and shall be endorsed or amended to
include (i) a provision that, from and after the Closing Date, the insurer
shall pay (x) prior to a Cash Dominion Event, all 


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proceeds in
excess of $1,000,000, and (y) upon the occurrence and during the continuance of
a Cash Dominion Event, 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(c) 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 copy of a
renewal or replacement policy (or other evidence of renewal of a policy
previously delivered to the Collateral Agent, including an insurance binder)
together with evidence satisfactory to the Collateral Agent of payment of the
premium therefor. 


                    (c)
If at any time the area in which any Eligible Real Estate is located is
designated (i) a “flood hazard area” in any Flood Insurance Rate Map published
by the Federal Emergency Management Agency (or any successor agency), obtain
flood insurance in such total amount as is reasonable and customary for
companies engaged in the business of operating supermarkets, and otherwise
comply with the National Flood Insurance Program as set forth in the Flood
Disaster Protection Act of 1973, as amended from time to time, or (ii) a “Zone
1” area, obtain earthquake insurance in such total amount as is reasonable and
customary for companies engaged in the Business. 


                    (d)
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. 


                    (e)
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. 


                    (f)
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. 


          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) 


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


	
 

	
 


	
 

	
          (b)
 at all times retain a Registered Public Accounting Firm which is are
 reasonably satisfactory to the Administrative Agent and shall instruct such
 Registered Public Accounting Firm to cooperate with, and be available to, the
 Administrative Agent or its representatives to discuss the Loan Parties’
 financial performance, financial condition, operating results, controls, and
 such other matters, within the scope of the retention of such Registered
 Public Accounting Firm, as may be raised by the Administrative Agent. 


	
 

	
 


	
 

	
6.10 Inspection Rights. (a) Permit
representatives and independent contractors of the Administrative Agent to
visit and inspect any of its properties, to examine its corporate, financial
and operating records, and make copies thereof or abstracts therefrom, and to
discuss its affairs, finances and accounts with its directors, officers, and
Registered Public Accounting Firm, all at the expense of the Loan Parties 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 when an Event of Default exists the Administrative
Agent (or any of its representatives or independent contractors) may do any
of the foregoing at the expense of the Loan Parties at any time during normal
business hours and without advance notice.  


	
 

	
 


	
 

	
          (b)
 Upon the request of the Administrative Agent after reasonable prior notice,
 permit the Administrative Agent or professionals (including investment
 bankers, consultants, accountants, lawyers and appraisers) retained by the
 Administrative Agent to conduct appraisals, commercial finance examinations
 and other evaluations, including, without limitation, of (i) the Lead
 Borrower’s practices in the computation of the Borrowing Base and (ii) the
 assets included in the Borrowing Base and related financial information such
 as, but not limited to, sales, gross margins, payables, accruals and reserves.
 The Loan Parties shall pay the fees and expenses of the Administrative Agent
 and such professionals with respect to any real estate appraisals performed
 and up to two (2) Inventory appraisals and two (2) commercial finance
 examinations in any twelve-month period; provided that, if
 Availability is at any time less than twenty-five percent (25%) of the Loan
 Cap, the Loan Parties shall pay the fees and expenses of the Administrative
 Agent and such professionals with respect to up to three (3) Inventory appraisals
 and three (3) commercial finance examinations in any twelve month period. In
 addition to the foregoing, the Loan Parties shall pay the fees and expenses
 of the Administrative Agent and such professionals with respect to (i) one
 (1) additional Inventory appraisal, one (1) additional commercial finance
 examination, and two (2) additional desktop Inventory appraisals during 2009,
 and (ii) one (1) additional Inventory appraisal and one (1) additional
 commercial finance examination during 2010. Notwithstanding any of the
 foregoing, the Administrative Agent may cause additional appraisals and
 commercial finance examinations to be undertaken (i) as it in its discretion
 deems necessary or appropriate, at its own expense or, (ii) if required by
 Law or if a Default shall have occurred and be continuing, at the expense of
 the Loan Parties. 


	
 

	
 


	
 

	
          (c)
 Permit the Administrative Agent, from time to time, engage a geohydrologist,
 an independent engineer or other qualified consultant or expert, reasonably
 acceptable to the 





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Administrative
 Agent, at the expense of the Loan Parties, to undertake Phase I environmental
 site assessments during the term of this Agreement of the Eligible Real
 Estate, provided that such assessments may only be undertaken (i) during the
 continuance of an Event of Default or (ii) if a Loan Party receives any
 notice or obtains knowledge of (A) any potential or known release of any
 Hazardous Materials at or from any Eligible Real Estate, notification of
 which must be given to any Governmental Authority under any Environmental
 Law, or notification of which has, in fact, been given to any Governmental
 Authority, or (B) any complaint, order, citation or notice with regard to air
 emissions, water discharges, or any other environmental health or safety
 matter affecting any Loan Party or any Eligible Real Estate from any
 Governmental Authority (including, without limitation, the Environmental
 Protection Agency). Environmental assessments may include detailed visual
 inspections of the Real Estate, including, without limitation, any and all
 storage areas, storage tanks, drains, dry wells and leaching areas, and the
 taking of soil samples, surface water samples and ground water samples, as
 well as such other investigations or analyses as are reasonably necessary for
 a determination of the compliance of the Real Estate and the use and
 operation thereof with all applicable Environmental Laws. The Borrowers will,
 and will cause each of their Subsidiaries to, cooperate in all respects with
 the Administrative Agent and such third parties to enable such assessment and
 evaluation to be timely completed in a manner reasonably satisfactory to the
 Administrative Agent. 





          6.11 Use of Proceeds. Use the
proceeds of
the Credit Extensions (a) to repay outstanding Indebtedness under the Existing
Credit Agreement, (b) to finance the working capital needs of the Borrowers,
including the purchase of inventory and equipment, in each case in the ordinary
course of business, (c) to finance Capital Expenditures of the Borrowers, and
(d) for general corporate purposes of the Loan Parties, in each case to the
extent expressly permitted under 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), 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 to this Agreement or a
counterpart of the Facility Guaranty 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, 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 of 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 “Credit
 Card Notification”) substantially in the form attached hereto as Exhibit
 F which have 





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been
 executed on behalf of such Loan Party and delivered to such Loan Party’s
 credit card clearinghouses and processors listed on Schedule 5.21(b);
 and 


	
 

	
 


	
 

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





                    (b)
The Loan Parties shall ACH or wire transfer (i) prior to the occurrence and
continuance of an Event of Default, periodically in accordance with past
practices of the Loan Parties, but in no event less frequently than every fifth
Business Day, and (ii) upon the occurrence and during the continuance of an
Event of Default, as frequently as requested by the Administrative Agent (and
in each case whether or not there are then any outstanding Obligations) to a
Blocked Account all amounts on deposit in each such DDA. The Loan Parties shall
ACH or wire transfer no less frequently than daily (and whether or not there
are then any outstanding Obligations) to a Blocked Account all payments
received from credit card processors. 


                    (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
Bank of America (the “Concentration Account”), of all cash receipts and
collections, including, without limitation, the following: 


	
 

	
 


	
 

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


	
 

	
 


	
 

	
                    (ii)
 all proceeds of collections of Accounts; 


	
 

	
 


	
 

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


	
 

	
 


	
 

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


	
 

	
 


	
 

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


	
 

	
 


	
 

	
                    (vi)
 the proceeds of all credit card charges. 





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


          6.14
Information Regarding the Collateral.


                    (a)
Furnish to the Administrative Agent at least thirty (30) days
prior written notice of any change in: (i) any Loan Party’s name 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); (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. 


                    (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, 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. 


          6.15
Physical Inventories.


                    (a)
Cause not less than one (1) physical inventory to be undertaken,
at the expense of the Loan Parties, in each twelve (12) month period and
periodic cycle counts, in each case consistent with past practices, conducted
by such inventory takers as are satisfactory to the Collateral Agent and
following such methodology as is consistent with the methodology used in the
immediately preceding inventory or as otherwise may be satisfactory to the
Collateral Agent. The Collateral Agent, at the expense of the Loan Parties, may
participate in and/or observe each scheduled physical count of Inventory which
is undertaken on behalf of any Loan Party. The Lead Borrower, within 30 days
following the completion of such inventory, shall provide the Collateral Agent
with a reconciliation of the results of such inventory (as well as of any other
physical inventory or cycle counts undertaken by a Loan Party) and shall post
such results to the Loan Parties’ stock ledgers and general ledgers, as
applicable. 


-87-






                    (b)
The Collateral Agent, in its discretion, if any Default or Event
of Default exists, may cause additional such inventories to be taken as the
Collateral Agent determines (each, at the expense of the Loan Parties). 


          6.16
Environmental Laws.


          Conduct
its operations and keep and maintain its Real Estate in material compliance
with all Environmental Laws; (b) obtain and renew all environmental permits
necessary for its operations and properties; and (c) implement any and all
investigation, remediation, removal and response actions that are appropriate
or necessary to maintain the value and marketability of the Real Estate or to
otherwise comply with Environmental Laws pertaining to the presence,
generation, treatment, storage, use, disposal, transportation or release of any
Hazardous Materials on, at, in, under, above, to, from or about any of its Real
Estate, provided, however, that neither a Loan Party nor any of
its Subsidiaries shall be required to undertake any such cleanup, removal,
remedial or other action to the extent that its obligation to do so is being
contested in good faith and by proper proceedings and adequate reserves have
been set aside and are being maintained by the Loan Parties with respect to
such circumstances in accordance with GAAP. 


          6.17
Further Assurances. 


                    (a)
Execute any and all further documents, financing statements,
agreements and instruments, and take all such further actions (including the
filing and recording of financing statements and other documents), that may be
required under any Law, or which any Agent may 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 (i) Real Estate and (ii) 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)
Upon the request of the Collateral Agent, cause each of its
customs brokers to deliver a Customs Broker Agreement to the Collateral Agent. 


          6.18
Compliance with Terms of Leaseholds. Except as
otherwise expressly permitted hereunder, make all payments and otherwise
perform all obligations in respect of all Leases of real property 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 or any
rights to renew such leases to be forfeited or cancelled, notify the
Administrative Agent of any default by any party with respect to such Leases
and cooperate with the Administrative Agent in all respects to cure any such
default, and cause each of its Subsidiaries to do so, except, in any case,
where the failure to do so, either individually or in the aggregate, could not be
reasonably likely to have a Material Adverse Effect. 


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          6.19
Material Contracts. Perform and observe all the terms
and provisions of each Material Contract to be performed or observed by it,
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. 


ARTICLE VII 

NEGATIVE COVENANTS


          So
long as any Lender shall have any Commitment hereunder, any Committed Loan or
other Obligation hereunder shall remain unpaid or unsatisfied, or any Letter of
Credit shall remain outstanding, no Loan Party shall, nor shall it permit any
Subsidiary to, directly or indirectly: 


          7.01
Liens. Create, incur, assume or suffer to exist any
Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired or sign or file or suffer to exist under the UCC or any
similar Law or statute of any jurisdiction a financing statement that names any
Loan Party or any Subsidiary thereof as debtor; sign or suffer to exist any
security agreement authorizing any Person thereunder to file such financing
statement; sell any of its property or 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. Make any Investments, except Permitted
Investments. 


          7.03
Indebtedness; Disqualified Stock 


                    (a)
Create, incur, assume, guarantee, suffer to exist or otherwise become or remain
liable with respect to, any Indebtedness, except Permitted Indebtedness or (b)
issue Disqualified Stock. 


          7.04
Fundamental Changes. Merge, dissolve, liquidate,
consolidate with or into another Person, (or agree to do any of the foregoing),
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 which is not a Loan Party may merge with any one or more other
 Subsidiaries provided that (i) in any merger involving a Loan Party,
 the Loan Party shall be the continuing or surviving Person, and (ii) in any
 merger involving a wholly-owned Subsidiary, the continuing or surviving
 Person shall be wholly-owned Subsidiary; 


	
 

	
 


	
 

	
          (b)
 any Loan Party may merge into any other Loan Party, provided that in
 any merger involving the Borrower, the Borrower shall be the continuing or
 surviving Person; 


	
 

	
 


	
 

	
          (c)
 in connection with a Permitted Acquisition, any Subsidiary of a Loan Party
 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 shall be a wholly-owned Subsidiary
 of a Loan Party and (ii) in the case of any such merger to which any Loan
 Party is a party, such Loan Party is the surviving Person; and 





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          (d)
 any CFC that is not a Loan Party may merge into any CFC that is not a Loan
 Party. 





          7.05
Dispositions. Make any Disposition or enter into any
agreement to make any Disposition, except Permitted Dispositions. 


          7.06
Restricted Payments. Declare or make, directly or
indirectly, any Restricted Payment, or incur any obligation (contingent or
otherwise) to do so, except that, so long as no Default or Event of Default
shall have occurred and be continuing prior to or immediately after giving
effect to any action described below or would result therefrom: 


	
 

	
 


	
 

	
          (a)
 each Subsidiary of a Loan Party may make Restricted Payments to any Loan
 Party; 


	
 

	
 


	
 

	
          (b)
 the Loan Parties and each Subsidiary may declare and make dividend payments
 or other distributions payable solely in the common stock or other common
 Equity Interests of such Person; 


	
 

	
 


	
 

	
          (c)
 if the Payment Conditions are satisfied, the Loan Parties and each Subsidiary
 may purchase, redeem or otherwise acquire Equity Interests issued by it; 


	
 

	
 


	
 

	
          (d)
 if the Payments Conditions are satisfied, the Lead Borrower may declare or
 pay cash dividends to its stockholders; and 


	
 

	
 


	
 

	
          (e)
 the Loan Parties may issue and sell Equity Interests provided that (i) (A)
 all dividends and other payments in respect thereof shall be paid 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 shall be expressly subordinated to the
 Obligations, and (ii) no Loan Party shall issue any additional Equity
 Interests in a Subsidiary.





          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, regularly scheduled or mandatory (i) repayments, (ii)
repurchases, (iii) redemptions or (iv) defeasances of Permitted Indebtedness
(other than Subordinated Indebtedness), (b) as long as no Event of Default then
exists, repayments and prepayments of Subordinated Indebtedness in accordance
with the subordination terms thereof, and (c) voluntary prepayments, repurchases,
redemptions or defeasances of Permitted Indebtedness (other than Subordinated
Indebtedness) as long as the Payment Conditions are satisfied. 


          7.08
Change in Nature of Business 


          Engage
in any line of business substantially different from the business conducted by
the Loan Parties and their Subsidiaries on the date hereof or any business
substantially related or incidental thereto, or cause or permit Syms
Advertising Inc. to own any assets or engage in any business. 


          7.09
Transactions with Affiliates. Enter into, renew,
extend or be a party to any transaction of any kind with any Affiliate of any
Loan Party, whether or not in the ordinary course of business, other than on
fair and reasonable terms 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 


-90-






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.



          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 (A) 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) customary provisions in leases restricting
the assignment thereof; or (b) requires the grant of a Lien to secure an
obligation of such Person if a Lien is granted to secure another obligation of
such Person. 


          7.11
Use of Proceeds. Use the proceeds of any Credit Extension,
whether directly or indirectly, and whether immediately, incidentally or
ultimately, to purchase or carry margin stock (within the meaning of Regulation
U of the FRB) or to extend credit to others for the purpose of purchasing or
carrying margin stock or to refund Indebtedness originally incurred for such
purpose. 


          7.12
Amendment of Material Documents.


          Amend,
modify or waive any of a Loan Party’s rights under (a) its Organization
Documents in a manner materially adverse to the Credit Parties, or (b) any
Material Contract or Material Indebtedness (other than on account of any
refinancing thereof otherwise permitted hereunder), in each case to the extent
that such amendment, modification or waiver would be reasonably likely to have
a Material Adverse Effect or would constitute a breach of any terms of the Loan
Documents. 


          7.13
Fiscal Year.


          Change
the Fiscal Year of any Loan Party, or the accounting policies or reporting
practices of the Loan Parties, except as required by GAAP. 


          7.14
Deposit Accounts; Credit Card Processors.


          Open
new DDAs or Blocked Accounts unless the Loan Parties shall have delivered to
the Collateral Agent appropriate Blocked Account Agreements consistent with the
provisions of Section 6.13 and otherwise satisfactory to the Collateral Agent.
No Loan Party shall maintain any bank accounts or enter into any agreements
with credit card processors other than the ones expressly contemplated herein
or in Section 6.13 hereof. 


          7.15
Financial Covenant. 


          Permit
Availability at any time to be less than twelve and one-half percent (12.5%) of
the Loan Cap. 


ARTICLE VIII

EVENTS OF DEFAULT AND REMEDIES 


          8.01
Events of Default. Any of the following shall constitute
an Event of Default: 


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          (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
 Committed Loan or any L/C Obligation, or fails to deposit any funds as Cash
 Collateral in respect of L/C Obligations, or (ii) any interest on any
 Committed 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 Section 6.01, 6.02,
 6.03(a), (b), (c), (h) or (i), 6.05, 6.07, 6.10, 6.11,
 6.12, 6.13 or 6.14 or Article VII; or 


	
 

	
 


	
 

	
          (c)
 Other Defaults. Any Loan Party fails to perform or observe any other
 covenant or agreement (not specified in subsection (a) or (b) above)
 contained in any Loan Document on its part to be performed or observed and
 such failure continues for 30 days; or 


	
 

	
 


	
 

	
          (d)
 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 


	
 

	
 


	
 

	
          (e)
 Cross-Default. (i) Any Loan Party or any Subsidiary thereof (A) fails
 to make any payment when due (whether by scheduled maturity, required
 prepayment, acceleration, demand, or otherwise) in respect of any Material
 Indebtedness (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 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) and, in
 either event, the Swap Termination Value owed by the Loan Party or such
 Subsidiary as a result thereof is greater than $1,000,000; or 


	
 

	
 


	
 

	
          (f)
 Insolvency Proceedings, Etc. Any Loan Party or any of its Subsidiaries
 institutes or consents to the institution of any proceeding under any Debtor
 Relief Law, 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 and the appointment continues
 undischarged, undismissed or unstayed for 60 calendar days or an order or decree
 approving or ordering any of the foregoing shall be entered; or any
 proceeding under any Debtor Relief Law relating to any such Person or to all
 or any material part of its property is 





-92-







	
 

	
 


	
 

	
instituted
 without the consent of such Person and continues undismissed or unstayed for
 60 calendar days, or an order for relief is entered in any such proceeding;
 or 


	
 

	
 


	
 

	
          (g)
 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 and is not released, vacated or fully bonded within 30
 days after its issuance or levy; or 


	
 

	
 


	
 

	
          (h)
 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 $2,000,000
 (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 


	
 

	
 


	
 

	
          (i)
 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
 $2,000,000 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 $2,000,000 or which
 would reasonably likely result in a Material Adverse Effect; or 


	
 

	
 


	
 

	
          (j)
 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 any manner the validity or enforceability of any
 provision of any Loan Document; or any Loan Party denies that it has any or
 further liability or obligation under any provision of any Loan Document, or
 purports to revoke, terminate or rescind any provision of any Loan Document
 or seeks to avoid, limit or otherwise adversely affect any Lien purported to
 be created under any Security Document; or (ii) any Lien purported to be
 created under any Security Document shall cease to be (except as permitted
 pursuant to the terms thereof or of this Agreement), or shall be asserted by
 any Loan Party or any other Person not to be, a valid and perfected Lien on
 any Collateral, with the priority required by the applicable Security Document;
 or 


	
 

	
 


	
 

	
          (k)
 Change of Control. There occurs any Change of Control; or 


	
 

	
 


	
 

	
          (l)
 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 (other than for the taking of a physical
 inventory in the ordinary course or at the request of the Agents), 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 





-93-







	
 

	
 


	
 

	
          (m)
 Loss of Collateral. There occurs any uninsured loss to any material
 portion of the Collateral; or 


	
 

	
 


	
 

	
          (n)
 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 


	
 

	
 


	
 

	
          (o)
 Indictment. The indictment or institution of any legal process or
 proceeding against, 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; 


	
 

	
 


	
 

	
          (p)
 Guaranty. The termination or attempted termination of any Facility
 Guaranty except as expressly permitted hereunder or under any other Loan
 Document; 


	
 

	
 


	
 

	
          (q)
 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, disavow or contest in any manner
 (A) the effectiveness, validity or enforceability of any of the Subordination
 Provisions, (B) that the Subordination Provisions exist for the benefit of
 the Credit Parties, or (C) that all payments of principal of or premium and
 interest on the applicable Subordinated Indebtedness, or realized from the
 liquidation of any property of any Loan Party, shall be subject to any of the
 Subordination Provisions. 


	
 

	
 


	
          8.02
 Remedies Upon Event of Default. If any Event of
 Default occurs and is continuing, the Administrative Agent may, or, at the
 request of the Required Lenders shall, take any or all of the following
 actions:








	
 

	
 


	
 

	
          (a)
 declare the Commitments of each Lender to make Committed 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 Committed 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 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; 





-94-







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 Committed 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 Committed 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. 


          8.03
Application of Funds. After the exercise of remedies
provided for in Section 8.02 (or after the Committed Loans have
automatically become immediately due and payable and the L/C Obligations have
automatically been required to be Cash Collateralized as set forth in the
proviso to Section 8.02), any amounts received on account of the
Obligations shall be applied by the Administrative Agent in the following
order: 


	
  

 	
  

 
	
  

 	
           First,
 to payment of that portion of the Obligations (excluding the Other
 Liabilities) constituting fees, indemnities, Credit Party Expenses and other
 amounts (including fees, charges and disbursements of counsel to the
 Administrative Agent and the Collateral Agent and amounts payable under Article
 III) payable to the Administrative Agent and the Collateral Agent, each
 in its capacity as such;

 
	
  

 	
  

 
	
  

 	
           Second,
 to payment of that portion of the Obligations (excluding the Other
 Liabilities) constituting indemnities, Credit Party Expenses, and other
 amounts (other than principal, interest and fees) payable to the Lenders and
 the L/C Issuer (including fees, charges and disbursements of counsel to the
 respective Lenders and the L/C Issuer and amounts payable under Article
 III), ratably among them in proportion to the amounts described in this
 clause Second payable to them;

 
	
  

 	
  

 
	
  

 	
           Third,
 to the extent not previously reimbursed by the Lenders, to payment to the
 Lenders of that portion of the Obligations constituting principal and accrued
 and unpaid interest on any Permitted Overadvances, ratably among the Lenders
 in proportion to the amounts described in this clause Third payable to
 them;

 
	
  

 	
  

 
	
  

 	
           Fourth,
 to 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 Fourth
 payable to them;

 
	
  

 	
  

 
	
  

 	
           Fifth,
 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 Fifth
 held by them;

 
	
  

 	
  

 
	
  

 	
           Sixth,
 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;

 
	
  

 	
  

 
	
  

 	
           Seventh,
 to payment of all other Obligations (including without limitation the cash
 collateralization of indemnification obligations as to which a claim has been
 made as provided in Section 10.04(g), but which is unliquidated as to
 amount, but excluding any Other Liabilities), 

 


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 ratably
among the Credit Parties in proportion to the respective amounts described in
this clause Seventh held by them; 

 
	
  

 	
  

 
	
  

 	
           Eighth, 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 Eighth held by them; 

 
	
  

 	
  

 
	
  

 	
           Ninth, 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 Ninth
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 Sixth 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 Bank of
 America 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 capacity as a Lender), and the L/C Issuer hereby
 irrevocably appoints Bank of America 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 


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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. 


          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 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. 


          No
Agent shall 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 an Agent obtains such actual knowledge or
receives such a notice, such Agent shall give prompt notice thereof to each of
the other Credit Parties. Upon the occurrence 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 Applicable 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 


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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. 


          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 Committed 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
Committed Loan or the issuance of such Letter of Credit. Each Agent may consult
with legal counsel (who may be counsel for any Loan Party), independent
accountants and other experts selected by it, and shall not be liable for any
action taken or not taken by it in accordance with the advice of any such
counsel, accountants or experts. 


          9.05
Delegation of Duties. Each Agent may perform any and
all of its duties and exercise its rights and powers hereunder or under any
other Loan Document by or through any one or more sub-agents appointed by such
Agent. Each Agent and any such sub-agent may perform any and all of its duties
and exercise its rights and powers by or through their respective Related
Parties. The exculpatory provisions of this Article shall apply to any such
sub-agent and to the Related Parties of the Agents and any such sub-agent, and
shall apply to their respective activities in connection with the syndication
of the credit facilities provided for herein as well as activities as such
Agent. 


          9.06
Resignation of Agents. Either Agent may at any time
give written notice of its resignation to the Lenders, the L/C Issuer and the
Lead Borrower. Upon receipt of any such notice of resignation, the Required
Lenders shall have the right, 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. 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 


-98-





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. 


          Any
resignation by Bank of America as Administrative Agent pursuant to this Section
shall also constitute its resignation 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, (b) the retiring L/C Issuer 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
Intentionally Omitted. 


          9.09
Administrative Agent May File Proofs of Claim. In case
of the pendency of any proceeding under any Debtor Relief Law or any other
judicial proceeding relative to any Loan Party, the Administrative Agent
(irrespective of whether the principal of any Committed 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 Committed Loans, L/C Obligations and all
 other Obligations that are owing and unpaid and to file such other documents
 as may be necessary or advisable in order to have the claims of the Lenders, the
 L/C Issuer, the Administrative Agent and the other Credit Parties (including
 any claim for the reasonable compensation, expenses, disbursements and
 advances of the Lenders, the L/C Issuer, the Administrative Agent, such
 Credit Parties and their respective agents and counsel and all other amounts
 due the Lenders, the L/C Issuer the Administrative Agent and such Credit
 Parties under Sections 2.03(i), 2.03(j), 2.09 and 10.04)
 allowed in such judicial proceeding; and 

 


-99-











	
  

 	
  

 
	
  

 	
           (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.



          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. 


          9.10
Collateral and Guaranty Matters. The Credit Parties
irrevocably authorize the Agents, at their option and in their discretion, 


	
  

 	
  

 
	
  

 	
           (a)
 to release any Lien on any property granted to or held by the Collateral
 Agent under any Loan Document (i) upon termination of the Aggregate
 Commitments and payment in full of all Obligations (other than contingent
 indemnification obligations for which no claim has been asserted) and the
 expiration or termination of all Letters of Credit, (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 Applicable 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 Applicable 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 9.10. In each case as
specified in this Section 9.10, 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 9.10. 


          9.11
Notice of Transfer.


          The
Agents may deem and treat a Lender party to this Agreement as the owner of such
Lender’s portion of the Obligations for all purposes, unless and until, and
except to the extent, an Assignment and Acceptance shall have become effective
as set forth in Section 10.06. 


          9.12
Reports and Financial Statements.


-100-






          By signing this
Agreement, each Lender: 


	
  

 	
  

 
	
  

 	
           (a)
 agrees to furnish the Administrative Agent after the occurrence and during
 the continuance of a Cash Dominion Event (and thereafter at such frequency as
 the Administrative Agent may reasonably request) 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 Committed Loan
 or Committed 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. 

 



          9.13
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 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. 


          9.14
Indemnification of Agents. The Lenders shall 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 


-101-






whatsoever
that may be imposed on, incurred by, or asserted against any Agent in any way
relating to or arising out of this Agreement or any other Loan Document or any
action taken or omitted to be taken by any Agent in connection therewith;
provided, that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from such Agent’s gross negligence or
willful misconduct as determined by a final and nonappealable judgment of a
court of competent jurisdiction.  


          9.15 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. 


          9.16
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 Committed
 Loans, expenses or setoff or purchase its Applicable Percentage of a
 participation interest in the 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 Committed
 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, and
 (iii) at the option of the Administrative Agent, any amount payable to such
 Defaulting Lender hereunder (whether on account of principal, interest, fees
 or otherwise) shall, in lieu of being distributed to such Defaulting Lender,
 be retained by the Administrative Agent as cash collateral for future funding
 obligations of the Defaulting Lender in respect of any Committed Loan or
 existing or future participating interest in any Letter of Credit. 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 rate set forth in Section
 2.14(b) hereof 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 Committed 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.  

 


-102-









	
  

 	
  

 
	
  

 	
           (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
 Committed Loan or to otherwise perform its obligations under the Loan
 Documents. 

 


ARTICLE X 

MISCELLANEOUS


          10.01 Amendments, Etc. No amendment or
waiver of any provision of this Agreement or any other Loan Document, and no
Consent to any departure by any Loan Party therefrom, shall be effective unless
in writing signed by the Administrative Agent, with the Consent of the Required
Lenders, and the Lead Borrower or the applicable Loan Party, as the case may
be, and acknowledged by the Administrative Agent, and each such waiver or
Consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no such
amendment, waiver or consent shall: 


	
  

 	
  

 
	
  

 	
           (a)
 extend or, increase the Commitment of any Lender (or reinstate any Commitment
 terminated pursuant to Section 8.02) without the written Consent of
 such Lender; 

 
	
  

 	
  

 
	
  

 	
           (b)
 postpone any date fixed by this Agreement or any other Loan Document for (i)
 any payment or mandatory prepayment of principal, interest, fees or other
 amounts due to the applicable 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 applicable 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 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; 

 
	
  

 	
  

 
	
  

 	
           (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; 

 


-103-









	
  

 	
  

 
	
  

 	
           (i)
 increase any advance rates set forth in the term “Borrowing Base” without the
 written Consent of each Lender, or otherwise 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 the Required Supermajority Lenders, provided that the foregoing shall not
 limit the discretion of the Administrative Agent to change, establish or
 eliminate any Reserves; 

 
	
  

 	
  

 
	
  

 	
           (j)
 modify the definition of Permitted Overadvance so as to increase the amount
 thereof or, except as provided in such definition, the time period for a
 Permitted Overadvance without the written Consent of each Lender; and 

 
	
  

 	
  

 
	
  

 	
           (k)
 except as expressly permitted herein or in any other Loan Document, subordinate
 the Obligations hereunder or the Liens granted hereunder or under the other
 Loan Documents, to any other Indebtedness or Lien, as the case may be without
 the written Consent of each Lender; 

 



and, provided
further, that (i) no amendment, waiver or Consent shall, unless in writing
and signed by the L/C Issuer in addition to the Lenders required above, affect
the rights or duties of the L/C Issuer under this Agreement or any Issuer
Document relating to any Letter of Credit issued or to be issued by it; (ii) no
amendment, waiver or Consent shall, unless in writing and signed by the
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; (iii) 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 (iv) 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 or electronic mail 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 or the L/C Issuer, 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. 

 


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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 received. Notices delivered
through electronic communications to the extent provided in subsection (b)
below, shall be effective as provided in such subsection (b). 


	
  

 	
  

 
	
  

 	
           (b)
 Electronic Communications. Notices 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)
 The Platform. THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE
 AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS
 OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY
 DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO
 WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY
 OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF
 THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY
 ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In
 no event shall the Agents or any of their Related Parties (collectively, the
 “Agent Parties”) have any liability to any Loan Party, any Lender, the
 L/C Issuer or any other Person for losses, claims, damages, liabilities or
 expenses of any kind (whether in tort, contract or otherwise) arising out of
 the Loan Parties’ or the Administrative Agent’s transmission of Borrower
 Materials through the Internet, except to the extent that such losses,
 claims, damages, liabilities or expenses are determined by a court of
 competent jurisdiction by a final and nonappealable judgment to have resulted
 from the gross negligence or willful misconduct of such Agent Party; provided,
 however, that in no event shall any Agent Party have any liability to
 any Loan Party, any Lender, the L/C Issuer or any other Person for indirect,
 special, incidental, consequential or punitive damages (as opposed to direct
 or actual damages). 

 
	
  

 	
  

 
	
  

 	
           (d)
 Change of Address, Etc. Each of the Loan Parties, the Agents and the
 L/C Issuer may change its mailing or electronic mail address, telecopier or
 telephone number for notices and other communications hereunder by notice to
 the other parties hereto. Each other Lender may change its mailing or
 electronic mail address, telecopier or telephone number for notices and 

 


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 other
 communications hereunder by notice to the Lead Borrower, the Agents and the
 L/C Issuer. 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. 

 
	
  

 	
  

 
	
  

 	
           (e)
 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) 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 Committed Loan or issuance of a
Letter of Credit shall not be construed as a waiver of any Default, regardless
of whether any Credit Party may have had notice or knowledge of such Default at
the time. 


          10.04
Expenses; Indemnity; Damage Waiver. 


	
  

 	
  

 
	
  

 	
           (a)
 Costs and Expenses. The Borrowers shall pay all Credit Party Expenses.
 

 
	
  

 	
  

 
	
  

 	
           (b)
 Indemnification by the Loan Parties. The Loan Parties shall indemnify
 the Agents (and any sub-agent thereof), each other Credit Party, and each
 Related Party of any of the foregoing Persons (each such Person being called
 an “Indemnitee”) against, and hold each Indemnitee harmless (on an
 after tax basis) from, any and all losses, claims, causes of action, damages,
 liabilities, settlement payments, costs, and related expenses (including the
 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 Committed 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 

 


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 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 are determined by a court of competent
 jurisdiction by final and nonappealable judgment to have resulted from the
 gross negligence or willful misconduct of such Indemnitee. 

 
	
  

 	
  

 
	
  

 	
           (c)
Reimbursement by Lenders. Without limiting their obligations under
Section 9.14 hereof, to the extent that the Loan Parties for any reason fail
to indefeasibly pay any amount required under subsection (a) or (b) of this
Section to be paid by it, each Lender severally agrees to pay to the Agents
(or any such sub-agent), the L/C Issuer or such Related Party, as the case
may be, such Lender’s Applicable Percentage (determined as of the time that
the applicable unreimbursed expense or indemnity payment is sought) of such
unpaid amount, provided that the unreimbursed expense or indemnified loss,
claim, damage, liability or related expense, as the case may be, was incurred
by or asserted against the Agents (or any such sub-agent) or the L/C Issuer
in its capacity as such, or against any Related Party of any of the foregoing
acting for the Agents (or any such sub-agent) or L/C Issuer in connection
with such capacity. The obligations of the Lenders under this subsection (c)
are subject to the provisions of Section 2.12(d).  

 
	
  

 	
  

 
	
  

 	
           (d)
 Waiver of Consequential Damages, Etc. To the fullest extent permitted
 by 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 Committed 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
 Committed 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 Law or otherwise, then (a) to the extent of
such recovery, the obligation or part 


-107-





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. 


                    (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 Committed
Loans (including for purposes of this Section 10.06(b), participations in L/C
Obligations) 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 Committed 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 Committed
Loans outstanding thereunder) or, if the Commitment is not then in effect,
the principal outstanding balance of the Committed 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 “Trade Date” is specified in the Assignment and
Assumption, as of the Trade Date, shall not be less than $5,000,000 unless
each of the Administrative Agent and, so long as no 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;  

 


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                     (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 Committed Loans or the
 Commitment assigned; 

 
	
  

 	
  

 
	
  

 	
                     (iii)
 Required Consents. No consent shall be required for any assignment
 except to the extent required by subsection (b)(i)(B) of this Section and, in
 addition: 

 
	
  

 	
  

 
	
  

 	
                               (A)
 the consent of the Lead Borrower (such consent not to be unreasonably withheld
 or delayed) shall be required unless (1) a Default has occurred and is
 continuing at the time of such assignment or (2) 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. 

 
	
  

 	
  

 
	
  

 	
                     (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 and, in the
event of an assignment by the assignor Lender of less than its entire
Commitment, a new Note to the assignor Lender reflecting its reduced
Commitment, provided that in any case the assignor Lender shall have returned
to the Borrower any Note payable to the assignor Lender or its order in the
amount of its Commitment prior to such assignment. 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 Committed 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 


-109-






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 (i) a natural person, (ii) the Loan Parties or any of
the Loan Parties’ Affiliates or Subsidiaries or (iii) any time prior to the
occurrence of an Event of Default pursuant to Section 8.01(a) or (f), a
competitor of a Loan Party or any of its 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 Committed
Loans (including such Lender’s participations in L/C Obligations owing to it); provided
that (i) such Lender’s obligations under this Agreement shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties hereto
for the performance of such obligations and (iii) the Loan Parties, the Agents,
the Lenders and the L/C Issuer shall continue to deal solely and directly with
such Lender in connection with such Lender’s rights and obligations under this
Agreement. Any Participant shall agree in writing to comply with all
confidentiality obligations set forth in Section 10.07 as if such Participant
was a Lender hereunder. 


          Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce this
Agreement and to approve any amendment, modification or waiver of any provision
of this Agreement; 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 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. 


-110-






                    (h)
Resignation as L/C Issuer after Assignment. Notwithstanding anything to
the contrary contained herein, if at any time Bank of America assigns all of
its Commitment and Committed Loans pursuant to subsection (b) above, Bank of
America may resign as L/C Issuer. In the event of any such resignation as L/C
Issuer, the Lead Borrower shall be entitled to appoint from among the Lenders a
successor L/C Issuer hereunder; provided, however, that no
failure by the Lead Borrower to appoint any such successor shall affect the
resignation of Bank of America as L/C Issuer. If Bank of America 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)). Upon the appointment of a successor L/C Issuer, (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 (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 Bank of America to effectively assume the obligations of Bank
of America with respect to such Letters of Credit or indemnify Bank of America
with respect to such Letters of Credit. 


          10.07 Treatment
of Certain Information; Confidentiality. Each of the
Credit Parties agrees to maintain the confidentiality of the Information (as
defined below), except that Information may be disclosed (a) to its Affiliates
and to its and its Affiliates’ respective partners, directors, officers,
employees, agents, funding sources, attorneys, advisors and representatives (it
being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such Information and instructed to keep
such Information confidential), (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 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 is clearly identified at the time of
delivery as confidential or as being suitable only for posting on a portion of
the Platform not designated “Public Investor”. 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 Law, including Federal and state
securities Laws. 


-111-






          10.08 Right of
Setoff. If an Event of Default shall have occurred and
be continuing or if any Lender shall have been served with a trustee process or
similar attachment relating to property of a Loan Party, each Lender, the L/C
Issuer and each of their respective Affiliates is hereby authorized at any time
and from time to time, after obtaining the prior written consent of the
Administrative Agent or the Required Lenders, to the fullest extent permitted
by Law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final, in whatever currency) at any time held and other
obligations (in whatever currency) at any time owing by such Lender, the L/C
Issuer or any such Affiliate to or for the credit or the account of the Borrowers
or any other Loan Party against any and all of the Obligations now or hereafter
existing under this Agreement or any other Loan Document to such Lender or the
L/C Issuer, regardless of the adequacy of the Collateral, and irrespective of
whether or not such Lender or the L/C Issuer shall have made any demand under
this Agreement or any other Loan Document and although such obligations of the
Borrowers or such Loan Party may be contingent or unmatured or are owed to a
branch or office of such Lender or the L/C Issuer different from the branch or
office holding such deposit or obligated on such indebtedness. The rights of
each Lender, the L/C Issuer and their respective Affiliates under this Section
are in addition to other rights and remedies (including other rights of setoff)
that such Lender, the L/C Issuer or their respective Affiliates may have. Each
Lender and the L/C Issuer agrees to notify the Lead Borrower and the
Administrative Agent promptly after any such setoff and application, provided that
the failure to give such notice shall not affect the validity of such setoff
and application.  


          10.09 Interest
Rate Limitation. Notwithstanding anything to the
contrary contained in any Loan Document, the interest paid or agreed to be paid
under the Loan Documents shall not exceed the maximum rate of non-usurious
interest permitted by 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
Committed 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 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 mail 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 Committed
Loan or any other Obligation hereunder shall remain unpaid or unsatisfied or
any Letter of Credit shall remain outstanding. Further, the provisions of
Sections 3.01, 3.04, 3.05 and 10.04 and  


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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, (y) any obligations that may thereafter arise with
respect to the Other Liabilities, and (z) any Obligations that may thereafter
arise under Section 10.04 hereof (other than any contingent indemnification
claims for which a claim has not then been asserted). 


          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 or such assignee 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 Committed 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 Laws. 





A Lender shall
not be required to make any such assignment or delegation if, prior thereto, as
a result of a waiver by such Lender or otherwise, the circumstances entitling
the Borrowers to require such assignment and delegation cease to apply. 


          10.14 Governing
Law; Jurisdiction; Etc. 


                    (a)
GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. 


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                    (b)
SUBMISSION TO JURISDICTION. EACH LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY
SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED
STATES DISTRICT COURT FOR 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 LAW, IN SUCH FEDERAL COURT. EACH OF THE LOAN
PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING
SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE
JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR
IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT ANY CREDIT PARTY MAY
OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT AGAINST ANY LOAN PARTY OR ITS PROPERTIES IN THE COURTS
OF ANY JURISDICTION. 


                    (c)
WAIVER OF VENUE. EACH LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY 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 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 ANY SUIT, ACTION OR PROCEEDING BY SENDING THE SAME BY FIRST CLASS
MAIL, RETURN RECEIPT REQUESTED OR BY OVERNIGHT COURIER SERVICE, TO THE ADDRESS
OF SUCH PARTY SET FORTH IN SECTION 10.02 OF THIS AGREEMENT. NOTHING IN THIS
AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY APPLICABLE LAW. 


                    (e)
ACTIONS COMMENCED BY LOAN PARTIES. EACH LOAN PARTY AGREES THAT ANY
ACTION COMMENCED BY ANY LOAN PARTY ASSERTING ANY CLAIM OR COUNTERCLAIM ARISING
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL BE
BROUGHT SOLELY IN A COURT OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY
OR ANY FEDERAL COURT SITTING THEREIN AS THE ADMINISTRATIVE AGENT MAY ELECT IN
ITS SOLE DISCRETION AND CONSENTS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS
WITH RESPECT TO ANY SUCH ACTION. 


          10.15 Waiver of
Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY 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 


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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, that 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 hereto, 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
Committed Loans will be used by the Loan Parties, directly or indirectly, for
any payments to any governmental official or employee, political party,
official of a political party, candidate for political office, or anyone else
acting in an official capacity, in order to obtain, retain or direct business
or obtain any improper advantage, in violation of the United States Foreign
Corrupt Practices Act of 1977, as amended. 


          10.18 Foreign
Asset Control Regulations. Neither of the advance of
the Committed Loans nor the use of the proceeds of any thereof will violate the
Trading With the Enemy Act (50 U.S.C. § 1 et 


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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 with respect to each provision of the Loan Documents for which a
specific time period is prescribed. 


          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 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)
 At any time after the Loan Parties shall have complied with the reporting
 requirements of the Securities Exchange Act of 1934 and all applicable
 regulations promulgated thereunder with respect to the financing transactions
 contemplated by this Agreement (including reporting requirements relating to
 any amendment to this Agreement or any other Loan Document), the
 Administrative Agent or any Lender shall be permitted to publish advertising
 material relating to the financing transactions contemplated by this
 Agreement using any Loan Party’s name, product photographs, logo or
 trademark, provided that, except with respect to advertising material
 consisting of a tombstone or league table measurement, reasonably in advance
 of the publication of such advertising material, the Administrative Agent or
 such Lender shall provide a draft thereof to the Lead Borrower for review and
 comment. Neither the Administrative Agent nor any Lender shall distribute any
 material non-public information relating to the Loan Parties without the
 prior consent of the Lead Borrower, which consent may be withheld by the Lead
 Borrower in its sole and absolute discretion. 





          10.22
Additional Waivers.


                    (a)
The Obligations are the joint and several obligation of each Loan Party. To the
fullest extent permitted by 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, 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 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, to the extent permitted by Law,
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 Law, to
impair or to extinguish any right of reimbursement or subrogation or other
right or remedy of such Loan Party against any other Loan Party, as the case
may be, or any security. 


                    (d)
Each Borrower is obligated to repay the Obligations as joint and several
obligors under this Agreement. Upon payment by any Loan Party of any
Obligations, all rights of such Loan Party against any other Loan Party arising
as a result thereof by way of right of subrogation, contribution,
reimbursement, indemnity or otherwise shall in all respects be subordinate and
junior in right of payment to the prior indefeasible payment in full in cash of
all the Obligations and the termination of the Commitments. In addition, any
indebtedness of any Loan Party now or hereafter held by any other Loan Party is
hereby subordinated in right of payment to the prior indefeasible payment in
full of the Obligations and no Loan Party will demand, sue for or otherwise
attempt to collect any such indebtedness. If any amount shall erroneously be
paid to any Loan Party on account of (i) such subrogation, contribution,
reimbursement, indemnity or similar right or (ii) any such indebtedness of any
Loan Party, such amount shall be held in trust for the benefit of the Credit
Parties and shall forthwith be paid to the Administrative Agent to be credited
against the payment of the Obligations, whether matured or unmatured, in
accordance with the terms of this Agreement and the other Loan Documents.
Subject to the foregoing, to the extent that any Borrower shall, under this
Agreement as a joint and several obligor, repay any of the Obligations
constituting Committed 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 


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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. 


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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:


	
 

	
 


	
 

	
SYMS CORP


	
 

	
 


	
 

	
By: 

	
/s/ Philip A. Piscopo


	
 

	
 


	
 

	
Name: Philip A. Piscopo


	
 

	
 


	
 

	
Title: Vice President
 & Chief Financial Officer


	
 

	
 


	
 

	
SYL, LLC


	
 

	
By: Syms Corp, sole member


	
 

	
 


	
 

	
By: 

	
/s/ Philip A. Piscopo


	
 

	
 


	
 

	
Name: Philip A. Piscopo


	
 

	
 


	
 

	
Title: Vice President
 & Chief Financial Officer





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BANK OF AMERICA, N.A., as Administrative Agent and as Collateral
Agent


	
 

	
 

	
 


	
 

	
By: 

	
/s/ Andrew Cerussi


	
 

	
 


	
 

	
Name: Andrew Cerussi


	
 

	
 


	
 

	
Title: Senior Vice
 President - Director





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BANK OF AMERICA, N.A., as a Lender and 

 as L/C Issuer


	
 

	
 


	
 

	
By: 

	
/s/ Andrew Cerussi


	
 

	
 


	
 

	
Name: Andrew Cerussi


	
 

	
 


	
 

	
Title:
 Senior Vice President - Director





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