exv10w5






Exhibit 10.5




 

 






CREDIT AGREEMENT




Dated as of April 10, 2008




among




rue21, inc.,

as the Lead Borrower




For




The Borrowers Party Hereto




The BORROWERS Party Hereto




The GUARANTORS Party Hereto




BANK OF AMERICA, N.A.

as Administrative Agent, Collateral Agent, Swing Line Lender

and

L/C Issuer,




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
	 	 	44	 
	 	1.03	 	 	Accounting Terms
	 	 	45	 
	 	1.04	 	 	Rounding
	 	 	46	 
	 	1.05	 	 	Times of Day
	 	 	46	 
	 	1.06	 	 	Letter of Credit Amounts
	 	 	46	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE II. THE COMMITMENTS AND CREDIT EXTENSIONS	 	 	46	 
	 	 	 	 	 
	 	 	 	 
	 	2.01	 	 	Committed Loans; Reserves
	 	 	46	 
	 	2.02	 	 	Borrowings, Conversions and Continuations of Committed Loans
	 	 	47	 
	 	2.03	 	 	Letters of Credit
	 	 	50	 
	 	2.04	 	 	Swing Line Loans
	 	 	59	 
	 	2.05	 	 	Prepayments
	 	 	62	 
	 	2.06	 	 	Termination or Reduction of Commitments
	 	 	64	 
	 	2.07	 	 	Repayment of Loans
	 	 	65	 
	 	2.08	 	 	Interest
	 	 	65	 
	 	2.09	 	 	Fees
	 	 	65	 
	 	2.10	 	 	Computation of Interest and Fees
	 	 	66	 
	 	2.11	 	 	Evidence of Debt
	 	 	66	 
	 	2.12	 	 	Payments Generally; Administrative Agent’s Clawback
	 	 	67	 
	 	2.13	 	 	Sharing of Payments by Lenders
	 	 	69	 
	 	2.14	 	 	Settlement Amongst Lenders 
	 	 	70	 
	 	2.15	 	 	Increase in Commitments
	 	 	70	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE III. TAXES, YIELD PROTECTION AND ILLEGALITY; APPOINTMENT OF LEAD BORROWER	 	 	72	 
	 	 	 	 	 
	 	 	 	 
	 	3.01	 	 	Taxes
	 	 	72	 
	 	3.02	 	 	Illegality
	 	 	74	 
	 	3.03	 	 	Inability to Determine Rates
	 	 	75	 
	 	3.04	 	 	Increased Costs; Reserves on LIBO Rate Loans
	 	 	75	 
	 	3.05	 	 	Compensation for Losses
	 	 	77	 
	 	3.06	 	 	Mitigation Obligations; Replacement of Lenders
	 	 	77	 
	 	3.07	 	 	Designation of Lead Borrower as Borrowers’ Agent
	 	 	78	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE IV. CONDITIONS PRECEDENT TO CREDIT EXTENSIONS	 	 	78	 
	 	 	 	 	 
	 	 	 	 
	 	4.01	 	 	Conditions of Initial Credit Extension
	 	 	78	 
	 	4.02	 	 	Conditions to all Credit Extensions
	 	 	82	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE V. REPRESENTATIONS AND WARRANTIES	 	 	83	 
	 	 	 	 	 
	 	 	 	 
	 	5.01	 	 	Existence, Qualification and Power
	 	 	83	 
	 	5.02	 	 	Authorization; No Contravention
	 	 	83	 
	 	5.03	 	 	Governmental Authorization; Other Consents
	 	 	83	 






i









 






	 	 	 	 	 	 	 	 	 
	Section	 	 	 	Page
	 	 	 	 	 
	 	 	 	 
	 	5.04	 	 	Binding Effect
	 	 	83	 
	 	5.05	 	 	Financial Statements; No Material Adverse Effect
	 	 	84	 
	 	5.06	 	 	Litigation
	 	 	84	 
	 	5.07	 	 	No Default
	 	 	85	 
	 	5.08	 	 	Ownership of Property; Liens
	 	 	85	 
	 	5.09	 	 	Environmental Compliance
	 	 	85	 
	 	5.10	 	 	Insurance
	 	 	86	 
	 	5.11	 	 	Taxes
	 	 	86	 
	 	5.12	 	 	ERISA Compliance
	 	 	87	 
	 	5.13	 	 	Subsidiaries; Equity Interests
	 	 	87	 
	 	5.14	 	 	Margin Regulations; Investment Company Act;
Public Utility Holding Company Act
	 	 	88	 
	 	5.15	 	 	Disclosure
	 	 	88	 
	 	5.16	 	 	Compliance with Laws
	 	 	88	 
	 	5.17	 	 	Intellectual Property; Licenses, Etc.
	 	 	89	 
	 	5.18	 	 	Labor Matters
	 	 	89	 
	 	5.19	 	 	Security Documents
	 	 	89	 
	 	5.20	 	 	Solvency
	 	 	90	 
	 	5.21	 	 	Deposit Accounts; Credit Card Arrangements
	 	 	90	 
	 	5.22	 	 	Brokers
	 	 	90	 
	 	5.23	 	 	Customer and Trade Relations
	 	 	90	 
	 	5.24	 	 	Material Contracts
	 	 	90	 
	 	5.25	 	 	Casualty
	 	 	90	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE VI. AFFIRMATIVE COVENANTS	 	 	90	 
	 	 	 	 	 
	 	 	 	 
	 	6.01	 	 	Financial Statements
	 	 	91	 
	 	6.02	 	 	Certificates; Other Information
	 	 	92	 
	 	6.03	 	 	Notices
	 	 	94	 
	 	6.04	 	 	Payment of Obligations
	 	 	95	 
	 	6.05	 	 	Preservation of Existence, Etc.
	 	 	96	 
	 	6.06	 	 	Maintenance of Properties
	 	 	96	 
	 	6.07	 	 	Maintenance of Insurance
	 	 	96	 
	 	6.08	 	 	Compliance with Laws
	 	 	97	 
	 	6.09	 	 	Books and Records; Accountants
	 	 	97	 
	 	6.10	 	 	Inspection Rights
	 	 	98	 
	 	6.11	 	 	Use of Proceeds
	 	 	98	 
	 	6.12	 	 	Additional Loan Parties
	 	 	99	 
	 	6.13	 	 	Cash Management
	 	 	99	 
	 	6.14	 	 	Information Regarding the Collateral
	 	 	100	 
	 	6.15	 	 	Physical Inventories
	 	 	101	 
	 	6.16	 	 	Environmental Laws
	 	 	102	 
	 	6.17	 	 	Further Assurances
	 	 	102	 
	 	6.18	 	 	Compliance with Terms of Leaseholds
	 	 	103	 
	 	6.19	 	 	Material Contracts
	 	 	103	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE VII. NEGATIVE COVENANTS	 	 	103	 
	 	 	 	 	 
	 	 	 	 
	 	7.01	 	 	Liens
	 	 	103	 






ii









 






	 	 	 	 	 	 	 	 	 
	Section	 	 	 	Page
	 	 	 	 	 
	 	 	 	 
	 	7.02	 	 	Investments
	 	 	103	 
	 	7.03	 	 	Indebtedness
	 	 	103	 
	 	7.04	 	 	Fundamental Changes
	 	 	104	 
	 	7.05	 	 	Dispositions
	 	 	104	 
	 	7.06	 	 	Restricted Payments
	 	 	104	 
	 	7.07	 	 	Prepayments of Indebtedness 
	 	 	105	 
	 	7.08	 	 	Change in Nature of Business
	 	 	105	 
	 	7.09	 	 	Transactions with Affiliates 
	 	 	105	 
	 	7.10	 	 	Burdensome Agreements
	 	 	105	 
	 	7.11	 	 	Use of Proceeds
	 	 	105	 
	 	7.12	 	 	Amendment of Material Documents
	 	 	105	 
	 	7.13	 	 	Corporate Name; Fiscal Year
	 	 	105	 
	 	7.14	 	 	Blocked Accounts; Credit Card Processors
	 	 	106	 
	 	7.15	 	 	Consolidated Fixed Charge Coverage Ratio
	 	 	106	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE VIII. EVENTS OF DEFAULT AND REMEDIES	 	 	106	 
	 	 	 	 	 
	 	 	 	 
	 	8.01	 	 	Events of Default
	 	 	106	 
	 	8.02	 	 	Remedies Upon Event of Default
	 	 	110	 
	 	8.03	 	 	Application of Funds
	 	 	111	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE IX. ADMINISTRATIVE AGENT	 	 	112	 
	 	 	 	 	 
	 	 	 	 
	 	9.01	 	 	Appointment and Authority
	 	 	112	 
	 	9.02	 	 	Rights as a Lender
	 	 	113	 
	 	9.03	 	 	Exculpatory Provisions
	 	 	113	 
	 	9.04	 	 	Reliance by Agents
	 	 	114	 
	 	9.05	 	 	Delegation of Duties
	 	 	114	 
	 	9.06	 	 	Resignation of Agents
	 	 	115	 
	 	9.07	 	 	Non-Reliance on Administrative Agent and Other Lenders
	 	 	116	 
	 	9.08	 	 	Administrative Agent May File Proofs of Claim
	 	 	116	 
	 	9.09	 	 	Collateral and Guaranty Matters
	 	 	117	 
	 	9.10	 	 	Notice of Transfer
	 	 	117	 
	 	9.11	 	 	Reports and Financial Statements
	 	 	117	 
	 	9.12	 	 	Agency for Perfection
	 	 	118	 
	 	9.13	 	 	Indemnification of Agents
	 	 	118	 
	 	9.14	 	 	Relation among Lenders
	 	 	118	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE X. MISCELLANEOUS	 	 	119	 
	 	 	 	 	 
	 	 	 	 
	 	10.01	 	 	Amendments, Etc.
	 	 	119	 
	 	10.02	 	 	Notices; Effectiveness; Electronic Communications
	 	 	120	 
	 	10.03	 	 	No Waiver; Cumulative Remedies
	 	 	122	 
	 	10.04	 	 	Expenses; Indemnity; Damage Waiver
	 	 	123	 
	 	10.05	 	 	Payments Set Aside
	 	 	124	 
	 	10.06	 	 	Successors and Assigns
	 	 	125	 
	 	10.07	 	 	Treatment of Certain Information; Confidentiality
	 	 	129	 
	 	10.08	 	 	Right of Setoff
	 	 	129	 
	 	10.09	 	 	Interest Rate Limitation
	 	 	130	 
	 	10.10	 	 	Counterparts; Integration; Effectiveness
	 	 	130	 






iii









 






	 	 	 	 	 	 	 	 	 
	Section	 	 	 	Page
	 	 	 	 	 
	 	 	 	 
	 	10.11	 	 	Survival
	 	 	130	 
	 	10.12	 	 	Severability
	 	 	131	 
	 	10.13	 	 	Replacement of Lenders
	 	 	131	 
	 	10.14	 	 	Governing Law; Jurisdiction; Etc.
	 	 	132	 
	 	10.15	 	 	Waiver of Jury Trial
	 	 	133	 
	 	10.16	 	 	No Advisory or Fiduciary Responsibility
	 	 	133	 
	 	10.17	 	 	USA PATRIOT Act Notice
	 	 	134	 
	 	10.18	 	 	Time of the Essence
	 	 	134	 
	 	10.19	 	 	Press Releases
	 	 	134	 
	 	10.20	 	 	Additional Waivers
	 	 	135	 
	 	10.21	 	 	No Strict Construction
	 	 	136	 
	 	10.22	 	 	Attachments
	 	 	136	 
	 
	SIGNATURES	 	 	S-1	 






iv









 






SCHEDULES





	 	 	 	 	 
	 	1.01	 	 	Borrowers

	 	1.02	 	 	Guarantors

	 	2.01	 	 	Commitments and Applicable Percentages

	 	5.01	 	 	Loan Parties; Organizational Information

	 	5.05	 	 	Material Indebtedness

	 	5.06	 	 	Litigation

	 	5.08	(b)(1)	 	Owned Real Estate

	 	5.08	(b)(2)	 	Leased Real Estate

	 	5.09	 	 	Environmental Matters

	 	5.10	 	 	Insurance

	 	5.13	 	 	Subsidiaries; Other Equity Investments

	 	5.17	 	 	Intellectual Property Matters

	 	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-l
	 	Committed Loan Notice
	 

	 	A-2
	 	Conversion/Continuation Notice
	 

	 	B
	 	Swing Line Loan Notice
	 

	 	C
	 	Note
	 

	 	D
	 	Compliance Certificate
	 

	 	E
	 	Assignment and Assumption
	 

	 	F
	 	Borrowing Base Certificate
	 

	 	G
	 	Credit Card Notification
	 

	 	H
	 	Joinder Agreement







v











 





CREDIT AGREEMENT




     This CREDIT AGREEMENT (“Agreement”) is entered into as of April 10, 2008, among



     rue21, inc., a Pennsylvania corporation, for itself and as agent (in such capacity, the
“Lead Borrower”) for the other Borrowers now or hereafter party hereto;



     the BORROWERS now or hereafter party hereto;



     r services llc, a Virginia limited liability company, as Guarantor;



     the other GUARANTORS now or hereafter party hereto;



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



     BANK OF AMERICA, N.A., as Administrative Agent, Collateral Agent, Swing Line Lender and L/C
Issuer.



     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:



     “ACH” means automated clearing house transfers.



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



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



1









 





     “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.



     “Additional Commitment Lender” shall have the meaning provided in Section
2.15(c).



     “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, provided that
the first Adjustment Date after the Closing Date shall be November 1, 2008.



     “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.



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



     “Agreement” means this Credit Agreement.



     “Applicable Margin”
means:




     (a) From and after the Closing Date until the first Adjustment Date, the
percentages set forth in Level III of the pricing grid below, unless Average Daily Excess



2









 






Availability does not support the requirements of Level III or lower, in which event the
Applicable Margin will be set at Level IV. In no event shall the Applicable Margin be set
at Level I or II prior to the first Adjustment Date (even if the Average Daily Excess
Availability requirements for Level I or II have been met); and




     (b) From and after the first Adjustment Date, the Applicable Margin shall be
determined from the following pricing grid based upon the Average Daily Excess Availability
for the most recent Fiscal Quarter ended immediately preceding such Adjustment Date;
provided, however, that notwithstanding anything to the contrary set forth
herein, upon the occurrence of an Event of Default, the Administrative Agent may, and at
the direction of the Required Lenders shall, immediately increase the Applicable Margin to
that set forth in Level IV (even if the Average Daily Excess Availability requirements for
a different Level have been met) and interest shall accrue at the Default Rate unless and
until such time as such Event of Default has been duly waived as provided in Section
10.01 hereof.



	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Base Rate
	Level	 	Average Daily Excess Availability	 	LIBO Applicable Margin	 	Applicable Margin
	I

	 	Greater than or
equal to
$45,000,000
	 	 	1.25	%	 	 	0.00	%
	 
	 	 	 	 	 	 	 	 	 	 
	II

	 	Less than
$45,000,000 but
equal to or greater
than $30,000,000
	 	 	1.50	%	 	 	0.00	%
	 
	 	 	 	 	 	 	 	 	 	 
	III

	 	Less than
$30,000,000 but
equal to or greater
than $15,000,000
	 	 	1.75	%	 	 	0.00	%
	 
	 	 	 	 	 	 	 	 	 	 
	IV

	 	Less than $15,000,000
	 	 	2.00	%	 	 	0.00	%






     “Applicable Percentage” means with respect to each Lender, that percentage of the
Commitments of all Lenders hereunder to make Credit Extensions to the Borrowers, in each case as
the context provides. If the commitment of each Lender to make Loans and the obligation of the L/C
Issuer to make L/C Credit Extensions have been terminated pursuant to Section 8.02 or if
the Aggregate Commitments have expired, then the Applicable Percentage of each Lender shall be
determined based on the Applicable Percentage of such Lender most recently in effect, giving effect
to any subsequent assignments. The initial Applicable Percentage of each Lender is



3









 




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.




     “Appraisal Percentage” means the following percentages during the periods indicated:



	 	 	 
	Period	 	Appraisal Percentage
	Closing Date through December 31, 2008
	 	125%
	January 1, 2009 through December 31, 2009
	 	110%
	January 1, 2010 through December 31, 2010
	 	100%
	At all times thereafter
	 	  95%






     “Appraised Value” means the net appraised value of the Borrowers’ Inventory
(expressed as a percentage of the Cost of such Inventory), as determined from time to time by
reference to the most recent appraisal received by the Administrative Agent conducted by an
independent appraiser reasonably satisfactory to the Administrative Agent utilizing such
methodology as may be reasonably acceptable to the Administrative Agent, substantially consistent,
however, with the methodology utilized in the most recent appraisal conducted prior to the Closing
Date.



     “Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b)
an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages
a Lender.



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



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



4









 





     “Audited Financial Statements” means the audited Consolidated balance sheet of the
Lead Borrower and its Subsidiaries for the Fiscal Year ended February 3, 2007, 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.



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



          (a) is the result of:




               (i) The Revolving Credit Ceiling,



                    Minus



               (ii) The aggregate unpaid balance of Credit Extensions to, or for the
account of, the Borrowers; and



          (b) is the result of:



               (i) The Borrowing Base,



                    Minus



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



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



     “Availability Condition” shall mean, for any date of calculation with respect to any
transaction or payment, Excess Availability will be greater than or equal to the lesser of (a) the
Revolving Credit Ceiling or (b) (i) thirty-five percent (35%) of the Borrowing Base at any time on
or after the Closing Date through December 31, 2008, (ii) twenty-five percent (25%) of the
Borrowing Base at any time on or after January 1, 2009 through December 31, 2009 or (iii) twenty
percent (20%) of the Borrowing Base at any time thereafter, on a pro forma basis for the twelve
months immediately following, and after giving effect to, such transaction or payment.



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



     “Availability Reserves” means, without duplication of any other Reserves or items that
are otherwise addressed or excluded through eligibility criteria, such reserves as the
Administrative Agent from time to time determines in its Discretion as being appropriate (a) to
reflect the impediments to the Agents’ ability to realize upon the Collateral, (b) to reflect
claims



5









 




and liabilities that the Administrative Agent determines will need to be satisfied in connection
with the realization upon the Collateral, (c) to reflect criteria, events, conditions,
contingencies or risks which adversely affect any component of the Borrowing Base, or the assets,
business, financial performance or financial condition of any Loan Party, or (d) to reflect that a
Default or an Event of Default then exists. Without limiting the generality of the foregoing,
Availability Reserves may include (but are not limited to) 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, and other Taxes which might have priority over the
interests of the Collateral Agent in the Collateral; (iv) salaries, wages and benefits due to
employees of any Borrower which might have priority over the interests of the Collateral Agent in
the Collateral, (v) Customer Credit Liabilities; (vi) warehousemen’s or bailee’s charges and other
Permitted Encumbrances which might have priority over the interests of the Collateral Agent in the
Collateral; (vii) Cash Management Reserves; and (viii) Bank Products Reserves.




     “Average Daily Excess Availability” shall mean the average daily Excess Availability
for the immediately preceding 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 or any of its Affiliates (but excluding Cash Management Services) on account
of (a) credit cards, (b) Swap Contracts, (c) purchase cards, (d) merchant services constituting a
line of credit, and/or (e) leasing.



     “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.



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



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



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



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



     “Blocked Account Bank” means Bank of America, N.A., National City Bank, Wells Fargo
Bank, National Association, JPMorgan Chase Bank, N.A., Wachovia Bank, National Association, U.S.
Bank National Association and each other bank with whom deposit accounts are maintained in which
any funds of any of the Loan Parties from one or more DDAs are



6









 




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” means, collectively, the Lead Borrower, the Persons named on Schedule
1.01 annexed hereto, and each other Person who shall from time to time enter into a Joinder
Agreement as a Borrower.



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



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




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




     plus




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




     plus




     (c) the Appraised Value of Eligible In-Transit Inventory, net of Inventory


Reserves, multiplied by the Appraisal Percentage, provided that in no
event shall the

amount available to be borrowed pursuant to this clause (c) exceed ten percent (10%) of
the Borrowing Base;




     plus




     (d) the Appraised Value of the Inventory supported by any Eligible Letter of
Credit, net of Inventory Reserves, multiplied by the Appraisal Percentage;




     minus




     (e) the then amount of all Availability Reserves.



     “Borrowing Base Certificate” has the meaning provided in
Section 6.02(c).



     “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



7









 




replacements and maintenance which are properly charged to current operations), in each case that
are set forth as capital expenditures in a Consolidated statement of cash flows of such Person for
such period, in each case prepared in accordance with GAAP, and (b) Capital Lease Obligations
incurred by a Person during such period.




     “Capital 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 capital leases on a balance sheet of such
Person under 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 under the
sole and exclusive dominion and control of the Collateral Agent, in the name of the Collateral
Agent or as the Collateral Agent shall otherwise direct, in which deposits are required to be made
in accordance with Section 2.03(g) or Section 8.02(c).



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



     “Cash Dominion Event” means either (a) the occurrence and continuance of any Event of
Default, or (b) the failure of the Borrowers to maintain Excess Availability for fourteen (14)
consecutive days equal to or greater than the lesser of (i) the Revolving Credit Ceiling or (ii)
(A) thirty-five percent (35%) of the Borrowing Base at any time on or after the Closing Date
through December 31, 2008, (B) twenty-five percent (25%) of the Borrowing Base at any time on or
after January 1, 2009 through December 31, 2009 or (C) twenty percent (20%) of the Borrowing Base
at any time thereafter. For purposes of this Agreement, the occurrence of a Cash Dominion 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 such Cash Dominion Event arises as a result of the
Borrowers’ failure to achieve Excess Availability as required hereunder, until Excess Availability
for thirty (30) consecutive Business Days is equal to or greater than the lesser of (i) the
Revolving Credit Ceiling or (ii) (A) thirty-five percent (35%) of the Borrowing Base if such Cash
Dominion Event has occurred at any time on or after the Closing Date through December 31, 2008,
(B) twenty-five percent (25%) of the Borrowing Base if such Cash Dominion Event has occurred at
any time on or after January 1, 2009 through December 31, 2009 or (C) twenty percent (20%) of the
Borrowing Base if such Cash Dominion Event has occurred at any time thereafter, 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 Excess Availability exceeds the required amount for thirty
(30) consecutive Business Days) at all times after a Cash Dominion Event has occurred and been
discontinued on three (3) occasions after the Closing Date.



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



8









 





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



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



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



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



     “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) at any time prior to the creation of a Public Market, SKM Equity Partners
II, L.P. and its Affiliates shall cease to own and control legally and beneficially
(free and
clear of all Liens), either directly or indirectly, equity securities in the Lead
Borrower
representing more than 50% of the combined voting power of all of Equity Interests
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
SKM Equity Partners II, L.P. and its Affiliates have the right to acquire pursuant to
any
option right (as defined in clause (b) below));




     (b) at any time after the creation of a Public Market, 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 SKM Equity Partners II, L.P. and its Affiliates 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 the greater of (i) 35% 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 all such Equity Interests that such “person” or “group” has the right to
acquire pursuant to any option right) or (ii) a percentage that is greater than the percentage
of the



9









 







Equity Interests of the Lead Borrower entitled to vote for members of the board of
directors or equivalent governing body of the Lead Borrower that is then beneficially owned
by SKM Equity Partners II, L.P. and its Affiliates; or




     (c) 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




     (d) 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, as amended and in effect.



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



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



10









 





     “Collateral Agent” means Bank of America, in its capacity as collateral agent for its
own benefit and the benefit of the other Credit Parties under any of the Loan Documents, or any
successor collateral agent.



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



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



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



     “Commitment Increase” shall have the meaning provided in Section
2.15(a).



     “Committed Borrowing” means a borrowing consisting of a Committed Loan or
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 Committed Borrowing pursuant to
Section 2.02, which, if in writing, shall be substantially in the form of Exhibit
A-1.



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




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



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



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



     “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



11









 




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 (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 the most recently completed Measurement Period
minus (ii) Capital Expenditures (net of tenant allowances) during such Measurement Period
to (b) the sum of (i) Debt Service Charges for such Measurement Period plus (ii) the
aggregate amount of all Restricted Payments made during such Measurement Period, plus
(iii) the aggregate amount of Federal, state, local and foreign income taxes paid in cash during
such Measurement Period, in each case, of or by the Lead Borrower and its Subsidiaries, 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 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, in each case excluding any
non-cash or deferred interest financing costs and debt issue cost amortization, (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, (b) the income (or loss) of
such Person during such Measurement Period and accrued prior to the date it becomes a Subsidiary of
a Person or any of such Person’s Subsidiaries or is merged into or consolidated with a Person or
any of its Subsidiaries or that Person’s assets are acquired by such Person or any of its
Subsidiaries, and (c) 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



12









 




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.



     “Conversion/Continuation Notice” means a notice of (a) a conversion of Loans from one
Type to the other, or (b) a continuation of LIBO Rate Loans, pursuant to Section 2.02(b),
which, if in writing, shall be substantially in the form of Exhibit A-2.



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



     “Covenant Compliance Event” means either (a) that an Event of Default has occurred and
is continuing or (b) Excess Availability is less than or equal to (i) twenty-five percent (25%) of
the Borrowing Base at any time on or after the Closing Date through December 31, 2008, (ii) fifteen
percent (15%) of the Borrowing Base at any time on or after January 1, 2009 through December 31,
2009 or (iii) ten percent (10%) of the Borrowing Base at any time thereafter. For purposes hereof,
the occurrence of a Covenant Compliance Event shall be deemed continuing at the Administrative
Agent’s option (a) so long as such Event of Default has not been waived, and/or (b) if the Covenant
Compliance Event arises as a result of the Borrowers’ failure to achieve Excess Availability as
required hereunder, until Excess Availability for thirty (30) consecutive Business Days has
exceeded (i) twenty-five percent (25%) of the Borrowing Base if such Covenant Compliance Event has
occurred at any time on or after the Closing Date through December 31, 2008, (ii) fifteen percent
(15%) of the Borrowing Base if such Covenant Compliance Event has occurred at any time on or after
January 1, 2009 through December 31, 2009 or (iii) ten percent (10%) of the Borrowing Base if such
Covenant Compliance Event has occurred at any time thereafter, in which case a Covenant Compliance
Event shall no longer be deemed to be continuing for purposes of this Agreement.



     “Credit Card Advance Rate” means 90%.



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



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



13









 





     “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, the Arranger and their respective Affiliates, in connection with
this Agreement and the other Loan Documents, including, without limitation, (i) the reasonable
fees, charges and disbursements of (A) counsel for the Agents and the Arranger, (B) outside
consultants for the Agents, (C) appraisers, (D) commercial finance examinations, and (E) all such
out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of
the Obligations, (ii) in connection with (A) the 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 Arranger, the L/C Issuer or any Affiliate of any of them, after the
occurrence and during the continuance of an Event of Default, provided that such Credit Parties
shall be entitled to reimbursement for no more than one counsel representing all such Credit
Parties (absent a conflict of interest in which case the Credit Parties may engage and be
reimbursed for additional counsel).



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



     “Customs Broker Agreement” means an agreement, in form and substance reasonably
satisfactory to the Collateral Agent, 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 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.



14









 





     “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, any Synthetic Lease Obligations, obligations under any operating lease and
obligations under Real Estate Leases, but including, without limitation, the amortized portion of
any Capital Lease Obligations) during such Measurement Period, in each case determined on a
Consolidated basis in accordance with GAAP.



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



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



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



     “Defaulting Lender” means any Lender that (a) has failed to fund any portion of the
Committed Loans, participations in L/C Obligations or participations in Swing Line Loans required
to be funded by it hereunder within one Business Day of the date required to be funded by it
hereunder, (b) has otherwise failed to pay over to the Administrative Agent or any other Lender
any other amount required to be paid by it hereunder within one Business Day of the date when due,
unless the subject of a good faith dispute, or (c) has been deemed insolvent or become the subject
of a bankruptcy or insolvency proceeding.



     “Discretion” means the exercise by the Administrative Agent of its reasonable
business judgment acting in accordance with industry standards for asset based lending in the
retail industry.



     “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 transaction or in a series of transactions) all or substantially all
of its assets) to or in favor of any Person) 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.



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




15











 





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



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



     “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; (c) an Approved
Fund; (d) any Person to whom a Credit Party assigns its rights and obligations under this
Agreement as part of an assignment and transfer of such Credit Party’s rights in and to a material
portion of such Credit Party’s portfolio of asset based credit facilities, and (e) any other
Person (other than a natural person) approved by (i) the Administrative Agent, the L/C Issuer and
the Swing Line Lender, and (ii) unless an Event of Default has occurred and is continuing, the
Borrower (each such approval not to be unreasonably withheld or delayed); provided that
notwithstanding the foregoing, “Eligible Assignee” shall not include (x) a Loan Party or any
of the Loan Parties’ Affiliates or Subsidiaries or (y) for purposes of clauses (a), (b), (c) and
(e) above, any Person which, together with its Affiliates, has a combined capital and surplus less
than $500,000,000.



     “Eligible Credit Card Receivables” means Accounts due to a Borrower on a non-recourse
basis from Visa, Mastercard, American Express Company, Discover, and other major credit card
processors, in each case acceptable to the Administrative Agent in its Discretion, as arise in the
ordinary course of business, which have been earned by performance, and are deemed by the
Administrative Agent in its Discretion to be eligible for inclusion in the calculation of the
Borrowing Base. Without limiting the foregoing, unless the Administrative Agent otherwise agrees,
none of the following shall be deemed to be Eligible Credit Card Receivables:




     (a) Accounts due from major credit card processors that have been
outstanding for more than seven (7) Business Days from the date of sale;




     (b) Accounts due from major credit card processors 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);




     (c) Accounts due from major credit card processors that are not subject to a
first priority security interest in favor of the Collateral Agent (it being the intent
that chargebacks in the ordinary course by the credit card processors shall not be deemed
violative of this clause);




     (d) Accounts due from major credit card processors 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);




     (e) Accounts due from major credit card processors as to which the credit card
processor has the right under certain circumstances to require a Loan Party to
repurchase the Accounts from such credit card processor; or




     (f) Accounts due from major credit card processors which the Administrative
Agent determines in its Discretion to be uncertain of collection.



16









 





     “Eligible In-Transit Inventory” means, as of any date of determination thereof,
without duplication of other Eligible Inventory, Inventory:




     (a) which has been shipped from (i) a foreign location for receipt by a
Borrower within thirty (30) days of the date of shipment or (ii) a domestic location
for receipt by a Borrower within fifteen (15) days of the date of shipment, but, in either
case, which has not yet been delivered to such Borrower;




     (b) for which (i) the purchase order is in the name of a Borrower and title has
passed to such Borrower or (ii) the document of title reflects a Borrower as consignee
or, if requested by the Collateral Agent, names the Collateral Agent as consignee, and in
each case as to which the Collateral Agent has control over the documents of title
which evidence ownership of the subject Inventory (such as, if requested by the Collateral
Agent, by the delivery of a Customs Broker Agreement);




     (c) which is insured to the reasonable satisfaction of the Collateral Agent; and




     (d) which otherwise would constitute Eligible Inventory.



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




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




     (b) Inventory that is leased by, or is on consignment to, a Borrower;




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




     (d) Inventory that is comprised of goods which (i) are damaged, defective,
“seconds,” or otherwise unmerchantable, (ii) are to be returned to the vendor, (iii)
are obsolete or slow moving, or custom items, work-in-process, raw materials, or that
constitute spare parts, promotional, marketing, packaging and shipping materials or



17









 







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;




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




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




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




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




     (i) 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 an Inventory advance rate and 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) which Inventory does not
constitute Eligible In-Transit Inventory and for which no documents of title have then been
issued, (ii) which Inventory, when completed, otherwise would constitute Eligible Inventory, (iii)
which Commercial Letter of Credit has an expiry within thirty (30) 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 documents of title have been
issued for such Inventory reflecting a Borrower or the Collateral Agent as consignee of such
Inventory.



     “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, contingent or otherwise (including any
liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the
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,



18









 







handling, transportation, storage, treatment or disposal 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.



     “Environmental Permit” means any permit, approval, identification number, license or
other authorization required under any Environmental Law.



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



     “ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) a
withdrawal by a 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 a 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 Section 4007 of ERISA, upon a 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 10.01 hereof.



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



19









 






     (a) The lesser of:




     (i) the Borrowing Base; or




     (ii) the Revolving Credit Ceiling;




     minus




     (b) the aggregate of the outstanding Credit Extensions.



     “Excluded Taxes” means, with respect to the Administrative Agent, any Lender, the L/C
Issuer or any other recipient of any payment to be made by or on account of any obligation of any
Borrower 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(d), 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).



     “Existing Revolving Credit Loan Agreement” means that certain Loan and Security
Agreement dated as of May 15, 2003 among the Lead Borrower, LaSalle Retail Finance, a Division of
LaSalle Business Credit, LLC, as agent, and LaSalle Bank Midwest National Association, as lender,
as amended and in effect as of the date hereof.



     “Existing Term Loan Agreement” means that certain Second Amended and Restated Credit
Agreement dated as of May 15, 2003 among the Lead Borrower, BNP Paribas, as administrative agent
and lender, Union Bank of California, N.A., National City Bank of Pennsylvania, SKM Investment Fund
II and SKM Equity Fund II, L.P., as amended and in effect as of the date hereof.



     “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 Dispositions permitted pursuant to
clause (b) of the definition of Permitted Dispositions, but excluding all other Permitted
Dispositions), 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.



20









 





     “Facility Guaranty” means a Guaranty made by a Guarantor in favor of the
Administrative Agent and the Lenders, 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 April 10, 2008, between the Lead
Borrower and the Administrative Agent.



     “Fiscal Month” means any fiscal month of any Fiscal
Year.



     “Fiscal Quarter” means any fiscal quarter of any
Fiscal Year.



     “Fiscal Year” means any period of twelve consecutive months ending on the Saturday
closest to January 31st of any calendar year.



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



     “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



21









 







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



     “Guarantee” means, as to any Person, any (a) any obligation, contingent or otherwise,
of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or
other obligation payable or performable by another Person (the “primary obligor”) in any manner,
whether directly or indirectly, and including any obligation of such Person, direct or indirect,
(i) to purchase or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for
the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the
payment or performance of such Indebtedness or other obligation, (iii) to maintain working
capital, equity capital or any other financial statement condition or liquidity or level of income
or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness
or other obligation, or (iv) entered into for the purpose of assuring in any other manner the
obligee in respect of such Indebtedness or other obligation of the payment or performance thereof
or to protect such obligee against loss in respect thereof (in whole or in part), 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). 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) listed on
Schedule 1.02 annexed hereto and each other Subsidiary of the Lead Borrower that shall be
required to execute and deliver a Facility Guaranty or Facility Guaranty supplement 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.



     “Increase Effective Date” shall have the meaning provided therefor in Section
2.15(d).



     “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;



22









 






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




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




     (d) all obligations of such Person to pay the deferred purchase price of
property or services (other than trade accounts payable in the ordinary course of
business not past due for more than 60 days after the date on which such trade account payable
was created or which are being contested in good faith by appropriate proceedings);




     (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 in respect of Capital Lease Obligations and
Synthetic Lease Obligations of such Person;




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




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



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



     “Indemnified Taxes” means Taxes other than Excluded Taxes.



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



     “Information” has the meaning specified in Section 10.07.



     “Intellectual Property” means all present and future: trade secrets, know-how and
other proprietary information; trademarks, trademark applications, internet domain names, service
marks, trade dress, trade names, business names, designs, logos, slogans (and all translations,
adaptations, derivations and combinations of the foregoing) indicia and other source and/or
business identifiers, and all registrations or applications for registrations which have heretofore
been or may hereafter be issued thereon throughout the world; copyrights and copyright
applications; (including copyrights for computer programs) and all tangible and intangible property
embodying the copyrights, unpatented inventions (whether or not patentable); patents



23









 







and patent applications; industrial design applications and registered industrial designs; license
agreements related to any of the foregoing and income therefrom; books, records, writings,
computer tapes or disks, flow diagrams, specification sheets, computer software, source codes,
object codes, executable code, data, databases and other physical manifestations, embodiments or
incorporations of any of the foregoing; all other intellectual property; and all common law and
other rights throughout the world in and to all of the foregoing.



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



     “Interest Payment Date” means, (a) as to any Loan other than a Base Rate Loan, the
last day of each Interest Period applicable to such 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 (including a Swing Line Loan),
the last 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:




     (a) 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;




     (b) 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;




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




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


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




     “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



24









 







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 saleability, at retail, of the Eligible Inventory or which reflect such other
factors as may affect the market value of the Eligible 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 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 the form attached hereto as Exhibit
H, 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 Pennsylvania, Virginia and Washington and such other
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.



25









 





     “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, or any successor issuer of Letters of Credit hereunder (which successor may only be a
Lender selected by the Administrative Agent in its discretion). The L/C Issuer may, in its
discretion, arrange for one or more Letters of Credit to be issued by Affiliates of the L/C
Issuer, in which case the term “L/C Issuer” shall include any such Affiliate with respect to
Letters of Credit issued by such Affiliate.



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



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



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



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



     “Letter of Credit” means each Standby Letter of Credit and each Commercial Letter of
Credit issued 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 $25,000,000. 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



26









 







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 the Lead Borrower’s option, less than) the
Aggregate Commitments.



     “LIBO Borrowing” means a Borrowing comprised of LIBO 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, or other
title retention agreement, any easement, right of way or other encumbrance on title to real
property, and any financing lease having substantially the same economic effect as any of the
foregoing) and (b) in the case of securities, any purchase option, call or similar right of a
third party with respect to such securities.



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



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



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



27









 





     “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, each 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 the
Administrative Agent or any of its Affiliates, each as amended and in effect from time to time.



     “Loan Parties” means, collectively, the Borrowers and each Guarantor.



     “Material Adverse Effect” means (a) a material adverse change in, or a material
adverse effect upon, the operations, business, properties, liabilities (actual or contingent) or
condition (financial or otherwise) of any Loan Party or the Lead Borrower and its Subsidiaries
taken as a whole; (b) a material impairment 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 impairment of the
rights and remedies of the Agent or the Lenders under any Loan Document or a material adverse
effect upon the legality, validity, binding effect or enforceability against any Loan Party of any
Loan Document to which it is a party. In determining whether any individual event would result in
a Material Adverse Effect, notwithstanding that such event in and of itself does not have such
effect, a Material Adverse Effect shall be deemed to have occurred if the cumulative effect of
such event and all other then existing events would result in a Material Adverse Effect.



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



     “Material Indebtedness” means Indebtedness (other than the Obligations) of the Loan
Parties in an aggregate principal amount exceeding $3,000,000. For purposes of determining the
amount of Material Indebtedness at any time, the amount of the obligations in respect of any Swap
Contract at such time shall be calculated at the Swap Termination Value thereof.



     “Maturity Date” means April 10, 2013.



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



     “Measurement Period” means, at any date of determination, the most recently completed
trailing twelve calendar months of the Lead Borrower.



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



     “Multiemplover 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:



28









 






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




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



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



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



     “NPL” means the National Priorities List under CERCLA.



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



     “Organization Documents” means, (a) with respect to any corporation, the certificate
or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents
with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the
certificate or articles of formation or organization and operating agreement; (c) with respect to
any partnership, joint venture, trust or other form of business entity, the partnership, joint
venture or other applicable agreement of formation or organization and any agreement, instrument,
filing or notice with respect thereto filed in connection with its formation or organization with
the applicable Governmental Authority in the jurisdiction of its formation or organization and, if



29









 







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 (a) any Cash Management Services furnished to any of the
Loan Parties or any of their Subsidiaries and/or (b) any transaction with any Agent or any of
their respective Affiliates, which arises out of any Bank Product entered into with any Loan Party
and any such Person, as each may be amended from time to time



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



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



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



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



     “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, (b) prior to, and on a pro
forma basis after giving effect to, such transaction or payment, the Availability Condition has
been satisfied, and (c) either (i) a certificate signed by a Responsible Officer of the Lead
Borrower, in form and substance reasonably satisfactory to the Administrative Agent, certifying
that (A) the Loan Parties are, and will continue to be, Solvent after giving effect to such
transaction or payment and (B) the Consolidated Fixed Charge Coverage Ratio, as projected on a
pro-forma basis for the twelve months following such transaction or payment, will be equal to or
greater than 1.0:1.0, or (ii) the Loan Parties shall have provided the Administrative Agent with a
solvency opinion (including an analysis of future Excess Availability demonstrating that the
Availability Condition will be satisfied) from an unaffiliated third party valuation firm
reasonably satisfactory to the Administrative Agent. Prior to undertaking any transaction or
payment which is subject to the Payment Conditions, the Loan Parties shall deliver to the
Administrative Agent either (a) the certificate required by clause (c)(i) above or (b) or the
solvency opinion referred to in clause (c)(ii).



     “PBGC” means the Pension Benefit Guaranty Corporation.




30












 





     “PCAOB” means the Public Company Accounting Oversight Board.



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



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




     (a) No Default or Event of Default 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 not have announced that it will oppose such Acquisition or
shall not have commenced any action which alleges that such Acquisition shall violate
applicable Law;




     (c) The Lead Borrower shall have furnished the Administrative Agent with thirty (30)
days’ prior written notice of such intended Acquisition and shall have furnished the
Administrative Agent with a current draft of the 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) If the proceeds of any Credit Extension are being used to directly or indirectly
finance all or any portion of such Acquisition, either (i) the legal structure of such
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 such Acquisition, if such Acquisition is an Acquisition of
the Equity Interests, a Loan Party shall acquire and own, directly or indirectly, a
majority of the Equity Interests in the Person being acquired and shall Control a majority
of any voting interests or shall otherwise Control the governance of the Person being
acquired;



31









 






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




     (h) Any assets acquired shall be utilized in, and if such 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;




     (i) 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 such 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 Guarantor, as the Administrative Agent shall determine, and the Collateral Agent shall
have received a first priority security interest in such Subsidiary’s Equity Interests, Inventory,
Accounts and other property of the same nature as constitutes collateral under the Security
Documents;




     (j) The total consideration paid for all such Acquisitions (whether in cash, tangible
property, notes or other property) after the Closing Date shall not exceed in the aggregate the
sum of $10,000,000; and




     (k) 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 of 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, five percent (5%) of the number of the Loan Parties’ Stores as
of the beginning of such Fiscal Year (net of new Store openings) and (ii) in the aggregate from and
after the Closing Date, fifteen percent (15%) of the number of the Loan Parties’ Stores in
existence as of the Closing Date (net of new Store openings), provided further that all
sales of Inventory in connection with Store closings that exceed the foregoing limits 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;



32









 






     (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;




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




     (g) dispositions of Equipment in connection with a Permitted Acquisition; and




     (h) the sale or issuance of any Equity Interests of the Lead Borrower in connection
with a Public Offering,



     “Permitted Encumbrances” means:




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




     (b) Carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liens
imposed by applicable Law, arising in the ordinary course of business and securing obligations that
are not overdue by more than sixty (60) 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 that has resulted, or could reasonably be expected to result, in a
Material Adverse Effect;




     (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
and which, collectively, could not reasonably be expected to result in a Material Adverse Effect;




     (g) Liens existing on the date hereof and listed on Schedule 7.01 and any renewals or
extensions thereof, provided that (i) the nature of the property or assets



33









 







covered thereby is not changed in any material manner, (ii) the amount secured or benefited
thereby is not increased except as contemplated by clause (a) of the definition of Permitted
Indebtedness, (iii) the direct or any contingent obligor with respect thereto is not changed
(other than to decrease the number of obligors), and (iv) any renewal or extension of the
obligations secured or benefited thereby is permitted by clause (a) of the definition of Permitted
Indebtedness, provided further that the limitations set forth in clauses (i) through (iv)
of this clause (g) shall not apply to Liens, if any, on point-of-sale equipment in connection with
the Lead Borrower’s lease of such point-of-sale equipment;




     (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 one hundred twenty (120) days after
such acquisition, (ii) the Indebtedness secured thereby does not exceed the cost of acquisition of
such fixed or capital assets and (iii) such Liens shall not extend to any other property or assets
of the Loan Parties;




     (i) Liens in favor the Collateral Agent;




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




     (1) 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; and




     (o) Liens in favor of customs and revenues authorities imposed by applicable Law arising in
the ordinary course of business in connection with the importation of goods and securing
obligations (i) that are not overdue by more than sixty (60) days, or (ii)(A) that are being
contested in good faith by appropriate proceedings while such Lien



34









 







is in effect, (B) the applicable Loan Party or Subsidiary has set aside on its books
adequate reserves with respect thereto in accordance with GAAP and (C) such contest
effectively suspends collection of the contested obligation and enforcement of any Lien
securing such obligation during the pendency of such contest;




     (p) Liens not otherwise permitted by any one or more of clauses (a) through (o) above,
provided that neither (i) the aggregate outstanding principal amount of the
obligations secured thereby nor (ii) the aggregate fair market value (determined as of the
date such Lien is incurred) of the assets subject thereto exceeds (as to the Lead Borrower
and all Subsidiaries) $3,000,000 at any time, provided further that no such Lien
shall extend to, or cover, any assets included in the Borrowing Base;


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




     “Permitted Indebtedness” means:




     (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 (other than to decrease the number of
obligors), (ii) the result of such extension, renewal or replacement shall not be an earlier
maturity date or decreased weighted average life of such Indebtedness, and (iii) the terms
relating to principal amount, amortization, maturity, collateral (if any) and
subordination (if any), and other material terms taken as a whole, of any such refinancing,
refunding, renewing or extending Indebtedness, and of any agreement entered into and of any
instrument issued in connection therewith, are no less favorable in any material respect to
the Loan Parties or the Lenders than the terms of any agreement or instrument governing the
Indebtedness being refinanced, refunded, renewed or extended;




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




     (c) Without duplication of Indebtedness described in clause (f) of this definition,
purchase money Indebtedness of any Loan Party to finance the acquisition of any fixed or
capital assets, including Capital Lease Obligations and Synthetic Lease Obligations, and any
Indebtedness assumed in connection with the acquisition of any such assets or secured by a
Lien on any such assets prior to the acquisition thereof, and extensions, renewals and
replacements of any such Indebtedness that do not increase the outstanding principal amount
thereof or result in an earlier maturity date or decreased weighted average life thereof
provided that the terms relating to principal amount, amortization, maturity, collateral (if
any) and subordination (if any), and other material terms taken as a whole, of any such
refinancing, refunding, renewing or extending



35









 







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 (c) shall not exceed $15,000,000 at any time outstanding; provided further
that, if requested by the Collateral Agent, 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;




     (d) obligations (contingent or otherwise) of any Loan Party or any Subsidiary thereof existing
or arising under any Swap Contract, provided that such obligations are (or were) entered
into by such Person in the ordinary course of business for the purpose of directly mitigating risks
associated with fluctuations in interest rates or foreign exchange rates, and not for purposes of
speculation or taking a “market view;” provided further that the aggregate Swap Termination
Value thereof shall not exceed $1,000,000 at any time outstanding;




     (e) Contingent liabilities under surety bonds or similar instruments incurred in the ordinary
course of business in connection with the construction or improvement of Real Estate;




     (f) Indebtedness incurred for the construction or acquisition or improvement of, or to finance
or to refinance, any Real Estate owned or leased by any Loan Party (including therein any
Indebtedness incurred in connection with sale-leaseback transactions permitted
hereunder), provided that, (A) all Net Proceeds received in connection with any such
Indebtedness are applied to the Obligations if then required in accordance with Section
2.05 hereof, and (B) 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 Administrative Agent;




     (h) Indebtedness of any Person that becomes a Subsidiary of a Loan Party in a Permitted
Acquisition, which Indebtedness is existing at the time such Person becomes a Subsidiary of a Loan
Party (other than Indebtedness incurred solely in contemplation of such Person’s becoming a
Subsidiary of a Loan Party);




     (i) The Obligations; and




     (j) Unsecured Indebtedness in an aggregate principal amount not to exceed $10,000,000 at any
time outstanding.



36









 





     “Permitted Investments” means:




     (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-l” (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;




     (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



37









 







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;




     (1) advances to officers, directors and employees of the Loan Parties and Subsidiaries
in the ordinary course of business in an amount not to exceed $1,000,000 to any individual
at any time or in an aggregate amount not to exceed $2,500,000 at any time outstanding;




     (m) Investments constituting Permitted Acquisitions; and




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


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




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




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




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




     (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
taking place, remain outstanding for more than forty-five (45) consecutive Business Days,
unless in each case, the Required Lenders otherwise agree;


provided, however, that the foregoing shall not (i) modify or abrogate any of the
provisions of Section 2.03 regarding the Lender’s obligations with respect to Letters of
Credit, or (ii) result in


38









 






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




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



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



     “Platform” has the meaning specified in Section 6.02.



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



     “Prepayment Event” means:




     (a) Any sale, transfer or other Disposition (including pursuant to a sale and leaseback
transaction, but excluding Dispositions permitted pursuant to clauses (a), (c), (d), (e),
(f), (g) and (h) of the definition of Permitted Dispositions) of any property or asset of a
Loan Party in an amount in excess of $2,500,000 prior to the occurrence of a Cash Dominion
Event;




     (b) Any (i) casualty or other insured damage to Inventory or (ii) taking under power of
eminent domain or by condemnation or similar proceeding of any property or asset of a Loan
Party in an amount in excess of $1,000,000, unless the proceeds therefrom are utilized for
purposes of replacing or repairing the assets in respect of which such proceeds, awards or
payments were received within 180 days of the occurrence of the damage to or loss of the
assets being repaired or replaced;




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




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



     “Public Market” shall exist if (a) a Public Offering has been consummated and (b) any
Equity Interests of the Lead Borrower have been distributed by means of an effective registration
statement under the Securities Act of 1933.



39









 





     “Public Offering”: an initial public offering of the equity interests of the Lead
Borrower pursuant to an effective registration statement under the Securities Act of 1933.



     “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.



     “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.



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



     “Reports” has the meaning provided in Section 9.11(b).



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



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



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



     “Responsible Officer” means the chief executive officer, president, chief financial
officer, controller, 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.



40









 





     “Restricted Payment” means any cash dividend or other cash distribution with respect
to any capital stock or other Equity Interest of any Person or any of its Subsidiaries, or any
cash payment, including any cash payment made with respect to, or in connection with, 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 payment of cash made with respect to, or in connection with,
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 cash payments made by such Person with any proceeds of a dissolution or liquidation of
such Person.



     “Revolving Credit Ceiling” means $60,000,000, as such amount may be increased or
otherwise modified in accordance with the terms of this Agreement.



     “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, as amended and in effect from
time to time.



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



     “Securities Laws” means the Securities Act of 1933, the Securities Exchange Act of
1934, Sarbanes-Oxley, and the applicable accounting and auditing principles, rules, standards and
practices promulgated, approved or incorporated by the SEC or the PCAOB.



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



     “Security Documents” means the Security Agreement, the Pledge Agreement, the
Intellectual Property Security Agreement, the Blocked Account Agreements, the 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



41









 







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, or (d)
supports payment or performance for identified purchases or exchanges of products or services in
the ordinary course of business.



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



     “Statutory Reserve Rate” means a fraction (expressed as a decimal), the numerator of
which is the number one and the denominator of which is the number one minus the aggregate of the
maximum reserve percentages (including any marginal, special, emergency or supplemental reserves)
expressed as a decimal established by the FRB to which 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 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




42












 




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).



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



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



     “Swing Line Lender” means Bank of America, in its capacity as provider of Swing Line
Loans, or any successor swing line lender hereunder.



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



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



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



43









 





     “Synthetic Lease Obligation” means the monetary obligation of a Person under (a) a
so-called synthetic, off-balance sheet or tax retention lease, or (b) an agreement for the use or
possession of property (including sale 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 Person, would be characterized as the indebtedness of such
Person (without regard to accounting treatment), excluding any operating lease in accordance with
GAAP.



     “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, or (iii) the date of the occurrence of any Event of Default pursuant to Section
8.0l(f).



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



     “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 the State of 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.



     “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



44









 






include the corresponding masculine, feminine and neuter forms. The words “include,”
“includes” and “including” shall be deemed to be followed by the phrase “without
limitation.” The word “will” shall be construed to have the same meaning and effect as the word
“shall.” Unless the context requires otherwise, (i) any definition of or reference to any
agreement, instrument or other document (including any Organization Document) shall be construed
as referring to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or
modifications set forth herein or in any other Loan Document), (ii) any reference herein to any
Person shall be construed to include such Person’s successors and assigns, (iii) the words
“herein,” “hereof and “hereunder,” and words of similar import when used
in any Loan Document, shall be construed to refer to such Loan Document in its entirety and not to
any particular provision thereof, (iv) all references in a Loan Document to Articles, Sections,
Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and
Schedules to, the Loan Document in which such references appear, (v) any reference to any law
shall include all statutory and regulatory provisions consolidating, amending replacing or
interpreting such law and any reference to any law or regulation shall, unless otherwise
specified, refer to such law or regulation as amended, modified or supplemented from time to time,
and (vi) the words “asset” and “property” shall be construed to have the same
meaning and effect and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.




     (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 Borrowers 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 Borrowers shall provide to the Administrative Agent



45









 






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



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



     1.06 Letter of Credit Amounts. Unless otherwise specified, all references herein to the
amount of a Letter of Credit at any time shall be deemed to be the Stated Amount of such
Letter
of Credit in effect at such time; provided, however, that with respect to any Letter of Credit
that,
by its terms 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.



ARTICLE II.

THE COMMITMENTS AND CREDIT EXTENSIONS




     2.01 Committed Loans; Reserves.




     (a) Subject to the terms and conditions set forth herein, each Lender severally agrees
to make loans (each such loan, a “Committed Loan”) to the Borrowers from time to
time, on any Business Day during the Availability Period, subject in each case to the
following limitations:




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




     (ii) after giving effect to any Committed Borrowing, the aggregate Outstanding
Amount of the Committed Loans of any Lender, plus such Lender’s Applicable
Percentage of the Outstanding Amount of all L/C Obligations, plus such
Lender’s Applicable Percentage of the Outstanding Amount of all Swing Line Loans
shall not exceed such Lender’s Commitment; 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 Borrowers may borrow under this Section 2.01, prepay under Section
2.05, and reborrow under this Section 2.01. Committed Loans may be Base Rate Loans or
LIBO Rate Loans, as further provided herein.




46









 







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




     (i) Shrink (an Inventory Reserve): An amount equal to two and one-quarter percent
(2.25%) of the gross sales of the Borrowers since the date of the last physical inventory;




     (ii) Rent (an Availability Reserve): An amount equal to two (2) months’ rent for all
of the Borrowers’ leased locations in Pennsylvania, Virginia and Washington, 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




     (iii) 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.




     (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 new, or modify or eliminate
any existing, eligibility criteria or Reserves upon three (3) Business Days prior notice to
the Lead Borrower (during which period the Administrative Agent shall be available to
discuss any such proposed changes with the Borrowers at reasonable times and upon
reasonable advance notice); provided that no such prior notice shall be required for
(i)
changes to any eligibility criteria in a manner that would not result in a decrease in the
amounts available to be borrowed by the Borrowers hereunder, (ii) changes to any
Reserves resulting solely by virtue of mathematical calculations of the amount of the
Reserve in accordance with the methodology of calculation previously utilized, or (iii)
changes to Reserves or the establishment of additional Reserves if a Material Adverse
Effect has occurred or it would be reasonably likely that a Material Adverse Effect to the
Lenders would occur were such Reserve not changed or established.



     2.02 Borrowings, Conversions and Continuations of Committed Loans.




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




     (b) Each Committed Borrowing, each conversion of Committed Loans from
one Type to the other, and each continuation of LIBO Rate Loans shall be made upon the
Lead Borrower’s irrevocable notice to the Administrative Agent, which may be given by
telephone. Each such notice must be received by the Administrative Agent not later than
2:00 p.m. (i) three Business Days prior to the requested date of any Borrowing of,
conversion to, or continuation of, LIBO Rate Loans or of any conversion of LIBO Rate
Loans to Base Rate Loans, and (ii) on the requested date of any Borrowing of Base Rate
Loans. Each telephonic notice by the Lead Borrower pursuant to this Section 2.02(b)



47









 






must be confirmed promptly by delivery to the Administrative Agent of a written Committed Loan
Notice or Conversion/Continuation Notice, as the case may be, appropriately completed and signed
by a Responsible Officer of the Lead Borrower. Each Borrowing of, conversion to, or continuation
of, LIBO Rate Loans shall be in a principal amount of $1,000,000 or a whole multiple of $500,000
in excess thereof. Except as provided in Sections 2.03(c) and 2.04(b), each
Borrowing of or conversion to Base Rate Loans shall be in a principal amount of $500,000 or a
whole multiple of $100,000 in excess thereof. Each Committed Loan Notice (whether telephonic or
written) shall specify (i) the requested date of the Borrowing (which shall be a Business Day),
(ii) the principal amount of Committed Loans to be borrowed, (iii) the Type of Committed Loans to
be borrowed, and (iv) if applicable, the duration of the Interest Period with respect thereto.
Each Conversion/Continuation Notice (whether telephonic or written) shall specify (i) whether the
Borrowers are requesting a conversion of Committed Loans from one Type to the other or a
continuation of LIBO Rate Loans, (ii) the requested date of the conversion or continuation, as the
case may be (which shall be a Business Day), (iii) the principal amount of Committed Loans to be
converted or continued, (iv) the Type of Committed Loans 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 of a conversion or continuation in a
Conversion/Continuation Notice, then the applicable Committed Loans shall be made as, or converted
to, Base Rate Loans. Any such automatic conversion to Base Rate Loans shall be effective as of the
last day of the Interest Period then in effect with respect to the applicable LIBO Rate Loans. If
the Lead Borrower requests a Borrowing of LIBO Rate Loans in any such Committed Loan Notice or a
conversion to, or continuation of, LIBO Rate Loans in a Conversion/Continuation Notice, but fails
to specify an Interest Period, it will be deemed to have specified an Interest Period of one
month. Notwithstanding anything to the contrary herein, a Swing Line Loan may not be converted to
a LIBO Rate Loan.




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



48









 






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




     (d) The Administrative Agent, without the request of the Lead Borrower, may
advance any interest, fee, service charge, Credit Party Expenses, or other payment to
which any Credit Party is entitled from the Loan Parties pursuant hereto or any other
Loan Document and may charge the same to the Loan Account notwithstanding that an
Overadvance may result thereby; provided, however, that an Overadvance which
results
from the charging to the Loan Account of any Credit Party Expense shall not be deemed
to constitute an Event of Default unless the Borrowers fail to repay such Overadvance in
accordance with the provisions of Section 2.05(c). The Administrative Agent shall
advise the Lead Borrower of any such advance or charge concurrently with the making
thereof. Such action on the part of the Administrative Agent shall not constitute a waiver
of the Administrative Agent’s rights and the Borrowers’ obligations under Section
2.05.
Any amount which is added to the principal balance of the Loan Account as provided in
this Section 2.02(d) shall bear interest at the interest rate then and thereafter
applicable to
Base Rate Loans.




     (e) Except as otherwise provided herein, a LIBO Rate Loan may be continued
or converted only on the last day of an Interest Period for such LIBO Rate Loan. During
the existence of a Default, no 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 Committed Loans.




     (h) The Administrative Agent, the Lenders, the Swing Line Lender and the L/C Issuer shall have
no obligation to make any Loan or to provide any Letter of Credit if an Overadvance would result.
The Administrative Agent may, in its discretion, make Permitted Overadvances without the consent of
the Lenders, the Swing Line Lender and the L/C Issuer and each Lender shall be bound thereby. Any
Permitted Overadvance may constitute a Swing Line Loan. A Permitted Overadvance is for the account
of the Borrowers and shall constitute a Loan and an Obligation and shall be repaid by the Borrowers
in accordance with the provisions of Section 2.05(c). The making of any such Permitted
Overadvance on any one occasion shall not obligate the Administrative Agent or any Lender to make
or permit any Permitted Overadvance on any other occasion or to



49









 






permit such Permitted Overadvances to remain outstanding. The making by the Administrative Agent
of a Permitted Overadvance shall not modify or abrogate any of the provisions of Section
2.03 regarding the Lenders’ obligations to purchase participations with respect to Letters of
Credit. 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 lesser of the Aggregate Commitments or the Borrowing
Base, (y) the aggregate Outstanding Amount of the Committed Loans of any Lender,
plus such Lender’s Applicable Percentage of the Outstanding Amount of all L/C
Obligations, plus such Lender’s Applicable Percentage of the Outstanding Amount of
all Swing Line Loans shall not exceed such Lender’s Commitment, and (z) the Outstanding
Amount of the L/C Obligations shall not exceed the Letter of Credit Sublimit. Each request
by the Lead Borrower for the issuance or amendment of a Letter of Credit shall be deemed to
be a representation by the Borrowers that the L/C Credit Extension so requested complies
with the conditions set forth in the proviso to the preceding sentence. Within the
foregoing limits, and subject to the terms and conditions hereof, the Borrowers’ ability to
obtain Letters of Credit shall be fully revolving, and accordingly the Borrowers may,
during the foregoing period, obtain Letters of Credit to replace Letters of Credit that
have expired or that have been drawn upon and reimbursed.




     (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



50









 






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




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




     (iii) 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;




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




     (E) 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
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



51









 






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
2:00 p.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 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



52









 






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




     (iii) If the Lead Borrower so requests in any applicable Letter of Credit Application, the 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 clauses (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 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



53









 






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; provided, however, that any failure to give or delay in giving such
notice shall not relieve the Borrowers of their obligation to reimburse the L/C Issuer and the
Lenders with respect to any such payment. Not later than 11:00 a.m. on the date of any payment by
the L/C Issuer under a Letter of Credit (each such date, an “Honor Date”), the Borrowers
shall reimburse the L/C Issuer through the Administrative Agent in an amount equal to the amount
of such drawing. If the Borrowers fail to so reimburse the L/C Issuer by such time, the
Administrative Agent shall promptly notify each Lender of the Honor Date, the amount of the
unreimbursed drawing (the “Unreimbursed Amount”), and the amount of such Lender’s
Applicable Percentage thereof. In such event, the Borrowers shall be deemed to have requested a
Committed Borrowing of Base Rate Loans to be disbursed on the Honor Date in an amount equal to the
Unreimbursed Amount, without regard to the minimum and multiples specified in Section 2.02
for the principal amount of Base Rate Loans, but subject to the amount of the unutilized portion
of the Aggregate Commitments and the conditions set forth in Section 4.02 (other than the
delivery of a Committed Loan Notice). Any notice given by the L/C Issuer or the Administrative
Agent pursuant to this Section 2.03(c)(i) may be given by telephone 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)(i) shall be deemed payment in respect
of its participation in such L/C



54









 






Borrowing and shall constitute an L/C Advance from such Lender in satisfaction of its
participation obligation under this Section 2.03.




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




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




     (vi) If any Lender fails to make available to the Administrative Agent for the account of the
L/C Issuer any amount required to be paid by such Lender pursuant to the foregoing provisions of
this Section 2.03(c) by the time specified in Section 2.03(c)(i), 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



55









 






related Unreimbursed Amount or interest thereon (whether directly from the Borrowers or
otherwise, including proceeds of Cash Collateral applied thereto by the Administrative
Agent), the Administrative Agent will distribute to such Lender its Applicable Percentage
thereof (appropriately adjusted, in the case of interest payments, to reflect the period
of time during which such Lender’s L/C Advance was outstanding) in the same funds as those
received by the Administrative Agent.




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




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




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




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




     (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



56









 






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;



     provided, however, that any such reimbursement by the Borrowers shall be
without prejudice and shall not constitute a waiver of any claim that the Borrowers may have
against the L/C Issuer, the Administrative Agent or the Lenders arising out of or relating to any
Letter of Credit, including the circumstances described in this clause (e).



     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, 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




57












 






which the Borrowers prove were caused by the L/C Issuer’s willful misconduct or gross negligence
or the L/C Issuer’s willful failure to pay under any Letter of Credit after the presentation to it
by the beneficiary of a sight draft and certificate(s) strictly complying with the terms and
conditions of a Letter of Credit. In furtherance, and not in limitation, of the foregoing, the L/C
Issuer may accept documents that appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to the contrary (or the L/C Issuer
may refuse to accept and make payment upon such documents if such documents are not in strict
compliance with the terms of such Letter of Credit), and the L/C Issuer shall not be responsible
for the validity or sufficiency of any instrument transferring or assigning or purporting to
transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in
whole or in part, which may prove to be invalid or ineffective for any reason.




     (g) Cash Collateral. Upon the request of the Administrative Agent, (i) if the L/C
Issuer has honored any full or partial drawing request under any Letter of Credit and such drawing
has resulted in an L/C Borrowing, or (ii) if, as of the Letter of Credit Expiration Date, any L/C
Obligation for any reason remains outstanding, the Borrowers shall, in each case, immediately Cash
Collateralize the then Outstanding Amount of all L/C Obligations. Sections 2.05 and
8.02(c) set forth certain additional requirements to deliver Cash Collateral hereunder. For
purposes of this Section 2.03, Section 2.05 and Section 8.02(c), “Cash
Collateralize” means to pledge and deposit with or deliver to the Administrative Agent, for the
benefit of the L/C Issuer and the Lenders, as collateral for the L/C Obligations, cash or deposit
account balances in an amount equal to one hundred three percent (103%) 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. If, at any time, the Administrative Agent determines that any
funds held as Cash Collateral are subject to any right or claim of any Person other than the
Administrative Agent or that the total amount of such funds is less than the aggregate Outstanding
Amount of all L/C Obligations, the Borrowers will, forthwith upon demand by the Administrative
Agent, pay to the Administrative Agent, as additional funds to be deposited as Cash Collateral, an
amount equal to the excess of (x) such aggregate Outstanding Amount over (y) the total amount of
funds, if any, then held as Cash Collateral that the Administrative Agent determines to be free and
clear of any such right and claim. Upon the drawing of any Letter of Credit for which funds are on
deposit as Cash Collateral, such funds shall be applied, to the extent permitted under applicable
Laws, to reimburse the L/C Issuer and, to the extent not so applied, shall thereafter be applied to
satisfy other Obligations.




     (h) Applicability of ISP and UCP. Unless otherwise expressly agreed by the L/C Issuer
and the Lead Borrower when a Letter of Credit is issued, (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



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International Chamber of Commerce at the time of issuance shall apply to each Commercial Letter of
Credit.




     (i) Letter of Credit Fees. The Borrowers shall pay to the Administrative Agent for
the account of each Lender in accordance with its Applicable Percentage a Letter of Credit fee
(the “Letter of Credit Fee”) (i) for each Commercial Letter of Credit equal to fifty
percent (50%) of the Applicable Margin for LIBO Rate Loans
multiplied by the daily Stated
Amount under such Letter of Credit (whether or not such maximum amount is then in effect under
such Letter of Credit), and (ii) for each Standby Letter of Credit equal to the Applicable Margin
for LIBO Rate Loans multiplied by the daily Stated Amount 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 Margin during any quarter,
the daily amount available to be drawn under of each Letter of Credit shall be computed and
multiplied by the Applicable Margin separately for each period during such quarter that such
Applicable Margin was in effect. Notwithstanding anything to the contrary contained herein, while
any Event of Default exists, the Administrative Agent may, and upon the request of the Required
Lenders shall, notify the Lead Borrower that all Letter of Credit Fees shall accrue at the Default
Rate and thereafter such Letter of Credit Fees shall accrue at the Default Rate to the fullest
extent permitted by applicable Laws.




     (j) Documentary and Processing Charges Payable to L/C Issuer. 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 Swing Line Loans.




     (a) The Swing Line. Subject to the terms and conditions set forth herein, the Swing
Line Lender agrees, in reliance upon the agreements of the other Lenders set forth in this
Section 2.04, to make loans (each such loan, a “Swing Line Loan”) to the Borrowers
from time to time on any Business Day during the Availability Period in an aggregate amount not to
exceed at any time outstanding the amount of the Swing Line Sublimit, notwithstanding the fact that
such Swing Line Loans, when aggregated with the Applicable Percentage of the Outstanding Amount of
Committed Loans and L/C Obligations of the Lender acting as Swing Line Lender, may exceed the
amount of such Lender’s Commitment; provided, however, that after giving effect to
any Swing Line Loan, (i) the Total Outstandings shall not exceed the lesser of (A) the Aggregate



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




     (b) Borrowing Procedures. Each Swing Line Borrowing shall be made upon
the Lead Borrower’s irrevocable notice to the Swing Line Lender and the Administrative
Agent, which may be given by telephone. Each such notice must be received by the
Swing Line Lender and the Administrative Agent not later than 2:00 p.m. on the
requested borrowing date, and shall specify (i) the amount to be borrowed, which shall be
a minimum of $500,000, and (ii) the requested borrowing date, which shall be a Business
Day. Each such telephonic notice must be confirmed promptly by delivery to the Swing
Line Lender and the Administrative Agent of a written Swing Line Loan Notice,
appropriately completed and signed by a Responsible Officer of the Lead Borrower.
Promptly after receipt by the Swing Line Lender of any telephonic Swing Line Loan
Notice, the Swing Line Lender will confirm with the Administrative Agent (by telephone
or in writing) that the Administrative Agent has also received such Swing Line Loan
Notice and, if not, the Swing Line Lender will notify the Administrative Agent (by
telephone or in writing) of the contents thereof. Unless the Swing Line Lender has
received notice (by telephone or in writing) from the Administrative Agent at the request
of the Required Lenders prior to 2:00 p.m. on the date of the proposed Swing Line
Borrowing (A) directing the Swing Line Lender not to make such Swing Line Loan as a
result of the limitations set forth in the proviso to the first sentence of Section
2.04(a), or (B) that one or more of the applicable conditions specified in Article IV is not then
satisfied, then, subject to the terms and conditions hereof, the Swing Line Lender may,
not later than 3:00 p.m. on the borrowing date specified in such Swing Line Loan Notice,
make the amount of its Swing Line Loan available to the Borrowers at its office by
crediting the account of the Lead Borrower on the books of the Swing Line Lender in
immediately available funds.




     (c) Refinancing of Swing Line Loans.




     (i) The Swing Line Lender, at any time in its sole and absolute discretion, may
request, on behalf of the Borrowers (which hereby irrevocably authorize the Swing Line
Lender to so request on their behalf), that each Lender make a Base Rate Loan in an amount
equal to such Lender’s Applicable Percentage of the amount of Swing Line Loans then
outstanding. Such request



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shall be made in writing (which written request shall be deemed to be a Committed Loan Notice for
purposes hereof) and in accordance with the requirements of Section 2.02, without regard
to the minimum and multiples specified therein for the principal amount of Base Rate Loans, but
subject to the unutilized portion of the Aggregate Commitments and the conditions set forth in
Section 4.02. The Swing Line Lender shall furnish the Lead Borrower with a copy of the
applicable Committed Loan Notice promptly after delivering such notice to the Administrative
Agent. Each Lender shall make an amount equal to its Applicable Percentage of the amount specified
in such Committed Loan Notice available to the Administrative Agent in immediately available funds
for the account of the Swing Line Lender at the Administrative Agent’s Office not later than 1:00
p.m. on the day specified in such Committed Loan Notice, whereupon, subject to Section
2.04(c)(ii), each Lender that so makes funds available shall be deemed to have made a Base
Rate Loan to the Borrowers in such amount. The Administrative Agent shall remit the funds so
received to the Swing Line Lender.




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




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




     (iv) Each Lender’s obligation to make Committed Loans or to purchase and fund risk
participations in Swing Line Loans pursuant to this Section 2.04(c) shall be absolute and
unconditional and shall not be affected by any circumstance, including (A) any setoff,
counterclaim, recoupment, defense or other right which such Lender may have against the Swing Line
Lender, the Borrowers or any other



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Person for any reason whatsoever, (B) the occurrence or continuance of a Default, or (C)
any other occurrence, event or condition, whether or not similar to any of the foregoing;
provided, however, that each Lender’s obligation to make Committed Loans
pursuant to this Section 2.04(c) is subject to the conditions set forth in
Section 4.02. No such funding of risk participations shall relieve or otherwise
impair the obligation of the Borrowers to repay Swing Line Loans, together with interest as
provided herein.




     (d) Repayment of Participations.




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




     (ii) If any payment received by the Swing Line Lender in respect of principal or
interest on any Swing Line Loan is required to be returned by the Swing Line Lender under
any of the circumstances described in Section 10.05 (including pursuant to any
settlement entered into by the Swing Line Lender in its discretion), each Lender shall pay
to the Swing Line Lender its Applicable Percentage thereof on demand of the Administrative
Agent, plus interest thereon from the date of such demand to the date such amount is
returned, at a rate per annum equal to the Federal Funds Rate. The Administrative Agent
will make such demand upon the request of the Swing Line Lender. The obligations of the
Lenders under this clause shall survive the payment in full of the Obligations and the
termination of this Agreement.




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




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



     2.05 Prepayments.




     (a) The Borrowers may, upon irrevocable notice from the Lead Borrower to the Administrative
Agent, at any time or from time to time voluntarily prepay Committed Loans in whole or in part,
without premium or penalty, provided that (i) such notice must be received by the
Administrative Agent not later than 1:00 p.m. (A) three Business Days



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prior to any date of prepayment of LIBO Rate Loans and (B) on the date of prepayment of Base Rate
Loans; (ii) any prepayment of LIBO Rate Loans shall be in a principal amount of $1,000,000 or a
whole multiple of $500,000 in excess thereof; and (iii) any prepayment of Base Rate Loans shall be
in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof or, in each
case, if less, the entire principal amount thereof then outstanding. Each such notice shall
specify the date and amount of such prepayment and the Type(s) of Loans to be prepaid and, if LIBO
Rate Loans, the Interest Period(s) of such Loans. The Administrative Agent will promptly notify
each Lender of its receipt of each such notice, and of the amount of such Lender’s Applicable
Percentage of such prepayment. If such notice is given by the Lead Borrower, the Borrowers shall
make such prepayment and the payment amount specified in such notice shall be due and payable on
the date specified therein. Any prepayment of a LIBO Rate Loan shall be accompanied by all accrued
interest on the amount prepaid, together with any additional amounts required pursuant to
Section 3.05. Each such prepayment shall be applied to the Committed Loans of the Lenders
in accordance with their respective Applicable Percentages.




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




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




     (d) After the occurrence and during the continuance of a Cash Dominion
Event, the Borrowers shall prepay the Loans in accordance with the provisions of
Section 6.13 hereof. In addition, any Net Proceeds received by a Loan Party upon the
occurrence of a Prepayment Event, irrespective of whether or not a Cash Dominion Event
then exists and is continuing, shall be paid over to the Administrative Agent on receipt by
the Loan Parties and shall be utilized to prepay the Loans in the order of priority set forth
in Section 2.05(e). The Agents shall not be obligated to release their Liens on any
Collateral until such Net Proceeds have been so received (to the extent required in this
clause (d)). The application of such Net Proceeds to the Loans shall not reduce the
Commitments. If all Obligations then due are paid, any excess Net Proceeds shall be



63









 







remitted to the operating account of the Borrowers maintained with the Administrative Agent.




     (e) Prepayments made pursuant to this Section 2.05, first, shall be applied
ratably to the L/C Borrowings and the Swing Line Loans, second, shall be applied ratably
to the outstanding Committed Loans, third, shall be used to Cash Collateralize the
remaining L/C Obligations, and, fourth, the amount remaining, if any, after the prepayment
in full of all L/C Borrowings, Swing Line Loans and Committed Loans outstanding at such time and
the Cash Collateralization of the remaining L/C Obligations in full may be retained by the
Borrowers for use in the ordinary course of its business. Upon the drawing of any Letter of Credit
that has been Cash Collateralized, the funds held as Cash Collateral shall be applied (without any
further action by or notice to or from the Borrowers or any other Loan Party) to reimburse the L/C
Issuer or the Lenders, as applicable.



     2.06 Termination or Reduction of Commitments.




     (a) The Borrowers may, upon irrevocable notice from the Lead Borrower to
the Administrative Agent, terminate the Aggregate Commitments, the Letter of Credit
Sublimit or the Swing Line Sublimit or from time to time permanently reduce the
Aggregate Commitments, the Letter of Credit Sublimit or the Swing Line Sublimit;
provided that (i) any such notice shall be received by the Administrative Agent not
later than 11:00 a.m. five Business Days prior to the date of termination or reduction, (ii) any
such partial reduction shall be in an aggregate amount of $5,000,000 or any whole
multiple of $1,000,000 in excess thereof, and (iii) the Borrowers shall not terminate or
reduce (A) the Aggregate Commitments if, after giving effect thereto and to any
concurrent prepayments hereunder, the Total Outstandings would exceed the Aggregate
Commitments, (B) the Letter of Credit Sublimit if, after giving effect thereto, the
Outstanding Amount of L/C Obligations not fully Cash Collateralized hereunder would
exceed the Letter of Credit Sublimit, and (C) the Swing Line Sublimit if, after giving
effect thereto, and to any concurrent payments hereunder, the Outstanding Amount of
Swing Line Loans hereunder would exceed the Swing Line Sublimit.




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




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



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     2.07 Repayment of Loans.




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




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



     2.08 Interest.




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




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




     (ii) If any other Event of Default 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 applicable Laws.




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




     (c) Interest on each Loan shall be due and payable in arrears on each Interest
Payment Date applicable thereto and at such other times as may be specified herein.
Interest hereunder shall be due and payable in accordance with the terms hereof before
and after judgment, and before and after the commencement of any proceeding under any
Debtor Relief 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 (the
“Commitment Fee”) equal to 0.25% times the actual daily amount by which the
Aggregate Commitments exceed the sum of (i) the Outstanding Amount of Loans and (ii) the
Outstanding Amount of L/C Obligations. The Commitment Fee shall



65









 







accrue at all times during the Availability Period, including at any time during which one
or more of the conditions in Article IV is not met, and shall be due and payable
monthly in arrears on the last Business Day of each calendar month, commencing with the
first such date to occur after the Closing Date, and on the last day of the Availability
Period.




     (b) Early Termination Fee. In the event that the Termination Date occurs, for
any reason, prior to the Maturity Date, the Borrowers shall pay to the Administrative
Agent, for the ratable benefit of the Lenders, a fee (the “Early Termination
Fee”) in respect of amounts which are or become payable by reason thereof equal to one percent
(1.00%) of the Revolving Credit Ceiling then in effect if the Termination Date shall
occur at any time on or before the second anniversary of the Closing Date. There shall be no
Early Termination Fee due after the second anniversary of the Closing Date. All parties
to this Agreement agree and acknowledge that the Lenders will have suffered damages on
account of the early termination of this Agreement and that, in view of the difficulty
in ascertaining the amount of such damages, the Early Termination Fee constitutes
reasonable compensation and liquidated damages to compensate the Lenders on account
thereof. Notwithstanding the foregoing, the Early Termination Fee shall not be payable
under the following circumstances: (A) the Borrowers refinance the Loans with a credit
facility provided by the Administrative Agent or its Affiliates (which refinance shall
be in the sole discretion of the Administrative Agent and its Affiliates); or (B) the
Borrowers repay the Loans with the proceeds from the sale of Equity Interests of the Lead
Borrower received after the Closing Date.




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



     2.10 Computation of Interest and Fees. All 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 Loan for the day on which the Loan is made, and shall not accrue on a Loan, or
any portion thereof, for the day on which the Loan or such portion is paid, provided that any
Loan that is repaid on the same day on which it is made shall, subject to Section 2.12(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 Loan from
such Lender, each payment and prepayment of principal of any such Loan, and each payment of
interest, fees and other amounts due in connection with the Obligations due to such Lender.
The accounts or records maintained by the Administrative Agent and each Lender shall be
conclusive absent manifest error of the amount of the Credit Extensions made by the Lenders
to the Borrowers and the interest and payments thereon. Any



66









 







failure to so record or any error in doing so shall not, however, limit or otherwise affect the
obligation of the Borrowers hereunder to pay any amount owing with respect to the Obligations. In
the event of any conflict between the accounts and records maintained by any Lender and the
accounts and records of the Administrative Agent in respect of such matters, the accounts and
records of the Administrative Agent shall control in the absence of manifest error. Upon the
request of any Lender made through the Administrative Agent, the Borrowers shall execute and
deliver to such Lender (through the Administrative Agent) a Note, which shall evidence such
Lender’s Loans in addition to such accounts or records. Each Lender may attach schedules to its
Note and endorse thereon the date, Type (if applicable), amount and maturity of its Loans and
payments with respect thereto. Upon receipt of an affidavit of a Lender as to the loss, theft,
destruction or mutilation of such Lender’s Note and upon cancellation of such Note, the Borrowers
will issue, in lieu thereof, a replacement Note in favor of such Lender, in the same principal
amount thereof and otherwise of like tenor.




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



     2.12 Payments Generally; Administrative Agent’s Clawback.




     (a) General. All payments to be made by the Borrowers shall be made
without condition or deduction for any counterclaim, defense, recoupment or setoff;
provided, however, that any such payments by the Borrowers shall be without
prejudice and shall not constitute a waiver of any claim that the Borrowers may have against the
Administrative Agent or any Lender hereunder. Except as otherwise expressly provided
herein, all payments by the Borrowers hereunder shall be made to the Administrative
Agent, for the account of the respective Lenders to which such payment is owed, at the
Administrative Agent’s Office in Dollars and in immediately available funds not later
than 2:00 p.m. on the date specified herein. The Administrative Agent will promptly
distribute to each Lender its Applicable Percentage (or other applicable share as provided
herein) of such payment in like funds as received by wire transfer to such Lender’s
Lending Office in accordance with the provisions of Section 2.14. All payments
received by the Administrative Agent after 2:00 p.m. shall be deemed received on the next
succeeding Business Day and any applicable interest or fee shall continue to accrue. If
any payment to be made by the Borrowers shall come due on a day other than a Business
Day, payment shall be made on the next following Business Day, and such extension of
time shall be reflected in computing interest or fees, as the case may be.




     (b) (i) Funding by Lenders; Presumption by Administrative Agent.
Unless the Administrative Agent shall have received notice from a Lender prior to the
proposed date of any Borrowing of LIBO Rate Loans (or in the case of any Borrowing of
Base Rate Loans, prior to 12:00 noon on the date of such Borrowing) that such Lender



67









 







will not make available to the Administrative Agent such Lender’s share of such Borrowing,
the Administrative Agent may assume that such Lender has made such share available on such
date in accordance with Section 2.02 (or, in the case of a Borrowing of Base Rate
Loans, that such Lender has made such share available in accordance with, and at the time
required by, Section 2.02) and may, in reliance upon such assumption, make
available to the Borrowers a corresponding amount. In such event, if a Lender has not in
fact made its share of the applicable Committed Borrowing available to the Administrative
Agent, then the applicable Lender and the Borrowers severally agree to pay to the
Administrative Agent forthwith on demand such corresponding amount in immediately available
funds with interest thereon, for each day from and including the date such amount is made
available to the Borrowers to but excluding the date of payment to the Administrative
Agent, at (A) in the case of a payment to be made by such Lender, the greater of the
Federal Funds Rate and a rate determined by the Administrative Agent in accordance with
banking industry rules on interbank compensation, plus any administrative processing or
similar fees customarily charged by the Administrative Agent in connection with the
foregoing, and (B) in the case of a payment to be made by the Borrowers, the interest rate
applicable to Base Rate Loans. If the Borrowers and such Lender shall pay such interest to
the Administrative Agent for the same or an overlapping period, the Administrative Agent
shall promptly remit to the Borrowers the amount of such interest paid by the Borrowers for
such period. If such Lender pays its share of the applicable Committed Borrowing to the
Administrative Agent, then the 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; Clawback 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 Section 2.12(b) shall be conclusive, absent manifest error.




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



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the foregoing provisions of this Article II, and such funds are not made available
to the Borrowers by the Administrative Agent because the conditions to the applicable
Credit Extension set forth in Article IV are not satisfied or waived in accordance
with the terms hereof (subject to the provisions of the last paragraph of Section
4.02 hereof), the Administrative Agent shall return such funds (in like funds as
received from such Lender) to such Lender, without interest.




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




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



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




     (a) 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




     (b) the provisions of this Section 2.13 shall not be construed to apply to (x)
any payment made by the Loan Parties pursuant to and in accordance with the express
terms of this Agreement or (y) any payment obtained by a Lender as consideration for
the assignment of or sale of a participation in any of its Committed
Loans or subparticipations in L/C Obligations or Swing Line Loans to any assignee or
participant, other than to the Borrowers or any Subsidiary thereof (as to which, the provisions of
this Section 2.13 shall apply).



     Each Loan Party consents to the foregoing and agrees, to the extent it may effectively do so
under applicable Law, that any Lender acquiring a participation pursuant to the foregoing



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arrangements may exercise against such Loan Party rights of setoff and counterclaim with respect
to such participation as fully as if such Lender were a direct creditor of such Loan Party in the
amount of such participation.




     2.14 Settlement Amongst Lenders.




     (a) The amount of each Lender’s Applicable Percentage of outstanding Loans
(including outstanding Swing Line Loans) shall be computed weekly (or more frequently
in the Administrative Agent’s discretion) and shall be adjusted upward or downward
based on all Loans (including Swing Line Loans) and repayments of Loans (including
Swingline 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.



     2.15 Increase in Commitments.




     (a) Request for Increase. Provided no Default or Event of Default then exists
or would arise therefrom, upon notice to the Administrative Agent (which shall promptly
notify the Lenders), the Lead Borrower may, from time to time, request an increase in the
Aggregate Commitments by an amount (for all such requests) not exceeding $25,000,000 (each
such increase, a “Commitment Increase”); provided that any such request for
a Commitment Increase shall be in a minimum amount of $5,000,000. At the time of sending
such notice, the Lead Borrower (in consultation with the Administrative Agent) shall
specify the time period within which each Lender is requested to respond (which



70









 







shall in no event be less than ten (10) Business Days from the date of delivery of such notice to
the Lenders).




     (b) Lender Elections to Increase. Each Lender shall notify the Administrative
Agent within such time period whether or not it agrees to increase its Commitment and, if
so, whether by an amount equal to, greater than, or less than its Applicable Percentage of
such requested Commitment Increase. Any Lender not responding within such time
period shall be deemed to have declined to increase its Commitment.




     (c) Notification by Administrative Agent; Additional Commitment Lenders.
The Administrative Agent shall notify the Lead Borrower and each Lender of the
Lenders’ responses to each request made hereunder. To achieve the full amount of a
requested Commitment Increase and subject to the approval of the Administrative Agent,
the L/C Issuer and the Swing Line Lender (which approvals shall not be unreasonably
withheld), to the extent that the existing Lenders decline to increase their Commitments,
or decline to increase their Commitments to the amount requested by the Lead Borrower,
the Administrative Agent, in consultation with the Lead Borrower, will use its reasonable
efforts to arrange for other Eligible Assignees to become a Lender hereunder and to issue
commitments in an amount equal to the amount of the increase in the Aggregate
Commitments requested by the Lead Borrower and not accepted by the existing Lenders
(and the Lead Borrower may also invite additional Eligible Assignees to become
Lenders) (each such Eligible Assignee issuing a commitment and becoming a Lender, an
“Additional Commitment Lender”), provided, however, that without the
consent of the Administrative Agent, at no time shall the Commitment of any Additional Commitment
Lender be less than $10,000,000.




     (d) Effective Date and Allocations. If the Aggregate Commitments are
increased in accordance with this Section 2.15, the Administrative Agent and the Lead
Borrower shall determine the effective date (the “Increase Effective Date”) and the
final allocation of such Commitment Increase. The Administrative Agent shall promptly
notify the Lead Borrower and the Lenders of the final allocation of such Commitment
Increase and the Increase Effective Date and, on the Increase Effective Date, (i) the
Aggregate Commitments under, and for all purposes of, this Agreement shall be
increased by the aggregate amount of such Commitment Increase, and (ii) Schedule 2.01
shall be deemed modified, without further action, to reflect the revised Commitments and
Applicable Percentages of the Lenders.




     (e) Conditions to Effectiveness of Commitment Increase. As a condition
precedent to such Commitment Increase: (i) the Lead Borrower shall deliver to the
Administrative Agent a certificate of each Loan Party dated as of the Increase Effective
Date (in sufficient copies for each Lender) signed by a Responsible Officer of such Loan
Party (A) certifying and attaching the resolutions adopted by such Loan Party approving
or consenting to such Commitment Increase, and (B) in the case of the Borrowers,
certifying that, before and after giving effect to such Commitment Increase, (1) the
representations and warranties contained in Article V and the other Loan Documents are
true and correct on and as of the Increase Effective Date, except to the extent that such
representations and warranties specifically refer to an earlier date, in which case they are



71









 







true and correct as of such earlier date, and except that for purposes of this Section
2.15, 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; (ii) the Borrowers, the Administrative Agent, and
any Additional Commitment Lender shall have executed and delivered a joinder to the Loan Documents
in such form as the Administrative Agent shall reasonably require; (iii) the Borrowers shall have
paid such fees and other compensation to the Additional Commitment Lenders as the Lead Borrower
and such Additional Commitment Lenders shall agree; (iv) the Borrowers shall have paid such
arrangement fees to the Administrative Agent as the Lead Borrower and the Administrative Agent may
agree; (v) the Borrowers shall deliver to the Administrative Agent and the Lenders an opinion or
opinions, in form and substance reasonably satisfactory to the Administrative Agent, from counsel
to the Borrowers reasonably satisfactory to the Administrative Agent and dated such date; (vi) the
Borrowers and the Additional Commitment Lender shall have delivered such other instruments,
documents and agreements as the Administrative Agent may reasonably have requested; and (vii) no
Default or Event of Default exists. The Borrowers shall prepay any Committed Loans outstanding on
the Increase Effective Date (and pay any additional amounts required pursuant to Section
3.05) to the extent necessary to keep the outstanding Committed Loans ratable with any revised
Applicable Percentages arising from any nonratable increase in the Commitments under this
Section 2.15.




     (f) Conflicting Provisions. This Section 2.15 shall supersede any
provisions in Sections 2.13 or 10.01 to the contrary.



ARTICLE III.

TAXES, YIELD PROTECTION AND ILLEGALITY;

APPOINTMENT OF LEAD BORROWER




     3.01 Taxes.




     (a) Payments Free of Taxes. Any and all payments by or on account of any
obligation of the Borrowers hereunder or under any other Loan Document shall be made
free and clear of, and without reduction or withholding for, any Indemnified Taxes or
Other Taxes, provided that, if the Borrowers shall be required by applicable 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 3.01),
the Administrative Agent, Lender or L/C Issuer, as the case may be, receives an amount
equal to the sum it would have received had no such deductions been made, (ii) the
Borrowers shall make such deductions and (iii) the Borrowers shall timely pay the full
amount deducted to the relevant Governmental Authority in accordance with applicable
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 applicable Law.




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     (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
3.01) paid by the Administrative Agent, such Lender or the L/C Issuer, as the case may
be, and any penalties, interest and reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally
imposed or asserted by the relevant Governmental Authority. A certificate as to the amount
of such payment or liability delivered to the Lead Borrower by a Lender or the L/C Issuer
(with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf
or on behalf of a Lender or the L/C Issuer, shall be conclusive absent manifest error.




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




     (e) Status of Lenders. Any Foreign Lender that is entitled to an exemption
from, or reduction of, withholding tax under the law of the jurisdiction in which any
Borrower is resident for tax purposes, or any treaty to which such jurisdiction is a party,
with respect to payments hereunder or under any other Loan Document shall deliver to the
Lead Borrower (with a copy to the Administrative Agent), at the time or times prescribed by
applicable Law or reasonably requested by the Lead Borrower or the Administrative Agent,
such properly completed and executed documentation prescribed by applicable Law as will
permit such payments to be made without withholding or at a reduced rate of withholding. In
addition, any Lender, if requested by the Lead Borrower or the Administrative Agent, shall
deliver such other documentation prescribed by applicable Law or reasonably requested by the
Lead Borrower or the Administrative Agent as will enable the Lead Borrower or the
Administrative Agent to determine whether or not such Lender is subject to backup
withholding or information reporting requirements.



     Without limiting the generality of the foregoing, in the event that any Borrower is resident
for tax purposes in the United States, any Foreign Lender shall deliver to the Lead Borrower and
the Administrative Agent (in such number of copies as shall be requested by the recipient) on or
prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time
to time thereafter upon the request of the Lead Borrower or the Administrative Agent, but only if
such Foreign Lender is legally entitled to do so), whichever of the following is applicable:




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



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




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




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




     (f) Treatment of Certain Refunds. If the Administrative Agent, any Lender or
the L/C Issuer receives a refund of any Taxes or Other Taxes as to which it has been
indemnified by the Borrowers or with respect to which the Borrowers have paid additional
amounts pursuant to this Section 3.01, 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 3.01 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



74









 




Interest Period therefor, if such Lender may lawfully continue to maintain such LIBO Rate Loans to
such day, or immediately, if such Lender may not lawfully continue to maintain such LIBO Rate
Loans. Upon any such prepayment or conversion, the Borrowers shall also pay accrued interest on
the amount so prepaid or converted.




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



     3.04 Increased Costs; Reserves on LIBO Rate Loans.



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





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




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


and the result of any of the foregoing shall be to increase the cost to such Lender of making or
maintaining any LIBO Rate Loan (or of maintaining its obligation to make any such Loan), or to
increase the cost to such Lender or the L/C Issuer of participating in, issuing or maintaining any
Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of
Credit), or to reduce the amount of any sum received or receivable by such Lender or the L/C
Issuer hereunder (whether of principal, interest or any other amount) then, upon request of such
Lender or the L/C Issuer and upon the approval of the Administrative Agent (which consent shall
not be unreasonably withheld), 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



75









 







Lender or such Lender’s or the L/C Issuer’s holding company, if any, regarding capital
requirements has had the effect of reducing the rate of return on such Lender’s or the L/C
Issuer’s capital or on the capital of such Lender’s or the L/C Issuer’s holding company, if any,
as a consequence of this Agreement, the Commitments of such Lender or the Loans made by, or
participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by the
L/C Issuer, to a level below that which such Lender or the L/C Issuer or such Lender’s or the L/C
Issuer’s holding company could have achieved but for such Change in Law (taking into consideration
such Lender’s or the L/C Issuer’s policies and the policies of such Lender’s or the L/C Issuer’s
holding company with respect to capital adequacy), then from time to time, upon the request of
such Lender or the L/C Issuer or such Lender’s or the L/C Issuer’s holding company and upon the
approval of the Administrative Agent (which consent shall not be unreasonably withheld), the
Borrowers will pay to such Lender or the L/C Issuer or such Lender’s or the L/C Issuer’s holding
company, 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, as the case may be, for any
such reduction suffered.




     (c) Certificates for Reimbursement. A certificate of a Lender or the L/C Issuer
specifying the Change in Law and setting forth the amount or amounts necessary to compensate such
Lender or the L/C Issuer or its holding company, as the case may be, as specified in subsection (a)
or (b) of this Section 3.04 and delivered to the Lead Borrower and the Administrative Agent
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 3.04 shall not
constitute a waiver of such Lender’s or the L/C Issuer’s right to demand such compensation,
provided that the Borrowers shall not be required to compensate a Lender or the L/C Issuer
pursuant to the foregoing provisions of this Section 3.04 for any increased costs incurred
or reductions suffered more than six (6) 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 six-month period referred to above shall be extended to include
the period of retroactive effect thereof); provided further that the Borrowers shall not be
required to compensate a Lender or the L/C Issuer pursuant to the foregoing provisions of this
Section 3.04 for any increased costs incurred or reductions suffered prior to the Closing
Date or after the Termination Date.




     (e) Reserves on LIBO Rate Loans. The Borrowers shall pay to each Lender, as long as
such Lender shall be required to maintain reserves with respect to liabilities or assets consisting
of or including Eurocurrency funds or deposits (currently known as “Eurocurrency liabilities”),
additional interest on the unpaid principal amount of each LIBO Rate Loan equal to the actual costs
of such reserves allocated to such Loan by such Lender (as determined by such Lender in good faith,
which determination shall be



76









 






conclusive), which shall be due and payable on each date on which interest is payable on
such Loan, provided that the Lead Borrower shall have received at least 10 days’
prior notice (with a copy to the Administrative Agent) of such additional interest together
with an explanation thereof 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 LIBO Rate Loan on a day
other than the last day of the Interest Period for such LIBO Rate Loan (whether voluntary,
mandatory, automatic, by reason of acceleration, or otherwise);




     (b) any failure by the Borrowers (for a reason other than the failure of such Lender to
make a Loan) to prepay, borrow, continue or convert any LIBO 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 or reasonable expense arising from the liquidation or reemployment of funds
obtained by it to maintain such Loan or from fees payable to terminate the deposits from which
such funds were obtained. The Borrowers shall also pay any customary administrative fees charged
by such Lender in connection with the foregoing.




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



     3.06 Mitigation Obligations; Replacement of Lenders.




     (a) Designation of a Different Lending Office. If any Lender requests
compensation under Section 3.04, or the Borrowers are required to pay any additional
amount to any Lender or any Governmental Authority for the account of any Lender pursuant to
Section 3.01, or if any Lender gives a notice pursuant to Section 3.02, then
such Lender shall use reasonable, good faith efforts to designate a different Lending Office
for funding or booking its Loans hereunder or to assign its rights and obligations hereunder
to another of its offices, branches or affiliates, if, in the judgment of such Lender, such
designation or assignment (i) would eliminate or reduce amounts payable pursuant to
Section 3.01 or Section 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



77









 







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 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:




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




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



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     (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 do so could not reasonably be expected to have a Material Adverse Effect;




     (v) a favorable opinion of Reed Smith LLP, counsel to the Loan Parties, addressed to the
Administrative Agent and each Lender, as to such matters concerning the Loan Parties and the Loan
Documents as the Administrative Agent may reasonably request;




     (vi) a certificate signed by a Responsible Officer of the Lead Borrower, satisfactory in form
and substance to the Administrative Agent, certifying (A) that the conditions specified in
Sections 4.02(a) and 4.02(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 be
reasonably expected to have, either individually or in the aggregate, a Material Adverse Effect,
(C) either that (1) no consents, licenses or approvals are required in connection with the
execution, delivery and performance by such Loan Party, and the validity against such Loan Party,
of the Loan Documents to which it is a party, or (2) that all such consents, licenses and
approvals have been obtained and are in full force and effect and (D) to the Solvency of the Loan
Parties as of the Closing Date after giving effect to the transactions contemplated hereby;




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




     (viii) a Borrowing Base Certificate dated the Closing Date, relating to the month ended on
March 31, 2008, and executed by a Responsible Officer of the Lead Borrower;



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     (ix) 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;




     (x) a payoff letter from the agent for the lenders under the Existing Revolving Credit Loan
Agreement satisfactory in form and substance to the Administrative Agent evidencing that the
Existing Revolving Credit Loan 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 Revolving Credit Loan Agreement have been or concurrently with the Closing Date
are being released;




     (xi) a payoff letter from the administrative agent for the lenders under the Existing Term
Loan Agreement satisfactory in form and substance to the Administrative Agent evidencing that the
Existing Term Loan 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 Term Loan Agreement have been or concurrently with the Closing Date are being released;




     (xii) the Security Documents and certificates evidencing any stock being pledged thereunder,
together with undated stock powers executed in blank, each duly executed by the applicable Loan
Parties;




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




     (xiv) 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;




     (xv) (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 and (B) the Credit Card Notifications and Blocked
Account Agreements required pursuant to Section 6.13 hereof; and




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



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




     (c) The Administrative Agent shall have received and be satisfied with such other information
(financial or otherwise) reasonably requested by the Administrative Agent.




     (d) All necessary consents and approvals to the transactions contemplated hereby shall
have been obtained and shall be reasonably satisfactory to the Administrative
Agent, other than those which, individually or in the aggregate, would not have, and would not
reasonably be expected to have, a Material Adverse Effect.




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




     (f) After giving effect to the consummation of the transactions contemplated under this
Agreement and the other Loan Documents on the Closing Date (including any Loans made or Letters of
Credit issued hereunder), no Default or Event of Default shall exist.




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




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




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




     (j) The Borrowers shall have paid all fees, charges and disbursements of counsel to the
Administrative Agent to the extent invoiced prior to or on the Closing Date, plus such additional
amounts of such fees, charges and disbursements as shall constitute its reasonable estimate of such
fees, charges and disbursements incurred or to be incurred by it through the closing proceedings
(provided that such estimate shall not thereafter preclude a final settling of accounts between the
Borrowers and the Administrative Agent).




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




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



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Without limiting the generality of the provisions of Section 9.04. for purposes of
determining compliance with the conditions specified in this Section 4.01, each Lender
that has signed this Agreement shall be deemed to have Consented to, approved or accepted or to be
satisfied with, each document or other matter required thereunder to be Consented to or approved
by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received
notice from such Lender prior to the proposed Closing Date specifying its objection thereto.




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




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




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




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




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


Each Request for Credit Extension (other than a Conversion/Continuation 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 4.02(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 Loans and L/C Advances and participate in all Swing Line Loans and
Letters of Credit whenever made or issued, which are requested by the Lead Borrower and which,
notwithstanding the failure of the Loan Parties to comply with the provisions of this Article
IV, agreed to by the Administrative Agent; provided, however, the making of any
such Loans or the issuance of any Letters of Credit shall not be deemed a modification or waiver by
any Credit Party of the provisions of this Article IV on any future occasion or a waiver of
any rights of the Credit Parties as a result of any such failure to comply.




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ARTICLE V.

REPRESENTATIONS AND WARRANTIES




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



     5.01 Existence, Qualification and Power. Each Loan Party and each Subsidiary thereof
(a) is a corporation, limited liability company, partnership or limited partnership, duly organized
or formed, validly existing and, where applicable, in good standing under the Laws of the
jurisdiction of its incorporation or organization, (b) has all requisite power and authority and
all requisite governmental licenses, permits, authorizations, consents and approvals to (i) own or
lease its assets and carry on its business 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



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is party thereto in accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors’ rights generally and subject to
general principles of equity, regardless of whether considered in a proceeding in equity or at
law.




     5.05 Financial Statements; No Material Adverse Effect.




     (a) The Audited Financial Statements (i) were prepared in accordance with GAAP
consistently applied throughout the period covered thereby, except as otherwise expressly
noted therein; (ii) fairly present 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 January 5, 2008, 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, material commitments and Material Indebtedness.




     (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) The Consolidated forecasted balance sheet and statements of income and cash flows
of the Lead Borrower and its Subsidiaries delivered pursuant to Sections 4.01 or
6.01 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) except as specifically disclosed in Schedule 5.06,
either



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individually or in the aggregate, if determined adversely, could reasonably be expected to have a
Material Adverse Effect.




     5.7 No Default. No Loan Party or any Subsidiary is in default under or with respect
to, or party 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.



     5.8 Ownership of Property; Liens.




     (a) Each of the Loan Parties and each Subsidiary thereof has good record and marketable
title in fee simple to or valid leasehold interests in, all real property necessary or used
in the ordinary conduct of its business, 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)(l) 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 date
hereof 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
Liens set forth on Schedule 7.01, and 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 date hereof, showing as of
the date hereof the amount, obligor or issuer and maturity, if any, thereof.



     5.09 Environmental Compliance.




     (a) Except as specifically disclosed in Schedule 5.09, no Loan Party or any
Subsidiary thereof (i) has failed to comply with any Environmental Law or to obtain,
maintain or comply with any permit, license or other approval required under any
Environmental Law, (ii) has become subject to any Environmental Liability, (iii) has
received notice of any claim with respect to any Environmental Liability or (iv) knows of



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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, (i) none of the properties
currently owned or operated by any Loan Party or any Subsidiary thereof or, to the knowledge
of the Loan Parties, formerly owned or operated by any Loan Party or any Subsidiary thereof,
is listed or proposed for listing on the NPL or on the CERCLIS or any analogous foreign,
state or local list or is adjacent to any such property; (ii) there are no and never have
been any underground or above-ground storage tanks or any surface impoundments, septic
tanks, pits, sumps or lagoons in which Hazardous Materials are being or have been treated,
stored or disposed on any property currently owned or operated by any Loan Party or any
Subsidiary thereof or, to the knowledge of the Loan Parties, on any property formerly owned
or operated by any Loan Party or Subsidiary thereof; (iii) there is no asbestos or
asbestos-containing material on any property currently owned or operated by any Loan Party
or Subsidiary thereof; and (iv) Hazardous Materials have not been released, discharged or
disposed of on any property currently owned or operated by any Loan Party or any Subsidiary
thereof or, to the knowledge of the Loan Parties, on any property formerly owned or operated
by any Loan Party or any Subsidiary thereof.




     (c) Except as otherwise set forth on Schedule 5.09, (i) 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 (ii) all Hazardous Materials generated, used,
treated, handled or stored at, or transported to or from, any property currently owned or
operated by any Loan Party or any Subsidiary thereof or, to the knowledge of the Loan
Parties, any property 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 (after giving effect to any self-insurance), with such deductibles
and covering such risks (including, without limitation, workmen’s compensation, public liability
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



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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, and which contest effectively suspends the
collection of the contested obligation and the enforcement of any Lien securing such obligation.
There is no proposed tax assessment against any Loan Party or any Subsidiary that would, if made,
have a Material Adverse Effect. No Loan Party or any Subsidiary thereof is a party to any tax
sharing agreement.




     5.12 ERISA Compliance.



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




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




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




     5.13 Subsidiaries; Equity Interests. 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




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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 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, each of which is valid and in full force and effect.




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




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




     (b) None of the Loan Parties, any Person Controlling any Loan Party, or any Subsidiary
is or is required to be registered as an “investment company” under the Investment Company
Act of 1940.



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



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     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 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. Except as specifically disclosed in Schedule 5.17, no
claim or litigation regarding any of the foregoing is pending or, to the 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
that has not been satisfied. 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. The Security Documents create in favor of the Collateral
Agent a legal, valid and enforceable security interest in the Collateral, and the Security
Documents constitute, or will 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 creation of a fully perfected first priority Lien on, and security interest in, all right,
title and interest of the Loan Parties thereunder in such Collateral, in each case prior and
superior in right to any other Person, except for Permitted Encumbrances having priority under
applicable Law.



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



     5.21 Deposit Accounts; Credit Card Arrangements.




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




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



     5.22 Brokers. No broker or finder brought about the obtaining, making or closing of
the Loans or transactions contemplated by the Loan Documents, and no Loan Party or Affiliate
thereof has any obligation to any Person in respect of any finder’s or brokerage fees in connection
therewith.



     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 Loan or other Obligation
hereunder shall remain unpaid or unsatisfied, or any Letter of Credit shall remain



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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 ninety (90) days after the end of
each Fiscal Year of the Lead Borrower (commencing with the Fiscal Year ended February 2,
2008), 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, such Consolidated statements to be audited and accompanied
by a report and unqualified opinion of a Registered Public Accounting Firm of nationally
recognized standing reasonably acceptable to the Administrative Agent, which report and
opinion shall be prepared in accordance with generally accepted auditing standards and shall
not be subject to any “going concern” or like qualification or exception or any
qualification or exception as to the scope of such audit;




     (b) as soon as available, but in any event within forty-five (45) days after the end of
each Fiscal Quarter of each Fiscal Year of the Lead Borrower (commencing with the first
Fiscal Quarter ended immediately after the creation of a Public Market), 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)
the corresponding Fiscal Quarter of the previous Fiscal Year and (B) the corresponding
portion of the previous Fiscal Year, all in reasonable detail, such Consolidated statements
to be certified by a Responsible Officer of the Lead Borrower as fairly presenting 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 (i) within thirty-five (35) days after the
end of each Fiscal Month (except February) of each Fiscal Year of the Lead Borrower
(commencing with the Fiscal Month ending May 2, 2008) and (ii) within forty-five (45) days
after the end of February 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 6.0 l(d) hereof, (B) the corresponding
Fiscal Month of the previous Fiscal Year and (C) the corresponding portion of the previous
Fiscal Year, all in reasonable detail, such Consolidated statements to be certified by a
Responsible Officer of the Lead Borrower as fairly presenting the



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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 and such
consolidating statements to be certified by a Responsible Officer of the Lead Borrower to
the effect that such statements are fairly stated in all material respects when considered
in relation to the Consolidated financial statements of the Lead Borrower and its
Subsidiaries;




     (d) as soon as available, but in any event at least thirty (30) days after 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, of 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).



     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), an opinion of its Registered Public Accounting Firm;




     (b) concurrently with the delivery of the financial statements referred to in
Sections 6.01 (a) and (c) (commencing with the delivery of the financial statements
for the Fiscal Month ended March 1, 2008), (i) a duly completed Compliance Certificate
signed by a Responsible Officer of the Lead Borrower (to be furnished even if a Covenant
Compliance Event is not then in effect) and (ii) a copy of management’s discussion and
analysis with respect to such financial statements in form and substance substantially
similar to the discussion and analysis which the Lead Borrower delivered to the agent under
the Existing Revolving Credit Loan Agreement immediately prior to the Closing Date, which
such changes thereto as the Administrative Agent may reasonably request from time to time.
In the event of any change in generally accepted accounting principles used in the
preparation of such financial statements, the Lead Borrower shall also provide a statement
of reconciliation conforming such financial statements to GAAP;




     (c) on the sixth 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 F (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 (i) if Excess Availability is less than (A) thirty-five
percent (35%) of the Borrowing Base at any time on or after the Closing Date through
December 31, 2008, (B) twenty-five percent (25%) of the Borrowing Base at any time on or
after January 1, 2009 through December 31, 2009 or (C) twenty percent (20%) of the Borrowing
Base at any time thereafter, or (ii) any Event of Default has occurred and is continuing, at
the election of the Administrative Agent, such Borrowing Base Certificate shall be delivered
on Wednesday of each week (or, if Wednesday is not a Business Day,



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on the next succeeding Business Day), as of the close of business on the immediately
preceding Saturday;




     (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;




     (e) promptly after the same are available, copies of each annual report, proxy or
financial statement or other report or communication sent to the shareholders of the Loan
Parties and, following the creation of a Public Market, 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 Sections 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) as soon as available, but in any event within sixty (60) 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;




     (h) promptly, and in any event within twenty-one (21) 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 be expected to
have a Material Adverse Effect; and




     (i) 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 Sections 6.01 (a),
(b), or
(c) 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


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that: (i) the Lead Borrower shall deliver paper copies of such documents to the
Administrative Agent or any Lender that requests the Lead Borrower to deliver such paper copies
until a written request to cease delivering paper copies is given by the Administrative Agent or
such Lender and (ii) the Lead Borrower shall notify the Administrative Agent and each Lender (by
telecopier or electronic mail) of the posting of any such documents and provide to the
Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents.
Notwithstanding anything contained herein, in every instance, the Lead Borrower shall be required
to provide paper copies of the Compliance Certificates required by Section 6.02(b) to the
Administrative Agent. The Administrative Agent shall have no obligation to request the delivery or
to maintain copies of the documents referred to above, and in any event shall have no
responsibility to monitor compliance by the Loan Parties with any such request for delivery, and
each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of
such documents.




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



     6.03 Notices. Promptly, and in any event within five (5) Business Days, 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, investigation, proceeding or
suspension between any Loan Party or any Subsidiary thereof and any Governmental



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Authority; or (iii) the commencement of, or any material development in, any 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 chief executive officer, chief financial officer
or general merchandise manager;




     (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;




     (h) of the filing of any Lien for unpaid Taxes against any Loan Party in excess of
$1,000,000 of which the Borrowers have knowledge; and




     (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.


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




     6.04 Payment of Obligations. Pay and discharge, 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



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Adverse Effect. Nothing contained herein shall be deemed to limit the rights of
the Administrative Agent 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 Sections 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. Maintain with financially sound and reputable
insurance companies not Affiliates of the Loan Parties, insurance with respect to its properties
and business against loss or damage of the kinds customarily insured against by Persons engaged in
the same or similar business and operating in the same or similar locations or as is required by
applicable Law, of such types and in such amounts (after giving effect to any self-insurance
compatible with the following standards) as are customarily carried under similar circumstances by
such other Persons and as are reasonably acceptable to the Administrative Agent.




     (a) Fire and extended coverage policies maintained with respect to any Collateral shall
name the Collateral Agent as a loss payee and 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
either directly to the Collateral Agent or jointly to the Collateral Agent and the Lead
Borrower, (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. Each such policy referred to in this Section 6.07(a)
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 ten (10) days prior written notice thereof
by the insurer to the Collateral Agent (giving the Collateral Agent the right to cure
defaults in the payment of premiums) or (ii) for any other reason except upon not less than
thirty (30) days prior written notice thereof by the insurer to the Collateral Agent. The
Lead Borrower shall deliver to the Collateral Agent, 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



96









 







delivered to the Collateral Agent, including an insurance binder) together with evidence
satisfactory to the Collateral Agent of payment of the premium therefor.




     (b) 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.




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



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



     6.09 Books and Records; Accountants.




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




     (b) At all times, retain a Registered Public Accounting Firm which is reasonably
satisfactory to the Administrative Agent and 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



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such Registered Public Accounting Firm, as may be raised by the Administrative Agent;
provided that the Lead Borrower’s chief financial officer shall be entitled to
participate in any such discussions.



     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 has occurred and is continuing, the Administrative Agent (or any of its
representatives or independent contractors) may do any of the foregoing at the expense of
the Loan Parties at any time during normal business hours and without advance notice.




     (b) Upon the request of the Administrative Agent after reasonable prior notice, permit
the Administrative Agent or professionals (including investment bankers, consultants,
accountants, lawyers and appraisers) retained by the Administrative Agent to conduct
appraisals, commercial finance examinations and other evaluations, including, without
limitation, of (i) the Lead Borrower’s practices in the computation of the Borrowing Base
and (ii) the assets included in the Borrowing Base and related financial information such
as, but not limited to, sales, gross margins, payables, accruals and reserves. Subject to
the following sentences, the Loan Parties shall pay the fees and expenses of the
Administrative Agent or such professionals with respect to such evaluations and appraisals.
The Loan Parties acknowledge that the Administrative Agent may, in its Discretion, undertake
up to two (2) inventory appraisals and up to two (2) commercial finance examinations each
Fiscal Year at the Loan Parties’ expense; provided that, if Excess Availability is
less than or equal to (i) thirty-five percent (35%) of the Borrowing Base at any time on or
after the Closing Date through December 31, 2008, (ii) twenty-five percent (25%) of the
Borrowing Base at any time on or after January 1, 2009 through December 31, 2009 or (iii)
twenty percent (20%) of the Borrowing Base at any time thereafter, the Loan
Parties acknowledge that the Administrative Agent may, in its Discretion, undertake up
to three (3) inventory appraisals and up to three (3) commercial finance examinations each
Fiscal Year at the Loan Parties’ expense; provided further that the cost of one (1)
inventory appraisal and one (1) commercial finance examination shall not exceed $60,000 in
the aggregate, plus all reasonable out-of-pocket expenses and costs incurred in connection
therewith. Notwithstanding anything to the contrary contained herein, the Administrative
Agent may cause additional inventory 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 applicable Law or if a Default or Event of Default shall have
occurred and be continuing, at the expense of the Loan Parties.



     6.11 Use of Proceeds. Use the proceeds of the Credit Extensions (a) to refinance the
Indebtedness of the Lead Borrower and its Subsidiaries under the Existing Revolving Credit



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Loan Agreement and the Existing Term Loan Agreement, (b) to finance transaction fees and expenses
related hereto, (c) to finance the acquisition of working capital assets of the Borrowers,
including the purchase of inventory and equipment, in each case in the ordinary course of
business, (d) to finance Capital Expenditures of the Borrowers, and (e) for general corporate
purposes of the Loan Parties, in each case to the extent expressly permitted under applicable Law
and the Loan Documents.



     6.12 Additional Loan Parties. Notify the Administrative Agent at the time that any
Person becomes a Subsidiary, and promptly thereafter (and in any event within fifteen (15) days),
cause any such Person (a) which is not a CFC, to (i) become a Loan Party by executing and
delivering to the Administrative Agent a Joinder Agreement or a 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 Sections 4.01(a)(iii) and
4.01(a)(iv) 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 Equity Interests of such
Subsidiary and such time period may be extended based on local law or practice), in each case in
form, content and scope reasonably satisfactory to the Administrative Agent. In no event shall
compliance with this Section 6.12 waive or be deemed a waiver or Consent to any transaction
giving rise to the need to comply with this Section 6.12 if such transaction was not
otherwise expressly permitted by this Agreement or constitute or be deemed to constitute, with
respect to any Subsidiary, an approval of such Person as a Borrower or permit the inclusion of any
acquired assets in the computation of the Borrowing Base.



     6.13 Cash Management.




     (a) On or prior to the Closing Date:




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




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




     (b) Each Credit Card Notification shall require the ACH or wire transfer no less
frequently than each Business Day (and whether or not there are then any outstanding
Obligations) to a Blocked Account of all payments due from credit card processors.




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     (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 each
Business Day (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;




     (iv) the then contents of each DDA (net of any minimum balance, not to exceed
$5,000.00, 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 $10,000.00, 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 Sections 2.05(e) or
8.03, as applicable, of 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.




     (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.




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     (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 physical inventory to be undertaken, at the expense of the Loan
Parties, in each twelve (12) month period conducted by RGIS LLC or such other 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 a physical count of Inventory which is undertaken on behalf of any Loan Party at (i)
any distribution center maintained by any Loan Party and (ii) a representative sample of the
Borrowers’ retail locations, as selected by the Collateral Agent in its discretion. The




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Lead Borrower, within thirty (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 undertaken by a Loan Party) and shall post such
results to the Loan Parties’ stock ledgers and general ledgers, as applicable.




     (b) Upon the occurrence and during the continuance of an Event of Default, the
Collateral Agent, in its Discretion, 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. (a) Conduct its operations and keep and maintain its Real
Estate in material compliance with all Environmental Laws and Environmental Permits; (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 applicable Law, or
which any Agent may reasonably request, to effectuate the transactions contemplated by the
Loan Documents or to grant, preserve, protect or perfect the Liens created or intended to be
created by the Security Documents or the validity or priority of any such Lien, all at the
expense of the Loan Parties. The Loan Parties also agree to provide to the Agents, from time
to time upon request, evidence satisfactory to the Agents as to the perfection and priority
of the Liens created or intended to be created by the Security Documents.




     (b) If any material assets are acquired by any Loan Party after the Closing Date (other
than assets constituting Collateral under the Security Agreement that become subject to the
Lien of the Security Agreement 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.



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     (c) Upon the request of the Collateral Agent, cause each of its customs brokers to
deliver an agreement (including, without limitation, a Customs Broker Agreement) to the
Collateral Agent covering such matters and in such form as the Collateral Agent may
reasonably require.



     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.



     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 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. Create, incur, assume, guarantee, suffer to exist or otherwise
become or remain liable with respect to, any Indebtedness, except Permitted Indebtedness.



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     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 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 may merge with (i) a Loan Party, provided that the Loan
Party shall be the continuing or surviving Person, or (ii) any one or more other
Subsidiaries, provided that when any wholly-owned Subsidiary is merging with another
Subsidiary, the wholly-owned Subsidiary shall be the continuing or surviving Person;




     (b) 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;




     (c) in connection with a Public Offering, the Lead Borrower may merge with or into any
other Person which is formed solely for the purposes of consummating a so-called “migratory
merger” upon no less than thirty (30) days prior written notice to the Administrative Agent,
provided that the Person surviving such merger shall automatically succeed, by
operation of Law, to all of the rights and obligations of the Lead Borrower hereunder; and




     (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, or issue or sell any Equity
Interests or accept any capital contribution, except that, so long as no 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; and




     (d) if the Payment Conditions are satisfied, the Lead Borrower may declare or pay cash
dividends to its shareholders.



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     7.07 Prepayments of Indebtedness. Prepay, redeem, purchase, defease or otherwise
satisfy prior to the scheduled maturity thereof in any manner any Indebtedness, or make any payment
in violation of any subordination terms of any Subordinated Indebtedness, except (a) as long as no
Default or Event of Default then exists or would arise therefrom, regularly scheduled or mandatory
repayments or redemptions of Permitted Indebtedness, and (b) prepayments of Permitted Indebtedness
(but excluding on account of any 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.



     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 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 any negative pledge incurred or provided in favor of any holder of Indebtedness
permitted under Section 7.01 solely to the extent any such negative pledge relates to the
property financed by or the subject of such Indebtedness; or (b) requires the grant of a Lien to
secure an obligation of such Person if a Lien is granted to secure another obligation of such
Person.



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



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



     7.13 Corporate Name; Fiscal Year.




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



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     (b) Change its name as it appears in official filings in the state of its
incorporation or other organization (b) change its chief executive office, principal place
of business, corporate offices or warehouses or locations at which Collateral is held or
stored, or the location of its records concerning the Collateral, (c) change the type of
entity that it is, (d) change its organization identification number, if any, issued by its
state of incorporation or other organization, or (e) change its state of incorporation or
organization, in each case without at least thirty (30) days prior written notice to the
Collateral Agent and after the Collateral Agent’s written acknowledgment, which
acknowledgment shall not be unreasonably withheld or delayed, that any reasonable action
requested by the Collateral Agent in connection therewith, including to continue the
perfection of any Liens in favor of the Collateral Agent, in any Collateral, has been
completed or taken, and provided that any such new location shall be in the
continental United States.



     7.14 Blocked Accounts; Credit Card Processors. Not open new 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 Consolidated Fixed Charge Coverage Ratio. During the continuance of a
Covenant Compliance Event, permit the Consolidated Fixed Charge Coverage Ratio, calculated as of
the last day of each month for the most recent Measurement Period, to be less than 1.0 to 1.0.



ARTICLE VIII.

EVENTS OF DEFAULT AND REMEDIES




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




     (a) Non-Payment. The Borrowers or any other Loan Party fails to pay when and
as required to be paid herein, (i) any amount of principal of any Loan or any L/C
Obligation, or deposit any funds as Cash Collateral in respect of L/C Obligations, or (ii)
any interest on any Loan or on any L/C Obligation, or any fee due hereunder, or (iii) any
other amount payable hereunder or under any other Loan Document; or




     (b) Specific Covenants.




     (i) Any Loan Party fails to perform or observe any term, covenant or agreement
contained in any of Sections 6.03, 6.05, 6.07,
6.10, 6.11, 6.12, 6.13 or 6.14 or
Article VII; or




     (ii) Any Loan Party fails to perform or observe any term, covenant or agreement
contained in Section 5.01 of the Security Agreement to which it is a party, or
Sections 6.2 or 6.3 of the Pledge Agreement to which it is a party; or



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     (iii) Any Loan Party fails to perform or observe any term, covenant or agreement
contained in Sections 6.01 or 6.02(c) and such failure continues unremedied
for two (2) Business Days; provided that, if any such Default described in this
clause (iii) occurs more than twice in any Fiscal Quarter, such Default shall constitute an
Event of Default (without any grace or cure period) immediately upon the occurrence of such
Default; or




     (iv) Any Loan Party fails to perform or observe any term, covenant or agreement
contained in Section 6.02(f) with respect to financial or collateral reports to be
delivered to the Administrative Agent on a weekly basis and such failure continues
unremedied for two (2) days; provided that, if any such Default described in this
clause (iv) occurs more than twice in any Fiscal Quarter, such Default shall constitute an
Event of Default (without any grace or cure period) immediately upon the occurrence of
such Default; or




     (v) Any Loan Party fails to perform or observe any term, covenant or agreement
contained in Section 6.02(f) with respect to financial or collateral reports to be
delivered to the Administrative Agent on a monthly basis and such failure continues
unremedied for five (5) days; provided that, if any such Default described in this
clause (v) occurs more than twice in any Fiscal Year, such Default shall constitute an
Event of Default (without any grace or cure period) immediately upon the occurrence of
such Default; 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 ten (10) days after the earlier of such
Loan Party’s knowledge of a breach of any such covenant or agreement or the Borrower’s receipt of
notice from the Administrative Agent of any such breach; 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, but after giving effect to the expiration of any grace or cure period with respect
thereto) in respect of any Material Indebtedness (other than Indebtedness hereunder and
Indebtedness under Swap Contracts) or Guarantee having an aggregate principal amount (including
undrawn committed or available amounts and including amounts owing to all creditors under any
combined or syndicated credit arrangement) of more than $1,000,000, or (B) fails to observe or
perform any other agreement or condition relating to any such Material Indebtedness or Guarantee or
contained in any instrument or agreement evidencing, securing or relating thereto (after





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giving effect to the expiration of any grace or cure period with respect thereto), or any other
event occurs (after giving effect to the expiration of any grace or cure period with respect
thereto), 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 such Guarantee (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 Material 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 Material 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 is
appointed and the appointment continues undischarged, undismissed or unstayed for sixty (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 instituted without the consent of such Person and continues undismissed or
unstayed for sixty (60) calendar days, or an order for relief is entered in any such proceeding; or




     (g) Liability 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 forty-five (45) days after
its issue 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 $2,500,000 (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, it being understood that a “reservation of
rights” letter shall not in and of itself constitute dispute of 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





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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 ten (10) 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 $1,000,000, 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 $1,000,000; 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, 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




     (1) Cessation of Business. Except as otherwise expressly permitted hereunder, any
Loan Party shall take any action to suspend the operation of its business in the ordinary course,
liquidate all or a material portion of its assets or Store locations, or employ an agent or other
third party to conduct a program of closings, liquidations or “Going-Out-Of-Business” sales of any
material portion of its business; or




     (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 the counterparty to such Material Contract to terminate such
Material Contract; or




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     (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; or




     (p) Guaranty. The termination or attempted termination of any Facility
Guaranty; or




     (q) Subordination. (i) The subordination provisions of the documents
evidencing or governing any Subordinated Indebtedness (the “Subordination
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 commitment of each Lender to make Loans and any obligation of the L/C
Issuer to make L/C Credit Extensions to be terminated, whereupon such commitments and
obligation shall be terminated;




     (b) declare the unpaid principal amount of all outstanding Loans, all interest accrued
and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan
Document to be immediately due and payable, without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived by the Loan Parties;




     (c) require that the Loan Parties Cash Collateralize the L/C Obligations; and




     (d) whether or not the maturity of the Obligations shall have been accelerated pursuant
hereto, may (and at the direction of the Required Lenders, shall) proceed to protect,
enforce and exercise all rights and remedies of the Credit Parties under this Agreement, any
of the other Loan Documents or applicable Law, including, but not limited to, by suit in
equity, action at law or other appropriate proceeding, whether for the specific performance
of any covenant or agreement contained in this Agreement and the other Loan Documents or
any instrument pursuant to which the Obligations are evidenced, and, if such amount shall
have become due, by declaration or otherwise, proceed to enforce the payment thereof or any
other legal or equitable right of the Credit Parties;


provided, however, that upon the entry of an order for relief with respect to any
Loan Party or any Subsidiary thereof under the Bankruptcy Code of the United States, the obligation
of each





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Lender to make Loans and any obligation of the L/C Issuer to make L/C Credit Extensions shall
automatically terminate, the unpaid principal amount of all outstanding Loans and all interest and
other amounts as aforesaid shall automatically become due and payable, and the obligation of the
Loan Parties to Cash Collateralize the L/C Obligations as aforesaid shall automatically become
effective, in each case without further act of the Administrative Agent or any Lender.




     No remedy herein is intended to be exclusive of any other remedy and each and every remedy
shall be cumulative and shall be in addition to every other remedy given hereunder or now or
hereafter existing at law or in equity or by statute or any other provision of Law.



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




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




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




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




     Fourth, to the extent that Swing Line Loans have not been refinanced by a
Committed Loan, payment to the Swing Line Lender of that portion of the Obligations
constituting accrued and unpaid interest on the Swing Line Loans;




     Fifth, to payment of that portion of the Obligations constituting accrued and
unpaid interest on the Loans, L/C Borrowings and other Obligations, and fees (including
Letter of Credit Fees but excluding Early Termination Fees), ratably among the Lenders and
the L/C Issuer in proportion to the respective amounts described in this clause Fifth
payable to them;




     Sixth, to the extent that Swing Line Loans have not been refinanced by a
Committed Loan, to payment to the Swing Line Lender of that portion of the Obligations
constituting unpaid principal of the Swing Line Loans;



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     Seventh, to payment of that portion of the Obligations constituting unpaid
principal of the Loans and L/C Borrowings, ratably among the Lenders and the L/C Issuer in
proportion to the respective amounts described in this clause Seventh held by them;




     Eighth, to the Administrative Agent for the account of the L/C Issuer, to Cash
Collateralize that portion of L/C Obligations comprised of the aggregate undrawn amount of
Letters of Credit;




     Ninth, to payment of all other Obligations (including, without limitation, the
cash collateralization of unliquidated indemnification obligations as provided in
Section 10.04 and Early Termination Fees, but excluding any Other Liabilities),
ratably among the Credit Parties in proportion to the respective amounts described in this
clause Ninth held by them;




     Tenth, to payment of that portion of the Obligations arising from Cash
Management Services to the extent secured under the Security Documents, ratably among the
Credit Parties in proportion to the respective amounts described in this clause Tenth
held by them;




     Eleventh, to payment of all other Obligations arising from Bank Products to
the extent secured under the Security Documents, ratably among the Credit Parties in
proportion to the respective amounts described in this clause Eleventh held by
them; and




     Last, the balance, if any, after all of the Obligations have been indefeasibly
paid in full, to the Loan Parties or as otherwise required by Law.


Subject to Section 2.03(c), amounts used to Cash Collateralize the aggregate undrawn
amount of Letters of Credit pursuant to clause Eighth above shall be applied to satisfy
drawings under such Letters of Credit as they occur. If any amount remains on deposit as Cash
Collateral after all Letters of Credit have either been fully drawn or expired, such remaining
amount shall be applied to the other Obligations, if any, in the order set forth above.




ARTICLE IX.

ADMINISTRATIVE AGENT




     9.01 Appointment and Authority.




     (a) Each of the Lenders and the L/C Issuer hereby irrevocably appoints 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 IX 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.



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     (b) Each of the Lenders (in its capacities as a Lender), Swing Line 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 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 applicable law; and




     (c) shall not, except as expressly set forth herein and in the other Loan Documents,
have any duty to disclose, and shall not be liable for the failure to disclose, any
information relating to the Loan Parties or any of its Affiliates that is communicated



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to or obtained by the Person serving as the Administrative Agent, the Collateral Agent or
any of its Affiliates in any capacity.


No Agent shall be liable for any action taken or not taken by it (i) with the Consent or at the
request of the Required Lenders (or such other number or percentage of the Lenders as shall be
necessary, or as such Agent shall believe in good faith shall be necessary, under the
circumstances as provided in Sections 10.01 and 8.02) or (ii) in the absence of
its own gross negligence or willful misconduct, as determined by a final and non-appealable
judgment of a court of competent jurisdiction. The Agents shall not be deemed to have knowledge of
any Default unless and until notice describing such Default is given to such Agent by the Loan
Parties, a Lender or the L/C Issuer.




     The Agents shall not be responsible for, or have any duty to ascertain or inquire into, (i)
any statement, warranty or representation made in or in connection with this Agreement or any
other Loan Document, (ii) the contents of any certificate, report or other document delivered
hereunder or thereunder or in connection herewith or therewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set forth herein or
therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or
genuineness of this Agreement, any other Loan Document or any other agreement, instrument or
document or the creation, perfection or priority of any Lien purported to be created by the
Security Documents, (v) the value or the sufficiency of any Collateral, or (vi) the satisfaction
of any condition set forth in Article IV or elsewhere herein, other than to confirm
receipt of items expressly required to be delivered to the Agents.



     9.04 Reliance by Agents. Each Agent shall be entitled to rely upon, and shall not incur
any liability for relying upon, any notice, request, certificate, consent, statement, instrument,
document or other writing (including, but not limited to, any electronic message, Internet or
intranet website posting or other distribution) believed by it to be genuine and to have been
signed, sent or otherwise authenticated by the proper Person. Each Agent also may rely upon any
statement made to it orally or by telephone and believed by it to have been made by the proper
Person, and shall not incur any liability for relying thereon. In determining compliance with any
condition hereunder to the making of a Loan, or the issuance of a Letter of Credit, that by its
terms must be fulfilled to the satisfaction of a Lender or the L/C Issuer, the Administrative Agent
may presume that such condition is satisfactory to such Lender or the L/C Issuer unless the
Administrative Agent shall have received written notice to the contrary from such Lender or the L/C
Issuer prior to the making of such Loan or the issuance of such Letter of Credit. Each Agent may
consult with legal counsel (who may be counsel for any Loan Party), independent accountants and
other experts selected by it, and shall not be liable for any action taken or not taken by it in
accordance with the advice of any such counsel, accountants or experts.



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




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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 9.06. Upon the acceptance of a successor’s appointment as Administrative Agent or
Collateral Agent, as applicable, hereunder, such successor shall succeed to and become vested with
all of the rights, powers, privileges and duties of the retiring (or retired) Agent, and the
retiring Agent shall be discharged from all of its duties and obligations hereunder or under the
other Loan Documents (if not already discharged therefrom as provided above in this Section
9.06). 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 IX 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
9.06 shall also constitute its resignation as L/C Issuer and Swing Line Lender. Upon the
acceptance of a successor’s appointment as Administrative Agent hereunder, (a) such successor shall
succeed to and become vested with all of the rights, powers, privileges and duties of the retiring
L/C Issuer and Swing Line Lender, (b) the retiring L/C Issuer and Swing Line Lender shall be
discharged from all of their respective 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.



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     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 9.11, the Agents shall not have any duty or responsibility to provide any Credit
Party with any other credit or other information concerning the affairs, financial condition or
business of any Loan Party that may come into the possession of the Agents.



     9.08 Administrative Agent May File Proofs of Claim. In case of the pendency of any
proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Loan Party,
the Administrative Agent (irrespective of whether the principal of any Loan or L/C Obligation shall
then be due and payable as herein expressed or by declaration or otherwise and irrespective of
whether the Administrative Agent shall have made any demand on the Loan Parties) shall be entitled
and empowered, by intervention in such proceeding or otherwise




     (a) to file and prove a claim for the whole amount of the principal and interest owing
and unpaid in respect of the Loans, L/C Obligations and all other Obligations that are owing
and unpaid and to file such other documents as may be necessary or advisable in order to
have the claims of the Lenders, the L/C Issuer, the Administrative Agent and the other
Credit Parties (including any claim for the reasonable compensation, expenses, disbursements
and advances of the Lenders, the L/C Issuer, the Administrative Agent, such Credit Parties
and their respective agents and counsel and all other amounts due the Lenders, the L/C
Issuer the Administrative Agent and such Credit Parties under Sections 2.03(1) and
2.03(i), as applicable, 2.09 and 10.04) allowed in such judicial
proceeding; and




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


and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Lender and the L/C Issuer to make
such payments to the Administrative Agent and, if the Administrative Agent shall consent to the
making of such payments directly to the Lenders and the L/C Issuer, to pay to the Administrative
Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the Administrative
Agent under Sections 2.09 and 10.04.




     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.



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




     (a) to release any Lien on any property granted to or held by the Collateral Agent
under any Loan Document (i) upon termination of the Aggregate Commitments and payment in
full of all Obligations (other than contingent indemnification obligations for which no
claim has been asserted) and the expiration or termination of all Letters of Credit, (ii)
that is sold or to be sold as part of or in connection with any sale permitted hereunder or
under any other Loan Document, or (iii) if approved, authorized or ratified in writing by
the Required Lenders in accordance with Section 10.01;




     (b) to subordinate any Lien on any property granted to or held by the Collateral Agent
under any Loan Document to the holder of any Lien on such property that is permitted by
clause (h) of the definition of Permitted Encumbrances; and




     (c) to release any Guarantor from its obligations under any Facility Guaranty if such
Person ceases to be a Subsidiary as a result of a transaction permitted hereunder.


Upon request by any Agent at any time, the Required Lenders will confirm in writing such Agent’s
authority to release or subordinate its interest in particular types or items of property, or to
release any Guarantor from its obligations under the Facility Guaranty pursuant to this
Section 9.09. In each case as specified in this Section 9.09, the Agents will, at
the Loan Parties’ expense, execute and deliver to the applicable Loan Party such documents as such
Loan Party may reasonably request to evidence the release of such item of Collateral from the
assignment and security interest granted under the Security Documents or to subordinate its
interest in such item, or to release such Guarantor from its obligations under the Facility
Guaranty, in each case in accordance with the terms of the Loan Documents and this Section
9.09.




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



     9.11 Reports and Financial Statements. By signing this Agreement, each Lender:




     (a) agrees to furnish the Administrative Agent on the first day of each month with a
summary of all Other Liabilities due or to become due to such Lender;




     (b) is deemed to have requested that the Administrative Agent furnish such Lender,
promptly after they become available, copies of all financial statements required to be
delivered by the Lead Borrower hereunder and all commercial finance examinations and
appraisals of the Collateral received by the Agents (collectively, the “Reports”);




     (c) expressly agrees and acknowledges that the Administrative Agent makes no
representation or warranty as to the accuracy of the Reports, and shall not be liable for
any information contained in any Report;




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




     (e) agrees to keep all Reports confidential in accordance with the provisions of
Section 10.07 hereof; and




     (f) without limiting the generality of any other indemnification provision contained in
this Agreement, agrees: (i) to hold the Agents and any such other Lender preparing a Report
harmless from any action the indemnifying Lender may take or conclusion the indemnifying
Lender may reach or draw from any Report in connection with any Credit Extensions that the
indemnifying Lender has made or may make to the Borrowers, or the indemnifying Lender’s
participation in, or the indemnifying Lender’s purchase of, a Loan or Loans; and (ii) to pay
and protect, and indemnify, defend, and hold the Agents and any such other Lender preparing
a Report harmless from and against, the claims, actions, proceedings, damages, costs,
expenses, and other amounts (including attorney costs) incurred by the Agents and any such
other Lender preparing a Report as the direct or indirect result of any third parties who
might obtain all or part of any Report through the indemnifying Lender.



     9.12 Agency for Perfection. Each Lender hereby appoints each other Lender as agent for
the purpose of perfecting Liens for the benefit of the Agents and the Lenders, in assets which, in
accordance with Article 9 of the UCC or any other Applicable Law of the United States can be
perfected only by possession. Should any Lender (other than the Agents) obtain possession of any
such Collateral, such Lender shall notify the Agents thereof, and, promptly upon the Collateral
Agent’s request therefor shall deliver such Collateral to the Collateral Agent or otherwise deal
with such Collateral in accordance with the Collateral Agent’s instructions.



     9.13 Indemnification of Agents. The Lenders agree to indemnify the Agents (to the
extent not reimbursed by the Loan Parties and without limiting the obligations of Loan Parties
hereunder), ratably according to their respective pro rata shares, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or asserted
against any Agent in any way relating to or arising out of this Agreement or any other Loan
Document or any action taken or omitted to be taken by any Agent in connection therewith;
provided, that no Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from such Agent’s gross negligence or willful misconduct as determined by a final and nonappealable
judgment of a court of competent jurisdiction.



     9.14 Relation among Lenders. The Lenders are not partners or co-venturers, and no
Lender shall be liable for the acts or omissions of, or (except as otherwise set forth herein in
case of the Agents) authorized to act for, any other Lender.



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ARTICLE X.

MISCELLANEOUS




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




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




     (b) postpone any date fixed by this Agreement or any other Loan Document for (i) any
payment or mandatory prepayment of principal, interest, fees or other amounts due to the
Lenders (or any of them) hereunder or under any of the other Loan Documents without the
written Consent of each Lender entitled to such payment, or (ii) any scheduled or mandatory
reduction of the Aggregate Commitments hereunder or under any other Loan Document without
the written Consent of each Lender;




     (c) reduce the principal of, or the rate of interest specified herein on, any Loan or
L/C Borrowing, or (subject to clause (iv) of the second proviso to this Section
10.01) any fees or other amounts payable hereunder or under any other Loan Document,
without the written Consent of each Lender entitled to such amount; provided,
however, that only the Consent of the Required Lenders shall be necessary (i) to
amend the definition of “Default Rate” or to waive any obligation of the Borrowers to pay
interest or Letter of Credit Fees at the Default Rate;




     (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 10.01 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;



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     (h) except as provided in Section 2.15, increase the Aggregate Commitments
without the written Consent of each Lender;




     (i) change the definition of the term “Borrowing Base” or any component definition
thereof if, as a result thereof, the amounts available to be borrowed by the Borrowers
would be increased without the written Consent of each Lender, provided that the foregoing
shall not limit the discretion of the Administrative Agent to change, establish or
eliminate any Reserves;




     (j) modify the definition of Permitted Overadvance without the written Consent of each
Lender;




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


and, provided further, that (i) no amendment, waiver or Consent shall, unless in writing
and signed by the L/C Issuer in addition to the Lenders required above, affect the rights or
duties of the L/C Issuer under this Agreement or any Issuer Document relating to any Letter of
Credit issued or to be issued by it; (ii) no amendment, waiver or Consent shall, unless in writing
and signed by the Swing Line Lender in addition to the Lenders required above, affect the rights
or duties of the Swing Line Lender under this Agreement; (iii) no amendment, waiver or Consent
shall, unless in writing and signed by the Administrative Agent in addition to the Lenders
required above, affect the rights or duties of the Administrative Agent under this Agreement or
any other Loan Document; (iv) no amendment, waiver or Consent shall, unless in writing and signed
by the Collateral Agent in addition to the Lenders required above, affect the rights or duties of
the Collateral Agent under this Agreement or any other Loan Document; and (v) the Fee Letter may
be amended, or rights or privileges thereunder waived, in a writing executed only by the parties
thereto. Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any
right to approve or disapprove any amendment, waiver or Consent hereunder, except that the
Commitment of such Lender may not be increased or extended without the consent of such Lender.




     If any Lender does not Consent (a “Non-Consenting Lender”) to a proposed amendment,
waiver, consent or release with respect to any Loan Document that requires the Consent of each
Lender and that has been approved by the Required Lenders, the Lead Borrower may replace such
Non-Consenting Lender in accordance with Section 10.13; provided that such
amendment, waiver, consent or release can be effected as a result of the assignment contemplated
by such Section (together with all other such assignments required by the Lead Borrower to be made
pursuant to this paragraph).



     10.02 Notices; Effectiveness; Electronic Communications.



     (a) Notices Generally. Except in the case of notices and other communications
expressly permitted to be given by telephone (and except as provided in subsection (b)
below), all notices and other communications provided for herein shall be



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in writing and shall be delivered by hand or overnight courier service, mailed by certified
or registered mail or sent by telecopier as follows, and all notices and other
communications expressly permitted hereunder to be given by telephone shall be made to the
applicable telephone number, as follows:




     (i) if to the Loan Parties, the Agents, the L/C Issuer or the Swing Line
Lender, to the address, telecopier number, electronic mail address or telephone
number specified for such Person on Schedule 10.02; and




     (ii) if to any other Lender, to the address, telecopier number, electronic
mail address or telephone number specified in its Administrative Questionnaire.


Notices sent by hand or overnight courier service, or mailed by certified or registered mail,
shall be deemed to have been given when received; notices sent by telecopier shall be deemed to
have been given when sent (except that, if not given during normal business hours for the
recipient, shall be deemed to have been given at the opening of business on the next Business Day
for the recipient). Notices delivered through electronic communications to the extent provided in
subsection (b) below, shall be effective as provided in such subsection (b).





     (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



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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, the L/C
Issuer and the Swing Line Lender may change its address, telecopier or telephone number for
notices and other communications hereunder by notice to the other parties hereto. Each other
Lender may change its address, telecopier or telephone number for notices and other
communications hereunder by notice to the Lead Borrower, the Agents, the L/C Issuer and the
Swing Line Lender. In addition, each Lender agrees to notify the Administrative Agent from
time to time to ensure that the Administrative Agent has on record (i) an effective address,
contact name, telephone number, telecopier number and electronic mail address to which
notices and other communications may be sent and (ii) accurate wire instructions for such
Lender.




     (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 and Swing Line Loan Notices) purportedly given by or on behalf of the
Loan Parties even if (i) such notices were not made in a manner specified herein, were
incomplete or were not preceded or followed by any other form of notice specified herein, or
(ii) the terms thereof, as understood by the recipient, varied from any confirmation
thereof. The Loan Parties shall indemnify the Agents, the L/C Issuer, each Lender and the
Related Parties of each of them from all losses, costs, expenses and liabilities resulting
from the reliance by such Person on each notice purportedly given by or on behalf of the
Loan Parties. All telephonic notices to and other telephonic communications with the Agents
may be recorded by the Agents, and each of the parties hereto hereby consents to such
recording.



     10.03 No Waiver; Cumulative Remedies. No failure by any Credit Party to exercise, and
no delay by any such Person in exercising, any right, remedy, power or privilege hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power
or privilege hereunder or under any other Loan Document preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges provided herein and in the other Loan Documents are



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cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.
Without limiting the generality of the foregoing, the making of a Loan or issuance of a Letter of
Credit shall not be construed as a waiver of any Default, regardless of whether any Credit Party
may have had notice or knowledge of such Default at the time.



     10.04 Expenses; Indemnity; Damage Waiver.




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




     (b) Indemnification by the Loan Parties. The Loan Parties shall indemnify the Agents
(and any sub-agent thereof), each other Credit Party, and each Related Party of any of the
foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each
Indemnitee harmless from, any and all losses, claims, damages, liabilities 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 the Borrowers or any other
Loan Party arising out of, in connection with, or as a result of (i) the execution or delivery of
this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or
thereby, the performance by the parties hereto of their respective obligations hereunder or
thereunder or the consummation of the transactions contemplated hereby or thereby, or, in the case
of the Agents (and any sub-agents thereof) and their Related Parties only, the administration of
this Agreement and the other Loan Documents, (ii) any Loan or Letter of Credit or the use or
proposed use of the proceeds therefrom (including any refusal by the L/C Issuer to honor a demand
for payment under a Letter of Credit if the documents presented in connection with such demand do
not strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged presence
or release of Hazardous Materials on or from any property owned or operated by any Loan Party or
any of its Subsidiaries, or any Environmental Liability related in any way to any Loan Party or any
of its Subsidiaries, (iv) any claims of, or amounts paid by any Credit Party to, a Blocked Account
Bank or other Person which has entered into a control agreement with any Credit Party hereunder, or
(v) any actual or prospective claim, litigation, investigation or proceeding relating to any of the
foregoing, whether based on contract, tort or any other theory, whether brought by a third party or
by any Borrower or any other Loan Party or any of the Loan Parties’ directors, shareholders or
creditors, and regardless of whether any Indemnitee is a party thereto, in all cases, whether or
not caused by or arising, in whole or in part, out of the comparative, contributory or sole
negligence of the Indemnitee; provided that such indemnity shall not, as to any Indemnitee,
be available to the extent that such losses, claims, damages, liabilities or related expenses (x)
are determined by a court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or willful misconduct of such Indemnitee or (y) result from a
claim brought by a Borrower or any other Loan Party against an Indemnitee for breach in bad faith
of such Indemnitee’s obligations hereunder or under any other Loan Document, if the Borrowers or
such Loan Party has obtained a final and nonappealable judgment in its favor on such claim as
determined by a court of competent jurisdiction.




     (c) Reimbursement by Lenders. 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 10.04
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



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(determined as of the time that the applicable unreimbursed expense or indemnity payment is
sought) of such unpaid amount, provided that the unreimbursed expense or indemnified loss,
claim, damage, liability or related expense, as the case may be, was incurred by or asserted
against the Agents (or any such sub-agent) or the L/C Issuer in its capacity as such, or against
any Related Party of any of the foregoing acting for the Agents (or any such sub-agent) or L/C
Issuer in connection with such capacity. The obligations of the Lenders under this subsection (c)
are subject to the provisions of Section 2.12(d).




     (d) Waiver of Consequential Damages, Etc. To the fullest extent permitted by
applicable Law, the Loan Parties shall not assert, and hereby waive, any claim against any
Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages
(as opposed to direct or actual damages) arising out of, in connection with, or as a result of,
this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the
transactions contemplated hereby or thereby, any Loan or Letter of Credit or the use of the
proceeds thereof. No Indemnitee shall be liable for any damages arising from the use by unintended
recipients of any information or other materials distributed to such unintended recipients by such
Indemnitee through telecommunications, electronic or other information transmission systems in
connection with this Agreement or the other Loan Documents or the transactions contemplated hereby
or thereby other than for direct or actual damages resulting from the gross negligence or willful
misconduct of such Indemnitee as determined by a final and nonappealable judgment of a court of
competent jurisdiction.




     (e) Payments. All amounts due under this Section 10.04 shall be payable not
later than ten (10) Business Days after demand therefor.




     (f) Survival. The agreements in this Section 10.04 shall survive the
resignation of any Agent and the L/C Issuer, the assignment of any Commitment or Loan by any
Lender, the replacement of any Lender, the termination of the Aggregate Commitments and the
repayment, satisfaction or discharge of all the other Obligations.



     10.05 Payments Set Aside. To the extent that any payment by or on behalf of the Loan
Parties is made to any Credit Party, or any Credit Party exercises its right of setoff, and such
payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to
be fraudulent or preferential, set aside or required (including pursuant to any settlement entered
into by such Credit Party in its discretion) to be repaid to a trustee, receiver or any other
party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the
extent of such recovery, the obligation or part thereof originally intended to be satisfied shall
be revived and continued in full force and effect as if such payment had not been made or such
setoff had not occurred, and (b) each Lender and the L/C Issuer severally agrees to pay to the
Agents upon demand its applicable share (without duplication) of any amount so recovered from or
repaid by the Agents, plus interest thereon from the date of such demand to the date such payment
is made at a rate per annum equal to the Federal Funds Rate from time to time in effect. The
obligations of the Lenders and the L/C Issuer under clause (b) of the preceding sentence shall
survive the payment in full of the Obligations and the termination of this Agreement.



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     10.06 Successors and Assigns.





     (a) Successors and Assigns Generally. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective successors and
assigns permitted hereby, except that no Loan Party may assign or otherwise transfer any of its
rights or obligations hereunder or under any other Loan Document without the prior written Consent
of the Administrative Agent and each Lender and no Lender may assign or otherwise transfer any of
its rights or obligations hereunder except (i) to an Eligible Assignee in accordance with the
provisions of Section 10.06(b), (ii) by way of participation in accordance with the
provisions of Section 10.06(d), or (iii) by way of pledge or assignment of a security
interest subject to the restrictions of Section 10.06(f) (and any other attempted
assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than the parties hereto,
their respective successors and assigns permitted hereby, Participants to the extent provided in
Section 10.06(d) and, to the extent expressly contemplated hereby, the Related Parties of
each of the Credit Parties) any legal or equitable right, remedy or claim under or by reason of
this Agreement.




     (b) Assignments by Lenders. Any Lender may at any time assign to one or more Eligible
Assignees all or a portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment(s) and the Loans (including for purposes of this Section
10.06(b), participations in L/C Obligations and in Swing Line Loans) at the time owing to it);
provided that any such assignment shall be subject to the following conditions:




     (i) Minimum Amounts.




     (A) in the case of an assignment of the entire remaining amount of the
assigning Lender’s Commitment and the Loans at the time owing to it or in the case
of an assignment to a Lender or an Affiliate of a Lender or an Approved Fund with
respect to a Lender, no minimum amount need be assigned; and




     (B) in any case not described in Section 10.06(b)(i)(A), the
aggregate amount of the Commitment (which for this purpose includes Loans
outstanding thereunder) or, if the Commitment is not then in effect, the principal
outstanding balance of the Loans of the assigning Lender subject to each such
assignment, determined as of the date the Assignment and Assumption with respect
to such assignment is delivered to the Administrative Agent or, if “Trade Date” is
specified in the Assignment and Assumption, as of the Trade Date, shall not be
less than $10,000,000 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



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single Eligible Assignee (or to an Eligible Assignee and members of its
Assignee Group) will be treated as a single assignment for purposes of
determining whether such minimum amount has been met;




     (ii) Proportionate Amounts. Each partial assignment shall be made as
an assignment of a proportionate part of all the assigning Lender’s rights and
obligations under this Agreement with respect to the Loans or the Commitment
assigned, except that this clause (ii) shall not apply to the Swing Line Lender’s
rights and obligations in respect of Swing Line Loans;




     (iii) Required Consents. No consent shall be required for any
assignment except to the extent required by Section 10.06(b)(i)(B) 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; and




     (C) the consent of the L/C Issuer (such consent not to be unreasonably
withheld or delayed) shall be required for any assignment that increases the
obligation of the assignee to participate in exposure under one or more
Letters of Credit (whether or not then outstanding); and




     (D) the consent of the Swing Line Lender (such consent not to be
unreasonably withheld or delayed) shall be required for any assignment in
respect of the assignment of any Commitment.




     (iv) Assignment and Assumption. The parties to each assignment shall
execute and deliver to the Administrative Agent an Assignment and Assumption,
together with a processing and recordation fee of $3,500; provided,
however, that the Administrative Agent may, in its sole discretion, elect
to waive such processing and recordation fee in the case of any assignment. The
assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an
Administrative Questionnaire.


Subject to acceptance and recording thereof by the Administrative Agent pursuant to Section
10.06(c), 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


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by such Assignment and Assumption, be released from its obligations under this Agreement (and, in
the case of an Assignment and Assumption covering all of the assigning Lender’s rights and
obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue
to be entitled to the benefits of Sections 3.01, 3.04, 3.05, and
10.04 with respect to facts and circumstances occurring prior to the effective date of
such assignment. Upon request, the Borrowers (at their expense) shall execute and deliver a Note
to the assignee Lender. Any assignment or transfer by a Lender of rights or obligations under this
Agreement that does not comply with this subsection shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and obligations in accordance
with Section 10.06(d).





     (c) Register. The Administrative Agent, acting solely for this purpose as an
agent of the Borrowers, shall maintain at the Administrative Agent’s Office a copy of each
Assignment and Assumption delivered to it and a register for the recordation of the names
and addresses of the Lenders, and the Commitments of, and principal amounts of the Loans and
L/C Obligations owing to, each Lender pursuant to the terms hereof from time to time (the
“Register”). The entries in the Register shall be conclusive, absent manifest error,
and the Loan Parties, the Administrative Agent and the Lenders may treat each Person whose
name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all
purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Lead Borrower and any Lender at any reasonable time and from
time to time upon reasonable prior notice.




     (d) Participations. Any Lender may at any time, without the consent of, or
notice to, the Loan Parties or the Administrative Agent, sell participations to any Person
(other than a natural person or the Loan Parties or any of the Loan Parties’ Affiliates or
Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s rights
and/or obligations under this Agreement (including all or a portion of its Commitment and/or
the Loans (including such Lender’s participations in L/C Obligations and/or Swing Line
Loans) owing to it); provided that (i) such Lender’s obligations under this
Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations and (iii) the Loan Parties, the
Agents, the Lenders and the L/C Issuer shall continue to deal solely and directly with such
Lender in connection with such Lender’s rights and obligations under this Agreement. Any
Participant shall agree in writing to comply with all confidentiality obligations set forth
in Section 10.07 as if such Participant was a Lender hereunder.



     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 Section 10.06(e), 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 that such Participant agrees to be subject to Section 2.13 as
though it were a Lender.



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     (e) Limitations upon Participant Rights. A Participant shall not be entitled to
receive any greater payment under Sections 3.01 or 3.04 than the applicable Lender
would have been entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the Lead Borrower’s prior
written consent. A Participant that would be a Foreign Lender if it were a Lender shall not be
entitled to the benefits of Section 3.01 unless the Lead Borrower is notified of the
participation sold to such Participant and such Participant agrees, for the benefit of the Loan
Parties, to comply with Section 3.01(e) as though it were a Lender.




     (f) Certain Pledges. Any Lender may at any time pledge or assign a security interest
in all or any portion of its rights under this Agreement (including under its Note, if any) to
secure obligations of such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender
from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as
a party hereto.




     (g) Electronic Execution of Assignments. The words “execution,” “signed,” “signature,”
and words of like import in any Assignment and Assumption shall be deemed to include electronic
signatures or the keeping of records in electronic form, each of which shall be of the same legal
effect, validity or enforceability as a manually executed signature or the use of a paper-based
recordkeeping system, as the case may be, to the extent and as provided for in any applicable law,
including the Federal Electronic Signatures in Global and National Commerce Act, the New York State
Electronic Signatures and Records Act, or any other similar state laws based on the Uniform
Electronic Transactions Act.




     (h) Resignation as L/C Issuer or Swing Line Lender after Assignment. Notwithstanding
anything to the contrary contained herein, if at any time Bank of America assigns all of its
Commitment and Loans pursuant to Section 10.06(b) above, Bank of America may, (i) upon 30
days’ notice to the Lead Borrower and the Lenders, resign as L/C Issuer and/or (ii) upon 30 days’
notice to the Lead Borrower, resign as Swing Line Lender. In the event of any such resignation as
L/C Issuer or Swing Line Lender, the Lead Borrower shall be entitled to appoint from among the
Lenders a successor L/C Issuer or Swing Line Lender hereunder; provided, however,
that no failure by the Lead Borrower to appoint any such successor shall affect the resignation of
Bank of America as L/C Issuer or Swing Line Lender, as the case may be. 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)). If Bank of America resigns as Swing Line Lender, it shall
retain all the rights of the Swing Line Lender provided for hereunder with respect to Swing Line
Loans made by it and outstanding as of the effective date of such resignation, including the right
to require the Lenders to make Base Rate Loans or fund risk participations in outstanding Swing
Line Loans pursuant to Section 2.04(c). Upon the appointment of a successor L/C Issuer
and/or Swing Line Lender, (a) such successor shall succeed to and become vested with all of the
rights,



128









 







powers, privileges and duties of the retiring L/C Issuer or Swing Line Lender, as the case
may be, and (b) the successor L/C Issuer shall issue letters of credit in substitution for
the Letters of Credit, if any, outstanding at the time of such succession or make other
arrangements satisfactory to Bank of America to effectively assume the obligations of 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, advisors and representatives (it being understood
that the Persons to whom such disclosure is made will be informed of the confidential nature of
such Information and instructed to keep such Information confidential), (b) to the extent requested
by any regulatory authority purporting to have jurisdiction over it (including any self-regulatory
authority, such as the National Association of Insurance Commissioners), (c) to the extent required
by applicable Laws or regulations or by any subpoena or similar legal process, (d) to any other
party hereto, (e) in connection with the exercise of any remedies hereunder or under any other Loan
Document or any action or proceeding relating to this Agreement or any other Loan Document or the
enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions
substantially the same as those of this Section 10.07, 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 10.07 or (y) becomes available to any Credit Party
or any of their respective Affiliates on a nonconfidential 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 nonconfidential 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. Any Person required to maintain the confidentiality of Information as provided in
this Section shall be considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.



     Each of the Credit Parties acknowledges that (a) the Information may include material
non-public information concerning the Loan Parties or a Subsidiary, as the case may be, (b) it has
developed compliance procedures regarding the use of material non-public information and (c) it
will handle such material non-public information in accordance with applicable Law, including
Federal and state securities Laws.



     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



129









 







hereby authorized at any time and from time to time, after obtaining the prior written consent of
the Administrative Agent or the Required Lenders, to the fullest extent permitted by applicable
Law, to set off and apply any and all deposits (general or special, time or demand, provisional or
final, in whatever currency) at any time held and other obligations (in whatever currency) at any
time owing by such Lender, the L/C Issuer or any such Affiliate to or for the credit or the
account of the Borrowers or any other Loan Party against any and all of the Obligations now or
hereafter existing under this Agreement or any other Loan Document to such Lender or the L/C
Issuer, 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 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
10.08 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 applicable Law (the “Maximum Rate”).
If the Administrative Agent or any Lender shall receive interest in an amount that exceeds the
Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds
such unpaid principal, refunded to the Borrowers. In determining whether the interest contracted
for, charged, or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such
Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not
principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments
and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts
the total amount of interest throughout the contemplated term of the Obligations hereunder.



     10.10 Counterparts; Integration; Effectiveness. This Agreement may be executed in
counterparts (and by different parties hereto in different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a single contract.
This Agreement and the other Loan Documents constitute the entire contract among the parties
relating to the subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except as provided in
Section 4.01, this Agreement shall become effective when it shall have been executed by the
Administrative Agent and when the Administrative Agent shall have received counterparts hereof
that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an
executed counterpart of a signature page of this Agreement by telecopy 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



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of any investigation made by any Credit Party or on their behalf and notwithstanding that any
Credit Party may have had notice or knowledge of any Default at the time of any Credit Extension,
and shall continue in full force and effect as long as any Loan or any other Obligation hereunder
shall remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding. Further, the
provisions of Article III, Article IX and Section 10.04 shall survive and
remain in full force and effect until the expiration or termination of the Letters of Credit and
the Commitments or the termination of this Agreement or any provision hereof and repayment of all
of the Obligations (including, without limitation, those arising under Article III,
Article IX and Section 10.04) hereunder. In connection with the termination of
this Agreement and the release and termination of the security interests in the Collateral, the
Agents may require such indemnities and collateral security as they shall reasonably deem
necessary or appropriate to protect the Credit Parties against (x) loss on account of credits
previously applied to the Obligations that may subsequently be reversed or revoked, and (y) any
obligations that may thereafter arise with respect to the Other Liabilities.



     10.12 Severability. If any provision of this Agreement or the other Loan Documents is
held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the
remaining provisions of this Agreement and the other Loan Documents shall not be affected or
impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the
illegal, invalid or unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the illegal, invalid or unenforceable provisions. The
invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable
such provision in any other jurisdiction.



     10.13 Replacement of Lenders. If any Lender requests compensation under Section
3.04, or if the Borrowers are required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 3.01, or if any
Lender is a Defaulting Lender or a Non-Consenting Lender, then the Lead Borrower may, at the
Borrowers’ sole expense and effort, upon notice to such Lender and the Administrative Agent,
require such Lender to assign and delegate, without recourse (in accordance with and subject to the
restrictions contained in, and consents required by, Section 10.06), all of its interests,
rights and obligations under this Agreement and the related Loan Documents to an assignee that
shall assume such obligations (which assignee may be another Lender, if a Lender accepts such
assignment), provided that:




     (a) the Borrowers shall have paid to the Administrative Agent the assignment fee
specified in Section 10.06(b);




     (b) such Lender shall have received payment of an amount equal to the outstanding
principal of its Loans and L/C Advances, accrued interest thereon, accrued fees and all
other amounts payable to it hereunder and under the other Loan Documents (including any
amounts under Section 3.05) from the assignee (to the extent of such outstanding
principal and accrued interest and fees) or the Borrowers (in the case of all other
amounts);




     (c) in the case of any such assignment resulting from a claim for compensation under
Section 3.04 or payments required to be made pursuant to Section



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3.01, such assignment will result in a reduction in such compensation or payments
thereafter; and




     (d) such assignment does not conflict with applicable Laws.


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




     10.14 Governing Law; Jurisdiction; Etc.




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




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




     (c) WAIVER OF VENUE. EACH LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS
SECTION. EACH OF THE LOAN PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, THE




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DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY
SUCH COURT.




     (d) SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY
CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR
NOTICES IN SECTION 10.02. NOTHING IN THIS AGREEMENT WILL AFFECT
THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY APPLICABLE LAW.




     (e) ACTIONS COMMENCED BY LOAN PARIES. 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 APPLICABLE LAW, ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION.



     10.16 No Advisory or Fiduciary Responsibility. In connection with all aspects of each
transaction contemplated hereby, the Loan Parties each acknowledge and agree that: (i) the
credit
facility provided for hereunder and any related arranging or other services in connection
therewith (including in connection with any amendment, waiver or other modification hereof or
of any other Loan Document) are an arm’s-length commercial transaction between the Loan
Parties, on the one hand, and the Credit Parties, on the other hand, and each of the Loan
Parties is
capable of evaluating and understanding and understands and accepts the terms, risks and
conditions of the transactions contemplated hereby and by the other Loan Documents (including
any amendment, waiver or other modification hereof or thereof); (ii) in connection with the
process leading to such transaction, each Credit Party is and has been acting solely as a
principal
and is not the financial advisor, agent or fiduciary, for the Loan Parties or any of their
respective
Affiliates, stockholders, creditors or employees or any other Person; (iii) none of the Credit
Parties has assumed or will assume an advisory, agency or fiduciary responsibility in favor of
the



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Loan Parties with respect to any of the transactions contemplated hereby or the process leading
thereto, including with respect to any amendment, waiver or other modification hereof or of any
other Loan Document (irrespective of whether any of the Credit Parties has advised or is currently
advising any Loan Party or any of its Affiliates on other matters) and none of the Credit Parties
has any obligation to any Loan Party or any of its Affiliates with respect to the transactions
contemplated hereby, except those obligations expressly set forth herein and in the other Loan
Documents; (iv) the Credit Parties and their respective Affiliates may be engaged in a broad range
of transactions that involve interests that differ from those of the Loan Parties and their
respective Affiliates, and none of the Credit Parties has any obligation to disclose any of such
interests by virtue of any advisory, agency or fiduciary relationship; and (v) the Credit Parties
have not provided, and will not provide, any legal, accounting, regulatory or tax advice with
respect to any of the transactions contemplated hereby (including any amendment, waiver or other
modification hereof or of any other Loan Document), and each of the Loan Parties has consulted its
own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate. Each
of the Loan Parties hereby waives and releases, to the fullest extent permitted by Law, any claims
that it may have against each of the Credit Parties with respect to any breach or alleged breach
of agency or fiduciary duty.




     10.17 USA PATRIOT Act Notice. Each Lender that is subject to the Act (as hereinafter

defined) and the Administrative Agent (for itself and not on behalf of any Lender) hereby
notifies the Loan Parties that pursuant to the requirements of the USA Patriot Act (Title III
of
Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain,
verify
and record information that identifies each Loan Party, which information includes the name
and
address of each Loan Party and other information that will allow such Lender or the Administrative Agent, as applicable, to identify each Loan Party in accordance with the Act.
Each Loan Party is in compliance, in all material respects, with the Patriot Act. No part of
the
proceeds of the Loans will be used by the Loan Parties, directly or indirectly, for any
payments
to any governmental official or employee, political party, official of a political party,
candidate
for political office, or anyone else acting in an official capacity, in order to obtain,
retain or direct
business or obtain any improper advantage, in violation of the United States Foreign Corrupt
Practices Act of 1977, as amended.



     10.18 Time of the Essence. Time is of the essence of the Loan Documents.



     10.19 Press Releases. 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 the Lead Borrower and without the prior written consent of Administrative Agent and the Lead
Borrower unless (and only to the extent that) such Credit Party or Affiliate is required to do
so
under applicable Law and then, in any event, such Credit Party or Affiliate will consult with
the
Administrative Agent and the Lead Borrower before issuing such press release or other public disclosure. The Administrative Agent or any Lender shall provide to the Lead Borrower a draft
of advertising material relating to the financing transactions contemplated by this Agreement
that
uses any Loan Party’s name, product photographs, logo or trademark reasonably in advance of
any publication of such advertising material and shall not make such publication without the
prior consent of the Lead Borrower, which consent shall not be unreasonably withheld or



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delayed. Administrative Agent reserves the right to provide to industry trade organizations
information necessary and customary for inclusion in league table measurements.




     10.20 Additional Waivers.




     (a) The Obligations are the joint and several obligation of each Loan Party. To the fullest extent permitted by applicable Law, the obligations of each Loan Party
shall not be affected by (i) the failure of any Credit Party to assert any claim or
demand
or to enforce or exercise any right or remedy against any other Loan Party under the
provisions of this Agreement, any other Loan Document or otherwise, (ii) any
rescission,
waiver, amendment or modification of, or any release from any of the terms or
provisions
of, this Agreement or any other Loan Document, or (iii) the failure to perfect any
security
interest in, or the release of, any of the Collateral or other security held by or on
behalf of
the Collateral Agent or any other Credit Party.




     (b) The obligations of each Loan Party shall not be subject to any reduction,
limitation, impairment or termination for any reason (other than the indefeasible
payment
in full in cash of the Obligations after the termination of the Commitments), including any claim of waiver, release, surrender, alteration or compromise of any of the
Obligations, and shall not be subject to any defense or setoff, counterclaim,
recoupment
or termination whatsoever by reason of the invalidity, illegality or unenforceability
of any
of the Obligations or otherwise. Without limiting the generality of the foregoing, the
obligations of each Loan Party hereunder shall not be discharged or impaired or
otherwise affected by the failure of any Agent or any other Credit Party to assert any
claim or demand or to enforce any remedy under this Agreement, any other Loan
Document or any other agreement, by any waiver or modification of any provision of any
thereof, any default, failure or delay, willful or otherwise, in the performance of any
of
the Obligations, or by any other act or omission that may or might in any manner or to
any extent vary the risk of any Loan Party or that would otherwise operate as a
discharge
of any Loan Party as a matter of law or equity (other than the indefeasible payment in
full
in cash of all the Obligations after the termination of the Commitments).




     (c) To the fullest extent permitted by applicable Law, each Loan Party waives

any defense based on or arising out of any defense of any other Loan Party or the
unenforceability of the Obligations or any part thereof from any cause, or the
cessation
from any cause of the liability of any other Loan Party, other than the indefeasible payment in full in cash of all the Obligations and the termination of the Commitments.
The Collateral Agent and the other Credit Parties may, at their election, foreclose on
any
security held by one or more of them by one or more judicial or nonjudicial sales,
accept
an assignment of any such security in lieu of foreclosure, compromise or adjust any
part
of the Obligations, make any other accommodation with any other Loan Party, or
exercise any other right or remedy available to them against any other Loan Party,
without affecting or impairing in any way the liability of any Loan Party hereunder
except to the extent that all the Obligations have been indefeasibly paid in full in
cash and
the Commitments have been terminated. Each Loan Party waives any defense arising out
of any such election even though such election operates, pursuant to applicable Law, to
impair or to extinguish any right of reimbursement or subrogation or other right or



135









 






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 date that the Commitments have been terminated. In addition,
any indebtedness of any Loan Party now or hereafter held by any other Loan Party is hereby
subordinated in right of payment to the prior indefeasible payment in full of the
Obligations and no Loan Party will demand, sue for or otherwise attempt to collect any such
indebtedness. If any amount shall erroneously be paid to any Loan Party on account of (i)
such subrogation, contribution, reimbursement, indemnity or similar right or (ii) any such
indebtedness of any Loan Party, such amount shall be held in trust for the benefit of the
Credit Parties and shall forthwith be paid to the Administrative Agent to be credited
against the payment of the Obligations, whether matured or unmatured, in accordance with the
terms of this Agreement and the other Loan Documents. Subject to the foregoing, to the
extent that any Borrower shall, under this Agreement as a joint and several obligor, repay
any of the Obligations constituting Revolving Loans made to another Borrower hereunder or
other Obligations incurred directly and primarily by any other Borrower (an
“Accommodation Payment”), then the Borrower making such Accommodation Payment shall
be entitled to contribution and indemnification from, and be reimbursed by, each of the
other Borrowers in an amount, for each of such other Borrowers, equal to a fraction of such
Accommodation Payment, the numerator of which fraction is such other Borrower’s Allocable
Amount and the denominator of which is the sum of the Allocable Amounts of all of the
Borrowers. As of any date of determination, the “Allocable Amount” of each Borrower
shall be equal to the maximum amount of liability for Accommodation Payments which could be
asserted against such Borrower hereunder without (a) rendering such Borrower “insolvent”
within the meaning of Section 101 (31) of the Bankruptcy Code, Section 2 of the Uniform
Fraudulent Transfer Act (“UFTA”) or Section 2 of the Uniform Fraudulent Conveyance Act
(“UFCA”), (b) leaving such Borrower with unreasonably small capital or assets, within the
meaning of Section 548 of the Bankruptcy Code, Section 4 of the UFTA, or Section 5 of the
UFCA, or (c) leaving such Borrower unable to pay its debts as they become due within the
meaning of Section 548 of the Bankruptcy Code or Section 4 of the UFTA, or Section 5 of the
UFCA.



     10.21 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.



     10.22 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



136









 







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.



[SIGNATURE PAGES FOLLOW]




137









 





     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of
the date first above written.



	 	 	 	 	 
	 	rue21, inc., as Lead Borrower and as a Borrower

 	 
	 	By:  	/s/ Keith McDonough
 	 
	 	 	Name:  	Keith McDonough  	 
	 	 	Title:  	Senior Vice President, Chief Financial
Officer and Secretary 	 
	 
	 	r services llc, as a Guarantor

 	 
	 	By:  	/s/ Keith McDonough
 	 
	 	 	Name:  	Keith McDonough 	 
	 	 	Title:  	Director and President 	 
	 



Signature Page to Credit Agreement




S/1









 








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

and as Collateral Agent

 	 
	 	By:  	/s/ Keith Vercauteren
 	 
	 	 	Name:  	Keith Vercauteren  	 
	 	 	Title:  	Managing Director 	 
	 



Signature Page to Credit Agreement





S/2









 





	 	 	 	 	 
	 	Bank of America, N.A., as a Lender, L/C Issuer

and Swing Line Lender

 	 
	 	By:  	/s/ Keith Vercauteren
 	 
	 	 	Name:  	Keith Vercauteren  	 
	 	 	Title:  	Managing Director 	 
	 



Signature Page to Credit Agreement





S/3