**Exhibit 10.1**

 

 

 

 

**AMENDED AND RESTATED CREDIT AGREEMENT**

 

Dated as of August 2, 2010

among

**SUMMER INFANT, INC.**,

**SUMMERINFANT (USA), INC.**,

**KIDDOPOTAMUS &COMPANY**,

as Borrowers,

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

**RBS CITIZENS, NATIONAL ASSOCIATION**,

as Collateral Agent,

and

The Other Lenders Party Hereto

 

 

 

 

 

 

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**TABLE OFCONTENTS**

 
| **Section**                                                 | ** **                                                                    | ** ** | **Page** |
|-------------------------------------------------------------|-------------------------------------------------------------------------------|------------|----------|
|                                                        |                                                                          |       |
| ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS            |                                                                          | 1          |
| 1.01                                                        | Defined Terms                                                                 |       | 1        |
| 1.02                                                        | Other Interpretive Provisions                                                 |       | 23       |
| 1.03                                                        | Accounting Terms                                                              |       | 24       |
| 1.04                                                        | Rounding                                                                      |       | 25       |
| 1.05                                                        | Times of Day                                                                  |       | 25       |
| 1.06                                                        | Letter of Credit Amounts                                                      |       | 25       |
|                                                        |                                                                          |       |
| ARTICLE II. THE COMMITMENTS  AND CREDIT EXTENSIONS     |                                                                          | 25         |
| 2.01                                                        | Committed Loans                                                               |       | 25       |
| 2.02                                                        | Borrowings, Conversions and  Continuations of Committed Loans                 |       | 25       |
| 2.03                                                        | Letters of Credit                                                             |       | 27       |
| 2.04                                                        | Swing Line Loans                                                              |       | 35       |
| 2.05                                                        | Prepayments                                                                   |       | 38       |
| 2.06                                                        | Termination or Reduction of Commitments                                       |       | 40       |
| 2.07                                                        | Repayment of Principal                                                        |       | 41       |
| 2.08                                                        | Interest                                                                      |       | 41       |
| 2.09                                                        | Fees                                                                          |       | 42       |
| 2.10                                                        | Computation of Interest and Fees;  Retroactive Adjustments of Applicable Rate |       | 42       |
| 2.11                                                        | Evidence of Debt                                                              |       | 43       |
| 2.12                                                        | Payments Generally;  Administrative Agent’s Clawback                     |       | 43       |
| 2.13                                                        | Sharing of Payments                                                           |       | 45       |
| 2.14                                                        | Increase in Commitments                                                       |       | 46       |
| 2.15                                                        | Cash Collateral                                                               |       | 47       |
| 2.16                                                        | Defaulting Lenders                                                            |       | 48       |
|                                                        |                                                                          |       |     |
| ARTICLE III. TAXES, YIELD  PROTECTION AND ILLEGALITY   |                                                                          | 50         |
| 3.01                                                        | Taxes                                                                         |       | 50       |
| 3.02                                                        | Illegality                                                                    |       | 53       |
| 3.03                                                        | Inability to Determine Rates                                                  |       | 54       |
| 3.04                                                        | Increased Costs; Reserves on  Eurodollar Rate Loans                           |       | 54       |
| 3.05                                                        | Compensation for Losses                                                       |       | 56       |
| 3.06                                                        | Mitigation Obligations                                                        |       | 56       |
| 3.07                                                        | Survival                                                                      |       | 57       |
|                                                        |                                                                          |       |     |
| ARTICLE IV. CONDITIONS  PRECEDENT TO CREDIT EXTENSIONS |                                                                          | 57         |
| 4.01                                                        | Conditions of Initial Credit  Extension                                       |       | 57       |
| 4.02                                                        | Conditions to all Credit  Extensions                                          |       | 60       |
| 4.03                                                        | Conditions to Credit Extension  for Acquisition                               |       | 60       |
|                                                        |                                                                          |       |     |
| ARTICLE V. REPRESENTATIONS AND  WARRANTIES             |                                                                          | 62         |
| 5.01                                                        | Existence, Qualification and  Power                                           |       | 62       |

 

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| 5.02                                    | Authorization; No Contravention                   |   | 62     |
|-----------------------------------------|---------------------------------------------------|--------|--------|
| 5.03                                    | Governmental Authorization; Other  Consents       |   | 63     |
| 5.04                                    | Binding Effect                                    |   | 63     |
| 5.05                                    | Financial Statements; No Material  Adverse Effect |   | 63     |
| 5.06                                    | Litigation                                        |   | 63     |
| 5.07                                    | No Default                                        |   | 64     |
| 5.08                                    | Ownership of Property; Liens                      |   | 64     |
| 5.09                                    | Environmental Compliance                          |   | 64     |
| 5.10                                    | Insurance                                         |   | 64     |
| 5.11                                    | Taxes                                             |   | 64     |
| 5.12                                    | ERISA Compliance                                  |   | 64     |
| 5.13                                    | Subsidiaries                                      |   | 65     |
| 5.14                                    | Margin Regulations; Investment  Company Act       |   | 65     |
| 5.15                                    | Disclosure                                        |   | 66     |
| 5.16                                    | Compliance with Laws                              |   | 66     |
| 5.17                                    | Taxpayer Identification Number                    |   | 66     |
| 5.18                                    | Intellectual Property; Licenses,  Etc.            |   | 66     |
| 5.19                                    | Rights in Collateral; Priority of  Liens          |   | 66     |
|                                    |                                              |   |   |
| ARTICLE VI. AFFIRMATIVE  COVENANTS |                                              | 67     |
| 6.01                                    | Financial Statements                              |   | 67     |
| 6.02                                    | Certificates; Other Information                   |   | 68     |
| 6.03                                    | Notices                                           |   | 69     |
| 6.04                                    | Payment of Obligations                            |   | 70     |
| 6.05                                    | Preservation of Existence, Etc.                   |   | 70     |
| 6.06                                    | Maintenance of Properties                         |   | 70     |
| 6.07                                    | Maintenance of Insurance                          |   | 70     |
| 6.08                                    | Compliance with Laws                              |   | 71     |
| 6.09                                    | Books and Records                                 |   | 71     |
| 6.10                                    | Inspection Rights                                 |   | 71     |
| 6.11                                    | Use of Proceeds                                   |   | 71     |
| 6.12                                    | Financial Covenants                               |   | 71     |
| 6.13                                    | Guarantors                                        |   | 72     |
| 6.14                                    | Collateral Records                                |   | 72     |
| 6.15                                    | Security Interests                                |   | 72     |
| 6.16                                    | Agent as Primary Depository                       |   | 73     |
|                                    |                                              |   |   |
| ARTICLE VII. NEGATIVE COVENANTS    |                                              | 73     |
| 7.01                                    | Liens                                             |   | 73     |
| 7.02                                    | Investments                                       |   | 74     |
| 7.03                                    | Indebtedness                                      |   | 74     |
| 7.04                                    | Fundamental Changes                               |   | 75     |
| 7.05                                    | Dispositions                                      |   | 75     |
| 7.06                                    | Restricted Payments                               |   | 76     |
| 7.07                                    | Change in Nature of Business                      |   | 76     |
| 7.08                                    | Transactions with Affiliates                      |   | 76     |
| 7.09                                    | Burdensome Agreements                             |   | 77     |
| 7.10                                    | Use of Proceeds                                   |   | 77     |

 

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| ARTICLE VIII. EVENTS OF DEFAULT AND REMEDIES                                                           |                                                             | 77     |
|-------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------|--------|
| 8.01                                                                                                        | Events of Default                                                |   | 77 |
| 8.02                                                                                                        | Remedies Upon Event of Default                                   |   | 79 |
| 8.03                                                                                                        | Application of Funds                                             |   | 80 |
|                                                                                                        |                                                             |   |   |
| ARTICLE IX. ADMINISTRATIVE AGENT                                                                       |                                                             | 81     |
| 9.01                                                                                                        | Appointment and Authorization of  Administrative Agent           |   | 81 |
| 9.02                                                                                                        | Rights as a Lender                                               |   | 81 |
| 9.03                                                                                                        | Exculpatory Provisions                                           |   | 82 |
| 9.04                                                                                                        | Reliance by Administrative Agent                                 |   | 82 |
| 9.05                                                                                                        | Delegation of Duties                                             |   | 83 |
| 9.06                                                                                                        | Resignation of Administrative  Agent                             |   | 83 |
| 9.07                                                                                                        | Non-Reliance on Administrative  Agent and Other Lenders          |   | 84 |
| 9.08                                                                                                        | No Other Duties, Etc.                                            |   | 84 |
| 9.09                                                                                                        | Administrative Agent  May File Proofs of Claim              |   | 84 |
| 9.10                                                                                                        | Collateral Matters                                               |   | 85 |
| 9.11                                                                                                        | Secured Cash Management  Agreements and Secured Hedge Agreements |   | 87 |
|                                                                                                        |                                                             |   |   |
| ARTICLE X. MISCELLANEOUS                                                                               |                                                             | 87     |
| 10.01                                                                                                       | Amendments                                                       |   | 87 |
| 10.02                                                                                                       | Notices; Effectiveness;  Electronic Communications               |   | 89 |
| 10.03                                                                                                       | No Waiver; Cumulative Remedies                                   |   | 91 |
| 10.04                                                                                                       | Expenses; Indemnity; Damage  Waiver                              |   | 91 |
| 10.05                                                                                                       | Payments Set Aside                                               |   | 93 |
| 10.06                                                                                                       | Successors and Assigns                                           |   | 93 |
| 10.07                                                                                                       | Treatment of Certain Information;  Confidentiality               |   | 98 |
| 10.08                                                                                                       | Right of Setoff                                                  |   | 98 |
| 10.09                                                                                                       | Interest Rate Limitation                                         |   | 99 |
| 10.10                                                                                                       | Counterparts; Integration;  Effectiveness                        |   | 99 |
| 10.11                                                                                                       | Survival of Representations and  Warranties                      |   | 99 |
| 10.12                                                                                                       | Severability                                                     |   | 100 |
| 10.13                                                                                                       | Replacement of Lenders                                           |   | 100 |
| 10.14                                                                                                       | Governing Law; Jurisdiction; Etc.                                |   | 101 |
| 10.15                                                                                                       | Waiver of Jury Trial                                             |   | 101 |
| 10.16                                                                                                       | No Advisory or Fiduciary  Responsibility                         |   | 102 |
| 10.17                                                                                                       | USA PATRIOT Act Notice                                           |   | 102 |
|                                                                                                        |                                                             |   |   |
| ARTICLE XI.  APPOINTMENT OF THE BORROWER REPRESENTATIVE, JOINT AND SEVERAL LIABILITY OF  THE BORROWERS |                                                             | 103    |
| 11.01                                                                                                       | Borrower Representative                                          |   | 103 |
| 11.02                                                                                                       | Joint and Several Liability of Borrowers                         |   | 103 |

 

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| **SCHEDULES** |                                                               |   |
|---------------|--------------------------------------------------------------------|--------|
| 2.01          | Commitments  and Applicable Percentages                            |   |   |
| 4.01(a)(iv)   | Landlord  Waiver Sites                                             |   |   |
| 5.09          | Environmental  Matters                                             |   |   |
| 5.12(d)       | ERISA  Disclosures                                                 |   |   |
| 5.13          | Subsidiaries  and Other Equity Investments                         |   |   |
| 7.01          | Existing  Liens                                                    |   |   |
| 7.03          | Existing  Indebtedness                                             |   |   |
| 10.02         | Administrative  Agent’s Office, Certain Addresses for Notices |   |   |
|          |                                                               |   |   |
| **EXHIBITS**  |                                                               |   |
| A             | Committed  Loan Notice                                             |   |   |
| B             | Swing  Line Loan Notice                                            |   |   |
| C             | Note                                                               |   |   |
| D             | Compliance  Certificate                                            |   |   |
| E             | Assignment  and Assumption                                         |   |   |
|               |                                                                    |        |  |  |

 

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** **

**AMENDED ANDRESTATED CREDIT AGREEMENT**

 

**THIS AMENDED AND RESTATED CREDIT AGREEMENT** (this “Agreement”)is entered into as of August 2, 2010,****among**SUMMER INFANT, INC.**, a Delawarecorporation (“SI Holdings”), **SUMMERINFANT (USA), INC.**, aRhode Island corporation (“SI USA”) and **KIDDOPOTAMUS & COMPANY**, a Delaware corporation (“Kiddopotamus”,and collectively with SI Holdings and SI USA, the “Borrowers” and eachindividually a “Borrower”), **each lender from time totime party hereto** (collectively, “Lenders” and eachindividually, a “Lender”), **BANK OF AMERICA, N.A.**, a national banking association asAdministrative Agent, Swing Line Lender and L/C Issuer, and **RBS CITIZENS, NATIONAL ASSOCIATION**, as Collateral Agent.

 

**RECITALS:**

 

Borrowers,certain Lenders and Administrative Agent are parties to a certain CreditAgreement dated as of April 10, 2008, as heretofore amended (as amended,the “Existing Credit Agreement”), pursuant to which certain Lendersextended to Borrowers a revolving credit loan in the principal amount of up to$36,000,000 (the “Existing Revolving Credit Loan”), and an acquisitioncredit term loan in the principal amount of $10,000,000 (the “ExistingAcquisition Loan”).

 

Borrowershave requested that Lenders provide a revolving credit facility to consolidateand increase the Existing Revolving Credit Loan and the Existing Acquisition Loaninto a single revolving credit facility, and to provide other financialaccommodations, and Lenders are willing to do so on the terms and conditionsset forth herein.

 

Inconsideration of the mutual covenants and agreements herein contained, theparties hereto hereby amend and restated the Existing Credit Agreement in itsentirety (but retaining references tothe foregoing Preamble and Recitals), and hereby covenant and agree, asfollows:

 

**ARTICLE I.  DEFINITIONS AND ACCOUNTING TERMS**

 

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

 

“Acquisition”,by any Person, means the acquisition by such Person, in a single transaction orin a series of related transactions, of all or any substantial portion of theproperty and assets of another Person or all or a substantial portion of theequity securities or capital stock of another Person, in each case whether ornot involving a merger or consolidation with such other Person and whether forcash, property, services, assumption of Indebtedness, securities or otherwise.

 

“AdministrativeAgent” or “Agent” means Bank of America, in its capacity asadministrative agent under this Agreement and any of the other Loan Documents,or any successor administrative agent.

 

“AdministrativeAgent Fee Letter” has the meaning specified in Section 2.09(c).

 

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“AdministrativeAgent Parties” has the meaning specified in Section 10.02(c).

 

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

 

“AdministrativeQuestionnaire” means an Administrative Questionnaire in a form supplied byAdministrative Agent.

 

“Affiliate”means, with respect to any Person, another Person that directly, or indirectlythrough one or more intermediaries, Controls or is Controlled by or is undercommon Control with the Person specified.

 

“AggregateCommitments” means the Commitments of all Lenders.

 

“Agreement”means this Amended and Restated Credit Agreement, as the same may be amended,restated, supplemented, extended, replaced or otherwise modified from time totime.

 

“ApplicablePercentage” means with respect to any Lender at any time, the percentage(carried out to the ninth decimal place) of the Aggregate Commitmentsrepresented by such Lender’s Commitment at such time, subject to adjustment asprovided in Section 2.16.  Ifthe commitment of each Lender to make Loans and the obligation of the L/CIssuer to make L/C Credit Extensions have been terminated pursuant to Section 8.02or if the Aggregate Commitments have expired, then the Applicable Percentage ofeach Lender shall be determined based on the Applicable Percentage of suchLender most recently in effect, giving effect to any subsequentassignments.  The initial ApplicablePercentage of each Lender is set forth opposite the name of such Lender on Schedule2.01 or in the Assignment and Assumption pursuant to which such Lenderbecomes a party hereto, as applicable.

 

“ApplicableRate” means, from time to time, the following percentages per annum, basedupon the Consolidated Leverage Ratio as set forth in the most recent ComplianceCertificate received by Administrative Agent pursuant to Section 6.02(a):

 

**Applicable Rate**

 

| **Pricing  Level** | ** ** | **Consolidated  Leverage Ratio** | ** ** | **Applicable Rate for  Eurodollar Loans  and L/C Fees** | ** ** | **Applicable Rate  For Base Rate**

**Loans** | ** ** |
|--------------------|------------|----------------------------------|------------|---------------------------------------------------------|------------|-----------------------------------------------|------------|
| 1                  |       | <2.50:1.00                    |       | 2.00                                                    | %          | 0.00                                          | %          |
| 2                  |       | >2.50:1.00                    |       | 2.50                                                    | %          | 0.50                                          | %          |

 

Any increase or decrease in the Applicable Rateresulting from a change in the Consolidated Leverage Ratio shall becomeeffective as of the first Business Day of the month immediately following thedate a Compliance Certificate is delivered pursuant to Section 6.02(a);provided, however, that if a Compliance Certificate is notdelivered when due in accordance with such Section, then, upon the request ofthe Required Lenders, Pricing Level 2 shall apply as of the first Business Dayof the month following the date such Compliance Certificate was required tohave been delivered.  The Applicable Ratein effect from the Closing Date until the first time the 

 

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Applicable Rate is determined in accordance with thepreceding sentence shall be determined based upon Pricing Level 1.

 

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

 

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

 

“Assignmentand Assumption” means an assignment and assumption entered into by a Lenderand an assignee (with the consent of any party whose consent is required by Section 10.06(b)),and accepted by Administrative Agent, in substantially the form of Exhibit Eor any other form approved by Administrative Agent.

 

“AttributableIndebtedness” means, on any date, (a) in respect of any capital leaseof any Person, the capitalized amount thereof that would appear on a balancesheet of such Person prepared as of such date in accordance with GAAP, and (b) inrespect of any Synthetic Lease Obligation, the capitalized amount of theremaining lease payments under the relevant lease that would appear on abalance sheet of such Person prepared as of such date in accordance with GAAPif such lease were accounted for as a capital lease.

 

“AuditedFinancial Statements” means the audited consolidated and consolidatingbalance sheet of Borrowers and their Subsidiaries for the fiscal year ended December 31, 2009, and therelated consolidated statements of income or operations, shareholders’ equityand cash flows for such fiscal year of Borrowers and their Subsidiaries,including the notes thereto.

 

“Auto-ReinstatementLetter of Credit” has the meaning specified in Section 2.03(b)(v).

 

“AvailabilityPeriod” means the period from and including the Closing Date to the earliestof (a) the Maturity Date, (b) the date of termination of theAggregate Commitments pursuant to Section 2.06, and (c) thedate of termination of the commitment of each Lender to make Loans and of theobligation of the L/C Issuer to make L/C Credit Extensions pursuant to Section 8.02.

 

“Bankof America” means Bank of America, N.A., a national banking association,and its successors.

 

“BaseRate” means for any day a fluctuating rate per annum equal to the highestof (a) the Federal Funds Rate plus 1/2 of 1%, (b) the rate ofinterest in effect for such day as publicly announced from time to time by Bankof America as its “prime rate”, and (c) the Eurodollar Rate plus2.00%.  The “prime rate” is a rate set byBank of America based upon various factors including Bank of America’s costsand desired return, general economic conditions and other factors, and is usedas a reference point for pricing some loans, which may be priced at, above, orbelow such announced rate.  Any change insuch prime rate announced by Bank of America shall take effect at the openingof business on the day specified in the public announcement of such change.

 

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“BaseRate Committed Loan” means a Committed Loan that is a Base Rate Loan.

 

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

 

“BasicFixed Charge Coverage Ratio” means the ratio, calculated on a consolidatedbasis, of (a) the sum of Consolidated EBITDA plus lease expense andrent expense, minus income tax, unfinanced capital expenditures,dividends, withdrawals, and other distributions, to (b) the sum ofConsolidated Interest Charges, lease expense, rent expense, the current portionof long term liabilities and the current portion of capitalized leaseobligations.

 

“Borrower(s)”has the meaning specified in the introductory paragraph hereto.

 

“BorrowerMaterials” has the meaning specified in Section 6.02.

 

“BorrowerRepresentative” means SI Holdings, in its capacity as agent for andrepresentative of Borrowers.

 

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

 

“BusinessDay” means any day other than a Saturday, Sunday or other day on whichcommercial banks are authorized to close under the Laws of, or are in factclosed in, the state where Administrative Agent’s Office is located and, ifsuch day relates to any Eurodollar Rate Loan, means any such day that is also aLondon Banking Day.

 

“CashCollateralize” means to pledge and deposit with or deliver toAdministrative Agent, for the benefit of Administrative Agent, L/C Issuer orSwing Line Lender (as applicable) and Lenders, as collateral for L/CObligations, Obligations in respect of Swing Line Loans, or obligations ofLenders to fund participations in respect of either thereof (as the context mayrequire), cash or deposit account balances or, if the L/C Issuer or Swing LineLender benefiting from such collateral shall agree in its sole discretion,other credit support, in each case pursuant to documentation in form andsubstance satisfactory to (a) Administrative Agent and (b) L/C Issueror Swing Line Lender (as applicable).  “CashCollateral” shall have a meaning correlative to the foregoing and shallinclude the proceeds of such cash collateral and other credit support.

 

“Cash Equivalents” means anyof the following types of Investments, to the extent owned by a Borrower or anySubsidiary free and clear of all Liens (other than Liens created under theCollateral Documents and other Lienspermitted hereunder):

 

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

 

(b)           subject to Section 6.16,time deposits with, or insured certificates of deposit or bankers’ acceptancesof, any commercial bank that (i) (A) is a Lender or (B) isorganized under the laws of the United States of America, any state thereof orthe District of Columbia or is the principal banking subsidiary of a bankholding company organized under the laws of the United 

 

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Statesof America, any state thereof or the District of Columbia, and is a member ofthe Federal Reserve System, (ii) issues (or the parent of which issues)commercial paper rated as described in clause (c) of this definition and(iii) has combined capital and surplus of at least $1,000,000,000, in eachcase with maturities of not more than 90days from the date of acquisition thereof;

 

(c)           commercial paper issued by any Personorganized under the laws of any state of the United States of America and ratedat least “Prime-1” (or the then equivalent grade) by Moody’s or at least “A-1”(or the then equivalent grade) by S&P, in each case with maturities ofnot more than 180 days from the date of acquisition thereof; and

 

(d)           Investments, classified in accordancewith GAAP as current assets of any Borrower or any of its Subsidiaries, inmoney market investment programs registered under the Investment Company Act of1940, which are administered by financial institutions that have the highestrating obtainable from either Moody’s or S&P, and the portfolios of whichare limited solely to Investments of the character, quality and maturitydescribed in clauses (a), (b) and (c) of this definition.

 

“CashManagement Agreement” means any agreement to provide cash managementservices, including treasury, depository, overdraft, credit or debit card,electronic funds transfer and other cash management arrangements.

 

“CashManagement Bank” means Bank of America or any of its Affiliates.

 

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

 

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

 

(a)           any “person” or “group”(as such terms are used in Sections 13(d) and 14(d) of the SecuritiesExchange Act of 1934, but excluding any employee benefit plan of such person orits subsidiaries, and any person or entity acting in its capacity as trustee,agent or other fiduciary or administrator of any such plan) becomes the “beneficialowner” (as defined in Rules 13d-3 and 13d-5 under the Securities ExchangeAct of 1934, except that a person or group shall be deemed to have “beneficialownership” of all securities that such person or group has the right toacquire, whether such right is exercisable immediately or only after thepassage of time (such right, an “option right”)), directly or indirectly,of 25% or more of the equity securities of a Borrower entitled to vote formembers of the board of directors or equivalent governing body of such Borroweron a fully-diluted basis (and taking into account all such securities that suchperson or group has the right to acquire pursuant to any option right);

 

(b)           during any period of24 consecutive months, a majority of the members of the board of directors orother equivalent governing body of a Borrower cease to be composed ofindividuals (i) who were members of that board or equivalent governing 

 

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bodyon the first day of such period, (ii) whose election or nomination to thatboard or equivalent governing body was approved by individuals referred to inclause (i) above constituting at the time of such election or nominationat least a majority of that board or equivalent governing body or (iii) whoseelection or nomination to that board or other equivalent governing body wasapproved by individuals referred to in clauses (i) and (ii) aboveconstituting at the time of such election or nomination at least a majority ofthat board or equivalent governing body (excluding, in the case of both clause (ii) andclause (iii), any individual whose initial nomination for, or assumption ofoffice as, a member of that board or equivalent governing body occurs as aresult of an actual or threatened solicitation of proxies or consents for theelection or removal of one or more directors by any person or group other than asolicitation for the election of one or more directors by or on behalf of theboard of directors); or

 

(c)           the passage ofthirty days from the date upon which any Person or two or more Persons actingin concert shall have acquired by contract or otherwise, or shall have enteredinto a contract or arrangement that, upon consummation thereof, will result inits or their acquisition of the power to exercise, directly or indirectly, acontrolling influence over the management or policies of a Borrower, or controlover the equity securities of a Borrower entitled to vote for members of theboard of directors or equivalent governing body of such Borrower on afully-diluted basis (and taking into account all such securities that suchPerson or group has the right to acquire pursuant to any option right)representing 25% or more of thecombined voting power of such securities.

 

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

 

“Code”means the Internal Revenue Code of 1986.

 

“Collateral” means any and all assets andrights and interests in or to property of each Pledging Borrower and each ofthe other Loan Parties, whether real or personal, tangible or intangible, inwhich a Lien is granted or purported to be granted to Administrative Agent forthe benefit of the Secured Parties pursuant to the Collateral Documents,including, without limitation, the Security Agreement and the IP SecurityAgreements.

 

“Collateral Agent” means RBS Citizens,National Association, in its capacity as collateral agent under this Agreement.

 

“Collateral Documents” means all agreements,instruments and documents now or hereafter executed and delivered in connectionwith this Agreement pursuant to which Liens are granted or purported to begranted to Administrative Agent in Collateral securing all or part of theObligations each in form and substance satisfactory to Administrative Agent,and each as may be amended, restated, extended, replaced or otherwise modifiedfrom time to time.

 

“Commitment”means, as to each Lender, its obligation to (a) make Committed Loans toBorrowers pursuant to Section 2.01, (b) purchaseparticipations in L/C Obligations, and (c) purchase participations inSwing Line Loans, in an aggregate principal amount at any one time outstandingnot to exceed the amount set forth opposite such Lender’s name on Schedule2.01 or 

 

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inthe Assignment and Assumption pursuant to which such Lender becomes a partyhereto, as applicable, as such amount may be adjusted from time to time inaccordance with this Agreement.

 

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

 

“CommittedLoan” has the meaning specified in Section 2.01.

 

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

 

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

 

“ConsolidatedEBITDA” means, for any period, for Borrowers and their Subsidiaries on aconsolidated basis, an amount equal to Consolidated Net Income for such period plus(a) the following to the extent deducted in calculating such ConsolidatedNet Income: (i) Consolidated Interest Charges for such period, (ii) theprovision for Federal, state, local and foreign income taxes payable by theBorrowers and their Subsidiaries for such period, (iii) depreciation andamortization expense, and (iv) other non-recurring expenses of Borrowersand their Subsidiaries reducing such Consolidated Net Income which do notrepresent a cash item in such period or any future period and minus (b) thefollowing to the extent included in calculating such Consolidated Net Income: (i) Federal,state, local and foreign income tax credits of Borrowers and their Subsidiariesfor such period and (ii) all non-cash items increasing Consolidated NetIncome for such period.

 

“ConsolidatedFunded Indebtedness” means, as of any date of determination, for Borrowersand their Subsidiaries on a consolidated basis, the sum of (a) theoutstanding principal amount of all obligations, whether current or long-term,for borrowed money (including Obligations hereunder) and all obligations evidencedby bonds, debentures, notes, loan agreements or other similar instruments, (b) allpurchase money Indebtedness, (c) all direct obligations arising underletters of credit (including standby and commercial), bankers’ acceptances,bank guaranties, surety bonds and similar instruments, (d) all obligationsin respect of the deferred purchase price of property or services (other thantrade accounts payable in the ordinary course of business), (e) AttributableIndebtedness in respect of capital leases and Synthetic Lease Obligations, (f) withoutduplication, all Guarantees with respect to outstanding Indebtedness of thetypes specified in clauses (a) through (e) above of Persons otherthan any Borrower or any Subsidiary, and (g) all Indebtedness of the typesreferred to in clauses (a) through (f) above of any partnership orjoint venture (other than a joint venture that is itself a corporation orlimited liability company) in which any Borrower or a Subsidiary is a generalpartner or joint venturer, unless such Indebtedness is expressly madenon-recourse to such Borrower or such Subsidiary.

 

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“ConsolidatedInterest Charges” means, for any period, for Borrowers and theirSubsidiaries on a consolidated basis, the sum of (a) all interest, premiumpayments, debt discount, fees, charges and related expenses of Borrowers andtheir Subsidiaries in connection with borrowed money (including capitalizedinterest) or in connection with the deferred purchase price of assets, in eachcase to the extent treated as interest in accordance with GAAP, and (b) theportion of rent expense of Borrowers and their Subsidiaries with respect tosuch period under capital leases that is treated as interest in accordance withGAAP.

 

“ConsolidatedLeverage Ratio” means, as of any date of determination, the ratio of (a) ConsolidatedFunded Indebtedness as of such date*to*(b) ConsolidatedEBITDA for the period of the four (4) fiscal quarters most recently ended.

 

“ConsolidatedNet Income” means, for any period, for Borrowers and their Subsidiaries ona consolidated basis, the net income of Borrowers and their Subsidiaries(excluding extraordinary gains and extraordinary losses) for that period.

 

“ContractualObligation” means, as to any Person, any provision of any security issuedby such Person or of any agreement, instrument or other undertaking to whichsuch 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 causethe direction of the management or policies of a Person, whether through theability to exercise voting power, by contract or otherwise.  “Controlling” and “Controlled”have meanings correlative thereto.

 

“CreditExtension” means each of the following: (a) a Borrowing and (b) anL/C Credit Extension.

 

“DebtorRelief Laws” means the Bankruptcy Code of the United States, and all otherliquidation, conservatorship, bankruptcy, assignment for the benefit ofcreditors, moratorium, rearrangement, receivership, insolvency, reorganization,or similar debtor relief Laws of the United States or other applicablejurisdictions from time to time in effect and affecting the rights of creditorsgenerally.

 

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

 

“DefaultRate” means (a) when used with respect to Obligations other than L/CFees an interest rate equal to (i) the Base Rate plus (ii) theApplicable Rate, if any, applicable to Base Rate Loans plus (iii) 4%per annum; provided, however, that with respect to a EurodollarRate Loan, the Default Rate shall be an interest rate equal to the interestrate (including any Applicable Rate) otherwise applicable to such Loan plus 4%per annum, and (b) when used with respect to L/C Fees, a rate equal to theApplicable Rate plus 4% per annum.

 

“DefaultingLender” means, subject to Section 2.16(b), any Lender that, asdetermined by Administrative Agent, (a) has failed to perform any of itsfunding obligations hereunder, including in respect of its Loans orparticipations in respect of Letters of Credit or Swing Line Loans, withinthree (3) Business Days of the date required to be funded by it hereunder,(b) has 

 

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notifiedany Borrower, or Administrative Agent or any Lender that it does not intend tocomply with its funding obligations or has made a public statement to thateffect with respect to its funding obligations hereunder or, except inconnection with a good faith dispute, under other agreements in which itcommits to extend credit, (c) has failed, within three (3) BusinessDays after request by Administrative Agent, to confirm in a manner satisfactoryto Administrative Agent that it will comply with its funding obligations, or (d) has,or has a direct or indirect parent company that has, (i) become thesubject of a proceeding under any Debtor Relief Law, (ii) had a receiver,conservator, trustee, administrator, assignee for the benefit of creditors orsimilar Person charged with reorganization or liquidation of its business or acustodian appointed for it, or (iii) taken any action in furtherance of,or indicated its consent to, approval of or acquiescence in any such proceedingor appointment; provided that a Lender shall not be a Defaulting Lender solelyby virtue of the ownership or acquisition of any equity interest in that Lenderor any direct or indirect parent company thereof by a Governmental Authority.

 

“Disposition”or “Dispose” means the sale, transfer, license, lease or otherdisposition (including any sale and leaseback transaction) of any property byany Person, including any sale, assignment, transfer or other disposal, with orwithout recourse, of any notes or accounts receivable or any rights and claimsassociated therewith.

 

“Dollar(s)”and “$” mean lawful money of the United States.

 

“DollarEquivalent” means on any particular date, with respect to any amountdenominated in Dollars, such amount in Dollars, and with respect to any amountdenominated in any other currency, the amount (as conclusively ascertained byLenders absent manifest error) of Dollars which could be purchased by Lenders(in accordance with its normal banking practices) in the London foreigncurrency deposit markets with such amount of such currency at the spot rate ofexchange prevailing at or about 11:00 a.m. (London time) on such date.

 

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

 

“EligibleAssignee” means any Approved Fund or any other Person that meets therequirements to be an assignee under Section 10.06(b)(iii), (v) and(vi) (subject to such consents, if any, as may be required under Section 10.06(b)(iii)).

 

“EnvironmentalLaws” means any and all Federal, state, local, and foreign statutes, laws,regulations, ordinances, rules, judgments, orders, decrees, permits,concessions, grants, franchises, licenses, agreements or governmentalrestrictions relating to pollution and the protection of the environment or therelease of any materials into the environment, including those related tohazardous substances or wastes, air emissions and discharges to waste or publicsystems.

 

“EnvironmentalLiability” means any liability, contingent or otherwise (including anyliability for damages, costs of environmental remediation, fines, penalties orindemnities), of Borrowers, any other Loan Party or any of their respectiveSubsidiaries directly or indirectly resulting from or based upon (a) violationof any Environmental Law, (b) the generation, use, handling,transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure

 

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toany Hazardous Materials, (d) the release or threatened release of anyHazardous Materials into the environment or (e) any contract, agreement orother consensual arrangement pursuant to which liability is assumed or imposedwith respect to any of the foregoing.

 

“EquityInterests” means, with respect to any Person, all of the shares of capitalstock of (or other ownership or profit interests in) such Person, all of thewarrants, options or other rights for the purchase or acquisition from such Personof shares of capital stock of (or other ownership or profit interests in) suchPerson, all of the securities convertible into or exchangeable for shares ofcapital stock of (or other ownership or profit interests in) such Person orwarrants, rights or options for the purchase or acquisition from such Person ofsuch shares (or such other interests), and all of the other ownership or profitinterests in such Person (including partnership, member or trust intereststherein), whether voting or nonvoting, and whether or not such shares,warrants, options, rights or other interests are outstanding on any date ofdetermination.

 

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

 

“ERISAAffiliate” means any trade or business (whether or not incorporated) undercommon 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 forpurposes of provisions relating to Section 412 of the Code).

 

“ERISAEvent” means (a) a Reportable Event with respect to a Pension Plan;(b) the withdrawal of any Borrower or any ERISA Affiliate from a PensionPlan subject to Section 4063 of ERISA during a plan year in which suchentity was a “substantial employer” as defined in Section 4001(a)(2) ofERISA or a cessation of operations that is treated as such a withdrawal under Section 4062(e) ofERISA; (c) a complete or partial withdrawal by any Borrower or any ERISAAffiliate from a Multiemployer Plan or notification that a Multiemployer Planis in reorganization; (d) the filing of a notice of intent to terminate,the treatment of a Pension Plan amendment as a termination under Section 4041or 4041A of ERISA; (e) the institution by the PBGC of proceedings toterminate a Pension Plan; (f) any event or condition which constitutesgrounds under Section 4042 of ERISA for the termination of, or theappointment of a trustee to administer, any Pension Plan; (g) thedetermination that any Pension Plan is considered an at-risk plan or a plan inendangered or critical status within the meaning of Sections 430, 431 and 432of the Code or Sections 303, 304 and 305 of ERISA; or (h) the impositionof any liability under Title IV of ERISA, other than for PBGC premiums due butnot delinquent under Section 4007 of ERISA, upon any Borrower or any ERISAAffiliate.

 

“EurodollarRate” means:

 

(a)           for any Interest Period with respect to a Eurodollar RateLoan, the rate per annum equal to (i) the British Bankers AssociationLIBOR Rate (“BBA LIBOR”), as published by Reuters (or such othercommercially available source providing quotations of BBA LIBOR as may bedesignated by Administrative Agent from time to time) at approximately 11:00 a.m.,London time, two London Banking Days prior to the commencement of such InterestPeriod, for Dollar deposits (for delivery on the first day of such InterestPeriod) with a term equivalent to such Interest Period or, (ii) if suchrate is not available at such time for any reason, the rate per annumdetermined by Administrative Agent to be the rate at which deposits in Dollarsfor 

 

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delivery on the first day of such Interest Period insame day funds in the approximate amount of the Eurodollar Rate Loan beingmade, continued or converted and with a term equivalent to such Interest Periodwould be offered by Bank of America’s London Branch to major banks in theLondon interbank eurodollar market at their request at approximately 11:00 a.m.(London time) two London Banking Days prior to the commencement of suchInterest Period; and

 

(b)           for any interest calculation with respect to a Base RateLoan on any date, the rate per annum equal to (i) BBA LIBOR, atapproximately 11:00 a.m., London time determined two London Banking Daysprior to such date for Dollar deposits being delivered in the London interbankmarket for a term of one month commencing that day or (ii) if suchpublished rate is not available at such time for any reason, the rate per annumdetermined by Administrative Agent to be the rate at which deposits in Dollarsfor delivery on the date of determination in same day funds in the approximateamount of the Base Rate Loan being made or maintained and with a term equal toone month would be offered by Bank of America’s London Branch to major banks inthe London interbank Eurodollar market at their request at the date and time ofdetermination.

 

“EurodollarRate Loan” means a Committed Loan that bears interest at a rate based onclause (a) of the definition of “Eurodollar Rate.”

 

“Eventof Default” has the meaning specified in Section 8.01.

 

“ExcludedTaxes” means, with respect to Administrative Agent, any Lender, L/C Issueror any other recipient of any payment to be made by or on account of anyobligation of any Borrower hereunder, (a) taxes imposed on or measured byits overall net income (however denominated), and franchise taxes imposed on it(in lieu of net income taxes), by the jurisdiction (or any politicalsubdivision thereof) under the Laws of which such recipient is organized or inwhich its principal office is located or, in the case of any Lender, in whichits applicable Lending Office is located, (b) any branch profits taxesimposed by the United States or any similar tax imposed by any otherjurisdiction in which any Borrower is located, (c) any backup withholdingtax that is required by the Code to be withheld from amounts payable to aLender that has failed to comply with clause (A) of Section 3.01(e)(ii),and (d) in the case of a Foreign Lender (other than an assignee pursuantto a request by Borrowers under Section 10.13), any United States****withholding tax that (i) is required to be imposed onamounts payable to such Foreign Lender pursuant to the Laws in force at thetime such Foreign Lender becomes a party hereto (or designates a new LendingOffice) or (ii) is attributable to such Foreign Lender’s failure orinability (other than as a result of a Change in Law) to comply with clause (B) ofSection 3.01(e)(ii), except to the extent that such Foreign Lender(or its assignor, if any) was entitled, at the time of designation of a newLending Office (or assignment), to receive additional amounts from Borrowerswith respect to such withholding tax pursuant to Section 3.01(a)(ii) or(c).

 

“ExistingAcquisition Loan” has the meaning given to such term in the Recitals.

 

“ExistingCredit Agreement” has the meaning given to such term in the Recitals.

 

“ExistingLetters of Credit” means any Letter of Credit issued by L/C Issuer pursuantto the Existing Credit Agreement and which is outstanding on the Closing Date.

 

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“ExistingRevolving Credit Loan” has the meaning given to such term in the Recitals.

 

“ExtraordinaryReceipt” means any cash received by or paid to or for the account ofany Person as proceeds of insurance (other than proceeds of businessinterruption insurance to the extent such proceeds constitute compensation forlost earnings) or condemnation awards (and payments in lieu thereof).

 

“FASBASC” means the Accounting Standards Codification of the FinancialAccounting Standards Board.

 

“FederalFunds Rate” means, for any day, the rate per annum equal to the weightedaverage of the rates on overnight Federal funds transactions with members ofthe Federal Reserve System arranged by Federal funds brokers on such day, aspublished by the Federal Reserve Bank of New York on the Business Day nextsucceeding such day; provided that (a) if such day is not aBusiness Day, the Federal Funds Rate for such day shall be such rate on suchtransactions on the next preceding Business Day as so published on the nextsucceeding Business Day, and (b) if no such rate is so published on suchnext succeeding Business Day, the Federal Funds Rate for such day shall be theaverage 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 byAdministrative Agent.

 

“ForeignLender” means any Lender that is organized under the Laws of a jurisdictionother than that in which the Borrower is resident for tax purposes (includingsuch a Lender when acting in the capacity of the L/C Issuer).  For purposes of this definition, the UnitedStates, each State thereof and the District of Columbia shall be deemed toconstitute a single jurisdiction.

 

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

 

“FrontingExposure” means, at any time there is a Defaulting Lender, (a) withrespect to L/C Issuer, such Defaulting Lender’s Applicable Percentage of theoutstanding L/C Obligations other than L/C Obligations as to which suchDefaulting Lender’s participation obligation has been reallocated to otherLenders or Cash Collateralized in accordance with the terms hereof, and (b) withrespect to Swing Line Lender, such Defaulting Lender’s Applicable Percentage ofSwing Line Loans other than Swing Line Loans as to which such Defaulting Lender’sparticipation obligation has been reallocated to other Lenders or CashCollateralized in accordance with the terms hereof.

 

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

 

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

 

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“GovernmentalAuthority” means the government of the United States or any other nation,or of any political subdivision thereof, whether state or local, and anyagency, authority, instrumentality, regulatory body, court, central bank orother entity exercising executive, legislative, judicial, taxing, regulatory oradministrative powers or functions of or pertaining to government (includingany supra-national bodies such as the European Union or the European CentralBank).

 

“Guarantee”means, as to any Person, any (a) obligation, contingent or otherwise, ofsuch Person guaranteeing or having the economic effect of guaranteeing anyIndebtedness or other obligation payable or performable by another Person (the “primaryobligor”) in any manner, whether directly or indirectly, and including anyobligation of such Person, direct or indirect, (i) to purchase or pay (oradvance or supply funds for the purchase or payment of) such Indebtedness orother obligation, (ii) to purchase or lease property, securities orservices for the purpose of assuring the obligee in respect of suchIndebtedness or other obligation of the payment or performance of suchIndebtedness or other obligation, (iii) to maintain working capital,equity capital or any other financial statement condition or liquidity or levelof income or cash flow of the primary obligor so as to enable the primaryobligor to pay such Indebtedness or other obligation, or (iv) entered intofor the purpose of assuring in any other manner the obligee in respect of suchIndebtedness or other obligation of the payment or performance thereof or toprotect such obligee against loss in respect thereof (in whole or in part), or (b) anyLien on any assets of such Person securing any Indebtedness or other obligationof any other Person, whether or not such Indebtedness or other obligation isassumed by such Person (or any right, contingent or otherwise, of any holder ofsuch Indebtedness to obtain any such Lien). The amount of any Guarantee shall be deemed to be an amount equal to thestated or determinable amount of the related primary obligation, or portionthereof, in respect of which such Guarantee is made or, if not stated ordeterminable, the maximum reasonably anticipated liability in respect thereofas determined by the guaranteeing Person in good faith.  The term “Guarantee” as a verb has acorresponding meaning.

 

“Guarantor”means each Domestic Subsidiary (other than Borrowers) of each Borrower, whethernow existing or hereafter formed or organized.

 

“HazardousMaterials” means all explosive or radioactive substances or wastes and allhazardous or toxic substances, wastes or other pollutants, including petroleumor petroleum distillates, asbestos or asbestos-containing materials,polychlorinated biphenyls, radon gas, infectious or medical wastes and allother substances or wastes of any nature regulated pursuant to anyEnvironmental Law.

 

“HedgeBank” means any Person that, at the time it enters into a Swap Contractpermitted under this Agreement is a Lender or an Affiliate of a Lender, in itscapacity as a party to such Swap Contract.

 

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

 

“ICC”has the meaning specified in Section 2.03(h).

 

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

 

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

 

(b)           all direct or contingent obligationsof such Person arising under letters of credit (including standby andcommercial), bankers’ acceptances, bank guaranties, surety bonds and similarinstruments;

 

(c)           net obligations of such Person underany Swap Contract;

 

(d)           all obligations of such Person to paythe deferred purchase price of property or services (other than trade accountspayable in the ordinary course of business and, in each case, not past due formore than 60 days after the dateon which such trade account payable was created);

 

(e)           indebtedness (excluding prepaidinterest thereon) secured by a Lien on property owned or being purchased bysuch Person (including indebtedness arising under conditional sales or othertitle retention agreements), whether or not such indebtedness shall have beenassumed by such Person or is limited in recourse;

 

(f)            capital leases and Synthetic LeaseObligations;

 

(g)           all obligations of such Person topurchase, redeem, retire, defease or otherwise make any payment in respect ofany Equity Interest in such Person or any other Person, valued, in the case ofa redeemable preferred interest, at the greater of its voluntary or involuntaryliquidation preference plus accrued and unpaid dividends; and

 

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

 

Forall purposes hereof, the Indebtedness of any Person shall include theIndebtedness of any partnership or joint venture (other than a joint venturethat is itself a corporation or limited liability company) in which such Personis a general partner or a joint venturer, unless such Indebtedness is expresslymade non-recourse to such Person.  Theamount of any net obligation under any Swap Contract on any date shall bedeemed to be the Swap Termination Value thereof as of such date.  The amount of any capital lease or SyntheticLease Obligation as of any date shall be deemed to be the amount ofAttributable Indebtedness in respect thereof as of such date.

 

“IndemnifiedTaxes” 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.

 

“IntercompanyNotes” has the meaning specified in the Security Agreement.

 

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“InterestPayment Date” means:

 

(a)           as to any Loan other than a Base RateLoan, the last day of each Interest Period applicable to such Loan and the MaturityDate; provided, however, that if any Interest Period for aEurodollar Rate Loan exceeds three months, the respective dates that fall everythree months after the beginning of such Interest Period shall also be InterestPayment Dates; and (b) as to any Base Rate Loan (including a Swing Line Loan),the last Business Day of each March, June, September and December and theMaturity Date.

 

“InterestPeriod” means, as to each Eurodollar Rate Loan, the period commencing onthe date such Eurodollar Rate Loan is disbursed or converted to or continued asa Eurodollar Rate Loan and ending on the date one, two, three or six monthsthereafter, as selected by Borrowers in their Committed Loan Notice, or suchother period that is twelve months or less requested by the Borrowers andconsented to by all the Lenders; provided that:

 

(i)            any Interest Period that wouldotherwise end on a day that is not a Business Day shall be extended to the nextsucceeding Business Day unless such Business Day falls in another calendarmonth, in which case such Interest Period shall end on the next precedingBusiness Day;

 

(ii)           any Interest Period that begins onthe last Business Day of a calendar month (or on a day for which there is nonumerically corresponding day in the calendar month at the end of such InterestPeriod) shall end on the last Business Day of the calendar month at the end ofsuch Interest Period; and

 

(iii)          no Interest Period shall extend beyondthe Maturity Date.

 

“Investment”means, as to any Person, any direct or indirect acquisition or investment bysuch Person, whether by means of (a) the purchase or other acquisition ofcapital stock or other securities of another Person, (b) a loan, advance orcapital contribution to, Guarantee or assumption of debt of, or purchase orother acquisition of any other debt or equity participation or interest in,another Person, including any partnership or joint venture interest in suchother Person and any arrangement pursuant to which the investor GuaranteesIndebtedness of such other Person, or (c) the purchase or other acquisition (inone transaction or a series of transactions) of assets of another Person thatconstitute a business unit.  For purposesof covenant compliance, the amount of any Investment shall be the amount actuallyinvested, without adjustment for subsequent increases or decreases in the valueof such Investment.

 

“IPSecurity Agreements” has the meaning specified in the Security Agreement.

 

“IRS”means the United States Internal Revenue Service.

 

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

 

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

 

“Kiddopotamus”has the meaning set forth in the Preamble hereto.

 

“Laws”means, collectively, all international, foreign, Federal, state and localstatutes, treaties, rules, guidelines, regulations, ordinances, codes andadministrative or judicial precedents or authorities, including theinterpretation or administration thereof by any Governmental Authority chargedwith the enforcement, interpretation or administration thereof, and allapplicable administrative orders, directed duties, requests, licenses,authorizations and permits of, and agreements with, any Governmental Authority,in each case whether or not having the force of law.

 

“L/CAdvance” means, with respect to each Lender, such Lender’s funding of itsparticipation in any L/C Borrowing in accordance with its ApplicablePercentage.

 

“L/CApplication” means an application and agreement for the issuance oramendment of a Letter of Credit in the form from time to time in use by the L/CIssuer.

 

“L/CBorrowing” means an extension of credit resulting from a drawing under anyLetter of Credit which has not been reimbursed on the date when made orrefinanced as a Committed Borrowing.

 

“L/CCredit Extension” means, with respect to any Letter of Credit, the issuancethereof or extension of the expiry date thereof, or the increase of the amountthereof.

 

“L/CExpiration Date” means the day that is thirty (30) days prior to theMaturity Date then in effect (or, if such day is not a Business Day, the nextpreceding Business Day).

 

“L/CFee” has the meaning specified in Section 2.03(h).

 

“L/CIssuer” means Bank of America in its capacity as issuer of Letters ofCredit hereunder, or any successor issuer of Letters of Credit hereunder.

 

“L/CObligations” means, as at any date of determination, the aggregate amountavailable to be drawn under all outstanding Letters of Credit plus theaggregate of all Unreimbursed Amounts, including all L/C Borrowings. Forpurposes of computing the amount available to be drawn under any Letter ofCredit, the amount of such Letter of Credit shall be determined in accordancewith Section 1.06.  For allpurposes of this Agreement, if on any date of determination a Letter of Credithas expired by its terms but any amount may still be drawn thereunder by reasonof the operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemedto be “outstanding” in the amount so remaining available to be drawn.

 

“L/CSublimit” means an amount equal to $5,000,000.  The L/C Sublimit is part of, and not in additionto, the Aggregate Commitments.

 

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

 

“LendingOffice” means, as to any Lender, the office or offices of such Lenderdescribed as such in such Lender’s Administrative Questionnaire, or such otheroffice or offices as a Lender may from time to time notify Borrowers andAdministrative Agent.

 

“Letterof Credit” means any standbyletter of credit and any commercial letter of credit issued hereunder, andshall include the Existing Letter(s) of Credit.

 

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

 

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

 

“LoanDocuments” means this Agreement, each Note, each Issuer Document, anyagreement creating or perfecting rights in Cash Collateral pursuant to theprovisions of Section 2.15 of this Agreement, Administrative Agent FeeLetter, each Collateral Document,and any other documents which any Loan Party have executed and may execute toevidence, secure or guarantee the Obligations, as each may be amended from timeto time.

 

“LoanParties” means, collectively, Borrowers, each Guarantor and each Person (otherthan Administrative Agent, L/C Issuer, Swing Line Lender, or any Lender)executing a Loan Document or CollateralDocument.

 

“LondonBanking Day” means any day on which dealings in Dollar deposits areconducted by and between banks in the London interbank eurodollar market.

 

“MaterialAdverse Effect” means (a) a material adverse change in, or a materialadverse effect upon, the operations, business, properties, liabilities (actualor contingent), condition (financial or otherwise) or prospects of Borrowers orBorrowers and their Subsidiaries taken as a whole; (b) a material impairment ofthe ability of any Loan Party to perform its obligations under any LoanDocument to which it is a party; or (c) a material adverse effect upon thelegality, validity, binding effect or enforceability against any Loan Party ofany Loan Document to which it is a party; provided, however, thatnone of the following shall be deemed to constitute a Material Adverse Effect:any adverse change, event, development or effect arising from (i) generaleconomic conditions, including in the United Kingdom or Canada;(ii) conditions relating to the manufacturing, distribution or sale ofinfant and child supplies, equipment or goods; (iii) regional, national orinternational political or social conditions, including the engagement by theUnited States of America in hostilities, whether or not pursuant to thedeclaration of a national emergency or war, or the occurrence of any militaryor terrorist attack upon the United States of America, or any of itsterritories, possessions or diplomatic or consular offices or upon any militaryinstallation, equipment or personnel of the United States of America 

 

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orany other national or international hostilities, acts of terror or acts of war;(iv) financial, banking or securities markets (including any disruptionthereof and any decline in the price of any security or any market index);(v) changes in GAAP; or (vi) changes in applicable Law.

 

“MaturityDate” means June 30, 2012;****provided, however,that if such date is not a Business Day, the Maturity Date shall be the nextpreceding Business Day.

 

“MultiemployerPlan” means any employee benefit plan of the type described inSection 4001(a)(3) of ERISA, to which any Borrower or any ERISA Affiliatemakes or is obligated to make contributions, or during the preceding five planyears, has made or been obligated to make contributions.

 

“MultipleEmployer Plan” means a Plan which has two or more contributing sponsors(including the Borrower or any ERISA Affiliate) at least two of whom are notunder common control, as such a plan is described in Section 4064 ofERISA.

 

“NetCash Proceeds” means:

 

(a)           with respect to any Disposition by a Borrower or any Subsidiary, or anyExtraordinary Receipt received or paid to the account of a Borrower****orany Subsidiary, the excess, if any, of (i) the sum of cash and Cash Equivalentsreceived in connection with such transaction (including any cash or CashEquivalents received by way of deferred payment pursuant to, or by monetizationof, 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 theapplicable asset and that is required to be repaid in connection with suchtransaction (other than Indebtedness under the Loan Documents), (B) thereasonable out-of-pocket expenses incurred by Holdings or such Subsidiary in connection with such transactionand (C) income taxes reasonably estimated to be actually payable within twoyears of the date of the relevant transaction as a result of any gainrecognized in connection therewith; provided that, if the amount of anyestimated taxes pursuant to subclause (C) exceeds the amount of taxes actuallyrequired to be paid in cash in respect of such Disposition, the aggregateamount of such excess shall constitute Net Cash Proceeds; and

 

(b)           with respect to the sale or issuanceof any Equity Interest by a Borroweror a Subsidiary, or the incurrence or issuance of any Indebtedness by Borrower or a Subsidiary, the excessof (i) the sum of the cash and Cash Equivalents received in connection withsuch transaction over (ii) the underwriting discounts and commissions, andother reasonable out-of-pocket expenses, incurred by such Borrower or Subsidiary in connectiontherewith.

 

“Non-ReinstatementDeadline” has the meaning specified in Section 2.03(b)(v).

 

“Note(s)”means one or more promissory notes made by Borrowers in favor of a Lenderevidencing Loans made by such Lender, substantially in the form of Exhibit C,each as may be amended, restated, extended, replaced or otherwise modified fromtime to time.

 

“Obligations”means all advances to, and debts, liabilities, obligations, covenants andduties of, any Loan Party arising under any Loan Document or otherwise withrespect to any Loan, Letter of Credit, Secured Cash Management Agreement orSecured Hedge Agreement, 

 

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whetherdirect or indirect (including those acquired by assumption), absolute orcontingent, due or to become due, now existing or hereafter arising andincluding interest and fees that accrue after the commencement by or againstany Loan Party or any Affiliate thereof of any proceeding under any DebtorRelief Laws naming such Person as the debtor in such proceeding, regardless ofwhether such interest and fees are allowed claims in such proceeding.

 

“OrganizationDocuments” means, (a) with respect to any corporation, the certificate orarticles of incorporation and the bylaws (or equivalent or comparableconstitutive documents with respect to any non-U.S. jurisdiction); (b) withrespect to any limited liability company, the certificate or articles offormation or organization and operating agreement; and (c) with respect to anypartnership, joint venture, trust or other form of business entity, thepartnership, joint venture or other applicable agreement of formation ororganization and any agreement, instrument, filing or notice with respect theretofiled in connection with its formation or organization with the applicableGovernmental Authority in the jurisdiction of its formation or organizationand, if applicable, any certificate or articles of formation or organization ofsuch entity.

 

“OtherTaxes” means all present or future stamp, intangible or documentary taxesor any other excise or property taxes, charges or similar levies arising fromany payment made hereunder or under any other Loan Document or from theexecution, delivery or enforcement of, or otherwise with respect to, thisAgreement or any other Loan Document.

 

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

 

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

 

“PBGC”means the Pension Benefit Guaranty Corporation.

 

“PensionAct” means the Pension Protection Act of 2006.

 

“PensionFunding Rules” means the rules of the Code and ERISA regarding minimumrequired contributions (including any installment payment thereof) to PensionPlans and set forth in, with respect to plan years ending prior to theeffective date of the Pension Act, Section 412 of the Code and Section 302 ofERISA, each as in effect prior to the Pension Act and, thereafter, Section 412,430, 431, 432 and 436 of the Code and Sections 302, 303, 304 and 305 of ERISA.

 

“PensionPlan” means any employee pension benefit plan (including a MultipleEmployer Plan or a Multiemployer Plan) that is maintained or is contributed toby the Borrower and any ERISA Affiliate and is either covered by Title IV ofERISA or is subject to the minimum funding standards under Section 412 ofthe Code.

 

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“PermittedAcquisitions” means Investments consisting of an Acquisition or series ofAcquisitions by Borrowers during the term of this Agreement which is or areconsented to in writing (x) by Administrative Agent in its sole discretion ifthe aggregate cash consideration agreed to be paid for any individualAcquisition or in the aggregate for all Acquisitions during the term of this Agreement is equal to or less than$10,000,000, or (y) by Required Lenders in their sole discretion if theaggregate cash consideration agreed to be paid for any individual Acquisitionor in the aggregate for all Acquisitions during the term of this Agreement is greater than $10,000,000,provided in all cases that (i) the property and assets acquired (orthe property and assets of the Person acquired) in such Acquisition is identical,similar, complementary or ancillary to the line of business as the Borrowersand their Subsidiaries were engaged in on the Closing Date,(ii) Administrative Agent shall have received all items in respect of theEquity Interests or property acquired in such Acquisition required to bedelivered by the terms of the Collateral Documents, (iii) in the case ofan Acquisition of the Equity Interests of another Person, the board ofdirectors (or other comparable governing body) of such other Person shall haveduly approved such Acquisition, (iv) the Borrower Representative shallhave delivered to Administrative Agent a proforma ComplianceCertificate demonstrating that, upon giving effect to such Acquisition on a proforma basis, Borrowers would be in compliance with the financialcovenants set forth in Section 6.12 as of the most recent fiscalquarter for which Borrowers have delivered financial statements pursuant to Section 6.01(a)or Section 6.01(b), as applicable, and no other Default hasoccurred and is continuing or would be caused by such Acquisition, and(v) the representations and warranties made by Borrowers in each LoanDocument shall be true and correct in all material respects at and as if madeas of the date of such Acquisition (after giving effect thereto) except to theextent such representations and warranties expressly relate to an earlier date.

 

“Person”means any natural person, corporation, limited liability company, trust, jointventure, association, company, partnership, Governmental Authority or otherentity.

 

“Plan”means any employee benefit plan within the meaning of Section 3(3) ofERISA (including a Pension Plan), maintained for employees of the Borrower orany ERISA Affiliate or any such Plan to which any Borrower or any ERISA Affiliateis required to contribute on behalf of any of its employees.

 

“Platform”has the meaning specified in Section 6.02.

 

“PledgingBorrowers” means, collectively, SI Holdings, SI USA, Kiddopotamus and anyfuture Borrower or Guarantor that pledges Collateral for the Obligationspursuant to (except as otherwise consented to by Administrative Agent) afirst-priority perfected security interest.

 

“PublicLender” has the meaning specified in Section 6.02.

 

“ReductionAmount” has the meaning specified in Section 2.05(b)(v).

 

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

 

“RelatedParties” means, with respect to any Person, such Person’s Affiliates andthe partners, directors, officers, employees, agents and advisors of suchPerson and of such Person’s Affiliates.

 

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

 

“Requestfor Credit Extension” means (a) with respect to a Borrowing, conversion orcontinuation of Committed Loans, a Committed Loan Notice, (b) with respect toan L/C Credit Extension, an L/C Application, and (c) with respect to a SwingLine Loan, a Swing Line Loan Notice.

 

“Required Lenders”means, as of any date of determination, Lenders having Aggregate Commitmentsor, if the commitment of each Lender to make Loans and the obligation of theL/C Issuer to make L/C Credit Extensions have been terminated pursuant to Section8.02, Lenders holding in the aggregate more than 662/3% of the Total Outstandings (with the aggregateamount of each Lender’s risk participation and funded participation in L/CObligations and Swing Line Loans being deemed “held” by such Lender forpurposes of this definition); provided that the Commitment of, and theportion of the Total Outstandings held or deemed held by, any Defaulting Lendershall be excluded for purposes of making a determination of Required Lenders.

 

“ResponsibleOfficer” means the chief executive officer, president, chief financialofficer, treasurer, assistanttreasurer or controller of a Loan Party and, solely for purposes of noticesgiven pursuant to Article II, any other officer or employee of theapplicable Loan Party so designated by any of the foregoing officers in anotice to Administrative Agent, and solely for purposes of the delivery ofincumbency certificates pursuant to Section 4.01, the secretary or anyassistant secretary of a Loan Party.  Any document delivered hereunder that issigned by a Responsible Officer of a Loan Party shall be conclusively presumedto have been authorized by all necessary corporate, partnership and/or otheraction on the part of such Loan Party and such Responsible Officer shall beconclusively presumed to have acted on behalf of such Loan Party.

 

“RestrictedPayment” means any dividend or other distribution (whether in cash,securities or other property) with respect to any capital stock or other EquityInterest of any Borrower or any Subsidiary, or any payment (whether in cash,securities or other property), including any sinking fund or similar deposit,on account of the purchase, redemption, retirement, acquisition, cancellationor termination of any such capital stock or other Equity Interest or on accountof any return of capital to a Borrower’s stockholders, partners or members (orthe equivalent Person thereof).

 

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

 

“SecuredCash Management Agreement” means any Cash Management Agreement that isentered into by and between any Loan Party and any Cash Management Bank.

 

“SecuredHedge Agreement” means any Swap Contract permitted under this Agreementthat is entered into by and between any Loan Party and any Hedge Bank.

 

“SecuredParties” means, collectively, Administrative Agent, the Lenders, the L/CIssuer, the Hedge Banks, the Cash Management Banks, each co-agent or sub-agentappointed by Administrative Agent from time to time pursuant to Section 9.05,and the other Persons the 

 

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Obligationsowing to which are or are purported to be secured by the Collateral under theterms of the Collateral Documents.

 

“SecurityAgreement” means that certain Guaranty and Security Agreement of even dateherewith, by and between the Pledging Borrowers, as debtors, and AdministrativeAgent, as Agent for the benefit of the Secured Parties, as amended from time totime.

 

“SIHoldings” and “SI USA” each have the respective meaning set forth inthe Preamble hereto.

 

“SubordinatedLiabilities” means liabilities subordinated to the Obligations in a manneracceptable to Administrative Agent in its sole discretion.

 

“Subsidiary”of a Person means a corporation, partnership, joint venture, limited liabilitycompany or other business entity of which a majority of the shares ofsecurities or other interests having ordinary voting power for the election ofdirectors or other governing body (other than securities or interests havingsuch power only by reason of the happening of a contingency) are at the timebeneficially owned, or the management of which is otherwise controlled,directly, or indirectly through one or more intermediaries, or both, by suchPerson.  Unless otherwise specified, allreferences herein to a “Subsidiary” or to “Subsidiaries” shall refer to aSubsidiary or Subsidiaries of any Borrower.

 

“SwapContract” means (a) any and all rate swap transactions, basis swaps, creditderivative transactions, forward rate transactions, commodity swaps, commodityoptions, forward commodity contracts, equity or equity index swaps or options,bond or bond price or bond index swaps or options or forward bond or forwardbond price or forward bond index transactions, interest rate options, forwardforeign exchange transactions, cap transactions, floor transactions, collartransactions, currency swap transactions, cross-currency rate swaptransactions, currency options, spot contracts, or any other similartransactions or any combination of any of the foregoing (including any optionsto enter into any of the foregoing), whether or not any such transaction isgoverned by or subject to any master agreement, and (b) any and alltransactions of any kind, and the related confirmations, which are subject tothe terms and conditions of, or governed by, any form of master agreementpublished by the International Swaps and Derivatives Association, Inc., anyInternational Foreign Exchange Master Agreement, or any other master agreement(any such master agreement, together with any related schedules, a “MasterAgreement”), including any such obligations or liabilities under any MasterAgreement.

 

“SwapTermination Value” means, in respect of any one or more Swap Contracts,after taking into account the effect of any legally enforceable nettingagreement relating to such Swap Contracts, (a) for any date on or after thedate such Swap Contracts have been closed out and termination value(s)determined in accordance therewith, such termination value(s), and (b) for anydate prior to the date referenced in clause (a), the amount(s) determined asthe mark-to-market value(s) for such Swap Contracts, as determined based uponone or more mid-market or other readily available quotations provided by anyrecognized dealer in such Swap Contracts (which may include a Lender or anyAffiliate of a Lender).

 

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“SwingLine Borrowing” means a borrowing of a Swing Line Loan pursuant to Section2.04.

 

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

 

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

 

“SwingLine Loan Notice” means a notice of a Swing Line Borrowing pursuant to Section2.04(b), which, if in writing, shall be substantially in the form of ExhibitB.

 

“SwingLine Sublimit” means an amount equal to the lesser of (a) $5,000,000 and (b) the AggregateCommitments.  The Swing Line Sublimit ispart of (although uncommitted), and not in addition to, the AggregateCommitments.

 

“SyntheticLease Obligation” means the monetary obligation of a Person under (a) a so-calledsynthetic, off-balance sheet or tax retention lease, or (b) an agreement forthe use or possession of property creating obligations that do not appear onthe balance sheet of such Person but which, upon the insolvency or bankruptcyof such Person, would be characterized as the indebtedness of such Person(without regard to accounting treatment).

 

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

 

“ThresholdAmount” means One Million Dollars ($1,000,000).

 

“TotalOutstandings” means the aggregate Outstanding Amount of all Loans and allL/C Obligations.

 

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

 

“UCC”means the Uniform Commercial Code as the same may be in effect from time totime in the State of Rhode Island.

 

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

 

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

 

**1.02        OtherInterpretive Provisions**.  With reference to this Agreement and eachother Loan Document, unless otherwise specified herein or in such other Loan Document:

 

(a)           The definitions of terms herein shallapply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronounshall include the corresponding masculine, feminine and neuter forms.  The words “include,” “includes”and “including” shall be deemed to be followed by the phrase “withoutlimitation.”  The word “will” shallbe construed to have the same meaning and effect as the word “shall.”  Unless the context

 

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requiresotherwise, (i) any definition of or reference to any agreement, instrument orother document (including any Organization Document) shall be construed asreferring to such agreement, instrument or other document as from time to timeamended, supplemented or otherwise modified (subject to any restrictions onsuch amendments, supplements or modifications set forth herein or in any otherLoan Document), (ii) any reference herein to any Person shall be construed toinclude such Person’s successors and assigns, (iii) the words “herein,” “hereof”and “hereunder,” and words of similar import when used in any LoanDocument, shall be construed to refer to such Loan Document in its entirety andnot to any particular provision thereof, (iv) all references in a Loan Documentto Articles, Sections, Exhibits and Schedules shall be construed to refer toArticles and Sections of, and Exhibits and Schedules to, the Loan Document inwhich such references appear, (v) any reference to any law shall include allstatutory and regulatory provisions consolidating, amending, replacing orinterpreting such law and any reference to any law or regulation shall, unlessotherwise specified, refer to such law or regulation as amended, modified orsupplemented 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 andall tangible and intangible assets and properties, including cash, securities,accounts and contract rights.

 

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

 

(c)           Section headings herein and in theother Loan Documents are included for convenience of reference only and shallnot affect the interpretation of this Agreement or any other Loan Document.

 

**1.03        AccountingTerms**. (a) Generally.  All accounting terms not specifically orcompletely defined herein shall be construed in conformity with, and allfinancial data (including financial ratios and other financial calculations)required to be submitted pursuant to this Agreement shall be prepared inconformity with, GAAP applied on a consistent basis, as in effect from time totime, applied in a manner consistent with that used in preparing the AuditedFinancial Statements, except as otherwise specifically prescribedherein.  Notwithstanding the foregoing,for purposes of determining compliance with any covenant (including thecomputation of any financial covenant) contained herein, Indebtedness of theBorrower and its Subsidiaries shall be deemed to be carried at 100% of theoutstanding principal amount thereof, and the effects of FASB ASC 825****on financial liabilities shall be disregarded.

 

(b)           Changes in GAAP.  If at any time any change in GAAP wouldaffect the computation of any financial ratio or requirement set forth in anyLoan Document, and either Borrowers or the Required Lenders shall so request,Administrative Agent, Lenders and Borrowers shall negotiate in good faith toamend such ratio or requirement to preserve the original intent thereof inlight of such change in GAAP (subject to the approval of the Required Lenders);providedthat, until so amended, (i) such ratio or requirementshall continue to be computed in accordance with GAAP prior to such changetherein and (ii) Borrowers shall provide to Administrative Agent andLenders financial statements and other documents required under this Agreementor as reasonably requested hereunder setting forth a reconciliation between 

 

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calculationsof such ratio or requirement made before and after giving effect to such changein GAAP.

 

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

 

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

 

**1.06        Letter ofCredit Amounts**.** **Unlessotherwise specified herein the amount of a Letter of Credit at any time shallbe deemed to be the stated amount of such Letter of Credit in effect at suchtime; provided, however, that with respect to any Letter ofCredit that, by its terms or the terms of any Issuer Document related thereto,provides for one or more automatic increases in the stated amount thereof, theamount of such Letter of Credit shall be deemed to be the maximum stated amountof such Letter of Credit after giving effect to all such increases, whether ornot such maximum stated amount is in effect at such time.

 

**ARTICLEII.  THE COMMITMENTS AND CREDITEXTENSIONS**

 

**2.01        CommittedLoans**.  Subject to the terms and conditions set forthherein, each Lender severally agrees to make revolving credit loans (each suchloan, a “Committed Loan”) to Borrowers from time to time, on anyBusiness Day during the Availability Period, in an aggregate amount not toexceed at any time outstanding the amount of such Lender’s Commitment; provided,however, that after giving effect to any Committed Borrowing, (i) theTotal Outstandings shall not exceed the Aggregate Commitments, and (ii) theaggregate Outstanding Amount of the Committed Loans of any Lender, plussuch Lender’s Applicable Percentage of the Outstanding Amount of all L/CObligations, plus such Lender’s Applicable Percentage of the OutstandingAmount of all Swing Line Loans shall not exceed such Lender’s Commitment.  Within the limits of each Lender’sCommitment, and subject to the other terms and conditions hereof, Borrowers mayborrow under this Section 2.01(a), prepay under Section 2.05, andreborrow under this Section 2.01(a). Committed Loans may be Base Rate Loans or Eurodollar Rate Loans, asfurther provided herein; provided, however, that Committed Loansmade on the Closing Date shall be Base Rate Loans.

 

**2.02        Borrowings,Conversions and Continuations of Committed Loans**.  (a) Each Committed Borrowing, eachconversion of Committed Loans from one Type to the other, and each continuationof Eurodollar Rate Loans shall be made upon Borrowers’ irrevocable notice toAdministrative Agent, which may be given by telephone.  Each such notice must be received byAdministrative Agent not later than 11:00 a.m. (i) three Business Days prior tothe requested date of any Borrowing of, conversion to or continuation ofEurodollar Rate Loans or of any conversion of Eurodollar Rate Loans to BaseRate Committed Loans, and (ii) on the requested date of any Borrowing of BaseRate Committed Loans; provided, however, that if Borrowers wishto request Eurodollar Loans having an Interest Period other than one, two,three or six months in duration as provided in the definition of “InterestPeriod,” the applicable notice must 

 

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bereceived by Administrative Agent not later than 11:00 a.m. four Business Daysprior to the requested date of such Borrowing, conversion or continuation,whereupon Administrative Agent shall give prompt notice to the Lenders of suchrequest and determine whether the requested Interest Period is acceptable toall of them.  Not later than 11:00 a.m.,three Business Days before the requested date of such Borrowing, conversion orcontinuation, Administrative Agent shall notify the Borrower (which notice maybe by telephone) whether or not the requested Interest Period has beenconsented to by all the Lenders.  Eachtelephonic notice by Borrowers pursuant to this Section 2.02(a) must beconfirmed promptly by delivery to Administrative Agent of a written CommittedLoan Notice, appropriately completed and signed by a Responsible Officer ofBorrowers.  Each Borrowing of, conversionto or continuation of Eurodollar Rate Loans shall be in a principal amount of$500,000 or a whole multiple of $100,000 in excess thereof.  Except as provided in Sections 2.03(c)and 2.04(c), each Borrowing of or conversion to Base Rate CommittedLoans shall be in a principal amount of $500,000 or a whole multiple of$100,000 in excess thereof.  EachCommitted Loan Notice (whether telephonic or written) shall specify (i) whetherBorrowers are requesting a Committed Borrowing, a conversion of Committed Loansfrom one Type to the other, or a continuation of Eurodollar Rate Loans, (ii)the requested date of the Borrowing, conversion or continuation, as the casemay be (which shall be a Business Day), (iii) the principal amount of CommittedLoans to be borrowed, converted or continued, (iv) the Type of Committed Loansto be borrowed or to which existing Committed Loans are to be converted, and(v) if applicable, the duration of the Interest Period with respectthereto.  If Borrowers fail to specify aType of Committed Loan in a Committed Loan Notice or if Borrowers fail to givea timely notice requesting a conversion or continuation, then the applicableCommitted Loans shall be made as, or converted to, Base Rate Loans.  Any such automatic conversion to Base RateLoans shall be effective as of the last day of the Interest Period then ineffect with respect to the applicable Eurodollar Rate Loans.  If Borrowers request a Borrowing of,conversion to, or continuation of Eurodollar Rate Loans in any such CommittedLoan Notice, but fails to specify an Interest Period, it will be deemed to havespecified an Interest Period of one month.

 

(b)           Following receipt of a Committed LoanNotice, Administrative Agent shall promptly notify each Lender (in the case ofa request for a Committed Loan) of the amount of its Applicable Percentage ofthe applicable Committed Loans, and if no timely notice of a conversion orcontinuation is provided by Borrowers, Administrative Agent shall notify eachLender of the details of any automatic conversion to Base Rate Loans describedin the preceding subsection.  In the caseof a Committed Borrowing, each Lender shall make the amount of its CommittedLoan available to Administrative Agent in immediately available funds atAdministrative Agent’s Office not later than 1:00 p.m. on the Business Dayspecified in the applicable Committed Loan Notice.  Upon satisfaction of the applicableconditions set forth in Section 4.02 (and, if such Borrowing is theinitial Credit Extension, Section 4.01), Administrative Agent shall makeall funds so received available to Borrowers in like funds as received byAdministrative Agent either by (i) crediting the account of Borrowers on thebooks of Bank of America with the amount of such funds or (ii) wire transfer ofsuch funds, in each case in accordance with instructions provided to (andreasonably acceptable to) Administrative Agent by Borrowers; provided, however,that if, on the date the Committed Loan Notice with respect to such Borrowingis given by Borrowers, there are L/C Borrowings outstanding, then the proceedsof such Borrowing first, shall be applied, to the payment in full of anysuch L/C Borrowings, and second, shall be made available to Borrowers asprovided above.

 

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(c)           Except as otherwise provided herein,a Eurodollar Rate Loan may be continued or converted only on the last day of anInterest Period for such Eurodollar Rate Loan. During the existence of a Default, no Loans may be requested as,converted to or continued as Eurodollar Rate Loans without the consent of theRequired Lenders, and the Required Lenders may demand that any or all of thethen outstanding Eurodollar Rate Loans be converted immediately to Base RateCommitted Loans and Borrowers agree to jointly and severally pay all amountsdue under Section 3.05 in accordance with the terms thereof due to anysuch conversion.

 

(d)           Administrative Agent shall promptlynotify Borrowers and Lenders of the interest rate applicable to any InterestPeriod for Eurodollar Rate Loans upon determination of such interest rate.

 

(e)           Aftergiving effect to all Committed Borrowings, all conversions of Committed Loansfrom one Type to the other, and all continuations of Committed Loans as thesame Type, there shall not be more than seven (7) Interest Periods in effect withrespect to Committed Loans.

 

**2.03        Letters ofCredit**.  (a) The Letter of Credit Commitment.

 

(i)            Subject to the terms and conditionsset forth herein, (A) the L/C Issuer agrees, in reliance upon the agreements ofthe other Lenders set forth in this Section 2.03, (1) from time to timeon any Business Day during the period from the Closing Date until the L/CExpiration Date, to issue Letters of Credit for the account of Borrowers ortheir Subsidiaries, and to amend or extend Letters of Credit previously issued by it, in accordance with subsection(b) below, and (2) to honor drawings under the Letters of Credit; and (B)Lenders severally agree to participate in Letters of Credit issued for theaccount of Borrowers and any drawings thereunder; provided that aftergiving effect to any L/C Credit Extension with respect to any Letter of Credit,(x) the Total Outstandings shall not exceed the Aggregate Commitments, (y) theaggregate Outstanding Amount of the Committed Loans of any Lender, plussuch Lender’s Applicable Percentage of the Outstanding Amount of all L/CObligations, plus such Lender’s Applicable Percentage of the OutstandingAmount 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 L/CSublimit.  Each request by Borrowers forthe issuance or amendment of a Letter of Credit shall be deemed to be arepresentation by Borrowers that the L/C Credit Extension so requested complieswith the conditions set forth in the proviso to the preceding sentence.  Within the foregoing limits, and subject tothe terms and conditions hereof, Borrowers’ ability to obtain Letters of Creditshall be fully revolving, and accordingly Borrowers may, during the foregoingperiod, obtain Letters of Credit to replace Letters of Credit that have expiredor that have been drawn upon and reimbursed. All Existing Letters of Credit shall be deemed to have been issuedpursuant hereto, and from and after the Closing Date shall be subject to andgoverned by the terms and conditions hereof.

 

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

 

(A)          subject to Section 2.03(b)(iv),the expiry date of the requested Letter of Credit would occur more than twelve(12) months after the date of issuance orlast extension, unless the Required Lenders have approved such expirydate; or

 

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(B)          the expiry date ofthe requested Letter of Credit would occur after the L/C Expiration Date,unless all Lenders have approved such expiry date.

 

(iii)          The L/C Issuer shall be under noobligation to issue any Letter of Credit if:

 

(A)          any order, judgmentor decree of any Governmental Authority or arbitrator shall by its termspurport to enjoin or restrain the L/C Issuer from issuing the Letter of Credit,or any Law applicable to the L/C Issuer or any request or directive (whether ornot having the force of law) from any Governmental Authority with jurisdictionover the L/C Issuer shall prohibit, or request that the L/C Issuer refrainfrom, the issuance of letters of credit generally or the Letter of Credit inparticular or shall impose upon the L/C Issuer with respect to the Letter ofCredit any restriction, reserve or capital requirement (for which the L/CIssuer is not otherwise compensated hereunder) not in effect on the ClosingDate, or shall impose upon the L/C Issuer any unreimbursed loss, cost orexpense which was not applicable on the Closing Date and which the L/C Issuerin good faith deems material to it;

 

(B)          the issuance of theLetter of Credit would violate one or more policies of the L/C Issuerapplicable to letters of credit generally;

 

(C)          except as otherwiseagreed by Administrative Agent and the L/C Issuer, the Letter of Credit is inan initial stated amount less than $100,000, in the case of a commercial Letterof Credit, or $500,000, in thecase of a standby Letter of Credit;

 

(D)          the Letter of Creditis to be denominated in a currency other than Dollars;

 

(E)           any Lender isat that time a Defaulting Lender, unless the L/C Issuer has entered intoarrangements, including the delivery of Cash Collateral, satisfactory to theL/C Issuer (in its sole discretion) with Borrowers or such Lender to eliminatethe L/C Issuer’s actual or potential Fronting Exposure (after giving effect to Section2.16(a)(iv)) with respect to the Defaulting Lender arising from either theLetter of Credit then proposed to be issued or that Letter of Credit and allother L/C Obligations as to which the L/C Issuer has actual or potential FrontingExposure, as it may elect in its sole discretion; or

 

(F)           unless specificallyprovided for in this Agreement, the Letter of Credit contains any provisionsfor automatic reinstatement of the stated amount after any drawing thereunder.

 

(iv)          The L/C Issuer shall not amend anyLetter of Credit if the L/C Issuer would not be permitted at such time to issuethe Letter of Credit in its amended form under the terms hereof.

 

(v)           The L/C Issuer shall be under noobligation to amend any Letter of Credit if (A) the L/C Issuer would have noobligation at such time to issue the Letter of Credit in its amended form underthe terms hereof, or (B) the beneficiary of the Letter of Credit does notaccept the proposed amendment to the Letter of Credit.

 

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(vi)          The L/C Issuer shall act on behalf ofLenders with respect to any Letters of Credit issued by it and the documentsassociated therewith, and the L/C Issuer shall have all of the benefits andimmunities (A) provided to Administrative Agent in Article IX withrespect to any acts taken or omissions suffered by the L/C Issuer in connectionwith Letters of Credit issued by it or proposed to be issued by it and IssuerDocuments pertaining to such Letters of Credit as fully as if the term “AdministrativeAgent” or “Agent” as used in Article IX included the L/C Issuer withrespect to such acts or omissions, and (B) as additionally provided herein withrespect 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 beissued or amended, as the case may be, upon the request of Borrowers deliveredto the L/C Issuer (with a copy to Administrative Agent) in the form of a L/CApplication, appropriately completed and signed by a Responsible Officer ofBorrowers.  Such L/C Application must bereceived by the L/C Issuer and Administrative Agent not later than 11:00 a.m.at least two Business Days (or such later date and time as Administrative Agentand 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 maybe.  In the case of a request for aninitial issuance of a Letter of Credit, such L/C Application shall specify inform and detail satisfactory to the L/C Issuer: (A) the proposed issuance dateof the requested Letter of Credit (which shall be a Business Day); (B) theamount thereof; (C) the expiry date thereof; (D) the name and address of thebeneficiary thereof; (E) the documents to be presented by such beneficiary incase of any drawing thereunder; (F) the full text of any certificate to bepresented by such beneficiary in case of any drawing thereunder; (G) thepurpose and nature of the requested Letter of Credit; and (H) such othermatters as the L/C Issuer may require. In the case of a request for an amendment of any outstanding Letter ofCredit, such L/C Application shall specify in form and detail satisfactory tothe L/C Issuer (A) the Letter of Credit to be amended; (B) the proposed date ofamendment thereof (which shall be a Business Day); (C) the nature of theproposed amendment; and (D) such other matters as the L/C Issuer mayrequire.  Additionally, Borrowers shallfurnish to the L/C Issuer and Administrative Agent such other documents andinformation pertaining to such requested Letter of Credit issuance oramendment, including any Issuer Documents, as the L/C Issuer or AdministrativeAgent may require.

 

(ii)           Promptly after receipt of any L/CApplication at the address set forth on Schedule 10.02 for receiving L/CApplications and related correspondence, the L/C Issuer will confirm withAdministrative Agent (by telephone or in writing) that Administrative Agent hasreceived a copy of such L/C Application from Borrowers and, if not, the L/CIssuer will provide Administrative Agent with a copy thereof.  Unless the L/C Issuer has received writtennotice from any Lender, Administrative Agent or any Loan Party, at least oneBusiness Day prior to the requested date of issuance or amendment of theapplicable Letter of Credit, that one or more applicable conditions in ArticleIV shall not then be satisfied, then, subject to the terms and conditionshereof, the L/C Issuer shall, on the requested date, issue a Letter of Creditfor the account of Borrowers (or the applicable Subsidiary) or enter into theapplicable amendment, as the case may be, in each case in accordance with theL/C Issuer’s usual and customary business practices.  Immediately upon the issuance of each Letterof Credit, each Lender shall be deemed to, and hereby irrevocably andunconditionally agrees to, purchase from the L/C Issuer a risk 

 

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participationin such Letter of Credit in an amount equal to the product of such Lender’sApplicable Percentage times the amount of such Letter of Credit.

 

(iii)          Promptly after its delivery of anyLetter of Credit or any amendment to a Letter of Credit to an advising bankwith respect thereto or to the beneficiary thereof, the L/C Issuer will alsodeliver to Borrowers and Administrative Agent a true and complete copy of suchLetter of Credit or amendment.

 

(iv)          IfBorrowers so request in any applicable L/C Application, the L/C Issuer may, inits sole and absolute discretion, agree to issue a Letter of Credit that hasautomatic extension provisions (each, an “Auto-Extension Letter of Credit”);provided that any such Auto-Extension Letter of Credit must permit the L/CIssuer to prevent any such extension at least once in each twelve-month period(commencing with the date of issuance of such Letter of Credit) by giving priornotice to the beneficiary thereof not later than a day (the “Non-ExtensionNotice Date”) in each such twelve-month period to be agreed upon at thetime such Letter of Credit is issued. Unless otherwise directed by the L/C Issuer, Borrowers shall not berequired to make a specific request to the L/C Issuer for any such extension.  Once an Auto-Extension Letter of Credit hasbeen issued, Lenders shall be deemed to have authorized (but may not require)the L/C Issuer to permit the extension of such Letter of Credit at any time toan expiry date not later than the L/C Expiration Date; provided, however, thatthe L/C Issuer shall not permit any such extension if (A) the L/C Issuer hasdetermined that it would not be permitted, or would have no obligation, at suchtime to issue such Letter of Credit in its revised form (as extended) under theterms hereof (by reason of the provisions of clause (ii) or (iii) of Section2.03(a) or otherwise), or (B) it has received notice (which may be bytelephone or in writing) on or before the day that is five Business Days beforethe Non-Extension Notice Date (1) from Administrative Agent that the RequiredLenders have elected not to permit such extension or (2) from AdministrativeAgent, any Lender or Borrowers that one or more of the applicable conditionsspecified in Section 4.02 is not then satisfied, and in each such casedirecting the L/C Issuer not to permit such extension.

 

(v)           IfBorrowers so request in any applicable Letter of Credit Application, the L/CIssuer may, in its sole and absolute discretion, agree to issue a Letter ofCredit that permits the automatic reinstatement of all or a portion of thestated amount thereof after any drawing thereunder (each, an “Auto-ReinstatementLetter of Credit”).  Unless otherwisedirected by the L/C Issuer, Borrowers shall not be required to make a specificrequest to the L/C Issuer to permit such reinstatement.  Once an Auto-Reinstatement Letter of Credithas been issued, except as provided in the following sentence, Lenders shall bedeemed to have authorized (but may not require) the L/C Issuer to reinstate allor a portion of the stated amount thereof in accordance with the provisions ofsuch Letter of Credit.  Notwithstandingthe foregoing, if such Auto-Reinstatement Letter of Credit permits the L/CIssuer to decline to reinstate all or any portion of the stated amount thereofafter a drawing thereunder by giving notice of such non-reinstatement within aspecified number of days after such drawing (the “Non-Reinstatement Deadline”),the L/C Issuer shall not permit such reinstatement if it has received a notice(which may be by telephone or in writing) on or before the day that is sevenBusiness Days before the Non-Reinstatement Deadline (A) from AdministrativeAgent that the Required Lenders have elected not to permit such reinstatementor (B) from Administrative Agent, any Lender or Borrowers that one or more of theapplicable conditions specified in Section 4.02 is not then satisfied 

 

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(treating such reinstatement as an L/C CreditExtension for purposes of this clause) and, in each case, directing the L/CIssuer not to permit such reinstatement.

 

(c)           Drawings and Reimbursements;Funding of Participations.

 

(i)            Upon receipt from the beneficiary ofany Letter of Credit of any notice of a drawing under such Letter of Credit,the L/C Issuer shall notify Borrowers and Administrative Agent thereof.  Not later than 11:00 a.m. on the date of anypayment by the L/C Issuer under a Letter of Credit (each such date, an “HonorDate”), Borrowers shall reimburse the L/C Issuer through AdministrativeAgent in an amount equal to the amount of such drawing.  If Borrowers fail to so reimburse the L/CIssuer by such time, Administrative Agent shall promptly notify each Lender ofthe Honor Date, the amount of the unreimbursed drawing (the “UnreimbursedAmount”), and the amount of such Lender’s Applicable Percentagethereof.  In such event, Borrowers shallbe deemed to have requested a Committed Borrowing of Base Rate Loans to bedisbursed on the Honor Date in an amount equal to the Unreimbursed Amount, withoutregard to the minimum and multiples specified in Section 2.02 for theprincipal amount of Base Rate Loans, but subject to the amount of theunutilized portion of the Aggregate Commitments and Aggregate Commitments andthe conditions set forth in Section 4.02 (other than the delivery of aCommitted Loan Notice).  Any notice givenby the L/C Issuer or Administrative Agent pursuant to this Section2.03(c)(i) may be given by telephone if immediately confirmed in writing; providedthat the lack of such an immediate confirmation shall not affect theconclusiveness or binding effect of such notice.

 

(ii)           Each Lender shall upon any noticepursuant to Section 2.03(c)(i) make funds available (and AdministrativeAgent may apply Cash Collateral provided for this purpose) for the account ofthe L/C Issuer at the Administrative Agent’s Office in an amount equal to itsApplicable Percentage of the Unreimbursed Amount not later than 1:00 p.m. onthe Business Day specified in such notice by Administrative Agent, whereupon,subject to the provisions of Section 2.03(c)(iii), each Lender that somakes funds available shall be deemed to have made a Base Rate Committed Loanto Borrowers in such amount. Administrative Agent shall remit the funds so received to the L/CIssuer.

 

(iii)          With respect to any UnreimbursedAmount that is not fully refinanced by a Committed Borrowing of Base Rate Loansbecause the conditions set forth in Section 4.02 cannot be satisfied orfor any other reason, Borrowers shall be deemed to have incurred from the L/CIssuer an L/C Borrowing in the amount of the Unreimbursed Amount that is not sorefinanced, which L/C Borrowing shall be due and payable on demand (togetherwith interest) and shall bear interest at the Default Rate.  In such event, each Lender’s payment toAdministrative Agent for the account of the L/C Issuer pursuant to Section2.03(c)(ii) shall be deemed payment in respect of its participation in suchL/C Borrowing and shall constitute an L/C Advance from such Lender insatisfaction of its participation obligation under this Section 2.03.

 

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

 

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(v)           Each Lender’s obligation to makeCommitted Loans or L/C Advances to reimburse the L/C Issuer for amounts drawnunder 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 rightwhich such Lender may have against the L/C Issuer, Borrowers or any otherPerson for any reason whatsoever; (B) the occurrence or continuance of aDefault, or (C) any other occurrence, event or condition, whether or notsimilar to any of the foregoing; provided, however, that eachLender’s obligation to make Committed Loans pursuant to this Section 2.03(c) issubject to the conditions set forth in Section 4.02 (other than deliveryby Borrowers of a Committed Loan Notice). No such making of an L/C Advance shall relieve or otherwise impair theobligation of Borrowers to reimburse the L/C Issuer for the amount of anypayment made by the L/C Issuer under any Letter of Credit, together withinterest as provided herein.

 

(vi)          If any Lender fails to make availableto Administrative Agent for the account of the L/C Issuer any amount requiredto be paid by such Lender pursuant to the foregoing provisions of this Section 2.03(c) bythe time specified in Section 2.03(c)(ii), then, without limitingthe other provisions of this Agreement, the L/C Issuer shall be entitled torecover from such Lender (acting through Administrative Agent), on demand, suchamount with interest thereon for the period from the date such payment isrequired to the date on which such payment is immediately available to the L/CIssuer at a rate per annum equal to the greater of the Federal Funds Rate and arate determined by the L/C Issuer in accordance with banking industry rules oninterbank compensation, plus any administrative, processing or similarfees customarily charged by the L/C Issuer in connection with theforegoing.  If such Lender pays suchamount (with interest and fees as aforesaid), the amount so paid shallconstitute such Lender’s Committed Loan included in the relevant CommittedBorrowing or L/C Advance in respect of the relevant L/C Borrowing, as the casemay be.  A certificate of the L/C Issuersubmitted to any Lender (through Administrative Agent) with respect to anyamounts owing under this clause (vi) shall be conclusive absent manifesterror.

 

(d)           Repayment of Participations.

 

(i)            At any time after the L/C Issuer hasmade a payment under any Letter of Credit and has received from any Lender suchLender’s L/C Advance in respect of such payment in accordance with Section 2.03(c),if Administrative Agent receives for the account of the L/C Issuer any paymentin respect of the related Unreimbursed Amount or interest thereon (whetherdirectly from Borrowers or otherwise, including proceeds of Cash Collateralapplied thereto by Administrative Agent), Administrative Agent will distributeto such Lender its Applicable Percentage thereof in the same funds as thosereceived by Administrative Agent.

 

(ii)           If any payment received byAdministrative Agent for the account of the L/C Issuer pursuant to Section 2.03(c)(i) isrequired 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 itsdiscretion), each Lender shall pay to Administrative Agent for the account ofthe L/C Issuer its Applicable Percentage thereof on demand of AdministrativeAgent, plus interest thereon from the date of such demand to the date suchamount is returned by such Lender, at a rate per annum equal to the FederalFunds Rate from time to time in effect. The obligations of Lenders under 

 

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thisclause shall survive the payment in full of the Obligations and the terminationof this Agreement.

 

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

 

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

 

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

 

(iii)          any draft, demand,certificate or other document presented under such Letter of Credit proving tobe forged, fraudulent, invalid or insufficient in any respect or any statementtherein being untrue or inaccurate in any respect; or any loss or delay in thetransmission or otherwise of any document required in order to make a drawingunder such Letter of Credit;

 

(iv)          any payment by theL/C Issuer under such Letter of Credit against presentation of a draft orcertificate that does not comply with the terms of such Letter of Credit; orany payment made by the L/C Issuer under such Letter of Credit to any Personpurporting to be a trustee in bankruptcy, debtor-in-possession, assignee forthe benefit of creditors, liquidator, receiver or other representative of orsuccessor to any beneficiary or any transferee of such Letter of Credit,including any arising in connection with any proceeding under any Debtor ReliefLaw; or

 

(v)           any othercircumstance or happening whatsoever, whether or not similar to any of theforegoing, including any other circumstance that might otherwise constitute adefense available to, or a discharge of, Borrowers or any Subsidiary.

 

Borrowersshall promptly examine a copy of each Letter of Credit and each amendmentthereto that is delivered to it and, in the event of any claim of noncompliancewith Borrowers’ instructions or other irregularity, Borrowers will immediatelynotify the L/C Issuer.  Borrowers shallbe conclusively deemed to have waived any such claim against the L/C Issuer andits correspondents unless such notice is given as aforesaid.

 

(f)            Role of L/C Issuer.** **EachLender and Borrowers agree that, in paying any drawing under a Letter ofCredit, the L/C Issuer shall not have any responsibility to obtain any document(other than any sight draft, certificates and documents expressly required bythe Letter of Credit) or to ascertain or inquire as to the validity or accuracyof any such document or the authority of the Person executing or delivering anysuch document.  None of the L/C Issuer,Administrative Agent, any of their respective Related Parties nor anycorrespondent, participant 

 

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orassignee of the L/C Issuer shall be liable to any Lender for (i) anyaction taken or omitted in connection herewith at the request or with theapproval of Lenders or the Required Lenders, as applicable; (ii) anyaction taken or omitted in the absence of gross negligence or willfulmisconduct; or (iii) the due execution, effectiveness, validity orenforceability of any document or instrument related to any Letter of Credit orIssuer Document.  Borrowers hereby assumeall risks of the acts or omissions of any beneficiary or transferee withrespect to its use of any Letter of Credit; provided, however,that this assumption is not intended to, and shall not, preclude Borrowers’pursuing such rights and remedies as it may have against the beneficiary ortransferee at law or under any other agreement. None of the L/C Issuer, Administrative Agent, any of their respectiveRelated Parties nor any correspondent, participant or assignee of the L/CIssuer, shall be liable or responsible for any of the matters described inclauses (i) through (v) of Section 2.03(e); provided,however, that anything in such clauses to the contrary notwithstanding,Borrowers may have a claim against the L/C Issuer, and the L/C Issuer may beliable to Borrowers, to the extent, but only to the extent, of any direct, asopposed to consequential or exemplary, damages suffered by Borrowers which Borrowersprove were caused by the L/C Issuer’s willful misconduct or gross negligence orthe L/C Issuer’s willful failure to pay under any Letter of Credit after thepresentation to it by the beneficiary of a sight draft and certificate(s) complyingwith the terms and conditions of a Letter of Credit.**** In furtherance and notin limitation of the foregoing, the L/C Issuer may accept documents that appearon their face to be in order, without responsibility for further investigation,regardless of any notice or information to the contrary, and the L/C Issuershall not be responsible for the validity or sufficiency of any instrumenttransferring or assigning or purporting to transfer or assign a Letter ofCredit or the rights or benefits thereunder or proceeds thereof, in whole or inpart, which may prove to be invalid or ineffective for any reason.

 

(g)           Applicability of ISP and UCP.** **Unlessotherwise expressly agreed by the L/C Issuer and Borrowers when a Letter ofCredit is issued, (i) the rules of the ISP shall apply to eachstandby Letter of Credit, and (ii) the rules of the Uniform Customsand Practice for Documentary Credits, as most recently published by theInternational Chamber of Commerce (the “ICC”) at the time of issuanceshall apply to each commercial Letter of Credit.

 

(h)           L/C Fees.  Borrowers shall pay to Administrative Agentfor the account of each Lender in accordance with its Applicable Percentage, aL/C fee (the “L/C Fee”) (i) for each commercial Letter of Creditequal to the Applicable Rate times the daily amount available to bedrawn under such Letter of Credit, and (ii) for each standby Letter ofCredit equal to the Applicable Rate times the daily amount available tobe drawn under such Letter of Credit; provided, however, any L/CFees otherwise payable for the account of a Defaulting Lender with respect toany Letter of Credit as to which such Defaulting Lender has not provided CashCollateral satisfactory to the L/C Issuer pursuant to this Section 2.03shall be payable, to the maximum extent permitted by applicable Law, to theother Lenders in accordance with the upward adjustments in their respectiveApplicable Percentages allocable to such Letter of Credit pursuant to Section 2.16(a)(iv),with the balance of such fee, if any, payable to the L/C Issuer for its ownaccount.  For purposes of computing thedaily amount available to be drawn under any Letter of Credit, the amount ofsuch Letter of Credit shall be determined in accordance with Section 1.06.  L/C Fees shall be (i) due and payable onthe first Business Day after the end of each March, June, September and December, commencing with thefirst such date to occur after the issuance of such Letter of Credit, on theL/C Expiration Date and thereafter on demand and 

 

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(ii) computedon a quarterly basis in arrears.  Ifthere is any change in the Applicable Rate during any quarter, the daily amountavailable to be drawn under each standby Letter of Credit and commercial Letterof Credit shall be computed and multiplied by the Applicable Rate separatelyfor each period during such quarter that such Applicable Rate was ineffect.  Notwithstanding anything to thecontrary contained herein, upon the request of the Required Lenders, while anyEvent of Default exists, all L/C Fees shall accrue at the Default Rate.

 

(i)            Fronting Fee and Documentary andProcessing Charges Payable to L/C Issuer.** **Borrowers shall pay directly tothe L/C Issuer for its own account a fronting fee (i) with respect to each commercial Letter of Credit, at the ratespecified in the Administrative Agent Fee Letter, computed on the amount ofsuch Letter of Credit, and payable upon the issuance thereof, (ii) withrespect to any amendment of a commercial Letter of Credit increasing the amountof such Letter of Credit, at a rate separately agreed between the Borrowers andthe L/C Issuer, computed on the amount of such increase, and payable upon theeffectiveness of such amendment, and (iii) with respect to each standby Letter of Credit, at the rateper annum specified in theAdministrative Agent Fee Letter, computed on the daily amount availableto be drawn under such Letter of Credit on a quarterly basis in arrears.  Such fronting fee shall be due and payable onthe tenth Business Day after the end of each****March, June, September and December,in respect of the most recently-ended quarterly period (or portion thereof, inthe case of the first payment), commencing with the first such date to occurafter the issuance of such Letter of Credit, on the L/C Expiration Date andthereafter on demand.  For purposes ofcomputing the daily amount 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.  In addition, Borrowers shall pay directly tothe L/C Issuer for its own account the customary issuance, presentation,amendment and other processing fees, and other standard costs and charges, ofthe L/C Issuer relating to letters of credit as from time to time in effect.  Such individual customary fees and standardcosts and charges are due and payable on demand and are nonrefundable.

 

(j)            Conflict with Issuer Documents.  In the event of any conflict between theterms hereof and the terms of any Issuer Documents, the terms hereof shallcontrol.

 

(k)           Letters of Credit Issued forSubsidiaries.  Notwithstanding that aLetter of Credit issued or outstanding hereunder is in support of anyobligations of, or is for the account of, a Subsidiary, Borrowers shall bejointly and severally obligated to reimburse the L/C Issuer hereunder for anyand all drawings under such Letter of Credit. Each Borrower hereby acknowledges that the issuance of Letters of Creditfor the account of Subsidiaries inures to the benefit of Borrowers, and that Borrowers’business derives substantial benefits from the businesses of such Subsidiaries.

 

**2.04        Swing LineLoans**.  (a) The Swing Line.  Subject to the terms and conditions set forthherein, Swing Line Lender agrees, in reliance upon the agreements of the otherLenders set forth in this Section 2.04, may in its sole discretionmake loans (each such loan, a “Swing Line Loan”) to Borrowers from timeto time on any Business Day during the Availability Period in an aggregateamount not to exceed at any time outstanding the amount of the Swing LineSublimit, notwithstanding the fact that such Swing Line Loans, when aggregatedwith the Applicable Percentage of the Outstanding Amount of Committed Loans andL/C Obligations of the Lender acting as Swing Line Lender, may exceed theamount of such Lender’s Commitment; provided, 

 

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however, that aftergiving effect to any Swing Line Loan, (i) the Total Outstandings shall notexceed the Aggregate Commitments, and (ii) the aggregate OutstandingAmount of the Committed Loans of any Lender, plus such Lender’sApplicable Percentage of the Outstanding Amount of all L/C Obligations, plussuch Lender’s Applicable Percentage of the Outstanding Amount of all Swing LineLoans shall not exceed such Lender’s Commitment; and providedfurther,that Borrowers shall not use the proceeds of any Swing Line Loan to refinanceany outstanding Swing Line Loan.  TheSwing Line is a discretionary, uncommitted facility and Swing Line Lender mayterminate or suspend the Swing Line at any time in its sole discretion uponnotice to Borrowers which notice may be given by Swing Line Lender before orafter Borrowers request a Swing Line Loan hereunder.  Within the foregoing limits, and subject tothe other terms and conditions hereof, 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 be a Base RateLoan.  Immediately upon the making of aSwing Line Loan, each Lender shall be deemed to, and hereby irrevocably andunconditionally agrees to, purchase from Swing Line Lender a risk participationin such Swing Line Loan in an amount equal to the product of such Lender’sApplicable Percentage times the amount of such Swing Line Loan.

 

(b)           Borrowing Procedures.  Unless the Swing Line has been terminated orsuspended by the Swing Line Lender as provided in subsection (a) above,each Swing Line Borrowing shall be made upon Borrowers’ irrevocable notice toSwing Line Lender and Administrative Agent, which may be given by telephone.Each such notice must be received by Swing Line Lender and Administrative Agentnot later than 1:00 p.m. on the requested borrowing date, and shallspecify (i) the amount to be borrowed, which shall be a minimum of$100,000, and (ii) the requested borrowing date, which shall be a BusinessDay.  Each such telephonic notice must beconfirmed promptly by delivery to Swing Line Lender and Administrative Agent ofa written Swing Line Loan Notice, appropriately completed and signed by aResponsible Officer of Borrowers. Promptly after receipt by Swing Line Lender of any telephonic Swing LineLoan Notice, Swing Line Lender will confirm with Administrative Agent (bytelephone or in writing) that Administrative Agent has also received such SwingLine Loan Notice and, if not, Swing Line Lender will notify AdministrativeAgent (by telephone or in writing) of the contents thereof.  Unless (x) the Swing Line has beenterminated or suspended by the Swing Line Lender as provided in subsection (a) above,or (y) the Swing Line Lender has received notice (by telephone or inwriting) from Administrative Agent (including at the request of any Lender)prior to 2:00 p.m. on the date of the proposed Swing Line Borrowing (A) directingSwing Line Lender not to make such Swing Line Loan as a result of thelimitations 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 IVis not then satisfied, then, subject to the terms and conditions hereof, SwingLine Lender will, not later than 3:00 p.m. on the borrowing date specifiedin such Swing Line Loan Notice, make the amount of its Swing Line Loanavailable to Borrowers at its office bycrediting the account of Borrowers on the books of Swing Line Lender inimmediately available funds. Lenders agree that Swing Line Lender may agree to modify the borrowingprocedures used in connection with the Swing Line in its discretion and withoutaffecting any of the obligations of Lenders hereunder other than notifyingAdministrative Agent of a Swing Line Loan Notice.

 

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(c)           Refinancing of Swing Line Loans.

 

(i)            Swing Line Lender at any time in itssole and absolute discretion may request, on behalf of Borrowers (which herebyirrevocably authorizes Swing Line Lender to so request on its behalf), thateach Lender make a Base Rate Committed Loan in an amount equal to such Lender’sApplicable Percentage of the amount of Swing Line Loans then outstanding.  Such request shall be made in writing (whichwritten request shall be deemed to be a Committed Loan Notice for purposeshereof) and in accordance with the requirements of Section 2.02,without regard to the minimum and multiples specified therein for the principalamount of Base Rate Loans, but subject to the unutilized portion of theAggregate Commitments and the conditions set forth in Section 4.02.  Swing Line Lender shall furnish Borrowerswith a copy of the applicable Committed Loan Notice promptly after deliveringsuch notice to Administrative Agent. Each Lender shall make an amount equal to its Applicable Percentage ofthe amount specified in such Committed Loan Notice available to AdministrativeAgent in immediately available funds (and Administrative Agent may apply CashCollateral available with respect to the applicable Swing Line Loan) for theaccount of Swing Line Lender at Administrative Agent’s Office not later than1:00 p.m. on the day specified in such Committed Loan Notice, whereupon,subject to Section 2.04(c)(ii), each Lender that so makes fundsavailable shall be deemed to have made a Base Rate Committed Loan to Borrowersin such amount.  Administrative Agentshall remit the funds so received to Swing Line Lender.

 

(ii)           If for any reason any Swing Line Loancannot be refinanced by such a Committed Borrowing in accordance with Section 2.04(c)(i),the request for Base Rate Committed Loans submitted by Swing Line Lender as setforth herein shall be deemed to be a request by Swing Line Lender that each ofthe Lenders fund its risk participation in the relevant Swing Line Loan andeach Lender’s payment to Administrative Agent for the account of Swing LineLender pursuant to Section 2.04(c)(i) shall be deemed paymentin respect of such participation.

 

(iii)          If any Lender fails to make availableto Administrative Agent for the account of Swing Line Lender any amountrequired to be paid by such Lender pursuant to the foregoing provisions of thisSection 2.04(c) by the time specified in Section 2.04(c)(i),Swing Line Lender shall be entitled to recover from such Lender (acting throughAdministrative Agent), on demand, such amount with interest thereon for theperiod from the date such payment is required to the date on which such paymentis immediately available to Swing Line Lender at a rate per annum equal to thegreater of the Federal Funds Rate and a rate determined by Swing Line Lender inaccordance with banking industry rules on interbank compensation, plusany administrative, processing or similar fees customarily charged by SwingLine 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 inthe relevant Committed Borrowing or funded participation in the relevant SwingLine Loan, as the case may be.  Acertificate of Swing Line Lender submitted to any Lender (throughAdministrative Agent) with respect to any amounts owing under this clause (iii) shallbe conclusive absent manifest error.

 

(iv)          Each Lender’s obligation to makeCommitted Loans or to purchase and fund risk participations in Swing Line Loanspursuant to this Section 2.04(c) shall be absolute andunconditional and shall not be affected by any circumstance, including (A) anysetoff, counterclaim, recoupment, defense or other right which such Lender mayhave against Swing 

 

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LineLender, Borrowers or any other Person for any reason whatsoever, (B) theoccurrence or continuance of a Default, or (C) any other occurrence, eventor 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) issubject to the conditions set forth in Section 4.02.  No such funding of risk participations shallrelieve or otherwise impair the obligation of Borrowers to repay Swing LineLoans, together with interest as provided herein.

 

(d)           Repayment of Participations.

 

(i)            At any time after any Lender haspurchased and funded a risk participation in a Swing Line Loan, if Swing LineLender receives any payment on account of such Swing Line Loan, Swing LineLender will distribute to such Lender its Applicable Percentage thereof in thesame funds as those received by Swing Line Lender.

 

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

 

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

 

(f)            Payments Directly to Swing LineLender.  Borrowers shall make allpayments of principal and interest in respect of the Swing Line Loans directlyto Swing Line Lender.

 

**2.05        Prepayments**.  (a) Optional.  (i) Borrowers may, upon notice toAdministrative Agent, at any time or from time to time voluntarily prepayCommitted Loans in whole or in part without premium or penalty; providedthat (A) such notice must be received by Administrative Agent not laterthan 11:00 a.m. (1) three Business Days prior to any date ofprepayment of Eurodollar Rate Loans and (2) on the date of prepayment ofBase Rate Committed Loans; (B) any prepayment of Eurodollar Rate Loansshall be in a principal amount of $1,000,000 or a whole multiple of $500,000 inexcess thereof; and (C) any prepayment of Base Rate Committed Loans shallbe in a principal amount of $500,000 or a whole multiple of $100,000 in excessthereof or, in each case, if less, the entire principal amount thereof thenoutstanding.  Each such notice shallspecify the date and amount of such prepayment and the Type(s) ofCommitted Loans to be prepaid and, if Eurodollar Rate Loans are to be prepaid,the Interest Period(s) of such Loans. Administrative Agent will promptly notify each Lender of its receipt ofeach such notice, and of the amount of such Lender’s Applicable Percentage ofsuch prepayment.  If such notice is givenby Borrowers, Borrowers shall make such prepayment and the payment amount 

 

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specifiedin such notice shall be due and payable on the date specified therein.  Any prepayment of a Eurodollar Rate Loanshall be accompanied by all accrued interest on the amount prepaid, togetherwith any additional amounts required pursuant to Section 3.05.  Subject to Section 2.15, eachsuch prepayment shall be applied to the Committed Loans of Lenders inaccordance with their respective Applicable Percentages.

 

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

 

(b)           Mandatory.  (i)  If for any reason the TotalOutstandings at any time exceed the Aggregate Commitments then in effect,Borrowers shall immediately prepay Loans and/or Cash Collateralize the L/CObligations in an aggregate amount equal to such excess; provided, however,that Borrowers shall not be required to Cash Collateralize the L/C Obligationspursuant to this Section 2.05(b)(i) unless after theprepayment in full of the Committed Loans and Swing Line Loans the TotalOutstandings exceed the Aggregate Commitments then in effect.

 

(ii)           If any Borrower or any Subsidiary Disposes of any property (otherthan any Disposition of any property permitted by Section 7.05(b), (c),(d) or (e)) which results in the realization by any suchPerson of Net Cash Proceeds, the Borrowers shall prepay an aggregate principalamount of Loans equal to 100% of such Net Cash Proceeds immediately uponreceipt thereof by such Person (such prepayments to be applied as set forth inclause (v) below).

 

(iii)          Upon the incurrence or issuance by any Borrower or any Subsidiary of anyIndebtedness (other than Indebtedness expressly permitted to be incurred orissued pursuant to Section 7.03(a)-(e)), Borrowers shall prepay anaggregate principal amount of Loans equal to 100% of all Net Cash Proceedsreceived therefrom immediately upon receipt thereof by any such Person (such prepayments to be applied as set forth inclause (v) below).

 

(iv)          Upon any Extraordinary Receiptreceived by or paid to or for the account of any Borrower or any Subsidiary, Borrowers shall prepay anaggregate principal amount of Loans equal to 100% of all Net Cash Proceedsreceived therefrom immediately upon receipt thereof by any such Person (such prepayments to be applied as set forth inclause (viii) below);****provided, however, that withrespect to any proceeds of insurance or condemnation awards (or payments inlieu thereof) or indemnity payments, at the election of Borrowers (as notifiedby Borrowers to Administrative Agent on or prior to the date of receipt of suchinsurance proceeds, condemnation awards or indemnity payments), and so long asno Default shall have occurred and be continuing, such Person may apply within180 days after the receipt of such cash proceeds to replace or repair theequipment, fixed assets or real property in respect of which such cash proceedswere received; and provided, further, however, that anycash proceeds not so applied shall be immediately applied to the prepayment ofthe Loans as set forth in Section 2.05(b)(v).

 

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(v)           Prepayments of the Loans made pursuant to Section 2.05(b)(ii) through(iv), first, shall be applied ratably to the L/C Borrowings, second,shall be applied ratably to the outstanding Loans, third, shall be usedto Cash Collateralize the remaining L/C Obligations; and the amount remaining,if any, after the prepayment in full of all L/C Borrowings and Loansoutstanding at such time and the Cash Collateralization of the remaining L/CObligations in full (the sum of such prepayment amounts, cash collateralizationamounts and remaining amount being, collectively, the “Reduction Amount”) may beretained by Borrowers for use in the ordinary course of their business, and theAggregate Commitments shall be automatically and permanently reduced by theReduction Amount as set forth in Section 2.06(b)(ii).  Upon the drawing of any Letter of Credit thathas been Cash Collateralized, the funds held as Cash Collateral shall beapplied (without any further action by or notice to or from the Borrower or anyother Loan Party) to reimburse the L/C Issuer or the Lenders, as applicable.

 

**2.06        Termination orReduction of Commitments**. (a) Optional.  Borrowersmay, upon notice to Administrative Agent, terminate the Aggregate Commitments,or from time to time permanently reduce the Aggregate Commitments; providedthat (i) any such notice shall be received by Administrative Agent notlater than 11:00 a.m. five Business Days prior to the date of terminationor reduction, (ii) any such partial reduction shall be in an aggregateamount of $5,000,000 or any whole multiple of $1,000,000 in excess thereof, (iii) Borrowersshall not terminate or reduce the Aggregate Commitments if, after giving effectthereto and to any concurrent prepayments hereunder, the Total Outstandingswould exceed the Aggregate Commitments, and (iv) Borrowers shall notterminate or reduce the Aggregate Commitments if, after giving effect to anyreduction of the Aggregate Commitments, the L/C Sublimit or the Swing LineSublimit exceeds the amount of the Aggregate Commitments, such Sublimit shallbe automatically reduced by the amount of such excess.  Administrative Agent will promptly notify theLenders of any such notice of termination or reduction of the AggregateCommitments.  Any reduction of theAggregate Commitments shall be applied to the Commitment of each applicableLender according to its Applicable Percentage.

 

(b)           Mandatory.  (i) The Aggregate Commitments shall beautomatically and permanently reduced on each date on which the prepayment ofLoans outstanding thereunder is required to be made (A) pursuant to Section 2.05(b)(ii),to the extent that the aggregate amount of all proceeds received in respect ofDispositions occurring after the Closing Date exceeds $2,500,000, and (B) pursuantto Section 2.05(b)(iii) or (iv) by an amount equalto the applicable Reduction Amount.

 

(ii)           If after giving effect to anyreduction or termination of the Commitments under this Section 2.06,the Letter of Credit Sublimit or the Swing Line Sublimit exceeds theCommitments at such time, the Letter of Credit Sublimit or the Swing LineSublimit, as the case may be, shall be automatically reduced by the amount ofsuch excess.

 

(c)           Application of Commitment Reductions; Payment of Fees.  AdministrativeAgent will promptly notify Lenders of any termination or reduction of theLetter of Credit Sublimit, the Swing Line Sublimit or any Aggregate Commitmentsunder this Section 2.06. Upon any reduction of the Aggregate Commitments, the Commitment of eachLender shall be reduced by such Lender’s Applicable Percentage of suchreduction amount.  All fees in respect ofthe 

 

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Commitmentsaccrued until the effective date of any termination of any portion of theCommitments shall be paid on the effective date of such termination.

 

**2.07        Repayment ofPrincipal**.** **(a) Borrowersshall jointly and severally repay to Lenders on the Maturity Date the aggregateprincipal amount of Committed Loans outstanding on such date.

 

(b)           Borrowers shall jointly and severallyrepay to Swing Line Lender each Swing Line Loan on the earlier to occur of(i) the date which is ten (10) Business Days after such Swing LineLoan is made, and (ii) the Maturity Date.

 

**2.08        Interest**.  (a) Subject to theprovisions of subsection (b) below, (i) each Eurodollar Rate Loanshall bear interest on the outstanding principal amount thereof for eachInterest Period at a rate per annum equal to the Eurodollar Rate for suchInterest Period plus the Applicable Rate; (ii) each Base RateCommitted Loan shall bear interest on the outstanding principal amount thereoffrom the applicable borrowing date at a rate per annum equal to the Base Rate plusthe Applicable Rate; and (iii) each Swing Line Loan shall bear interest onthe outstanding principal amount thereof from the applicable borrowing date ata rate per annum equal to the Base Rate plus the Applicable Rate.

 

(b)           (i)  If any amount of principalof any Loan is not paid when due (without regard to any applicable graceperiods), whether at stated maturity, by acceleration or otherwise, such amountshall thereafter bear interest at a fluctuating interest rate per annum at all timesequal to the Default Rate to the fullest extent permitted by applicable Laws.

 

(ii)           If any amount (other than principalof any Loan) payable by Borrowers under any Loan Document is not paid when due(without regard to any applicable grace periods), whether at stated maturity,by acceleration or otherwise, then upon the request of the Required Lenders,such amount shall thereafter bear interest at a fluctuating interest rate perannum at all times equal to the Default Rate to the fullest extent permitted byapplicable Laws.

 

(iii)          Upon the request of the RequiredLenders, while any Event of Default exists, Borrowers shall pay interest on theprincipal amount of all outstanding Obligations hereunder at a fluctuatinginterest rate per annum at all times equal to the Default Rate to the fullestextent permitted by applicable Laws.

 

(iv)          Accrued and unpaid interest on pastdue amounts (including interest on past due interest) shall be due and payableupon demand.

 

(c)           Interest on each Loan shall be dueand payable in arrears on each Interest Payment Date applicable thereto and atsuch other times as may be specified herein. Interest hereunder shall be due and payable in accordance with the termshereof before and after judgment, and before and after the commencement of anyproceeding under any Debtor Relief Law.

 

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**2.09        Fees**.  In addition to certain feesdescribed in subsections (h) and (i) of Section 2.03:

 

(a)           Unused Line Fee.** **Borrowersshall jointly and severally pay to Administrative Agent for the account of eachLender in accordance with its Applicable Percentage, an unused line fee equalto one-quarter of one percent (0.25%) of the actual daily amount by which theAggregate Commitments exceed the sum of (i) the Outstanding Amount ofCommitted Loans and (ii) the Outstanding Amount of L/C Obligations,subject to adjustment as provided in Section 2.16.  The unused line fee shall accrue at all timesduring the Availability Period, including at any time during which one or moreof the conditions in Article IV is not met, and shall be due andpayable quarterly in arrears on the last Business Day of each March, June, September andDecember, with the first such date to occur after the Closing Date, and on thelast day of the Availability Period.  Forpurposes of computing the unused line fee, Swing Line Loans shall not becounted towards or considered usage of the Aggregate Commitments.

 

(b)           Commitment Fee.  Borrowers shall on the Closing Date pay toAdministrative Agent for the account of Lenders to be allocated in accordancewith their respective Applicable Percentages, a commitment fee in the amount of$90,000.

 

(c)           Administrative Agent’s Fees.** **Borrowersshall jointly and severally pay to Administrative Agent for AdministrativeAgent’s own account, fees in the amounts and at the times specified in theletter agreement of even date herewith (the “Administrative Agent Fee Letter”),between Borrowers and Administrative Agent. Such fees shall be fully earned when paid and shall be nonrefundable forany reason whatsoever.

 

**2.10        Computationof Interest and Fees; Retroactive Adjustments of Applicable Rate**.  (a) Allcomputations of interest for Base Rate Loans (including Base Rate Loansdetermined by reference to the Eurodollar Rate) shall be made on the basis of ayear of 360 days and actual days elapsed. All other computations of fees and interest shall be made on the basisof a 360-day year and actual days elapsed (which results in more fees orinterest, as applicable, being paid than if computed on the basis of a 365-dayyear).  Interest shall accrue on eachLoan for the day on which the Loan is made, and shall not accrue on a Loan, orany portion thereof, for the day on which the Loan or such portion is paid, providedthat any Loan that is repaid on the same day on which it is made shall, subjectto Section 2.12(a), bear interest for one day.  Each determination by Administrative Agent ofan interest rate or fee hereunder shall be conclusive and binding for allpurposes, absent manifest error.

 

(b)           If,as a result of any restatement of or other adjustment to the financial statementsof Borrowers or for any other reason, Borrowers or the Lenders determine that(i) the Consolidated Leverage Ratio used in the definition of “ApplicableRate” as calculated by Borrowers as of any applicable date was inaccurateand (ii) a proper calculation of such Consolidated Leverage Ratio wouldhave resulted in higher pricing for such period, Borrowers shall immediatelyand retroactively be obligated to pay to Administrative Agent for the accountof the applicable Lenders or the L/C Issuer, promptly on demand byAdministrative Agent (or, after the occurrence of an actual or deemed entry ofan order for relief with respect to Borrowers under the Bankruptcy Code of theUnited States, automatically and without further action by Administrative Agent,any Lender or the L/C Issuer), an amount equal to the excess of the 

 

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amount of interest and fees that should have beenpaid for such period over the amount of interest and fees actually paid for suchperiod.  This paragraph shall not limitthe rights of Administrative Agent, any Lender or the L/C Issuer, as the casemay be, under Section 2.03(c)(iii), 2.03(i) or 2.08(b) orunder Article VIII. Borrowers’ obligations under this paragraph shall survive thetermination of the Aggregate Commitments and the repayment of all otherObligations hereunder.

 

**2.11        Evidence ofDebt**.  (a) The Credit Extensions made by eachLender shall be evidenced by one or more accounts or records maintained by suchLender and by Administrative Agent in the ordinary course of business.  The accounts or records maintained byAdministrative Agent and each Lender shall be conclusive absent manifest errorof the amount of the Credit Extensions made by Lenders to Borrowers and the interestand payments thereon.  Any failure to sorecord or any error in doing so shall not, however, limit or otherwise affectthe obligation of Borrowers hereunder to pay any amount owing with respect tothe Obligations.  In the event of anyconflict between the accounts and records maintained by any Lender and theaccounts and records of Administrative Agent in respect of such matters, theaccounts and records of Administrative Agent shall control in the absence ofmanifest error.  Upon the request of anyLender made through Administrative Agent, Borrowers shall execute and deliverto such Lender (through Administrative Agent) a Note, which shall evidence suchLender’s Loans in addition to such accounts or records.  Each Lender may attach schedules to its Noteand endorse thereon the date, Type (if applicable), amount and maturity of itsLoans and payments with respect thereto.

 

(b)           In addition to the accounts andrecords referred to in subsection (a), each Lender and Administrative Agentshall maintain in accordance with its usual practice accounts or recordsevidencing the purchases and sales by such Lender of participations in Lettersof Credit and Swing Line Loans.  In theevent of any conflict between the accounts and records maintained byAdministrative Agent and the accounts and records of any Lender in respect ofsuch matters, the accounts and records of Administrative Agent shall control inthe absence of manifest error.

 

**2.12        PaymentsGenerally; Administrative Agent’s Clawback**.  (a) General.  All payments to be made by Borrowers shall bemade without condition or deduction for any counterclaim, defense, recoupmentor setoff.  Except as otherwise expresslyprovided herein, all payments by Borrowers hereunder shall be made toAdministrative Agent, for the account of the respective Lenders to which suchpayment is owed, at the Administrative Agent’s Office in Dollars and inimmediately available funds not later than 12:00 noon on the date specifiedherein.  Administrative Agent willpromptly distribute to each Lender its Applicable Percentage (or otherapplicable share as provided herein) of such payment in like funds as receivedby wire transfer to such Lender’s Lending Office.  All payments received by Administrative Agentafter 12:00 noon shall be deemed received on the next succeeding Business Dayand any applicable interest or fee shall continue to accrue.  If any payment to be made by Borrowers shallcome due on a day other than a Business Day, payment shall be made on the nextfollowing Business Day, and such extension of time shall be reflected incomputing interest or fees, as the case may be.

 

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

 

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notmake available to Administrative Agent such Lender’s share of such CommittedBorrowing, Administrative Agent may assume that such Lender has made such shareavailable on such date in accordance with Section 2.02 (or, in thecase of a Committed Borrowing of Base Rate Loans, that such Lender has madesuch share available in accordance with and at the time required by Section 2.02)and may, in reliance upon such assumption, make available to Borrowers acorresponding amount.  In such event, ifa Lender has not in fact made its share of the applicable Committed Borrowingavailable to Administrative Agent, then the applicable Lender and Borrowersseverally agree to pay to Administrative Agent forthwith on demand suchcorresponding amount in immediately available funds with interest thereon, foreach day from and including the date such amount is made available to Borrowersto but excluding the date of payment to Administrative Agent, at (A) inthe case of a payment to be made by such Lender, the greater of the FederalFunds Rate and a rate determined by Administrative Agent in accordance withbanking industry rules on interbank compensation, plus any administrative,processing or similar fees customarily charged by Administrative Agent inconnection with the foregoing and (B) in the case of a payment to be madeby Borrowers, the interest rate applicable to Base Rate Loans.  If Borrowers and such Lender shall pay suchinterest to Administrative Agent for the same or an overlapping period, AdministrativeAgent shall promptly remit to Borrowers the amount of such interest paid byBorrowers for such period.  If suchLender pays its share of the applicable Committed Borrowing to AdministrativeAgent, then the amount so paid shall constitute such Lender’s Committed Loan includedin such Committed Borrowing.  Any paymentby Borrowers shall be without prejudice to any claim Borrowers may have againsta Lender that shall have failed to make such payment to Administrative Agent.

 

(ii)           Payments by Borrowers;Presumptions by Administrative Agent. Unless Administrative Agent shall have received notice from Borrowersprior to the date on which any payment is due to Administrative Agent for theaccount of the Lenders or L/C Issuer hereunder that Borrowers will not makesuch payment, Administrative Agent may assume that Borrowers have made suchpayment on such date in accordance herewith and may, in reliance upon suchassumption, distribute to Lenders or L/C Issuer, as the case may be, the amountdue.  In such event, if Borrowers havenot in fact made such payment, then each of Lenders or the L/C Issuer, as thecase may be, severally agrees to repay to Administrative Agent forthwith ondemand the amount so distributed to such Lender or L/C Issuer, in immediatelyavailable funds with interest thereon, for each day from and including the datesuch amount is distributed to it to but excluding the date of payment toAdministrative Agent, at the greater of the Federal Funds Rate and a ratedetermined by Administrative Agent in accordance with banking industry rules oninterbank compensation.  A notice ofAdministrative Agent to any Lender or Borrowers with respect to any amountowing under this subsection (b) shall be conclusive, absent manifesterror.

 

(c)           Failure to Satisfy Conditions Precedent.  If any Lender makes available toAdministrative Agent funds for any Loan to be made by such Lender as providedin the foregoing provisions of this Article II, and such funds arenot made available to Borrowers by Administrative Agent because the conditionsto the applicable Credit Extension set forth in Article IV are notsatisfied or waived in accordance with the terms hereof, Administrative Agentshall return such funds (in like funds as received from such Lender) to suchLender, without interest.

 

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

 

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

 

**2.13        Sharing ofPayments**.  If anyLender shall, by exercising any right of setoff or counterclaim or otherwise,obtain payment in respect of any principal of or interest on any of theCommitted Loans made by it, or the participations in L/C Obligations or inSwing Line Loans held by it resulting in such Lender’s receiving payment of aproportion of the aggregate amount of such Committed Loans or participationsand accrued interest thereon greater than its prorata sharethereof as provided herein, then the Lender receiving such greater proportionshall (a) notify Administrative Agent of such fact, and (b) purchase(for cash at face value) participations in the Committed Loans andsubparticipations in L/C Obligations and Swing Line Loans of the other Lenders,or make such other adjustments as shall be equitable, so that the benefit ofall such payments shall be shared by the Lenders ratably in accordance with theaggregate amount of principal of and accrued interest on their respectiveCommitted Loans and other amounts owing them, provided that:

 

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

 

(ii)           the provisions ofthis Section shall not be construed to apply to (x) any payment madeby or on behalf of Borrowers pursuant to and in accordance with the expressterms of this Agreement (including the application of funds arising from theexistence of a Defaulting lender), or (y) the application of CashCollateral provided for in Section 2.15, or (z) any paymentobtained by a Lender as consideration for the assignment of or sale of aparticipation in any of its Committed Loans or subparticipations in L/CObligations or Swing Line Loans to any assignee or participant, other than anassignment to Borrowers or any Subsidiary thereof (as to which the provisionsof this Section shall apply).

 

EachLoan Party consents to the foregoing and agrees, to the extent it mayeffectively do so under applicable law, that any Lender acquiring aparticipation pursuant to the foregoing arrangements may exercise against suchLoan Party rights of setoff and counterclaim with respect to such participationas fully as if such Lender were a direct creditor of such Loan Party in theamount of such participation.

 

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**2.14**        **Increase in Commitments**.

 

(a)           Requestfor Increase.  Provided there existsno Default, upon notice to Administrative Agent (which shall promptly notifyLenders), Borrowers may on a one-time basis exercised after March 31,2011, request an increase in the Aggregate Commitments by an amount notexceeding $10,000,000.  At the time ofsending such notice, Borrowers (in consultation with Administrative Agent)shall specify the time period within which each Lender is requested to respond(which shall in no event be less than ten (10) Business Days from the dateof delivery of such notice to Lenders).

 

(b)           LenderElections to Increase.  Each Lendershall notify Administrative Agent within such time period whether or not itagrees to increase its Commitment and, if so, whether by an amount equal to,greater than, or less than its Applicable Percentage of such requestedincrease.  Any Lender not respondingwithin such time period shall be deemed to have declined to increase itsCommitment.

 

(c)           Notificationby Administrative Agent; Additional Lenders.  Administrative Agent shall notify Borrowersand each Lender of Lenders’ responses to each request made hereunder.  To achieve the full amount of a requestedincrease and subject to the approval of Administrative Agent, L/C Issuer andSwing Line Lender (which approvals shall not be unreasonably withheld),Borrowers may also invite additional Eligible Assignees to become Lenderspursuant to a joinder agreement in form and substance satisfactory toAdministrative Agent and its counsel.

 

(d)           EffectiveDate and Allocations.  If the AggregateCommitments are increased in accordance with this Section, Administrative Agentand Borrowers shall determine the effective date (the “Increase EffectiveDate”) and the final allocation of such increase.  Administrative Agent shall promptly notifyBorrowers and Lenders of the final allocation of such increase and the IncreaseEffective Date.

 

(e)           Conditionsto Effectiveness of Increase.  As acondition precedent to such increase, (i) Borrowers shall deliver toAdministrative Agent a certificate of each Loan Party dated as of the IncreaseEffective Date (in sufficient copies for each Lender) signed by a ResponsibleOfficer of such Loan Party (x) certifying and attaching the resolutionsadopted by such Loan Party approving or consenting to such increase, and (y) inthe case of each Borrower, certifying that, before and after giving effect tosuch increase, (A) the representations and warranties contained in Article Vand the other Loan Documents are true and correct on and as of the IncreaseEffective Date, except to the extent that such representations and warrantiesspecifically refer to an earlier date, in which case they are true and correctas of such earlier date, and except that for purposes of this Section 2.16,the representations and warranties contained in subsections (a) and (b) ofSection 5.05 shall be deemed to refer to the most recent statementsfurnished pursuant to clauses (a) and (b), respectively, of Section 6.01,and (B) no Default has occurred and is continuing, (ii) Borrowersshall on the Increase Effective Date pay to Administrative Agent for thebenefit of Lenders participating in the increase a closing fee equal toone-quarter of one percent (0.25%) of the amount of the increase, and(iii) Borrowers shall execute and deliver new Notes to Lenders who areparticipating in the increase.  Borrowersshall 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 

 

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CommittedLoans ratable with any revised Applicable Percentages arising from anynonratable increase in the Commitments under this Section.

 

(f)            ConflictingProvisions.  This Section shallsupersede any provisions in Section 2.13 or 10.01 to thecontrary.

 

**2.15        Cash Collateral**.

 

(a)           CertainCredit Support Events.  Upon therequest of Administrative Agent or L/C Issuer (i) if L/C Issuer hashonored any full or partial drawing request under any Letter of Credit and suchdrawing has resulted in an L/C Borrowing, or (ii) if, as of the Letter ofCredit Expiration Date, any L/C Obligation for any reason remains outstanding,Borrowers shall, in each case, immediately Cash Collateralize the thenOutstanding Amount of all L/C Obligations. At any time that there shall exist a Defaulting Lender, immediately uponthe request of Administrative Agent, L/C Issuer or Swing Line Lender, Borrowersshall deliver to Administrative Agent Cash Collateral in an amount sufficientto cover all Fronting Exposure (after giving effect to Section 2.16(a)(iv) andany Cash Collateral provided by the Defaulting Lender).

 

(b)           Grantof Security Interest.  All CashCollateral (other than credit support not constituting funds subject todeposit) shall be maintained in blocked, non-interest bearing deposit accountsat Bank of America.  Borrowers, and tothe extent provided by any Lender, such Lender, hereby grant to (and subjectsto the control of) Administrative Agent, for the benefit of AdministrativeAgent, L/C Issuer and Lenders (including Swing Line Lender), and agree tomaintain, a first priority security interest in all such cash, deposit accountsand all balances therein, and all other property so provided as collateralpursuant hereto, and in all proceeds of the foregoing, all as security for theobligations to which such Cash Collateral may be applied pursuant to Section 2.15(c).  If at any time Administrative Agentdetermines that Cash Collateral is subject to any right or claim of any Personother than Administrative Agent as herein provided, or that the total amount ofsuch Cash Collateral is less than the applicable Fronting Exposure and otherobligations secured thereby, Borrowers or the relevant Defaulting Lender will,promptly upon demand by Administrative Agent, pay or provide to AdministrativeAgent additional Cash Collateral in an amount sufficient to eliminate suchdeficiency.

 

(c)           Application.** **Notwithstandinganything to the contrary contained in this Agreement, Cash Collateral providedunder any of this Section 2.15 or Sections 2.04, 2.05,2.06, 2.16 or 8.02 in respect of Letters of Credit orSwing Line Loans shall be held and applied to the satisfaction of the specificL/C Obligations, Swing Line Loans, obligations to fund participations therein(including, as to Cash Collateral provided by a Defaulting Lender, any interestaccrued on such obligation) and other obligations for which the Cash Collateralwas so provided, prior to any other application of such property as may be providedfor herein.

 

(d)           Release.  Cash Collateral (or the appropriate portionthereof) provided to reduce Fronting Exposure or other obligations shall bereleased promptly following (i) the elimination of the applicable FrontingExposure or other obligations giving rise thereto (including by the terminationof Defaulting Lender status of the applicable Lender (or, as appropriate, itsassignee following compliance with Section 10.06(b)(vi))) or (ii) AdministrativeAgent’s good faith 

 

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determinationthat there exists excess Cash Collateral; provided, however, (x) thatCash Collateral furnished by or on behalf of a Loan Party shall not be releasedduring the continuance of a Default or Event of Default (and followingapplication as provided in this Section 2.15 may be otherwiseapplied in accordance with Section 8.03), and (y) the Personproviding Cash Collateral and the L/C Issuer or Swing Line Lender, asapplicable, may agree that Cash Collateral shall not be released but insteadheld to support future anticipated Fronting Exposure or other obligations.

 

**2.16        Defaulting Lenders**.  Adjustments.  (a) Notwithstanding anything to thecontrary contained in this Agreement, if any Lender becomes a DefaultingLender, then, until such time as that Lender is no longer a Defaulting Lender,to the extent permitted by applicable Law:

 

(i)            Waivers and Amendments.  That Defaulting Lender’s right to approve ordisapprove any amendment, waiver or consent with respect to this Agreementshall be restricted as set forth in Section 10.01.

 

(ii)           Reallocation of Payments.  Any payment of principal, interest, fees orother amounts received by Administrative Agent for the account of thatDefaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article VIIIor otherwise, and including any amounts made available to Administrative Agentby that Defaulting Lender pursuant to Section 10.08), shall beapplied at such time or times as may be determined by Administrative Agent asfollows: *first*, to the payment of any amountsowing by that Defaulting Lender to Administrative Agent hereunder; *second*, to the payment on a pro rata basis of any amountsowing by that Defaulting Lender to the L/C Issuer or Swing Line Lenderhereunder; *third*, if so determined byAdministrative Agent or requested by the L/C Issuer or Swing Line Lender, to beheld as Cash Collateral for future funding obligations of that DefaultingLender of any participation in any Swing Line Loan or Letter of Credit; *fourth*, as the Borrower may request (so long as no Defaultor Event of Default exists), to the funding of any Loan in respect of whichthat Defaulting Lender has failed to fund its portion thereof as required bythis Agreement, as determined by Administrative Agent; *fifth*,if so determined by Administrative Agent and the Borrower, to be held in anon-interest bearing deposit account and released in order to satisfyobligations of that Defaulting Lender to fund Loans under this Agreement; *sixth*, to the payment of any amounts owing to the Lenders,the L/C Issuer or Swing Line Lender as a result of any judgment of a court ofcompetent jurisdiction obtained by any Lender, the L/C Issuer or Swing LineLender against that Defaulting Lender as a result of that Defaulting Lender’sbreach of its obligations under this Agreement; *seventh*,so long as no Default or Event of Default exists, to the payment of any amountsowing to the Borrower as a result of any judgment of a court of competentjurisdiction obtained by the Borrower against that Defaulting Lender as aresult of that Defaulting Lender’s breach of its obligations under thisAgreement; and *eighth*, to that Defaulting Lenderor as otherwise directed by a court of competent jurisdiction; providedthat if (x) such payment is a payment of the principal amount of any Loansor L/C Borrowings in respect of which that Defaulting Lender has not fullyfunded its appropriate share and (y) such Loans or L/C Borrowings weremade at a time when the conditions set forth in Section 4.02 weresatisfied or waived, such payment shall be applied solely to pay the Loans of,and L/C Borrowings owed to, all non-Defaulting Lenders on a pro rata basisprior to being applied 

 

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to the payment of any Loans of, or L/C Borrowingsowed to, that Defaulting Lender.  Anypayments, prepayments or other amounts paid or payable to a Defaulting Lenderthat are applied (or held) to pay amounts owed by a Defaulting Lender or topost Cash Collateral pursuant to this Section 2.16(a)(ii) shallbe deemed paid to and redirected by that Defaulting Lender, and each Lenderirrevocably consents hereto.

 

(iii)          Certain Fees. That Defaulting Lender (x) shall****notbe entitled to receive any unused line fee pursuant to Section 2.09(a) forany period during which that Lender is a Defaulting Lender (and Borrowers shallnot be required to pay any such fee that otherwise would have been required tohave been paid to that Defaulting Lender)****and (y) shallbe limited in its right to receive Letter of Credit Fees as provided in Section 2.03(h).

 

(iv)          Reallocation of Applicable Percentages to ReduceFronting Exposure.  During any periodin which there is a Defaulting Lender, for purposes of computing the amount ofthe obligation of each non-Defaulting Lender to acquire, refinance or fundparticipations in Letters of Credit or Swing Line Loans pursuant to Sections2.03 and 2.04, the “Applicable Percentage” of each non-DefaultingLender shall be computed without giving effect to the Commitment of thatDefaulting Lender; provided, that, (i) each such reallocation shallbe given effect only if, at the date the applicable Lender becomes a DefaultingLender, no Default or Event of Default exists; and (ii) the aggregateobligation of each non-Defaulting Lender to acquire, refinance or fundparticipations in Letters of Credit and Swing Line Loans shall not exceed thepositive difference, if any, of (1) the Commitment of that non-DefaultingLender minus (2) the aggregate Outstanding Amount of the CommittedLoans of that Lender.

 

(b)           **Defaulting Lender Cure**.  If Borrowers, Administrative Agent, SwingLine Lender and the L/C Issuer agree in writing in their sole discretion that aDefaulting Lender should no longer be deemed to be a Defaulting Lender,Administrative Agent will so notify the parties hereto, whereupon as of theeffective date specified in such notice and subject to any conditions set forththerein (which may include arrangements with respect to any Cash Collateral),that Lender will, to the extent applicable, purchase that portion ofoutstanding Loans of the other Lenders or take such other actions asAdministrative Agent may determine to be necessary to cause the Committed Loansand funded and unfunded participations in Letters of Credit and Swing LineLoans to be held on a pro rata basis by Lenders in accordance with theirApplicable Percentages (without giving effect to Section 2.16(a)(iv)),whereupon that Lender will cease to be a Defaulting Lender; providedthat no adjustments will be made retroactively with respect to fees accrued orpayments made by or on behalf of Borrower while that Lender was a DefaultingLender; and provided, further, that except to the extentotherwise expressly agreed by the affected parties, no change hereunder fromDefaulting Lender to Lender will constitute a waiver or release of any claim ofany party hereunder arising from that Lender’s having been a Defaulting Lender.

 

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**ARTICLE III.  TAXES, YIELD PROTECTION AND ILLEGALITY**

 

**3.01        Taxes**.

 

(a)           PaymentsFree of Taxes; Obligation to Withhold; Payments on Account of Taxes.  Any and all payments by or on account of anyobligation of Borrowers hereunder or under any other Loan Document shall to theextent permitted by applicable Laws be made free and clear of and withoutreduction or withholding for any Taxes. If, however, applicable Laws require Borrowers or Administrative Agentto withhold or deduct any Tax, such Tax shall be withheld or deducted inaccordance with such Laws as determined by Borrowers or Administrative Agent,as the case may be, upon the basis of the information and documentation to bedelivered pursuant to subsection (e) below.

 

(i)            If Borrowers or Administrative Agent shall be required bythe Code to withhold or****deduct anyTaxes, including both United States Federal backup withholding and withholdingtaxes, from any payment, then (A) Administrative Agent shall withhold ormake such deductions as are determined by Administrative Agent to be requiredbased upon the information and documentation it has received pursuant tosubsection (e) below, (B) Administrative Agent shall timely pay thefull amount withheld or deducted to the relevant Governmental Authority inaccordance with the Code, and (C) to the extent that the withholding ordeduction is made on account of Indemnified Taxes or Other Taxes, the sumpayable by Borrowers shall be increased as necessary so that after any requiredwithholding or the making of all required deductions (including deductionsapplicable to additional sums payable under this Section) Administrative Agent,each Lender or L/C Issuer, as the case may be, receives an amount equal to thesum it would have received had no such withholding or deduction been made.

 

(b)           Paymentof Other Taxes by the Borrowers. Without limiting the provisions of subsection (a) above, Borrowersshall timely pay any Other Taxes to the relevant Governmental Authority inaccordance with applicable Laws.

 

(c)           TaxIndemnifications.  (i) Withoutlimiting the provisions of subsection (a) or (b) above, Borrowersshall, and do hereby, indemnify Administrative Agent, each Lender and L/CIssuer, and shall make payment in respect thereof within 10 days after demandtherefor, for the full amount of any Indemnified Taxes or Other Taxes(including Indemnified Taxes or Other Taxes imposed or asserted on orattributable to amounts payable under this Section) withheld or deducted byBorrowers or Administrative Agent or paid by Administrative Agent, such Lenderor L/C Issuer, as the case may be, and any penalties, interest and reasonableexpenses arising therefrom or with respect thereto, whether or not suchIndemnified Taxes or Other Taxes were correctly or legally imposed or assertedby the relevant Governmental Authority. Borrowers shall also, and do hereby, indemnify Administrative Agent, andshall make payment in respect thereof within 10 days after demand therefor, forany amount which a Lender or L/C Issuer for any reason fails to payindefeasibly to Administrative Agent as required by clause (ii) of thissubsection.  A certificate as to theamount of any such payment or liability delivered to Borrowers by a Lender orL/C Issuer (with a copy to Administrative Agent), or by 

 

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AdministrativeAgent on its own behalf or on behalf of a Lender or L/C Issuer, shall beconclusive absent manifest error.

 

(ii)           Without limiting the provisions of subsection (a) or (b) above,each Lender and L/C Issuer shall, and do hereby, indemnify Borrowers andAdministrative Agents, and shall make payment in respect thereof within 10 daysafter demand therefor, against any and all Taxes and any and all relatedlosses, claims, liabilities, penalties, interest and expenses (including the fees,charges and disbursements of any counsel for Borrowers or****AdministrativeAgent) incurred by or asserted against any Borrower or Administrative Agent byany Governmental Authority as a result of the failure by such Lender or L/CIssuer, as the case may be, to deliver, or as a result of the inaccuracy,inadequacy or deficiency of, any documentation required to be delivered by suchLender or L/C Issuer, as the case may be, to any Borrower or AdministrativeAgent pursuant to subsection (e).  EachLender and L/C Issuer hereby authorizes Administrative Agent to set off andapply any and all amounts at any time owing to such Lender or L/C Issuer, asthe case may be, under this Agreement or any other Loan Document against anyamount due to Administrative Agent under this clause (ii).  The agreements in this clause (ii) shallsurvive the resignation and/or replacement of Administrative Agent, anyassignment of rights by, or the replacement of, a Lender or L/C Issuer, thetermination of the Aggregate Commitments and the repayment, satisfaction ordischarge of all other Obligations.

 

(d)           Evidenceof Payments. ** **Uponrequest by Borrowers or Administrative Agent, as the case may be, after anypayment of Taxes by Borrowers or by Administrative Agent to a GovernmentalAuthority as provided in this Section 3.01, Borrowers shall deliverto Administrative Agent or Administrative Agent shall deliver to Borrowers, asthe case may be, the original or a certified copy of a receipt issued by suchGovernmental Authority evidencing such payment, a copy of any return requiredby Laws to report such payment or other evidence of such payment reasonablysatisfactory to Borrowers or Administrative Agent, as the case may be.

 

(e)           Statusof Lenders; Tax Documentation.  (i) EachLender shall deliver to Borrower and to Administrative Agent, at the time ortimes prescribed by applicable Laws or when reasonably requested by Borrowersor Administrative Agent, such properly completed and executed documentationprescribed by applicable Laws or by the taxing authorities of any jurisdictionand such other reasonably requested information as will permit Borrowers orAdministrative Agent, as the case may be, to determine (A) whether or notpayments made hereunder or under any other Loan Document are subject to Taxes, (B) ifapplicable, the required rate of withholding or deduction, and (C) suchLender’s entitlement to any available exemption from, or reduction of,applicable Taxes in respect of all payments to be made to such Lender byBorrower pursuant to this Agreement or otherwise to establish such Lender’sstatus for withholding tax purposes in the applicable jurisdiction.

 

(ii)           Without limiting the generality of the foregoing, if anyBorrower is resident for tax purposes in the United States,

 

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(A)          any Lender that is a “United States person” within themeaning of Section 7701(a)(30) of the Code shall deliver to such Borrowerand Administrative Agent executed originals of Internal Revenue Service Form W-9or such other documentation or information prescribed by applicable Laws orreasonably requested by such Borrower or Administrative Agent as will enablesuch Borrower or Administrative Agent, as the case may be, to determine whetheror not such Lender is subject to backup withholding or information reportingrequirements; and

 

(B)          each Foreign Lender that is entitled under the Code or anyapplicable treaty to an exemption from or reduction of withholding tax withrespect to payments hereunder or under any other Loan Document shall deliver toBorrowers and Administrative Agent (in such number of copies as shall berequested by the recipient) on or prior to the date on which such ForeignLender becomes a Lender under this Agreement (and from time to time thereafterupon the request of Borrowers or Administrative Agent, but only if such ForeignLender is legally entitled to do so), whichever of the following is applicable:

 

(I)            executedoriginals of Internal Revenue Service Form W-8BEN claiming eligibility forbenefits of an income tax treaty to which the United States is a party,

 

(II)          executedoriginals of Internal Revenue Service Form W-8ECI,

 

(III)        executedoriginals of Internal Revenue Service Form W-8IMY and all requiredsupporting documentation,

 

(IV)         inthe case of a Foreign Lender claiming the benefits of the exemption forportfolio interest under section 881(c) of the Code, (x) acertificate 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 “10percent shareholder” of the Borrower within the meaning of section 881(c)(3)(B) ofthe Code, or (C) a “controlled foreign corporation” described in section881(c)(3)(C) of the Code and (y) executed originals of  Internal Revenue Service Form W-8BEN, or

 

(V)          executedoriginals of any other form prescribed by applicable Laws as a basis forclaiming exemption from or a reduction in United States Federal withholding taxtogether with such supplementary documentation as may be prescribed byapplicable Laws to permit Borrowers or Administrative Agent to determine thewithholding or deduction required to be made.

 

(iii)          Each Lender shall promptly (A) notify Borrowers andAdministrative Agent of any change in circumstances which would modify orrender invalid any claimed exemption or reduction, and (B) take such stepsas shall not be materially 

 

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disadvantageous to it, inthe reasonable judgment of such Lender, and as may be reasonably necessary(including the re-designation of its Lending Office) to avoid any requirementof applicable Laws of any jurisdiction that Borrowers or Administrative Agentmake any withholding or deduction for taxes from amounts payable to suchLender.

 

(f)            Treatmentof Certain Refunds.  Unless requiredby applicable Laws, at no time shall Administrative Agent have any obligationto file for or otherwise pursue on behalf of a Lender or L/C Issuer, or haveany obligation to pay to any Lender or L/C Issuer, any refund of Taxes withheldor deducted from funds paid for the account of such Lender or L/C Issuer, asthe case may be.  If AdministrativeAgent, any Lender or L/C Issuer determines, in its sole discretion, that it hasreceived a refund of any Taxes or Other Taxes as to which it has beenindemnified by Borrowers or with respect to which Borrowers have paidadditional amounts pursuant to this Section, it shall pay to Borrowers anamount equal to such refund (but only to the extent of indemnity payments made,or additional amounts paid, by Borrowers under this Section with respectto the Taxes or Other Taxes giving rise to such refund), net of allout-of-pocket expenses incurred by Administrative Agent, such Lender or L/CIssuer, as the case may be, and without interest (other than any interest paidby the relevant Governmental Authority with respect to such refund), providedthat Borrowers, upon the request of Administrative Agent, such Lender or L/CIssuer, agrees to repay the amount paid over to Borrowers (plus any penalties,interest or other charges imposed by the relevant Governmental Authority) toAdministrative Agent, such Lender or L/C Issuer in the event AdministrativeAgent, such Lender or the L/C Issuer is required to repay such refund to suchGovernmental Authority.  This subsectionshall not be construed to require Administrative Agent, any Lender or L/CIssuer to make available its tax returns (or any other information relating toits taxes that it deems confidential) to Borrowers or any other Person.

 

**3.02        Illegality**.  If any Lender determines that any Law hasmade it unlawful, or that any Governmental Authority has asserted that it isunlawful, for any Lender or its applicable Lending Office to make, maintain orfund Loans whose interest is determined by reference to the Eurodollar Rate, orto determine or charge interest rates based upon the Eurodollar Rate, or anyGovernmental Authority has imposed material restrictions on the authority ofsuch Lender to purchase or sell, or to take deposits of, Dollars in the Londoninterbank market, then, on notice thereof by such Lender to Borrowers throughAdministrative Agent, (i) any obligation of such Lender to make orcontinue Eurodollar Rate Loans or to convert Base Rate Committed Loans toEurodollar Rate Committed Loans shall be suspended, and (ii) if suchnotice asserts the illegality of such Lender making or maintaining Base RateLoans the interest rate on which is determined by reference to the EurodollarRate component of the Base Rate, the interest rate on which Base Rate Loans ofsuch Lender shall, if necessary to avoid such illegality, be determined byAdministrative Agent without reference to the Eurodollar Rate component of theBase Rate, in each case until such Lender notifies Administrative Agent andBorrowers that the circumstances giving rise to such determination no longerexist.  Upon receipt of such notice, (x) Borrowersshall, upon demand from such Lender (with a copy to Administrative Agent),prepay or, if applicable, convert all Eurodollar Rate Loans of such Lender toBase Rate Loans (the interest rate on which Base Rate Loans of such Lendershall, if necessary to avoid such illegality, be determined by AdministrativeAgent without reference to the Eurodollar Rate component of the Base Rate),either on the last day of the Interest Period therefor, if such Lender maylawfully 

 

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continueto maintain such Eurodollar Rate Loans to such day, or immediately, if suchLender may not lawfully continue to maintain such Eurodollar Rate Loans and (y) ifsuch notice asserts the illegality of such Lender determining or charginginterest rates based upon the Eurodollar Rate, Administrative Agent shallduring the period of such suspension compute the Base Rate applicable to suchLender without reference to the Eurodollar Rate component thereof untilAdministrative Agent is advised in writing by such Lender that it is no longerillegal  for such Lender to determine orcharge interest rates based upon the Eurodollar Rate.  Upon any such prepayment or conversion, Borrowersshall also pay accrued interest on the amount so prepaid or converted.

 

**3.03        Inability toDetermine Rates**.  If Administrative Agent or Required Lendersdetermine in connection with any request for a Eurodollar Rate Loan or aconversion to or continuation thereof that (a) Dollar deposits are notbeing offered to banks in the London interbank eurodollar market for theapplicable amount and Interest Period of such Eurodollar Rate Loan, (b) adequateand reasonable means do not exist for determining the Eurodollar Rate for anyrequested Interest Period with respect to a proposed Eurodollar Rate CommittedLoan or in connection with an existing or proposed Base Rate Loan, or (c) theEurodollar Rate for any requested Interest Period with respect to a proposed EurodollarRate Committed Loan does not adequately and fairly reflect the cost to suchLenders of funding such Loan, Administrative Agent will promptly so notifyBorrowers and each Lender.  Thereafter, (x) theobligation of Lenders to make or maintain Eurodollar Rate Loans shall besuspended, and (y) in the event of a determination described in thepreceding sentence with respect to the Eurodollar Rate component of the BaseRate, the utilization of the Eurodollar Rate component in determining the BaseRate shall be suspended, in each case until Administrative Agent (upon theinstruction of the Required Lenders) revokes such notice.  Upon receipt of such notice, Borrowers mayrevoke any pending request for a Borrowing of, conversion to or continuation ofEurodollar Rate Loans or, failing that, will be deemed to have converted suchrequest into a request for a Committed Borrowing of Base Rate Loans in theamount specified therein.

 

**3.04        IncreasedCosts; Reserves on Eurodollar Rate Loans**.** **(a) IncreasedCosts Generally.  If any Change inLaw shall:

 

(i)            impose, modify or deem applicableany reserve, special deposit, compulsory loan, insurance charge or similarrequirement against assets of, deposits with or for the account of, or creditextended or participated in by, any Lender (except any reserve requirementcontemplated by Section 3.04(e)) or the L/C Issuer;

 

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

 

(iii)          impose on any Lender or the L/C Issueror the London interbank market any other condition, cost or expense affectingthis Agreement or Eurodollar Rate Loans made by such Lender or any Letter ofCredit or participation therein;

 

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andthe result of any of the foregoing shall be to increase the cost to such Lenderof making or maintaining any Loan the interest on which is determined byreference to the Eurodollar Rate (or of maintaining its obligation to make anysuch Loan), or to increase the cost to such Lender or the L/C Issuer ofparticipating in, issuing or maintaining any Letter of Credit (or ofmaintaining 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 theL/C Issuer hereunder (whether of principal, interest or any other amount) then,upon request of such Lender or the L/C Issuer, Borrowers will pay to suchLender or the L/C Issuer, as the case may be, such additional amount or amountsas will compensate such Lender or the L/C Issuer, as the case may be, for suchadditional costs incurred or reduction suffered.

 

(b)           Capital Requirements.  If any Lender or the L/C Issuer determinesthat any Change in Law affecting such Lender or the L/C Issuer or any LendingOffice of such Lender or such Lender’s or the L/C Issuer’s holding company, ifany, regarding capital requirements has or would have the effect of reducingthe rate of return on such Lender’s or the L/C Issuer’s capital or on thecapital of such Lender’s or the L/C Issuer’s holding company, if any, as aconsequence of this Agreement, the Commitments of such Lender or the Loans madeby, or participations in Letters of Credit held by, such Lender, or the Lettersof Credit issued by the L/C Issuer, to a level below that which such Lender orthe L/C Issuer or such Lender’s or the L/C Issuer’s holding company could haveachieved but for such Change in Law (taking into consideration such Lender’s orthe L/C Issuer’s policies and the policies of such Lender’s or the L/C Issuer’sholding company with respect to capital adequacy), then from time to timeBorrowers will pay to such Lender or the L/C Issuer, as the case may be, suchadditional amount or amounts as will compensate such Lender or the L/C Issueror such Lender’s or the L/C Issuer’s holding company for any such reductionsuffered.

 

(c)           Certificates for Reimbursement.  A certificate of a Lender or the L/C Issuersetting forth the amount or amounts necessary to compensate such Lender or theL/C Issuer or its holding company, as the case may be, as specified insubsection (a) or (b) of this Section and delivered to Borrowersshall be conclusive absent manifest error. 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 receiptthereof.

 

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

 

(e)           Reserves on Eurodollar Rate Loans.  Borrowers shall pay to each Lender, as longas such Lender shall be required to maintain reserves with respect toliabilities or assets consisting of or including Eurocurrency funds or deposits(currently known as “Eurocurrency 

 

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liabilities”),additional interest on the unpaid principal amount of each Eurodollar Rate Loanequal to the actual costs of such reserves allocated to such Loan by suchLender (as determined by such Lender in good faith, which determination shallbe conclusive), which shall be due and payable on each date on which interest ispayable on such Loan, provided Borrowers shall have received at least 10days’ prior notice (with a copy to Administrative Agent) of such additionalinterest from such Lender.  If a Lenderfails to give notice 10 days prior to the relevant Interest Payment Date, suchadditional interest shall be due and payable 10 days from receipt of suchnotice.

 

**3.05        Compensationfor Losses**.  Upon demand of any Lender (with a copy toAdministrative Agent) from time to time, Borrowers shall promptly compensatesuch Lender for and hold such Lender harmless from any loss, cost or expenseincurred by it as a result of:

 

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

 

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

 

(c)           any assignment of a Eurodollar RateLoan on a day other than the last day of the Interest Period therefor as aresult of a request by Borrowers pursuant to Section 10.13;

 

includingany loss of anticipated profits and any loss or expense arising from theliquidation or reemployment of funds obtained by it to maintain such Loan orfrom fees payable to terminate the deposits from which such funds wereobtained.  Borrowers shall also pay anycustomary administrative fees charged by such Lender in connection with theforegoing.

 

Forpurposes of calculating amounts payable by Borrowers to Lenders under this Section 3.05,each Lender shall be deemed to have funded each Eurodollar Rate Committed Loanmade by it at the Eurodollar Rate for such Loan by a matching deposit or otherborrowing in the London interbank eurodollar market for a comparable amount andfor a comparable period, whether or not such Eurodollar Rate Loan was in factso funded.

 

**3.06        MitigationObligations; Replacement of Lenders**.

 

(a)           Designation of a Different LendingOffice.  If any Lender requestscompensation under Section 3.04, or Borrowers are required to payany additional amount to any Lender, the L/C Issuer or any GovernmentalAuthority for the account of any Lender or the L/C Issuer pursuant to Section 3.01,or if any Lender gives a notice pursuant to Section 3.02, then suchLender or the L/C Issuer shall, as applicable, use reasonable efforts todesignate a different Lending Office for funding or booking its Loans hereunderor to assign its rights and obligations hereunder to another of its offices,branches or affiliates, if, in the judgment of such Lender, such designation orassignment (i) would eliminate or reduce amounts payable pursuant to Section 3.01or 3.04, as the case may be, in the future, or eliminate the need forthe notice pursuant to Section 3.02, as applicable, and (ii) ineach case, would not subject such Lender or the L/C Issuer to any unreimbursedcost or expense and would not otherwise be disadvantageous to such Lender 

 

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orthe L/C Issuer.  Borrowers hereby agreeto pay all reasonable costs and expenses incurred by any Lender in connectionwith any such designation or assignment.

 

(b)           Replacement of Lenders.  If any Lender requests compensation under Section 3.04,or if Borrowers are required to pay any additional amount to any Lender or anyGovernmental Authority for the account of any Lender pursuant to Section 3.01,Borrowers may replace such Lender in accordance with Section 10.13.

 

**3.07        Survival**.  All of Borrowers’ obligationsunder this Article III shall survive termination of the AggregateCommitments, repayment of all other Obligations hereunder and resignation ofAdministrative Agent.

 

**ARTICLE IV.  CONDITIONS PRECEDENT TO CREDIT EXTENSIONS**

 

**4.01        Conditionsof Initial Credit Extension**.  The obligation of the L/C Issuer and eachLender to make its initial Credit Extension hereunder is subject tosatisfaction of the following conditions precedent:

 

(a)           AdministrativeAgent’s receipt of the following, each of which shall be originals ortelecopies (followed promptly by originals) unless otherwise specified, eachproperly executed by a Responsible Officer of the signing Loan Party, eachdated the Closing Date (or, in the case of certificates of governmentalofficials, a recent date before the Closing Date) and each in form andsubstance satisfactory to Administrative Agent and each of the Lenders:

 

(i)            executedcounterparts of this Agreement, sufficient in number for distribution toAdministrative Agent, each Lender and Borrower Representative;

 

(ii)           a Note executed byBorrowers in favor of each Lender requesting a Note;

 

(iii)          the Security Agreement, duly executed by each Loan Party,together with:

 

(A)          certificates representing the Pledged Equity referred totherein accompanied by undated stock powers executed in blank and instrumentsevidencing any Intercompany Notes indorsed in blank,

 

(B)          acknowledgment copies or stamped receipt copies of properfinancing statements, duly filed on or before the day of the initial CreditExtension under the Uniform Commercial Code of all jurisdictions thatAdministrative Agent may deem necessary or desirable in order to perfect theLiens created under the Security Agreement, covering the Collateral describedin the Security Agreement,

 

(C)          completed requests for information, dated on or before thedate of the initial Credit Extension, listingall effective financing statements filed in the jurisdictions referredto in clause (B) above that name any Loan Party as debtor, togetherwith copies of such other financing statements,

 

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(D)          evidence of the completion of all other actions, recordingsand filings of or with respect to the Security Agreement that AdministrativeAgent may deem necessary or desirable in order to perfect the Liens createdthereby,

 

(E)           the Account Control Agreements, in each case as referredto in the and Security Agreement and duly executed by the appropriate parties,

 

(F)           evidence that all other action that Administrative Agentmay deem necessary or desirable in order to perfect the Liens created under theSecurity Agreement has been taken (including receipt of duly executed payoffletters, UCC-3 termination statements and landlords’ and bailees’ waiver andconsent agreements); and

 

(G)          executed counterparts of any other Collateral Documents;

 

(iv)          a Landlord Waiver with respect to each location set forthon Schedule 4.01(a)(iv);

 

(v)           the IP Security Agreements, duly executed by eachapplicable Loan Party, together with evidence that all action thatAdministrative Agent may deem necessary or desirable in order to perfect theLiens created under the IP Security Agreements has been taken;

 

(vi)          executed counterparts of any other Loan Documents;

 

(vii)         such certificates of resolutions or other action, incumbencycertificates and/or other certificates of Responsible Officers of each LoanParty as Administrative Agent may require evidencing the identity, authorityand capacity of each Responsible Officer thereof authorized to act as aResponsible Officer in connection with this Agreement and the other LoanDocuments to which such Loan Party is a party;

 

(viii)        such documents and certifications asAdministrative Agent may reasonably require to evidence that each Loan Party isduly organized or formed, and that each Loan Party is validly existing, in goodstanding and qualified to engage in business in each jurisdiction where itsownership, lease or operation of properties or the conduct of its businessrequires such qualification, except to the extent that failure to do so couldnot reasonably be expected to have a Material Adverse Effect;

 

(ix)          a favorable opinion of counsel to the Loan Partiesacceptable to Administrative Agent addressed to Administrative Agent and eachLender, as to the matters set forth concerning the Loan Parties and the LoanDocuments in form and substance satisfactory to Administrative Agent;

 

(x)           a certificate of a Responsible Officer of each Loan Partyeither (A) attaching copies of all consents, licenses and approvalsrequired in connection with the execution, delivery and performance by suchLoan Party and the validity against such Loan Party of the Loan Documents towhich it is a party, and such consents, licenses and 

 

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approvals shall be in full force and effect, or (B) statingthat no such consents, licenses or approvals are so required;

 

(xi)          a certificate signed by a Responsible Officer of Borrowerscertifying (A) that the conditions specified in Sections 4.02(a) and(b) have been satisfied, and (B) that there has been no eventor circumstance since the date of the Audited Financial Statements that has hador could be reasonably expected to have, either individually or in theaggregate, a Material Adverse Effect;

 

(xii)         a copy of the earnings forecasts for the Borrowers and theirSubsidiaries on a consolidated basis, prepared by management of SI Holdings, ofconsolidated balance sheets and statements of income or operations and cashflows of the Borrowers and theirSubsidiaries on a monthly basis for the first year following the Closing Dateand on a quarterly basis for each year thereafter through 2012 (the Borrowersagreeing hereby to provide to Administrative Agent not later than December 31,2010, with extended forecasts through 2013);

 

(xiii)        certificates attesting to the Solvencyof each Loan Party before and after giving effect to the transactionscontemplated hereby, from its chief financial officer;

 

(xiv)        evidence that all insurance required to be maintainedpursuant to the Loan Documents has been obtained and is in effect, togetherwith the certificates of insurance, naming Administrative Agent, on behalf ofthe Lenders, as an additional insured or loss payee, as the case may be, underall insurance policies maintained with respect to the assets and properties ofthe Loan Parties that constitutes Collateral;

 

(xv)         a duly completed Compliance Certificate as of the last dayof the fiscal quarter of Borrowers most recently ended prior to the ClosingDate, signed by a Responsible Officer of Borrowers; and

 

(xvi)        such other assurances, certificates, documents, consents oropinions as Administrative Agent, the L/C Issuer, Swing Line Lender or theRequired Lenders reasonably may require.

 

(b)           Any fees required to be paid toAdministrative Agent or Lenders on or before the Closing Date shall have beenpaid.

 

(c)           Unless waived by AdministrativeAgent, Borrowers shall have paid all fees, charges and disbursements of counselto Administrative Agent (directly to such counsel if requested byAdministrative Agent) to the extent invoiced prior to or on the Closing Date,plus such additional amounts of such fees, charges and disbursements as shallconstitute its reasonable estimate of such fees, charges and disbursementsincurred or to be incurred by it through the closing proceedings (provided thatsuch estimate shall not thereafter preclude a final settling of accountsbetween Borrowers and Administrative Agent).

 

(d)           The Closing Date shall have occurredon or before August 31, 2010.

 

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Withoutlimiting the generality of the provisions of the last sentence of Section 9.03(d),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 consentedto, approved or accepted or to be satisfied with, each document or other matterrequired thereunder to be consented to or approved by or acceptable orsatisfactory to a Lender unless Administrative Agent shall have received noticefrom such Lender prior to the proposed Closing Date specifying its objection thereto.

 

**4.02        Conditionsto all Credit Extensions**.  The obligation of each Lender to honor anyRequest for Credit Extension is subject to the following conditions precedent:

 

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

 

(b)           No Default shall exist, or wouldresult from such proposed Credit Extension or from the application of theproceeds thereof.

 

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

 

(d)           Administrative Agent shall havereceived, in form and substance satisfactory to it, such other assurances,certificates, documents or consents related to the foregoing as AdministrativeAgent or the Required Lenders reasonably may require.

 

Each Request for Credit Extension submitted by Borrowers shall bedeemed to be a representation and warranty that the conditions specified in Sections4.02(a) and (b) have been satisfied on and as of the dateof the applicable Credit Extension.

 

**4.03        Conditionsto Credit Extension for Acquisition**.  The obligation of Lenders to make any Loan inconnection with any Acquisition by a Borrower is subject to the satisfaction ofthe following conditions on the closing date of the acquisition (unlessotherwise waived by Administrative Agent and Required Lenders):

 

(a)           All conditions set forth in Section 4.01(to the extent not previously satisfied with respect to the Acquisition) and Section 4.02shall have been satisfied.

 

(b)           Borrowers or the appropriate LoanParty shall have executed and delivered to Administrative Agent (or shall havecaused to be executed and delivered to Administrative Agent by the appropriatePersons) the following (each of which shall be in form and substancesatisfactory to Administrative Agent):

 

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(i)            To the extent notpreviously delivered, true and correct copies of all material consents,contracts, licenses, instruments and other documents assumed or acquired in theAcquisition;

 

(ii)           Certificates ofinsurance evidencing all insurance coverage and policy provisions required inthis Agreement and Collateral Documents;

 

(iii)          A pay-off letter(including therein provisions reasonably acceptable to Administrative Agent forthe delivery or filing of appropriate UCC termination statements and mortgage andlien releases) from all lenders and creditors of the Person or assets which arethe subject of the Acquisition;

 

(iv)          A properly completedRequest for Credit Extension in accordance with the requirements of thisAgreement;

 

(v)           AnOfficer’s Certificate of Borrower Representative stating that the Acquisitionwill be consummated immediately upon funding of the Loan requested inconnection therewith; and

 

(vi)          Such othersupporting documents and certificates as Administrative Agent may reasonablyrequest.

 

(c)           All legal matters incident to thetransactions hereby contemplated shall be reasonably satisfactory to specialcounsel for Administrative Agent and Required Lenders.

 

(d)           RequiredLenders shall have consented to such Acquisition in their sole discretion asconstituting a Permitted Acquisition.

 

(e)           Neither anEvent of Default nor a Default shall have occurred and be then continuing, orshall result after taking into consideration the effect of the requestedAcquisition and requested Loan.

 

(f)            Borrowers shall have paid toAdministrative Agent all reasonable fees required to be paid on the closingdate of the Acquisition pursuant to this Agreement.

 

(g)           In addition to the foregoingrequirements:

 

(i)            The Acquisitionshall be consummated contemporaneously with such Loan substantially inaccordance with the terms of the purchase agreement approved by RequiredLenders and, in any event, in a manner reasonably satisfactory toAdministrative Agent, including, without limitation, the satisfaction in full(simultaneously with, and from the proceeds of, the Loan or otherwise) of allIndebtedness of the target of such acquisition secured by the assets andproperties transferred to the Loan Parties which is not being assumed by theLoan Parties.

 

(ii)           Administrative Agentshall have received reasonable evidence of Borrowers’ ability to consummatereceipt at closing of all permits, approvals and 

 

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consents,if any, required with respect to the Acquisition and any other relatedtransaction contemplated by this Agreement.

 

(iii)          AdministrativeAgent shall have received copies of any legal opinions delivered to Borrowersin connection with the Acquisition.

 

(iv)          There shall not haveoccurred, in Administrative Agent’s reasonable opinion, any change in thefinancial condition, management or business operations, or the assets orbusiness of, the Person or assets which are the subject of such Acquisitionthat could reasonably be expected to have a Material Adverse Effect.

 

(v)           At the time ofconsummation of the Acquisition, Borrowers shall update all Schedules to thisAgreement to reflect changes thereto since the Closing Date, after givingeffect to the Acquisition.

 

(h)           Administrative Agent shall havecompleted a due diligence investigation of the assets and business subject tosuch Acquisition in scope, and with results, reasonably satisfactory toAdministrative Agent and Required Lenders, and shall have been given suchaccess to the management, records, books of account, contracts and propertiesof such target and shall have received such financial, business and otherinformation regarding each of the foregoing Persons and businesses as it shallhave reasonably requested, and such other due diligence reports, audits, andcertifications as it may reasonably request.

 

(i)            Unless the Required Lendersotherwise consent in writing, the aggregate amount of all Loans made to fundPermitted Acquisitions during the term of this Agreement shall not exceed$10,000,000.

 

**ARTICLE V.  REPRESENTATIONS AND WARRANTIES**

 

Borrowersrepresent and warrant to Administrative Agent and the Lenders that:

 

**5.01        Existence,Qualification and Power**.  Each Loan Party and each Subsidiary thereof (a) isduly organized or formed, validly existing and, as applicable, in good standingunder the Laws of the jurisdiction of its incorporation or organization, (b) hasall requisite power and authority and all requisite governmental licenses,authorizations, consents and approvals to (i) own or lease its assets andcarry on its business and (ii) execute, deliver and perform itsobligations under the Loan Documents to which it is a party, and (c) isduly qualified and is licensed and, as applicable, in good standing under theLaws of each jurisdiction where its ownership, lease or operation of propertiesor the conduct of its business requires such qualification or license; exceptin each case referred to in clause (b)(i), or (c), to the extent that failureto do so could not reasonably be expected to have a Material Adverse Effect.

 

**5.02        Authorization;No Contravention**.  The execution, delivery and performance byeach Loan Party of each Loan Document to which such Person is party, have beenduly authorized by all necessary corporate or other organizational action, anddo not and will not (a) contravene the terms of any of such Person’sOrganization Documents; (b) conflict with or result in any breach orcontravention of, or the creation of any Lien under, or require any payment tobe made under (i) any Contractual Obligation to which such Person is aparty or affecting such 

 

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Personor the properties of such Person or any of its Subsidiaries or (ii) anyorder, injunction, writ or decree of any Governmental Authority or any arbitralaward to which such Person or its property is subject; or (c) violate anyLaw.

 

**5.03        GovernmentalAuthorization; Other Consents**.  No approval, consent, exemption,authorization, or other action by, or notice to, or filing with, any GovernmentalAuthority or any other Person is necessary or required in connection with theexecution, delivery or performance by, or enforcement against, any Loan Partyof this Agreement or any other Loan Document.

 

**5.04        BindingEffect**.  This Agreement has been, and each other LoanDocument, when delivered hereunder, will have been, duly executed and deliveredby each Loan Party that is party thereto. This Agreement constitutes, and each other Loan Document when sodelivered will constitute, a legal, valid and binding obligation of such LoanParty, enforceable against each Loan Party that is party thereto in accordancewith its terms.

 

**5.05        FinancialStatements; No Material Adverse Effect**.  (a) The Audited Financial Statements(i) were prepared in accordance with GAAP consistently applied throughoutthe period covered thereby, except as otherwise expressly noted therein; and(ii) fairly present the financial condition of Borrowers and theirSubsidiaries as of the date thereof and their results of operations for the periodcovered thereby in accordance with GAAP consistently applied throughout theperiod covered thereby, except as otherwise expressly noted therein.

 

(b)           The unaudited consolidated and consolidating balance sheets ofBorrowers and their Subsidiaries dated March 31, 2010, and the relatedconsolidated and consolidatingstatements of income or operations, shareholders’ equity and cash flows for thefiscal quarter ended on that date (i) were prepared in accordance withGAAP consistently applied throughout the period covered thereby, except asotherwise expressly noted therein, and (ii) fairly present the financialcondition of Borrowers and their Subsidiaries as of the date thereof and theirresults of operations for the period covered thereby, subject, in the case ofclauses (i) and (ii), to the absence of footnotes and to normal year-endaudit adjustments.

 

(c)           Since the date of the AuditedFinancial Statements, there has been no event or circumstance, eitherindividually or in the aggregate, that has had or could reasonably be expectedto have a Material Adverse Effect.

 

(d)           The consolidated and consolidating forecasted balance sheet andstatements of income and cash flows of Borrowers and their Subsidiariesdelivered pursuant to Section 6.01(b) were prepared in goodfaith on the basis of the assumptions stated therein, which assumptions werefair in light of the conditions existing at the time of delivery of suchforecasts, and represented, at the time of delivery, Borrowers’ best estimateof its future financial condition and performance.

 

**5.06        Litigation**.**** Except as listed in the Borrowers’ filingswith the SEC made prior to the Closing Date, there are no actions, suits,proceedings, investigations, claims or disputes pending or, to the knowledge ofBorrowers after due and diligent investigation, threatened or contemplated, atlaw, in equity, in arbitration or before any Governmental Authority, by or 

 

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againstBorrowers or any of their Subsidiaries or against any of their properties orrevenues that (a) purport to affect or pertain to this Agreement or anyother Loan Document, or any of the transactions contemplated hereby, or (b) eitherindividually or in the aggregate, if determined adversely, could reasonably beexpected to have a Material Adverse Effect.

 

**5.07        No Default**.  Neither any Loan Party nor anySubsidiary thereof is in default under or with respect to any ContractualObligation that could, either individually or in the aggregate, reasonably beexpected to have a Material Adverse Effect. No Default has occurred and is continuing or would result from theconsummation of the transactions contemplated by this Agreement or any otherLoan Document.

 

**5.08        Ownership ofProperty; Liens**.  Each Borrower and each Subsidiary has goodrecord 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.  The property of Borrowers and theirSubsidiaries is subject to no Liens, other than Liens permitted by Section 7.01.

 

**5.09        EnvironmentalCompliance**.  Except as specifically disclosed in Schedule5.09, there are, to Borrowers’ knowledge, no claims alleging potentialliability or responsibility for the violation of any Environmental Law onBorrowers’ businesses, operations and properties which could not, individuallyor in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

**5.10        Insurance**.  The properties of Borrowers andtheir Subsidiaries are insured with financially sound and reputable insurancecompanies not Affiliates of Borrowers, in such amounts (after giving effect toany self-insurance compatible with the following standards), with suchdeductibles and covering such risks as are customarily carried by companiesengaged in similar businesses and owning similar properties in localities wherea Borrower or the applicable Subsidiary operates.

 

**5.11        Taxes**.** **Borrowers and their Subsidiaries have filed allFederal, state and other material tax returns and reports required to be filed,and have paid all Federal, state and other material taxes, assessments, feesand other governmental charges levied or imposed upon them or their properties,income or assets otherwise due and payable, except those which are beingcontested in good faith by appropriate proceedings diligently conducted and forwhich adequate reserves have been provided in accordance with GAAP.  There is no proposed tax assessment againstany Borrower or any Subsidiary that would, if made, have a Material AdverseEffect.

 

**5.12        ERISACompliance**.  (a) Each Plan is in compliance in allmaterial respects with the applicable provisions of ERISA, the Code and otherFederal or state laws.  Each Pension Planthat is intended to be a qualified plan under Section 401(a) of theCode has received a favorable determination letter from the Internal RevenueService to the effect that the form of such Plan is qualified under Section 401(a) ofthe Code and the trust related thereto has been determined by the InternalRevenue Service to be exempt from federal income tax under Section 501(a) ofthe Code, or an application for such a letter is currently being processed bythe Internal Revenue 

 

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Service.  To the best knowledge of the Borrower,nothing has occurred that would prevent or cause the loss of such tax-qualifiedstatus.

 

(b)           There are no pending or, to the bestknowledge of Borrowers, threatened claims, actions or lawsuits, or action byany Governmental Authority, with respect to any Plan that could be reasonablybe expected to have a Material Adverse Effect. There has been no prohibited transaction or violation of the fiduciaryresponsibility rules with respect to any Plan that has resulted or couldreasonably be expected to result in a Material Adverse Effect.

 

(c)           (i) No ERISA Event has occurred,and neither the Borrower nor any ERISA Affiliate is aware of any fact, event orcircumstance that could reasonably be expected to constitute or result in anERISA Event with respect to any Pension Plan; (ii) the Borrower and eachERISA Affiliate has met all applicable requirements under the Pension Funding Rules inrespect of each Pension Plan, and no waiver of the minimum funding standardsunder the Pension Funding Rules has been applied for or obtained; (iii) asof the most recent valuation date for any Pension Plan, the funding targetattainment percentage (as defined in Section 430(d)(2) of the Code)is 60% or higher and neither the Borrower nor any ERISA Affiliate knows of anyfacts or circumstances that could reasonably be expected to cause the fundingtarget attainment percentage for any such plan to drop below 60% as of the mostrecent valuation date; (iv) neither the Borrower nor any ERISA Affiliatehas incurred any liability to the PBGC other than for the payment of premiums,and there are no premium payments which have become due that are unpaid; (v) neitherthe Borrower nor any ERISA Affiliate has engaged in a transaction that could besubject to Section 4069 or Section 4212(c) of ERISA; and (vi) noPension Plan has been terminated by the plan administrator thereof nor by the PBGC,and no event or circumstance has occurred or exists that could reasonably beexpected to cause the PBGC to institute proceedings under Title IV of ERISA toterminate any Pension Plan.

 

(d)           Neither Borrower or any ERISAAffiliate maintains or contributes to, or has any unsatisfied obligation tocontribute to, or liability under, any active or terminated Pension Plan otherthan (A) on the Closing Date, those listed on Schedule 5.12(d) heretoand (B) thereafter, Pension Plans not otherwise prohibited by thisAgreement.

 

**5.13        Subsidiaries**.  As of the Closing Date, noBorrower has any Subsidiaries other than those specifically disclosed in Part (a) ofSchedule 5.13, and all of the outstanding Equity Interests in suchSubsidiaries have been validly issued, are fully paid and nonassessable and areowned by a Loan Party in the amounts specified on Part (a) of Schedule5.13 free and clear of all Liens.  NoBorrower has equity investments in any other corporation or entity other thanthose specifically disclosed in Part(b) of Schedule 5.13.  All of the outstanding Equity Interests ineach Borrower have been validly issued and are fully paid and nonassessable.

 

**5.14        MarginRegulations; Investment Company Act**.  (a) No Borrower is engaged or willengage, principally or as one of its important activities, in the business ofpurchasing or carrying margin stock (within the meaning of Regulation U issuedby the FRB), or extending credit for the purpose of purchasing or carryingmargin stock.  Following the application of the proceeds of each Borrowing or drawingunder each Letter of Credit, not more than 25% of the value of the assets(either of a Borrower only or of a Borrower and its Subsidiaries on aconsolidated basis) subject to the provisions of Section 7.01 or Section 7.05or subject to any 

 

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restriction contained in any agreement or instrumentbetween Borrowers and any Lender or any Affiliate of any Lender relating toIndebtedness that is within the scope of Section 8.01(e) willbe margin stock.

 

(b)           No Borrower, Person ControllingBorrower, or Subsidiary is, or is required to be registered as, an “investmentcompany” under the Investment Company Act of 1940.

 

**5.15        Disclosure**.  Borrowers have disclosed toAdministrative Agent and Lenders all agreements, instruments and corporate orother restrictions to which it or any of its Subsidiaries is subject, and allother matters known to it, that, individually or in the aggregate, couldreasonably be expected to result in a Material Adverse Effect.  No report, financial statement, certificateor other information furnished (whether in writing or orally) by or on behalfof any Loan Party to Administrative Agent or any Lender in connection with thetransactions contemplated hereby and the negotiation of this Agreement ordelivered hereunder or under any other Loan Document (in each case, as modifiedor supplemented by other information so furnished) contains any materialmisstatement of fact or omits to state any material fact necessary to make thestatements therein, in the light of the circumstances under which they weremade, not misleading; provided that, with respect to projected financialinformation, Borrowers represent only that such information was prepared ingood faith based upon assumptions believed to be reasonable at the time.

 

**5.16      Compliancewith Laws**.  Each Loan Party and each Subsidiary thereofis in compliance in all material respects with the requirements of all Laws andall orders, writs, injunctions and decrees applicable to it or to itsproperties, except in such instances in which (a) such requirement of Lawor order, writ, injunction or decree is being contested in good faith byappropriate proceedings diligently conducted or (b) the failure to complytherewith, either individually or in the aggregate, could not reasonably beexpected to have a Material Adverse Effect.

 

**5.17        TaxpayerIdentification Number**. Borrowers’ true and correct U.S. taxpayer identification numbers are setforth on Schedule 10.02.

 

**5.18        IntellectualProperty; Licenses, Etc**.  Borrowers and their Subsidiaries own, orpossess the right to use, all of the trademarks, service marks, trade names,copyrights, patents, patent rights, franchises, licenses and other intellectualproperty rights that are reasonably necessary for the operation of theirrespective businesses and, to Borrowers’ knowledge, without conflict with therights of any other Person.  To the bestknowledge of Borrowers, no slogan or other advertising device, product,process, method, substance, part or other material now employed, or nowcontemplated to be employed, by Borrowers or any Subsidiary infringes upon anyrights held by any other Person.  Noclaim or litigation regarding any of the foregoing is pending or, to the bestknowledge of Borrowers, threatened, which, either individually or in theaggregate, could reasonably be expected to have a Material Adverse Effect.

 

**5.19        Rights inCollateral; Priority of Liens**.  Borrowersand each other Loan Party own the property granted by it as Collateral underthe Collateral Documents, free and clear of any and all Liens in favor of thirdparties.  Upon the proper filing of UCCfinancing statements, and the taking of the other actions contemplated by theLoan Documents or required by the 

 

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Required Lenders, the Liens granted pursuant to theCollateral Documents will constitute valid and enforceable first, prior andperfected Liens on the Collateral in favor of Administrative Agent, for theratable benefit of the Secured Parties.

 

**ARTICLE VI.  AFFIRMATIVE COVENANTS**

 

So long as any Lender shall have any Commitment hereunder, any Loan orother Obligation hereunder shall remain unpaid or unsatisfied, or any Letter ofCredit shall remain outstanding, Borrowers shall, and shall (except in the caseof the covenants set forth in Sections 6.01, 6.02 and 6.03)cause each Subsidiary to:

 

**6.01        FinancialStatements**.  Deliver to Administrative Agent a sufficientnumber of copies for delivery by Administrative Agent to each Lender, in formand detail satisfactory to Administrative Agent and the Required Lenders:

 

(a)           as soon as available, but in anyevent within one hundred twenty (120) days of the end of each fiscal year of SIHoldings (or, if earlier, fifteen (15) days after the date required to be filedwith the SEC), audited balance sheets and statements of profit and loss andcash flows, retained earnings, reconciliation of net worth and source andapplication of funds for such fiscal year for SI Holdings and its Subsidiaries,each prepared in accordance with GAAP consistently applied, on a consolidatedand consolidating basis, in reasonable detail by independent certified publicaccountants selected by the Borrowers and acceptable to Administrative Agent,showing SI Holdings’ and its Subsidiaries’ consolidated and consolidatingfinancial condition at the close of such fiscal year and the results ofoperations during such year, together with a certificate signed by an officerof the Borrowers, certifying Borrowers’ compliance, or lack thereof, with thefinancial covenants described in Section 6.12 hereof, and aschedule showing the calculations used to determine such compliance (or lackthereof).

 

(b)           as soon as available, but in anyevent within forty-five (45) days after the end of each fiscal quarter in eachfiscal year of SI Holdings (or, if earlier, five (5) days after the daterequired to be filed with the SEC), consolidated balance sheets and statementsof profit and loss and cash flows, retained earnings, reconciliation of networth and source and application of funds for such fiscal year, each preparedin reasonable detail in accordance with GAAP, on a consolidated andconsolidating basis, consistently applied, and consistent in format with thefinancial statements furnished to Administrative Agent in connection with theBorrowers’ loan application, certified by the President or Chief FinancialOfficer of SI Holdings as fairly representing the financial position of theBorrowers and their Subsidiaries, such balance sheets to be as of the close ofsuch quarter and such other statements to be for the period from the beginningof the then current fiscal year to the end of such quarter in each case subjectto normal audit and year-end adjustments.

 

(c)           within thirty (30) days after thebeginning of each fiscal year, a management prepared budget for the then fiscalyear in form and substance reasonably satisfactory to Administrative Agent,prepared on a consolidated and consolidating basis, which budget shall include,without limitation, projected covenant compliance, projected profit and lossand cash flow statements, balance sheets and a capital expenditure budget.

 

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**6.02        Certificates;Other Information**.  Deliver to Administrative Agent a sufficientnumber of copies for delivery by Administrative Agent to each Lender, in formand detail satisfactory to Administrative Agent and the Required Lenders:

 

(a)           concurrently with the delivery of thefinancial statements referred to in Section 6.01(a) and (b),a duly completed Compliance Certificate signed by the chief executive officer,chief financial officer, treasurer or controller of Borrowers (which deliverymay, unless Administrative Agent, or a Lender requests executed originals, beby electronic communication including fax or email and shall be deemed to be anoriginal authentic counterpart thereof for all purposes);

 

(b)           promptly after any request byAdministrative Agent or any Lender, copies of any detailed audit reports ormanagement letters submitted to the board of directors (or the audit committeeof the board of directors) of Borrowers by independent accountants inconnection with the accounts or books of Borrowers or any Subsidiary, or anyaudit of any of them;

 

(c)           promptly after the same areavailable, copies of each annual report, proxy or financial statement or otherreport or communication sent to the stockholders of Borrowers, and copies ofall annual, regular, periodic and special reports and registration statementswhich Borrowers may file or be required to file with the SEC under Section 13or 15(d) of the Securities Exchange Act of 1934, and not otherwise required tobe delivered to Administrative Agent pursuant hereto;

 

(d)           promptly after the furnishingthereof, copies of any statement or report furnished to any holder of debtsecurities of any Loan Party or any Subsidiary thereof pursuant to the terms ofany indenture, loan or credit or similar agreement and not otherwise requiredto be furnished to the Lenders pursuant to Section 6.01 or any otherclause of this Section 6.02;

 

(e)           promptly, and in any event withinfive (5) Business Days after receipt thereof by any Loan Party or anySubsidiary thereof, copies of each notice or other correspondence received fromthe SEC (or comparable agency in any applicable non-U.S. jurisdiction)concerning any investigation or possible investigation or other inquiry by suchagency regarding financial or other operational results of any Loan Party orany Subsidiary thereof;

 

(f)            promptly, such additionalinformation regarding the business, financial or corporate affairs of Borrowersor any Subsidiary, or compliance with the terms of the Loan Documents, asAdministrative Agent or any Lender may from time to time reasonably request;

 

(g)           at the request of AdministrativeAgent, a field exam prepared by a third party reasonably acceptable toAdministrative Agent, which shall be paid for by Borrowers once in eachcalendar year or more frequently if an Event of Default has occurred; and

 

(h)           not later than December 31, 2010, theforecasts through 2013 contemplated by Section 4.01(a)(xii).

 

Documentsrequired to be delivered pursuant to Section 6.01(a), (b) or (c)or Section 6.02(d) (to the extent any such documents are included inmaterials otherwise filed with the SEC) to the extent any such documents arenot otherwise publicly available to Administrative Agent or 

 

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Lendersor at a Lenders’ request therefor, may be delivered electronically and if sodelivered, shall be deemed to have been delivered on the date (i) on whichBorrowers post such documents, or provide a link thereto on Borrowers’ websiteon the Internet at the website address listed on Schedule 10.02; or (ii)on which such documents are posted on Borrowers’ behalf on an Internet orintranet website, if any, to which each Lender and Administrative Agent haveaccess (whether a commercial, third-party website or whether sponsored byAdministrative Agent); provided that: (i) Borrowers shall deliver papercopies of such documents to Administrative Agent or any Lender upon its requestto Borrowers to deliver such paper copies until a written request to ceasedelivering paper copies is given by Administrative Agent or such Lender and(ii) Borrowers shall notify Administrative Agent and each Lender (by telecopieror electronic mail) of the posting of any such documents and provide toAdministrative Agent by electronic mail electronic versions (i.e., soft copies)of such documents.  Administrative Agentshall have no obligation to request the delivery of or to maintain paper copiesof the documents referred to above, and in any event shall have noresponsibility to monitor compliance by Borrowers with any such request by aLender for delivery, and each Lender shall be solely responsible for requestingdelivery to it or maintaining its copies of such documents.

 

Borrowershereby acknowledge that (a) Administrative Agent will make available to Lendersand the L/C Issuer materials and/or information provided by or on behalf ofBorrowers hereunder (collectively, “Borrower Materials”) by postingBorrower Materials on IntraLinks or another similar electronic system (the “Platform”)and (b) certain of the Lenders (each,a “Public Lender”) may have personnel who do not wish to receivematerial non-public information with respect to Borrowers or their Affiliatesor the respective securities of any of the foregoing, and who may be engaged ininvestment and other market-related activities with respect to such Persons’securities.  Borrowers hereby agree that so long as a Borrower is the issuer of anyoutstanding debt or equity securities that are registered or issued pursuant toa private offering or is actively contemplating issuing any such securities(w) all Borrower Materials that are to be made available to Public Lendersshall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shallmean that the word “PUBLIC” shall appear prominently on the first page thereof;(x) by marking Borrower Materials “PUBLIC,” Borrowers shall be deemed to haveauthorized Administrative Agent, the L/C Issuer and the Lenders to treat suchBorrower Materials as not containing any material non-public information withrespect to Borrowers or its securities for purposes of United States Federaland state securities laws (provided, however, that to the extent such BorrowerMaterials constitute Information, they shall be treated as set forth in Section10.07); (y) all Borrower Materials marked “PUBLIC” are permitted to be madeavailable through a portion of the Platform designated “Public Investor;” and(z) Administrative Agent shall be entitled to treat any Borrower Materials thatare not marked “PUBLIC” as being suitable only for posting on a portion of thePlatform not designated “Public Investor.”

 

**6.03        Notices**.  Promptly notify Administrative Agent and eachLender:

 

(a)           of the occurrence of any Default;

 

(b)           of any matter that has resulted orcould reasonably be expected to result in a Material Adverse Effect, including(i) breach or non-performance of, or any default under, a ContractualObligation of Borrowers or any Subsidiary; (ii) any dispute, litigation,investigation, proceeding or suspension between Borrowers or any Subsidiary andany Governmental 

 

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Authority;or (iii) the commencement of, or any material development in, any litigation orproceeding affecting Borrowers or any Subsidiary, including pursuant to anyapplicable Environmental Laws;

 

(c)           of the occurrence of any ERISA Event;and

 

(d)           of any material change in accountingpolicies or financial reporting practices by Borrowers or any Subsidiaryincluding any determination by Borrowers referred to in Section 2.10(b).

 

Eachnotice pursuant to this Section shall be accompanied by a statement of aResponsible Officer of Borrowers setting forth details of the occurrencereferred to therein and stating what action Borrowers has taken and proposes totake with respect thereto.  Each noticepursuant to Section 6.03(a) shall describe with particularity any andall provisions of this Agreement and any other Loan Document that have beenbreached.

 

**6.04        Payment ofObligations**.  Pay and discharge as the same shall becomedue and payable, all its obligations and liabilities, including (a) all taxliabilities, assessments and governmental charges or levies upon it or itsproperties or assets, unless the same are being contested in good faith byappropriate proceedings diligently conducted and adequate reserves inaccordance with GAAP are being maintained by Borrowers or such Subsidiary; (b)all lawful claims which, if unpaid, would by law become a Lien upon itsproperty; and (c) all Indebtedness, as and when due and payable, but subject toany subordination provisions contained in any instrument or agreementevidencing such Indebtedness.

 

**6.05        Preservationof Existence, Etc**. (a) Preserve, renew and maintain in full force and effect its legalexistence and good standing under the Laws of the jurisdiction of itsorganization except in a transaction permitted by Section 7.04 or 7.05;(b) take all reasonable action to maintain all rights, privileges, permits,licenses and franchises necessary or desirable in the normal conduct of itsbusiness, except to the extent that failure to do so could not reasonably beexpected to have a Material Adverse Effect; and (c) preserve or renew all ofits registered patents, trademarks, trade names and service marks, the non-preservationof which could reasonably be expected to have a Material Adverse Effect.

 

**6.06        Maintenanceof Properties**.  (a) Maintain, preserve and protect all of itsmaterial properties and equipment necessary in the operation of its business ingood working order and condition, ordinary wear and tear excepted; (b) make allnecessary repairs thereto and renewals and replacements thereof except wherethe failure to do so could not reasonably be expected to have a MaterialAdverse Effect; and (c) use the standard of care typical in the industry in theoperation and maintenance of its facilities.

 

**6.07        Maintenanceof Insurance**.  Maintain with financially sound and reputableinsurance companies not Affiliates of Borrowers, insurance with respect to itsproperties and business against loss or damage of the kinds customarily insuredagainst by Persons engaged in the same or similar business, of such types andin such amounts (after giving effect to any self-insurance compatible with thefollowing standards) as are customarily carried under similar 

 

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circumstancesby such other Persons and providing for not less than 30 days’ prior notice toAdministrative Agent of termination, lapse or cancellation of such insurance.

 

**6.08        Compliancewith Laws**.  Comply in all material respects with therequirements of all Laws and all orders, writs, injunctions and decreesapplicable to it or to its business or property, except in such instances inwhich (a) such requirement of Law or order, write, injunction or decree isbeing contested in good faith by appropriate proceedings diligently conducted;or (b) the failure to comply therewith could not reasonably be expected to havea Material Adverse Effect.

 

**6.09        Books andRecords**.  (a) Maintain proper books of record andaccount, in which full, true and correct entries in conformity with GAAPconsistently applied shall be made of all financial transactions and mattersinvolving the assets and business of Borrowers or such Subsidiary, as the casemay be; and (b) maintain such books of record and account in materialconformity with all applicable requirements of any Governmental Authorityhaving regulatory jurisdiction over Borrowers or such Subsidiary, as the casemay be.  Borrowers shall maintain at all times books and records pertaining to theCollateral in such detail, form and scope as Administrative Agent or any Lendershall reasonably require.

 

**6.10        InspectionRights**.  Permit representatives and independentcontractors of Administrative Agent and each Lender to visit and inspect any ofits properties, to examine its corporate, financial and operating records, andmake copies thereof or abstracts therefrom, and to discuss its affairs,finances and accounts with its directors, officers, and independent publicaccountants, all at the expense of Borrowers and at such reasonable timesduring normal business hours and as often as may be reasonably desired, uponreasonable advance notice to Borrowers; provided, however, thatwhen an Event of Default exists Administrative Agent or any Lender (or any oftheir respective representatives or independent contractors) may do any of theforegoing at the expense of Borrowers at any time during normal business hoursand without advance notice.

 

**6.11        Use ofProceeds**.  Use the proceeds of the Credit Extensions torefinance and consolidate the Existing Revolving Credit Loan and the ExistingAcquisition Term Loan, for working capital and other corporate purposes not incontravention of any Law or of any Loan Document; provided, however,that, unless the Required Lenders otherwise consent thereto in writing, notmore than an aggregate amount of $10,000,000 in Loan proceeds may be used tofinance Permitted Acquisitions.

 

**6.12        FinancialCovenants**.

 

(a)           Consolidated EBITDA.  Maintain and earn on a consolidated basis asof the last day of each fiscal quarter, Consolidated EBITDA for thetwelve-month period ending on each such date equal to or greater than thefollowing:

 

| **For  Each Fiscal  Quarter Ending on:**                                         | ** ** | **Consolidated EBITDA to be  not less than:** | ** ** |
|----------------------------------------------------------------------------------|------------|-----------------------------------------------|------------|
|                                                                             |       |                                          |       |
| Each of September 30, 2010, December 31, 2010,  March 31, 2011 and June 30, 2011 |       | $                                             | 15,000,000 |   |
| Each of September 30, 2011 and December 31, 2011                                 |       | $                                             | 16,000,000 |   |
| Each of March 31, 2012 and June 30, 2012                                         |       | $                                             | 17,000,000 |   |

 

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(b)           Consolidated Leverage Ratio.  Maintain a Consolidated Leverage Ratio notexceeding 3.25:1.00.  This ratio will becalculated as of the last day of each fiscal quarter for which this Agreementrequires Borrowers to deliver financial statements, using the results of thetwelve-month period ending on the last day of such fiscal quarter.

 

(c)           Basic Fixed Charge Coverage Ratio.  Maintain a Basic Fixed Charge Coverage Ratioof at least 1.50:1.00.  This ratio willbe calculated as of the last day of each fiscal quarter for which thisAgreement requires Borrowers to deliver financial statements, using the resultsof the twelve-month period ending on the last day of such fiscal quarter.  The current portion of long-term liabilitieswill be measured as of the date twelve(12) months prior to the current financial statement.

 

**6.13        Guarantors**.  Notify Administrative Agent atthe time that any Person becomes a Subsidiary, and promptly thereafter (and inany event within 30 days), cause such Person (if it is a Domestic Subsidiary)to (a) become a Guarantor by executing and delivering to Administrative Agent aGuaranty or such other document as Administrative Agent shall deem appropriatefor such purpose, which Guaranty shall be secured by a security interest in allassets of such Guarantor, and (b) deliver to Administrative Agent documents ofthe types referred to in clauses (iii) and (iv) of Section 4.01(a) andfavorable opinions of counsel to such Person (which shall cover, among otherthings, the legality, validity, binding effect and enforceability of thedocumentation referred to in clause (a)), all in form, content and scopereasonably satisfactory to Administrative Agent.

 

**6.14        CollateralRecords**.** **To execute and deliver promptly,and to cause each other Loan Party to execute and deliver promptly, toAdministrative Agent, from time to time, solely for Administrative Agent’sconvenience in maintaining a record of the Collateral, such written statementsand schedules as Administrative Agent may reasonably require designating,identifying or describing the Collateral. The failure by Borrowers or any other Loan Party, however, to promptlygive Administrative Agent such statements or schedules shall not affect,diminish, modify or otherwise limit the Liens on the Collateral grantedpursuant to the Collateral Documents.

 

**6.15        SecurityInterests**.** **(a)****Defend the Collateral against all claimsand demands of all Persons at any time claiming the same or any interesttherein, (b) comply with the requirements of all state and federal laws inorder to grant to Administrative Agent and Lenders valid and perfected firstpriority security interests in the Collateral, with perfection, in the case ofany investment property, deposit account or letter of credit, being effected bygiving Administrative Agent control of such investment property or depositaccount or letter of credit, rather than by the filing of a financing statementwith respect to such investment property, and 

 

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(c) do whatever Administrative Agent may reasonablyrequest, from time to time, to effect the purposes of this Agreement and theother Loan Documents, including filing notices of liens, UCC financingstatements, fixture filings and amendments, renewals and continuations thereof;cooperating with Administrative Agent’s representatives; keeping stock records;obtaining waivers from landlords and mortgagees and from warehousemen and theirlandlords and mortgages; and, paying claims which might, if unpaid, become aLien on the Collateral.  AdministrativeAgent is hereby authorized by Borrowers to file any UCC financing statementscovering the Collateral whether or not Borrowers’ signatures appear thereon.

 

**6.16        Agent asPrimary Depository**.  Maintain Bank of America as its primarydepository bank, including for the maintenance of business, cash management,main operating and administrative deposit accounts.

 

**ARTICLEVII.  NEGATIVE COVENANTS**

 

Solong as any Lender shall have any Commitment hereunder, any Loan or otherObligation hereunder shall remain unpaid or unsatisfied, or any Letter ofCredit shall remain outstanding, Borrowers shall not, nor shall it permit anySubsidiary to, directly or indirectly:

 

**7.01        Liens**.  Create, incur, assume or sufferto exist any Lien upon any of its property, assets or revenues, whether nowowned or hereafter acquired, other than the following:

 

(a)           Liens pursuant to any Loan Document;

 

(b)           Liens existing on the date hereof andlisted on Schedule 7.01 and any renewals or extensions thereof, providedthat (i) the property covered thereby is not changed, (ii) the amount securedor benefited thereby is not increased except as contemplated by Section7.03(b), (iii) the direct or any contingent obligor with respect thereto isnot changed, and (iv) and any renewal or extension of the obligations securedor benefited thereby is permitted by Section 7.03(b);

 

(c)           Liens for taxes not yet due or whichare being contested in good faith and by appropriate proceedings diligentlyconducted, if adequate reserves with respect thereto are maintained on thebooks of the applicable Person in accordance with GAAP;

 

(d)           carriers’, warehousemen’s, mechanics’,materialmen’s, repairmen’s or other like Liens arising in the ordinary courseof business which are not overdue for a period of more than 30 days or whichare being contested in good faith and by appropriate proceedings diligentlyconducted, if adequate reserves with respect thereto are maintained on the booksof the applicable Person;

 

(e)           pledges or deposits in the ordinarycourse of business in connection with workers’ compensation, unemploymentinsurance and other social security legislation, other than any Lien imposed byERISA;

 

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

 

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(g)           easements, rights-of-way,restrictions and other similar encumbrances affecting real property which, inthe aggregate, are not substantial in amount, and which do not in any casematerially detract from the value of the property subject thereto or materiallyinterfere with the ordinary conduct of the business of the applicable Person;

 

(h)           Liens securing judgments for thepayment of money not constituting an Event of Default under Section 8.01(h);and

 

(i)            Liens securing Indebtednesspermitted under Section 7.03(e); provided that (i) such Liens donot at any time encumber any property other than the property financed by suchIndebtedness and (ii) the Indebtedness secured thereby does not exceed the costor fair market value, whichever is lower, of the property being acquired on thedate of acquisition.

 

**7.02        Investments**.  Make any Investments, except:

 

(a)           Investments held by Borrowers or suchSubsidiary in the form of cash equivalents or short-term marketable debtsecurities;

 

(b)           advances to officers, directors andemployees of Borrowers and Subsidiaries in an aggregate amount not to exceed $500,000 at any time outstanding, forbusiness travel, business entertainment, relocation and analogous ordinarybusiness purposes;

 

(c)           Investments consisting of PermittedAcquisitions;

 

(d)           Investments of Borrowers in anywholly-owned Subsidiary which exists on the Closing Date or which constitutePermitted Acquisitions, and Investments of any wholly-owned Subsidiary inBorrowers or in another wholly-owned Subsidiary which exist on the Closing Dateor are acquired as Permitted Acquisition;

 

(e)           Investments consisting of extensionsof credit in the nature of accounts receivable or notes receivable arising fromthe grant of trade credit in the ordinary course of business, and Investmentsreceived in satisfaction or partial satisfaction thereof from financiallytroubled account debtors to the extent reasonably necessary in order to preventor limit loss; and

 

(f)            Guarantees permitted by Section7.03.

 

**7.03        Indebtedness**.  Create, incur, assume or sufferto exist any Indebtedness, except:

 

(a)           Indebtedness under the LoanDocuments;

 

(b)           Indebtedness outstanding on the datehereof and listed on Schedule 7.03 and any refinancings, refundings,renewals or extensions thereof; provided that (i) the amount of suchIndebtedness is not increased at the time of such refinancing, refunding,renewal or extension except by an amount equal to a reasonable premium or otherreasonable amount paid, and fees and expenses reasonably incurred, inconnection with such refinancing and by an amount equal to any existingcommitments unutilized thereunder and (ii) the terms relating to principalamount, 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, 

 

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andof any agreement entered into and of any instrument issued in connectiontherewith, are no less favorable in any material respect to the Loan Parties orLenders than the terms of any agreement or instrument governing theIndebtedness being refinanced, refunded, renewed or extended and the interestrate applicable to any such refinancing, refunding, renewing or extendingIndebtedness does not exceed the then applicable market interest rate;

 

(c)           Guarantees of Borrowers or anySubsidiary in respect of Indebtedness otherwise permitted hereunder ofBorrowers or any wholly-owned Subsidiary;

 

(d)           obligations (contingent or otherwise)of Borrowers or any Subsidiary existing or arising under any Swap Contract, providedthat (i) such obligations are (or were) entered into by such Person in theordinary course of business for the purpose of directly mitigating risksassociated with liabilities, commitments, investments, assets, or property heldor reasonably anticipated by such Person, or changes in the value of securitiesissued by such Person, and not for purposes of speculation or taking a “marketview;” and (ii) such Swap Contract does not contain any provision exoneratingthe non-defaulting party from its obligation to make payments on outstandingtransactions to the defaulting party; and

 

(e)           Indebtedness in respect of capitalleases, Synthetic Lease Obligations and purchase money obligations for fixed orcapital assets within the limitations set forth in Section 7.01(i); provided,however, that the aggregate amount of all such Indebtedness at any onetime outstanding shall not exceed $2,500,000.

 

**7.04        FundamentalChanges**.  Merge, dissolve, liquidate, consolidate withor into another Person, or Dispose of (whether in one transaction or in aseries of transactions) all or substantially all of its assets (whether nowowned or hereafter acquired) to or in favor of any Person, except that, so longas no Default exists or would result therefrom:

 

(a)           any Subsidiary may merge with (i) aBorrower, provided that such Borrower shall be the continuing orsurviving Person, or (ii) any one or more other Subsidiaries, providedthat when any wholly-owned Subsidiary is merging with another Subsidiary, thewholly-owned Subsidiary shall be the continuing or surviving Person, and, provided further that if aGuarantor is merging with another Subsidiary, the Guarantor shall be thesurviving Person;

 

(b)           any Subsidiary may Dispose of all orsubstantially all of its assets (upon voluntary liquidation or otherwise) to aBorrower or to another Subsidiary; provided that if the transferor insuch a transaction is a wholly-owned Subsidiary, then the transferee musteither be a Borrower or a wholly-owned Subsidiary and, provided further that if the transferor of such assets is aGuarantor, the transferee must either be a Borrower or a Guarantor; and

 

(c)           a Permitted Acquisition may beaccomplished by merger provided that a Borrower shall be the continuing orsurviving Person.

 

**7.05        Dispositions**.  Make any Disposition or enterinto any agreement to make any Disposition, except:

 

(a)           Dispositions of obsolete or worn outproperty, whether now owned or hereafter acquired, in the ordinary course ofbusiness;

 

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(b)           Dispositions of inventory in theordinary course of business;

 

(c)           Dispositions of equipment or realproperty to the extent that (i) such property is exchanged for credit againstthe purchase price of similar replacement property or (ii) the proceeds of suchDisposition are reasonably promptly applied to the purchase price of suchreplacement property;

 

(d)           Dispositions of property by anySubsidiary to a Borrower or to a wholly-owned Subsidiary; provided thatif the transferor of such property is a Guarantor, the transferee thereof musteither be a Borrower or a Guarantor; and

 

(e)           Dispositions permitted by Section7.04.

 

provided, however,that any Disposition pursuant to clauses (a) through (e) shall be for fairmarket value.

 

**7.06        RestrictedPayments**.  Declare or make, directly or indirectly, anyRestricted Payment, or incur any obligation (contingent or otherwise) to do so,or issue or sell any Equity Interests, except that, so long as no Default shallhave occurred and be continuing at the time of any action described below orwould result therefrom:

 

(a)           each Subsidiary may make RestrictedPayments to Borrowers, Guarantors and any other Person that owns an EquityInterest in such Subsidiary, ratably according to their respective holdings ofthe type of Equity Interest in respect of which such Restricted Payment isbeing made;

 

(b)           Borrowers and each Subsidiary maydeclare and make dividend payments or other distributions payable solely in thecommon stock or other common Equity Interests of such Person; and

 

(c)           Borrowers and each Subsidiary maypurchase, redeem or otherwise acquire Equity Interests issued by it with theproceeds received from the substantially concurrent issue of new shares of itscommon stock or other common Equity Interests.

 

**7.07        Change inNature of Business**.  Engage in any material line of businesssubstantially different from those lines of business conducted by Borrowers andtheir Subsidiaries on the date hereof or any business substantially related orincidental thereto.

 

**7.08        Transactionswith Affiliates**.  Without the prior written consent ofAdministrative Agent, which shall not be unreasonably withheld, conditioned, ordelayed, enter into any transaction of any kind with any Affiliate of aBorrower, which is not in the ordinary course of business, other than on fairand reasonable terms substantially as favorable to such Borrower or suchSubsidiary as would be obtainable by such Borrower or such Subsidiary at thetime in a comparable arm’s length transaction with a Person other than anAffiliate, provided that the foregoing restriction shall not apply totransactions between or among any Borrower and any Guarantor or between andamong Guarantors.

 

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**7.09        BurdensomeAgreements**.  Enter into any Contractual Obligation (otherthan this Agreement or any other Loan Document) that (a) limits theability (i) of any Subsidiary to make Restricted Payments to a Borrower orto otherwise transfer property to a Borrower, (ii) of any Subsidiary toGuarantee the Indebtedness of a Borrower or (iii) of a Borrower or anySubsidiary to create, incur, assume or suffer to exist Liens on property ofsuch Person; provided, however, that this clause (iii) shallnot prohibit any negative pledge incurred or provided in favor of any holder ofIndebtedness permitted under Section 7.03(e) solely to theextent any such negative pledge relates to the property financed by or thesubject of such Indebtedness; or (b) requires the grant of a Lien tosecure an obligation of such Person if a Lien is granted to secure anotherobligation of such Person.

 

**7.10        Use ofProceeds**.  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 theFRB) or to extend credit to others for the purpose of purchasing or carryingmargin stock or to refund indebtedness originally incurred for such purpose.

 

**ARTICLE VIII. EVENTS OF DEFAULT AND REMEDIES**

 

**8.01        Events ofDefault**.  Any of the following shall constitute anEvent of Default:

 

(a)           Non-Payment.  Any Borrower or any other Loan Party fails topay (i) within three business days after the same becomes due, any amount ofprincipal of any Loan or any L/C Obligation, or any interest on any Loan or onany L/C Obligation, or any fee due hereunder, or (ii) within five businessdays after the same becomes due, any other amount payable hereunder or underany other Loan Document; or

 

(b)           Specific Covenants.  Borrowers fail to perform or observe anyterm, covenant or agreement contained in any of Section 6.01, 6.02,6.03, 6.05, 6.10, 6.11,6.12 or 6.13 or Article VII;or

 

(c)           Other Defaults.  Any Loan Party fails to perform or observeany 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 suchfailure continues for 30 days or any default or Event of Default occurs underany other Loan Document; or

 

(d)           Representations and Warranties.  Any representation, warranty, certificationor statement of fact made or deemed made by or on behalf of Borrowers or anyother Loan Party herein, in any other Loan Document, or in any documentdelivered in connection herewith or therewith shall be incorrect or misleadingin any material respect when made or deemed made; or

 

(e)           Cross-Default.  (i) Any Borrower or any Subsidiary (A) failsto make any payment when due (whether by scheduled maturity, requiredprepayment, acceleration, demand, or otherwise) in respect of any Indebtednessor Guarantee (other than Indebtedness hereunder and Indebtedness under SwapContracts) having an aggregate principal amount (including undrawn committed oravailable amounts and including amounts owing to all creditors under anycombined or syndicated credit arrangement) of more than the Threshold Amountand such failure 

 

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isnot being diligently contested in good faith by such Borrower or Subsidiary, or(B) fails to observe or perform any other agreement or condition relatingto any such Indebtedness or Guarantee or contained in any instrument oragreement evidencing, securing or relating thereto, or any other event occurs,the effect of which default or other event is to cause, or to permit the holderor holders of such Indebtedness or the beneficiary or beneficiaries of suchGuarantee (or a trustee or agent on behalf of such holder or holders orbeneficiary or beneficiaries) to cause, with the giving of notice if required,such Indebtedness to be demanded or to become due or to be repurchased,prepaid, defeased or redeemed (automatically or otherwise), or an offer torepurchase, prepay, defease or redeem such Indebtedness to be made, prior toits stated maturity, or such Guarantee to become payable or cash collateral inrespect thereof to be demanded; or (ii) there occurs under any SwapContract an Early Termination Date (as defined in such Swap Contract) resultingfrom (A) any event of default under such Swap Contract as to whichBorrowers or any Subsidiary is the Defaulting Party (as defined in such SwapContract) or (B) any Termination Event (as so defined) under such SwapContract as to which Borrowers or any Subsidiary is an Affected Party (as sodefined) and, in either event, the Swap Termination Value owed by Borrowers orsuch Subsidiary as a result thereof is greater than the Threshold Amount; or

 

(f)            Insolvency Proceedings, Etc.  Any Loan Party or any of its Subsidiariesinstitutes or consents to the institution of any proceeding under any DebtorRelief Law, or makes an assignment for the benefit of creditors; or applies foror consents to the appointment of any receiver, trustee, custodian,conservator, liquidator, rehabilitator or similar officer for it or for all orany material part of its property; or any receiver, trustee, custodian,conservator, liquidator, rehabilitator or similar officer is appointed withoutthe application or consent of such Person and the appointment continuesundischarged or unstayed for 60 calendar days; or any proceeding under anyDebtor Relief Law relating to any such Person or to all or any material part ofits property is instituted without the consent of such Person and continues undismissedor unstayed for 60 calendar days, or an order for relief is entered in any suchproceeding; or

 

(g)           Inability to Pay Debts; Attachment.  (i) Any Borrower or any Subsidiaryadmits in writing its inability or fails generally to pay its debts as they becomedue, or (ii) any writ or warrant of attachment or execution or similarprocess is issued or levied against all or any material part of the property ofany such Person and is not released, vacated or fully bonded within 30 daysafter its issue or levy; or

 

(h)           Judgments.  There is entered against any Borrower or anySubsidiary (i) one or more final judgments or orders for the payment ofmoney in an aggregate amount (as to all such judgments or orders) exceeding theThreshold Amount (to the extent not covered by independent third-partyinsurance as to which the insurer does not dispute coverage), or (ii) anyone or more non-monetary final judgments that have, or could reasonably beexpected to have, individually or in the aggregate, a Material Adverse Effectand, in either case, (A) enforcement proceedings are commenced by anycreditor upon such judgment or order, or (B) there is a period of 10consecutive days during which a stay of enforcement of such judgment, by reasonof a pending appeal or otherwise, is not in effect; or

 

(i)            ERISA.  (i) An ERISA Event occurs with respectto a Pension Plan or Multiemployer Plan which has resulted or could reasonablybe expected to result in liability of 

 

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anyBorrower under Title IV of ERISA to the Pension Plan, Multiemployer Planor the PBGC in an aggregate amount in excess of the Threshold Amount, or (ii) anyBorrower or any ERISA Affiliate fails to pay when due, after the expiration ofany applicable grace period, any installment payment with respect to itswithdrawal liability under Section 4201 of ERISA under a MultiemployerPlan in an aggregate amount in excess of the Threshold Amount; or

 

(j)            Invalidity of Loan Documents.  Any Loan Document or any provision thereof,at any time after its execution and delivery and for any reason other than asexpressly permitted hereunder or thereunder or satisfaction in full of all theObligations, ceases to be in full force and effect; or any Loan Party or anyother Person contests in any manner the validity or enforceability of any LoanDocument or any provision thereof; or any Loan Party denies that it has any orfurther liability or obligation under any Loan Document, or purports to revoke,terminate or rescind any Loan Document or any provision thereof; or

 

(k)           Change of Control.  There occurs any Change of Control withrespect to any Borrower other than SIHoldings; or

 

(l)            Material Adverse Effect.  There occurs any event or circumstance thathas a Material Adverse Effect.

 

**8.02        RemediesUpon Event of Default**.  If any Event of Default occurs and iscontinuing, Administrative Agent shall, at the request of, or may, with theconsent of, the Required Lenders, take any or all of the following actions:

 

(a)           declare the commitment of each Lenderto make Loans and any obligation of the L/C Issuer to make L/C CreditExtensions to be terminated, whereupon such commitments and obligation shall beterminated;

 

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

 

(c)           require that Borrowers CashCollateralize the L/C Obligations (in an amount equal to the then OutstandingAmount thereof); and

 

(d)           exercise on behalf of itself, theLenders and the L/C Issuer all rights and remedies available to it, the Lendersand the L/C Issuer under the Loan Documents;

 

provided, however,that upon the occurrence of an actual or deemed entry of an order for reliefwith respect to Borrowers under the Bankruptcy Code of the United States, theobligation of each Lender to make Loans and any obligation of the L/C Issuer tomake L/C Credit Extensions shall automatically terminate, the unpaid principalamount of all outstanding Loans and all interest and other amounts as aforesaidshall automatically become due and payable, and the obligation of Borrowers toCash Collateralize the L/C Obligations as aforesaid shall automatically becomeeffective, in each case without further act of Administrative Agent or anyLender.

 

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**8.03        Applicationof Funds**.  After the exercise of remedies provided forin Section 8.02 (or after the Loans have automatically becomeimmediately due and payable and the L/C Obligations have automatically beenrequired to be Cash Collateralized as set forth in the proviso to Section 8.02),any amounts received on account of the Obligations shall, subject to theprovisions of Sections 2.15 and 2.16 be applied by Administrative Agentin the following order:

 

First, to payment ofthat portion of the Obligations constituting fees, indemnities, expenses andother amounts (including fees, charges and disbursements of counsel toAdministrative Agent (including fees and time charges for attorneys who may beemployees of Administrative Agent) and amounts payable under Article III)payable to Administrative Agent in its capacity as such;

 

Second, to payment ofthat portion of the Obligations constituting fees, indemnities and otheramounts (other than principal, interest and L/C Fees) payable to Lenders andthe L/C Issuer (including fees, charges and disbursements of counsel to therespective Lenders and the L/C Issuer (including fees and time charges forattorneys who may be employees of any Lender or the L/C Issuer) and amountspayable under Article III), ratably among them in proportion to therespective amounts described in this clause Second payable to them;

 

Third, to payment ofthat portion of the Obligations constituting accrued and unpaid L/C Fees andinterest on the Loans, L/C Borrowings and other Obligations arising under theLoan Documents, ratably among Lenders and the L/C Issuer in proportion to therespective amounts described in this clause Third payable to them;

 

Fourth, to payment ofthat portion of the Obligations constituting unpaid principal of the Loans, L/CBorrowings and Obligations then owing under Secured Hedge Agreements andSecured Cash Management Agreements, ratably among Lenders, the L/C Issuer, theHedge Banks and the Cash Management Banks in proportion to the respectiveamounts described in this clause Fourth held by them;

 

Fifth, toAdministrative Agent for the account of the L/C Issuer, to Cash Collateralizethat portion of L/C Obligations comprised of the aggregate undrawn amount ofLetters of Credit to the extent not otherwise Cash Collateralized by theBorrower pursuant to Sections 2.03 and 2.15; and

 

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

 

Subjectto Section 2.03(c) and 2.15, amounts used to Cash Collateralizethe aggregate undrawn amount of Letters of Credit pursuant to clause Fifthabove shall be applied to satisfy drawings under such Letters of Credit as theyoccur.  If any amount remains on depositas Cash Collateral after all Letters of Credit have either been fully drawn orexpired, such remaining amount shall be applied to the other Obligations, ifany, in the order set forth above.

 

Notwithstandingthe foregoing, Obligations arising under Secured Cash Management Agreements andSecured Hedge Agreements shall be excluded from the application described aboveif Administrative Agent has not received written notice thereof, together withsuch supporting documentation as Administrative Agent may request, from theapplicable Cash Management Bank or Hedge Bank, as the case may be.  Each Cash Management Bank or Hedge 

 

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Banknot a party to this Agreement that has given the notice contemplated by thepreceding sentence shall, by such notice, be deemed to have acknowledged andaccepted the appointment of the Administrative Agent pursuant to the terms of Article IXhereof for itself and its Affiliates as if a “Lender” party hereto.

 

**ARTICLE IX.  ADMINISTRATIVE AGENT**

 

**9.01        Appointmentand Authorization of Administrative Agent**.  (a)** **Each of the Lenders and theL/C Issuer hereby irrevocably appoints Bank of America to act on its behalf asAdministrative Agent hereunder and under the other Loan Documents andauthorizes Administrative Agent to take such actions on its behalf and toexercise such powers as are delegated to Administrative Agent by the termshereof and thereof, together with such actions and powers as are reasonablyincidental thereto.  The provisions ofthis Article are solely for the benefit of Administrative Agent, theLenders and the L/C Issuer, and neither Borrowers nor any other Loan Partyshall have rights as a third party beneficiary of any of such provisions.

 

(b)           AdministrativeAgent shall also act as the “collateral agent” under the Loan Documents, andeach of the Lenders (including in its capacities as a potential HedgeBank and a potential Cash Management Bank) and the L/C Issuer hereby irrevocably appoints and authorizesAdministrative Agent to act as the agent of such Lender and the L/C Issuer forpurposes of acquiring, holding and enforcing any and all Liens on Collateralgranted by any of the Loan Parties to secure any of the Obligations, togetherwith such powers and discretion as are reasonably incidental thereto.  In this connection, Administrative Agent, as “collateralagent” and any co-agents, sub-agents and attorneys-in-fact appointed byAdministrative Agent pursuant to Section 9.05 or otherwise forpurposes of holding or enforcing any Lien on the Collateral (or any portionthereof) granted under the Collateral Documents, or for exercising any rightsand remedies thereunder at the direction of Administrative Agent), shall beentitled to the benefits of all provisions of this Article IX and Article X,as though such co-agents, sub-agents and attorneys-in-fact were the “collateralagent” under the Loan Documents as if set forth in full herein with respectthereto.  The Collateral Agent shall nothave any authority or responsibility to exercise rights or remedies withrespect to the Collateral or Collateral Documents.

 

**9.02        Rights as aLender**.  The Person serving as Administrative Agenthereunder shall have the same rights and powers in its capacity as a Lender asany other Lender and may exercise the same as though it were not AdministrativeAgent and the term “Lender” or “Lenders” shall, unless otherwise expresslyindicated or unless the context otherwise requires, include the Person servingas Administrative Agent hereunder in its individual capacity.  Such Person and its Affiliates may acceptdeposits from, lend money to, act as the financial advisor or in any otheradvisory capacity for and generally engage in any kind of business withBorrowers or any Subsidiary or other Affiliate thereof as if such Person werenot Administrative Agent hereunder and without any duty to account therefor toLenders.

 

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**9.03        ExculpatoryProvisions**. Administrative Agent shall not have any duties or obligations exceptthose expressly set forth herein and in the other Loan Documents.  Without limiting the generality of the foregoing,Administrative Agent:

 

(a)           shall not be subject to any fiduciaryor other implied duties, regardless of whether a Default has occurred and iscontinuing;

 

(b)           shall not have any duty to take anydiscretionary action or exercise any discretionary powers, except discretionaryrights and powers expressly contemplated hereby or by the other Loan Documentsthat Administrative Agent is required to exercise as directed in writing by theRequired Lenders (or such other number or percentage of the Lenders as shall beexpressly provided for herein or in the other Loan Documents), providedthat Administrative Agent shall not be required to take any action that, in itsopinion or the opinion of its counsel, may expose Administrative Agent toliability or that is contrary to any Loan Document or applicable Law; and

 

(c)           shall not, except as expressly setforth herein and in the other Loan Documents, have any duty to disclose, andshall not be liable for the failure to disclose, any information relating toBorrowers or any of its Affiliates that is communicated to or obtained by thePerson serving as Administrative Agent or any of its Affiliates in anycapacity.

 

(d)           Administrative Agent shall not beliable for any action taken or not taken by it (i) with the consent or atthe request of the Required Lenders (or such other number or percentage of theLenders as shall be necessary, or as Administrative Agent shall believe in goodfaith shall be necessary, under the circumstances as provided in Sections8.02 and 10.01) or (ii) in the absence of its own gross negligenceor willful misconduct.  AdministrativeAgent shall be deemed not to have knowledge of any Default unless and untilwritten notice describing such Default is given to Administrative Agent byBorrowers, a Lender or the L/C Issuer. Administrative Agent shall not be responsible for or have any duty toascertain or inquire into (i) any statement, warranty or representationmade in or in connection with this Agreement or any other Loan Document, (ii) thecontents of any certificate, report or other document delivered hereunder orthereunder or in connection herewith or therewith, (iii) the performanceor observance of any of the covenants, agreements or other terms or conditionsset forth herein or therein or the occurrence of any Default, (iv) thevalidity, enforceability, effectiveness or genuineness of this Agreement, anyother Loan Document or any other agreement, instrument or document or (v) thesatisfaction of any condition set forth in Article IV or elsewhereherein, other than to confirm receipt of items expressly required to bedelivered to Administrative Agent.

 

**9.04        Reliance byAdministrative Agent**. Administrative Agent shall be entitled to rely upon, and shall not incurany liability for relying upon, any notice, request, certificate, consent, statement,instrument, document or other writing (including any electronic message, Internetor intranet website posting or other distribution) believed by it to be genuineand to have been signed, sent or otherwise authenticated by the properPerson.  Administrative Agent also mayrely upon any statement made to it orally or by telephone and believed by it tohave been made by the proper Person, and shall not incur any liability forrelying thereon.  In determining compliancewith any condition hereunder to the making of a Loan, or the issuance of aLetter of Credit, that by its terms must be fulfilled to the satisfaction of aLender or the L/C Issuer, 

 

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AdministrativeAgent may presume that such condition is satisfactory to such Lender or the L/CIssuer unless Administrative Agent shall have received notice to the contraryfrom such Lender or the L/C Issuer prior to the making of such Loan or theissuance of such Letter of Credit. Administrative Agent may consult with legal counsel (who may be counselfor Borrowers), independent accountants and other experts selected by it, andshall not be liable for any action taken or not taken by it in accordance withthe advice of any such counsel, accountants or experts.

 

**9.05        Delegationof Duties**.  Administrative Agent may perform any and allof its duties and exercise its rights and powers hereunder or under any otherLoan Document by or through any one or more sub-agents appointed byAdministrative Agent.  AdministrativeAgent and any such sub-agent may perform any and all of its duties and exerciseits rights and powers by or through their respective Related Parties.  The exculpatory provisions of this Article shallapply to any such sub-agent and to the Related Parties of Administrative Agentand any such sub-agent, and shall apply to their respective activities inconnection with the syndication of the credit facilities provided for herein aswell as activities as Administrative Agent.

 

**9.06        Resignationof Administrative Agent**.  (a) Administrative Agent may at any timegive notice of its resignation to Lenders, the L/C Issuer and Borrowers.  Upon receipt of any such notice ofresignation, the Lenders shall have the right, in consultation with Borrowers,to appoint a successor, which shall be a bank with an office in the UnitedStates, or an Affiliate of any such bank with an office in the UnitedStates.  If no such successor shall havebeen so appointed by the Lenders and shall have accepted such appointment within30 days after the retiring Administrative Agent gives notice of itsresignation, then the retiring Administrative Agent may on behalf of Lendersand the L/C Issuer, appoint a successor Administrative Agent meeting thequalifications set forth above; provided that if Administrative Agentshall notify Borrowers and the Lenders that no qualifying Person has acceptedsuch appointment, then such resignation shall nonetheless become effective inaccordance with such notice and (1) the retiring Administrative Agentshall be discharged from its duties and obligations hereunder and under theother Loan Documents (except that in the case of any collateral security heldby Administrative Agent on behalf of the Lenders or the L/C Issuer under any ofthe Loan Documents, the retiring Administrative Agent shall continue to holdsuch collateral security until such time as a successor Administrative Agent isappointed) and (2) all payments, communications and determinationsprovided to be made by, to or through Administrative Agent shall instead bemade by or to each Lender and the L/C Issuer directly, until such time as theLenders appoint a successor Administrative Agent as provided for above in thisSection.  Upon the acceptance of asuccessor’s appointment as Administrative Agent hereunder, such successor shallsucceed to and become vested with all of the rights, powers, privileges andduties of the retiring (or retired) Administrative Agent, and the retiringAdministrative Agent shall be discharged from all of its duties and obligationshereunder or under the other Loan Documents (if not already dischargedtherefrom as provided above in this Section). The fees payable by Borrowers to a successor Administrative Agent shallbe the same as those payable to its predecessor unless otherwise agreed betweenBorrowers and such successor.  After theretiring Administrative Agent’s resignation hereunder and under the other LoanDocuments, the provisions of this Article and Section 10.04shall continue in effect for the benefit of such retiring Administrative Agent,its sub-agents and their respective Related Parties in respect of any actionstaken or omitted to be 

 

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takenby any of them while the retiring Administrative Agent was acting asAdministrative Agent.

 

(b)           Any resignation by Bank of America asAdministrative Agent pursuant to this Section shall also constitute itsresignation as L/C Issuer and Swing Line Lender.  Upon the acceptance of a successor’sappointment as Administrative Agent hereunder, (a) such successor shallsucceed to and become vested with all of the rights, powers, privileges andduties of the retiring L/C Issuer and Swing Line Lender, (b) the retiringL/C Issuer and Swing Line Lender shall be discharged from all of theirrespective duties and obligations hereunder or under the other Loan Documents,and (c) the successor L/C Issuer shall issue letters of credit insubstitution for the Letters of Credit, if any, outstanding at the time of suchsuccession or make other arrangements satisfactory to the retiring L/C Issuerto effectively assume the obligations of the retiring L/C Issuer with respectto such Letters of Credit.

 

**9.07        Non-Relianceon Administrative Agent and Other Lenders**.  Each Lender and the L/C Issueracknowledges that it has, independently and without reliance uponAdministrative Agent or any other Lender or any of their Related Parties andbased on such documents and information as it has deemed appropriate, made itsown credit analysis and decision to enter into this Agreement.  Each Lender and the L/C Issuer alsoacknowledges that it will, independently and without reliance uponAdministrative Agent or any other Lender or any of their Related Parties and basedon such documents and information as it shall from time to time deemappropriate, continue to make its own decisions in taking or not taking actionunder or based upon this Agreement, any other Loan Document or any relatedagreement or any document furnished hereunder or thereunder.

 

**9.08        No OtherDuties, Etc**.  Anything herein to the contrarynotwithstanding, no Lender holding a title listed on the cover page hereof(including, without limitation, the Collateral Agent) shall have any rights,powers, duties, obligations or responsibilities under this Agreement or any ofthe other Loan Documents, except in its capacity, as applicable, asAdministrative Agent, a Lender or the L/C Issuer hereunder.  Without limiting the foregoing, none of theLenders or other Persons so identified shall have or be deemed to have anyfiduciary relationship with any Lender. Each Lender acknowledges that it has not relied, and will not rely, onany of the Lenders or other Persons so identified in deciding to enter intothis Agreement or in taking or not taking action hereunder.

 

**9.09        AdministrativeAgent May File Proofs of Claim**.  In case of the pendency of any proceedingunder any Debtor Relief Law or any other judicial proceeding relative to anyLoan Party, Administrative Agent (irrespective of whether the principal of anyLoan or L/C Obligation shall then be due and payable as herein expressed or bydeclaration or otherwise and irrespective of whether Administrative Agent shallhave made any demand on Borrowers) shall be entitled and empowered, byintervention in such proceeding or otherwise:

 

(a)           to file and prove a claim for thewhole amount of the principal and interest owing and unpaid in respect of theLoans, L/C Obligations and all other Obligations that are owing and unpaid andto file such other documents as may be necessary or advisable in order to havethe claims of Lenders, the L/C Issuer and Administrative Agent (including anyclaim for the reasonable compensation, expenses, disbursements and advances ofLenders, the L/C Issuer and 

 

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AdministrativeAgent and their respective agents and counsel and all other amounts dueLenders, the L/C Issuer and Administrative Agent under Sections 2.03(i) and(j), 2.09 and 10.04) allowed in such judicial proceeding;and

 

(b)           to collect and receive any monies orother property payable or deliverable on any such claims and to distribute thesame;

 

andany custodian, receiver, assignee, trustee, liquidator, sequestrator or othersimilar official in any such judicial proceeding is hereby authorized by eachLender and the L/C Issuer to make such payments to Administrative Agent and, inthe event that Administrative Agent shall consent to the making of suchpayments directly to Lenders and the L/C Issuer, to pay to Administrative Agentany amount due for the reasonable compensation, expenses, disbursements andadvances of Administrative Agent and its agents and counsel, and any otheramounts due Administrative Agent under Sections 2.09 and 10.04.  Nothing contained herein shall be deemed toauthorize Administrative Agent to authorize or consent to or accept or adopt onbehalf of any Lender or the L/C Issuer any plan of reorganization, arrangement,adjustment or composition affecting the Obligations or the rights of any Lenderor the L/C Issuer or to authorize Administrative Agent to vote in respect ofthe claim of any Lender or the L/C Issuer in any such proceeding.

 

**9.10        CollateralMatters**. (a) Each Lender (including in its capacities as a potentialHedge Bank and a potential Cash Management Bank) and the L/C Issuer hereby irrevocably authorizes and directsAdministrative Agent to enter into the Collateral Documents for the benefit ofsuch Lender and the L/C Issuer.  EachLender (including in its capacities as a potential Hedge Bank and apotential Cash Management Bank) and theL/C Issuer hereby agrees, and each holder of any Note by the acceptance thereofwill be deemed to agree, that, except as otherwise set forth in Section 10.01,any action taken by the Required Lenders, in accordance with the provisions ofthis Agreement or the Collateral Documents, and the exercise by the RequiredLenders of the powers set forth herein or therein, together with such otherpowers as are reasonably incidental thereto, shall be authorized and bindingupon all of Lenders and the L/C Issuer. Administrative Agent is hereby authorized (but not obligated) on behalfof all of Lenders (including in its capacities as a potential Hedge Bankand a potential Cash Management Bank) andthe L/C Issuer, without the necessity of any notice to or further consent fromany Lender or the L/C Issuer from time to time prior to, an Event of Default,to take any action with respect to any Collateral or Collateral Documents whichmay be necessary to perfect and maintain perfected the Liens upon theCollateral granted pursuant to the Collateral Documents.

 

(b)           EachLender (including in its capacities as a potential Hedge Bank and a potentialCash Management Bank) and the L/CIssuer hereby irrevocably authorize Administrative Agent, at its option and inits discretion,

 

(i)            torelease any Lien on any property granted to or held by Administrative Agentunder any Loan Document (A) upon termination of the Aggregate Commitmentsand payment in full of all Obligations (other than (A) contingentindemnification obligations and (B) obligations and liabilitiesunder Secured Cash Management Agreements and Secured Hedge Agreements as towhich arrangements satisfactory to the applicable Cash Management Bank or HedgeBank shall have been made) and theexpiration or termination of all Letters of Credit, (B) that is sold or tobe sold as part of or 

 

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in connection with any sale permitted hereunder orunder any other Loan Document, (C) subject to Section 10.01,if approved, authorized or ratified in writing by the Required Lenders, or (D) inconnection with any foreclosure sale or other disposition of Collateral afterthe occurrence of an Event of Default; and

 

(ii)           tosubordinate any Lien on any property granted to or held by Administrative Agentunder any Loan Document to the holder of any Lien on such property that ispermitted by this Agreement or any other Loan Document.

 

Upon request by Administrative Agent at any time,each Lender and the L/C Issuer will confirm in writing Administrative Agent’sauthority to release or subordinate its interest in particular types or itemsof Collateral pursuant to this Section 9.10.

 

(c)           Subjectto (b) above, Administrative Agent shall (and is hereby irrevocablyauthorized by each Lender and the L/C Issuer, to) execute such documents as maybe necessary to evidence the release or subordination of the Liens granted toAdministrative Agent for the benefit of Administrative Agent and Lenders andthe L/C Issuer herein or pursuant hereto upon the applicable Collateral;provided that (i) Administrative Agent shall not be required to executeany such document on terms which, in Administrative Agent’s opinion, wouldexpose Administrative Agent to or create any liability or entail anyconsequence other than the release or subordination of such Liens withoutrecourse or warranty and (ii) such release or subordination shall not inany manner discharge, affect or impair the Obligations or any Liens upon (orobligations of Borrowers or any other Loan Party in respect of) all interestsretained by Borrowers or any other Loan Party, including the proceeds of thesale, all of which shall continue to constitute part of the Collateral.  In the event of any sale or transfer of Collateral,or any foreclosure with respect to any of the Collateral, Administrative Agentshall be authorized to deduct all expenses reasonably incurred byAdministrative Agent from the proceeds of any such sale, transfer orforeclosure.

 

(d)           AdministrativeAgent shall have no obligation whatsoever to any Lender, the L/C Issuer or anyother Person to assure that the Collateral exists or is owned by Borrowers orany other Loan Party or is cared for, protected or insured or that the Liensgranted to Administrative Agent herein or in any of the Collateral Documents orpursuant hereto or thereto have been properly or sufficiently or lawfullycreated or (absent direction from the Required Lenders) enforced, or toexercise or to continue exercising at all or in any manner or under any duty ofcare, disclosure or fidelity any of the rights, authorities and powers grantedor available to Administrative Agent in this Section 9.10 or in anyof the Collateral Documents, it being understood and agreed that in respect of theCollateral, or any act, omission or event related thereto, Administrative Agentmay act in any manner it may deem appropriate, in its sole discretion, givenAdministrative Agent’s own interest in the Collateral as one of Lenders andthat Administrative Agent shall have no duty or liability whatsoever to Lendersor the L/C Issuer.

 

(e)           EachLender and the L/C Issuer herebyappoints each other Lender as agent for the purpose of perfecting Lenders’ andthe L/C Issuer’s security interest in assets which, in accordance with Article 9of the UCC can be perfected only by possession. Should any Lender or the L/C Issuer (other than Administrative Agent)obtain possession of any such Collateral, such Lender or the L/C Issuer shallnotify Administrative Agent thereof, and, promptly upon 

 

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Administrative Agent’s request therefor shalldeliver such Collateral to Administrative Agent or in accordance withAdministrative Agent’s instructions.

 

**9.11        Secured CashManagement Agreements and Secured Hedge Agreements**.  No Cash Management Bank or HedgeBank that obtains the benefits of Section 8.03, the Security Agreement orany Collateral by virtue of the provisions hereof or of the Security Agreementor any Collateral Document shall have any right to notice of any action or toconsent to, direct or object to any action hereunder or under any other LoanDocument or otherwise in respect of the Collateral (including the release orimpairment of any Collateral) other than in its capacity as a Lender and, insuch case, only to the extent expressly provided in the Loan Documents.  Notwithstanding any other provision of this Article IXto the contrary, Administrative Agent shall not be required to verify thepayment of, or that other satisfactory arrangements have been made with respectto, Obligations arising under Secured Cash Management Agreements and SecuredHedge Agreements unless Administrative Agent has received written notice ofsuch Obligations, together with such supporting documentation as AdministrativeAgent may request, from the applicable Cash Management Bank or Hedge Bank, asthe case may be.

 

**ARTICLE X.  MISCELLANEOUS**

 

**10.01      Amendments, Etc. **No amendment or waiver ofany provision of this Agreement or any other Loan Document, and no consent toany departure by Borrowers or any other Loan Party therefrom, shall beeffective unless in writing signed by the Required Lenders and Borrowers or theapplicable Loan Party, as the case may be, and acknowledged by AdministrativeAgent, and each such waiver or consent shall be effective only in the specificinstance and for the specific purpose for which given; provided, however,that no such amendment, waiver or consent shall:

 

(a)           waive any condition set forth in Section 4.01(a) withoutthe written consent of each Lender; provided, however, in thesole discretion of Administrative Agent, only a waiver by Administrative Agentshall be required with respect to immaterial matters or items specified in Section 4.01(a) (iii) or(iv) with respect to which Borrowers have given assurancessatisfactory to Administrative Agent that such items shall be deliveredpromptly following the Closing Date;

 

(b)           extend or increase the Commitment ofany Lender (or reinstate any Commitment terminated pursuant to Section 8.02)without the written consent of such Lender;

 

(c)           postpone any date fixed by thisAgreement or any other Loan Document for any payment (excluding mandatoryprepayments) of principal, interest, fees or other amounts due to Lenders (orany of them) hereunder or under any other Loan Document without the writtenconsent of each Lender directly affected thereby;

 

(d)           reduce the principal of, or the rateof interest specified herein on, any Loan or L/C Borrowing, or (subject toclause (iv) of the second proviso to this Section 10.01) anyfees or other amounts payable hereunder or under any other Loan Document,without the written consent of each Lender directly affected thereby; provided,however, that only the consent of the Required Lenders shall benecessary (i) to amend the definition of “Default Rate” or to waive anyobligation of Borrowers to pay interest or L/C Fees at the Default Rate or (ii) toamend any 

 

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financialcovenant hereunder (or any defined term used therein), unless the effect ofsuch amendment would be to reduce the rate of interest on any Loan or L/CBorrowing or to reduce any fee payable hereunder, in which case the consent ofall Lenders shall be required;

 

(e)           change Section 2.13 or Section 8.03in a manner that would alter the pro rata sharing of payments required therebywithout the written consent of each Lender;

 

(f)            change any provision of this Section orthe definition of “Required Lenders” or any other provision hereof specifyingthe number or percentage of Lenders required to amend, waive or otherwisemodify any rights hereunder or make any determination or grant any consenthereunder, without the written consent of each Lender; or

 

(g)           release any Borrower as an obligorhereunder, or release any Guarantor from the Guaranty or release the Liens onall or substantially all of the Collateral in any transaction or series ofrelated transactions except in accordance with the terms of any Loan Document,without the written consent of each Lender;

 

and,providedfurther, that (i) no amendment, waiver or consentshall, unless in writing and signed by the L/C Issuer in addition to theLenders required above, affect the rights or duties of the L/C Issuer underthis Agreement or any Issuer Document relating to any Letter of Credit issuedor to be issued by it; (ii) no amendment, waiver or consent shall, unlessin writing and signed by Swing Line Lender in addition to the Lenders requiredabove, affect the rights or duties of Swing Line Lender under this Agreement; (iii) noamendment, waiver or consent shall, unless in writing and signed byAdministrative Agent in addition to the Lenders required above, affect therights or duties of Administrative Agent under this Agreement or any other LoanDocument; and (iv) the Administrative Agent Fee Letter may be amended, orrights or privileges thereunder waived, in a writing executed only by theparties thereto.  Notwithstandinganything to the contrary herein, no Defaulting Lender shall have any right toapprove or disapprove any amendment, waiver or consent hereunder (and anyamendment, waiver or consent which by its terms requires the consent of allLenders or each affected Lender may be effected with the consent of theapplicable Lenders other than Defaulting Lenders), except that (x) theCommitment of any Defaulting Lender may not be increased or extended withoutthe consent of such Lender and (y) any waiver, amendment or modificationrequiring the consent of all Lenders or each affected Lender that by its termsaffects any Defaulting Lender more adversely than other affected Lenders shallrequire the consent of such Defaulting Lender.

 

Notwithstandingany provision herein to the contrary, this Agreement may be amended with thewritten consent of Required Lenders, Administrative Agent and Borrowers (i) toadd one or more additional revolving credit or term loan facilities to thisAgreement , in each case subject to the limitations in Section 2.14,and to permit the extensions of credit and all related obligations andliabilities arising in connection therewith from time to time outstanding toshare ratably (or on a basis subordinated to the existing facilities hereunder)in the benefits of this Agreement and the other Loan Documents with theobligations and liabilities from time to time outstanding in respect of theexisting facilities hereunder, and (ii) in connection with the foregoing,to permit, as deemed appropriate by Administrative Agent and approved by theRequired Lenders, the Lenders providing such additional credit facilities toparticipate in any 

 

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requiredvote or action required to be approved by the Required Lenders or by any othernumber, percentage or class of Lenders hereunder.

 

**10.02      Notices;Effectiveness; Electronic Communications**.  (a) Notices Generally.  Except in the case of notices and othercommunications expressly permitted to be given by telephone (and except asprovided in subsection (b) below), all notices and other communicationsprovided for herein shall be in writing and shall be delivered by hand orovernight courier service, mailed by certified or registered mail or sent bytelecopier as follows, and all notices and other communications expressly permittedhereunder to be given by telephone shall be made to the applicable telephonenumber, as follows:

 

(i)            if to Borrowers, AdministrativeAgent, the L/C Issuer or Swing Line Lender, to the address, telecopier number,electronic mail address or telephone number specified for such Person on Schedule10.02 ; and

 

(ii)           if to any other Lender, to theaddress, telecopier number, electronic mail address or telephone numberspecified in its Administrative Questionnaire (including, as appropriate,notices delivered solely to the Person designated by a Lender on itsAdministrative Questionnaire then in effect for the delivery of notices thatmay contain material non-public information relating to the Borrower).

 

Noticessent by hand or overnight courier service, or mailed by certified or registeredmail, shall be deemed to have been given when received; notices sent bytelecopier shall be deemed to have been given when sent (except that, if notgiven during normal business hours for the recipient, shall be deemed to havebeen given at the opening of business on the next business day for therecipient).  Notices delivered throughelectronic 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 Lendersand the L/C Issuer hereunder may be delivered or furnished by electroniccommunication (including e-mail and Internet or intranet websites) pursuant toprocedures approved by Administrative Agent, provided that the foregoing shallnot apply to notices to any Lender or the L/C Issuer pursuant to Article IIif such Lender or the L/C Issuer, as applicable has notified AdministrativeAgent that it is incapable of receiving notices under such Article byelectronic communication.  AdministrativeAgent or Borrowers may, in its or their discretion, agree to accept notices andother communications to it or them hereunder by electronic communicationspursuant to procedures approved by it, provided that approval of suchprocedures may be limited to particular notices or communications.  Unless Administrative Agent otherwiseprescribes, (i) notices and other communications sent to an e-mail addressshall be deemed received upon the sender’s receipt of an acknowledgement fromthe intended recipient (such as by the “return receipt requested” function, asavailable, return e-mail or other written acknowledgement), providedthat if such notice or other communication is not sent during the normalbusiness hours of the recipient, such notice or communication shall be deemedto have been sent at the opening of business on the next business day for therecipient, and (ii) notices or communications posted to an Internet orintranet website shall be deemed received upon the deemed receipt by theintended recipient at its e-mail address as described in the foregoingclause (i) of notification that such notice or communication isavailable and identifying the website address therefor.

 

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(c)           The Platform.  THE PLATFORM IS PROVIDED “AS IS” AND “ASAVAILABLE.”  THE AGENT PARTIES (ASDEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF BORROWERMATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FORERRORS IN OR OMISSIONS FROM BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDINGANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODEDEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH BORROWER MATERIALSOR THE PLATFORM.  In no event shallAdministrative Agent or any of its Related Parties (collectively, the “AdministrativeAgent Parties”) have any liability to Borrowers, any Lender, the L/C Issueror any other Person for losses, claims, damages, liabilities or expenses of anykind (whether in tort, contract or otherwise) arising out of Borrowers’ orAdministrative Agent’s transmission of Borrower Materials through the Internet,except to the extent that such losses, claims, damages, liabilities or expensesare determined by a court of competent jurisdiction by a final andnonappealable judgment to have resulted from the gross negligence or willfulmisconduct of such Administrative Agent Party; provided, however, that in noevent shall any Administrative Agent Party have any liability to Borrowers, anyLender, 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 Borrowers, Administrative Agent, theL/C Issuer and Swing Line Lender may change its address, telecopier ortelephone number for notices and other communications hereunder by notice tothe other parties hereto.  Each otherLender may change its address, telecopier or telephone number for notices andother communications hereunder by notice to Borrowers, Administrative Agent,the L/C Issuer and Swing Line Lender.  Inaddition, each Lender agrees to notify Administrative Agent from time to timeto ensure that Administrative Agent has on record (i) an effectiveaddress, contact name, telephone number, telecopier number and electronic mailaddress to which notices and other communications may be sent and (ii) accuratewire instructions for such Lender. Furthermore, each Public Lender agrees to cause at least one individualat or on behalf of such Public Lender to at all times have selected the “PrivateSide Information” or similar designation on the content declaration screen ofthe Platform in order to enable such Public Lender or its delegate, inaccordance with such Public Lender’s compliance procedures and applicable Law,including United States Federal and state securities Laws, to make reference toBorrower Materials that are not made available through the “Public SideInformation” portion of the Platform and that may contain material non-publicinformation with respect to the Borrowers or their securities for purposes ofUnited States Federal or state securities laws.

 

(e)           Reliance by Administrative Agent.L/C Issuer and Lenders.** **Administrative Agent, the L/CIssuer and 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 Borrowers even if (i) such noticeswere not made in a manner specified herein, were incomplete or were notpreceded or followed by any other form of notice specified herein, or (ii) theterms thereof, as understood by the recipient, varied from any confirmationthereof.  Borrowers shall indemnifyAdministrative Agent, the L/C Issuer, each Lender and the Related Parties ofeach of them from all losses, costs, expenses and liabilities resulting fromthe reliance 

 

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bysuch Person on each notice purportedly given by or on behalf of Borrowers.  All telephonic notices to and othertelephonic communications with Administrative Agent may be recorded byAdministrative Agent, and each of the parties hereto hereby consents to suchrecording.

 

**10.03      No Waiver;Cumulative Remedies**.  No failure by any Lender, the L/C Issuer orAdministrative Agent to exercise, and no delay by any such Person inexercising, any right, remedy, power or privilege hereunder shall operate as awaiver thereof; nor shall any single or partial exercise of any right, remedy,power or privilege hereunder preclude any other or further exercise thereof orthe exercise of any other right, remedy, power or privilege.  The rights, remedies, powers and privilegesherein provided are cumulative and not exclusive of any rights, remedies,powers and privileges provided by law.

 

**10.04      Expenses;Indemnity; Damage Waiver**.  (a) Costs and Expenses.  Borrowers shall jointly and severally pay(i) all reasonable out-of-pocket expenses incurred by Administrative Agentand its Affiliates (including the reasonable fees, charges and disbursements ofcounsel for Administrative Agent), in connection with the syndication of thecredit facilities provided for herein, the preparation, negotiation, execution,delivery and administration of this Agreement and the other Loan Documents orany amendments, modifications or waivers of the provisions hereof or thereof(whether or not the transactions contemplated hereby or thereby shall beconsummated), (ii) all reasonable out-of-pocket expenses incurred by theL/C Issuer in connection with the issuance, amendment, renewal or extension ofany Letter of Credit or any demand for payment thereunder and (iii) allout-of-pocket expenses incurred by Administrative Agent, any Lender or the L/CIssuer (including the fees, charges and disbursements of any counsel forAdministrative Agent, any Lender or the L/C Issuer), and shall pay all fees andtime charges for attorneys who may be employees of Administrative Agent, anyLender or the L/C Issuer, in connection with the enforcement or protection ofits rights (A) in connection with this Agreement and the other LoanDocuments, including its rights under this Section, or (B) in connectionwith the Loans made or Letters of Credit issued hereunder, including all suchout-of-pocket expenses incurred during any workout, restructuring ornegotiations in respect of such Loans or Letters of Credit.

 

(b)           Indemnification by Borrowers.  Borrowers shall indemnify AdministrativeAgent (and any sub-agent thereof), each Lender and the L/C Issuer, and eachRelated Party of any of the foregoing Persons (each such Person being called an“Indemnitee”) against, and hold each Indemnitee harmless from, any andall losses, claims, damages, liabilities and related expenses (including thefees, charges and disbursements of any counsel for any Indemnitee), and shall indemnify and holdharmless each Indemnitee from all fees and time charges and disbursements forattorneys who may be employees of any Indemnitee, incurred by any Indemnitee orasserted against any Indemnitee by any third party or by Borrowers or any otherLoan Party arising out of, in connection with, or as a result of (i) theexecution or delivery of this Agreement, any other Loan Document or anyagreement or instrument contemplated hereby or thereby, the performance by theparties hereto of their respective obligations hereunder or thereunder, or theconsummation of the transactions contemplated hereby or thereby, or, in thecase of Administrative Agent (and any sub-agent thereof) and its RelatedParties only, the administration of this Agreement and the other LoanDocuments, (ii) any Loan or Letter of Credit or the use or proposed use ofthe proceeds therefrom (including any refusal by the L/C Issuer to honor ademand for payment under a Letter of Credit if the documents presented inconnection with such 

 

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demanddo not comply with the terms of such Letter of Credit), (iii) any actualor alleged presence or release of Hazardous Materials on or from any propertyowned or operated by any Borrower or any of its Subsidiaries, or anyEnvironmental Liability related in any way to any Borrower or any of itsSubsidiaries, or (iv) any actual or prospective claim, litigation,investigation or proceeding relating to any of the foregoing, whether based oncontract, tort or any other theory, whether brought by a third party or by anyBorrower or any other Loan Party, and regardless of whether any Indemnitee is aparty thereto **IN ALL CASES, WHETHER OR NOT CAUSED BY ORARISING, IN WHOLE OR IN PART, OUT OF THE COMPARATIVE, CONTRIBUTORY OR SOLENEGLIGENCE OF THE INDEMNITEE**; provided that such indemnityshall not, as to any Indemnitee, be available to the extent that such losses,claims, damages, liabilities or related expenses (x) are determined by acourt of competent jurisdiction by final and nonappealable judgment to haveresulted from the gross negligence or willful misconduct of such Indemnitee or(y) result from a claim brought by any Borrower or any other Loan Partyagainst an Indemnitee for breach in bad faith of such Indemnitee’s obligationshereunder or under any other Loan Document, if such Borrower or Loan Party hasobtained a final and nonappealable judgment in its favor on such claim asdetermined by a court of competent jurisdiction.

 

(c)           Reimbursement by Lenders.  To the extent that Borrowers for any reasonfail to indefeasibly pay any amount required under subsection (a) or (b) ofthis Section to Administrative Agent (or any sub-agent thereof), the L/CIssuer or any Related Party of any of the foregoing, each Lender severallyagrees to pay to Administrative Agent (or any such sub-agent), the L/C Issueror such Related Party, as the case may be, such Lender’s Applicable Percentage(determined as of the time that the applicable unreimbursed expense orindemnity payment is sought) of such unpaid amount, provided that theunreimbursed expense or indemnified loss, claim, damage, liability or relatedexpense, as the case may be, was incurred by or asserted against AdministrativeAgent (or any such sub-agent) or the L/C Issuer in its capacity as such, oragainst any Related Party of any of the foregoing acting for AdministrativeAgent (or any such sub-agent) or L/C Issuer in connection with suchcapacity.  The obligations of the Lendersunder 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 applicablelaw, Borrowers shall not assert, and hereby waives, any claim against anyIndemnitee, on any theory of liability, for special, indirect, consequential orpunitive damages (as opposed to direct or actual damages) arising out of, inconnection with, or as a result of, this Agreement, any other Loan Document orany agreement or instrument contemplated hereby, the transactions contemplatedhereby or thereby, any Loan or Letter of Credit or the use of the proceedsthereof.  No Indemnitee referred to insubsection (b) above shall be liable for any damages arising from the useby unintended recipients of any information or other materials distributed tosuch unintended recipients by such Indemnitee through telecommunications,electronic or other information transmission systems in connection with thisAgreement or the other Loan Documents or the transactions contemplated herebyor thereby other than for direct or actual damages resulting from the grossnegligence or willful misconduct of such Indemnitee as determined by a finaland nonappealable judgment of a court of competent jurisdiction.

 

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

 

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(f)            Survival.  The agreements in this Section shallsurvive the resignation of Administrative Agent, the L/C Issuer and the SwingLine Lender, the replacement of any Lender, the termination of the AggregateCommitments and the repayment, satisfaction or discharge of all the otherObligations.

 

**10.05      Payments SetAside**.  To the extent that any payment by or onbehalf of Borrowers is made to Administrative Agent, the L/C Issuer or anyLender, or Administrative Agent, the L/C Issuer or any Lender exercises itsright of setoff, and such payment or the proceeds of such setoff or any partthereof is subsequently invalidated, declared to be fraudulent or preferential,set aside or required (including pursuant to any settlement entered into byAdministrative Agent, the L/C Issuer or such Lender in its discretion) to berepaid to a trustee, receiver or any other party, in connection with anyproceeding under any Debtor Relief Law or otherwise, then (a) to theextent of such recovery, the obligation or part thereof originally intended tobe satisfied shall be revived and continued in full force and effect as if suchpayment had not been made or such setoff had not occurred, and (b) eachLender and the L/C Issuer severally agrees to pay to Administrative Agent upondemand its applicable share (without duplication) of any amount so recoveredfrom or repaid by Administrative Agent, plus interest thereon from the date ofsuch demand to the date such payment is made at a rate per annum equal to theFederal Funds Rate from time to time in effect. The obligations of the Lenders and the L/C Issuer under clause (b) ofthe preceding sentence shall survive the payment in full of the Obligations andthe termination of this Agreement.

 

**10.06      Successorsand Assigns**.  (a) Successors and Assigns Generally.  The provisions of this Agreement shall bebinding upon and inure to the benefit of the parties hereto and theirrespective successors and assigns permitted hereby, except that neitherBorrowers nor any other Loan Party may assign or otherwise transfer any of itsrights or obligations hereunder without the prior written consent ofAdministrative Agent, the L/C Issuer and each Lender and no Lender may assignor otherwise transfer any of its rights or obligations hereunder except (i) toan assignee in accordance with the provisions of subsection (b) of thisSection, (ii) by way of participation in accordance with the provisions ofsubsection (d) of this Section, or (iii) by way of pledge orassignment of a security interest subject to the restrictions of subsection (f) ofthis Section (and any other attempted assignment or transfer by any partyhereto shall be null and void).  Nothingin this Agreement, expressed or implied, shall be construed to confer upon anyPerson (other than the parties hereto, their respective successors and assignspermitted hereby, Participants to the extent provided in subsection (d) ofthis Section and, to the extent expressly contemplated hereby, the RelatedParties of each of Administrative Agent, the L/C Issuer and the Lenders) anylegal 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 ormore assignees all or a portion of its rights and obligations under thisAgreement (including all or a portion of its Commitment and the Loans(including for purposes of this subsection (b), participations in L/CObligations and in Swing Line Loans) at the time owing to it); providedthat any such assignment shall be subject to the following conditions:

 

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(i)            Minimum Amounts

 

(A)          in the case of an assignment of the entire remaining amountof the assigning Lender’s Commitment under any Facility and the Loans at thetime owing to it****under such Facility****or in the case of an assignment to a Lender or an Affiliateof a Lender or an Approved Fund no minimum amount need be assigned; and

 

(B)          in any case not described in subsection (b)(i)(A) ofthis Section, the aggregate amount of the Commitment (which for this purposeincludes Loans outstanding thereunder) or, if the Commitment is not then ineffect, the principal outstanding balance of the Loans of the assigning Lendersubject to each such assignment, determined as of the date the Assignment andAssumption with respect to such assignment is delivered to Administrative Agentor, if “Trade Date” is specified in the Assignment and Assumption, as of theTrade Date, shall not be less than $5,000,000 unless each of AdministrativeAgent and, so long as no Event of Default has occurred and is continuing,Borrowers otherwise consent (each such consent not to be unreasonably withheldor delayed); provided, however, that concurrent assignments to members of anAssignee Group and concurrent assignments from members of an Assignee Group toa single Eligible Assignee (or to an Eligible Assignee and members of itsAssignee Group) will be treated as a single assignment for purposes ofdetermining whether such minimum amount has been met.

 

(ii)           ProportionateAmounts.  Each partial assignmentshall be made as an assignment of a proportionate part of all the assigningLender’s rights and obligations under this Agreement with respect to the Loansor the Commitment assigned, except that this clause (ii) shall not (A) applyto the Swing Line Lender’s rights and obligations in respect of Swing LineLoans or (B) prohibit any Lender from assigning all or a portion of itsrights and obligations among separate Facilities on a non-pro rata basis.

 

(iii)          RequiredConsents.  No consent shall berequired for any assignment except to the extent required by subsection (b)(i)(B) ofthis Section and, in addition:

 

(A)          the consent of Borrowers (such consent not to beunreasonably withheld or delayed) shall be required unless (1) an Event ofDefault has occurred and is continuing at the time of such assignment or (2) suchassignment is to a Lender or an Affiliate of a Lender or an Approved Fund; providedthat Borrowers shall be deemed to have consented to any such assignment unlessthey shall object thereto by written notice to Administrative Agent within five(5) Business Days after having received notice thereof;

 

(B)          the consent of Administrative Agent (such consent not to beunreasonably withheld or delayed) shall be required****forassignments in respect of any Commitment if such assignment is to a Person thatis not a Lender with a Commitment in respect of the applicable Facility, or anAffiliate of such Lender or an Approved Fund with respect to such Lender.

 

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

 

(D)          the consent of the Swing Line Lender (such consent not tobe unreasonably withheld or delayed) shall be required for any assignment inrespect of the Commitments.

 

(iv)          Assignment andAssumption.  The parties to eachassignment shall execute and deliver to Administrative Agent an Assignment andAssumption, together with a processing and recordation fee in the amount of$3,500.00; provided, however, that Administrative Agent may, inits sole discretion, elect to waive such processing and recordation fee in thecase of any assignment.  The assignee, ifit is not a Lender, shall deliver to Administrative Agent an AdministrativeQuestionnaire.

 

(v)           No Assignment toBorrowers.  No such assignment shallbe made (A) to Borrowers or any of Borrowers’ Affiliates or Subsidiariesor (B) to any Defaulting Lender or any of its Subsidiaries, or any Personwho, upon becoming a Lender hereunder, would constitute any of the foregoingPersons described in this clause (B), or (C) to a natural person.

 

(vi)          No Assignment toNatural Persons.  No such assignmentshall be made to a natural person.

 

(vii)         CertainAdditional Payments.  In connectionwith any assignment of rights and obligations of any Defaulting Lenderhereunder, no such assignment shall be effective unless and until, in additionto the other conditions thereto set forth herein, the parties to the assignmentshall make such additional payments to Administrative Agent in an aggregateamount sufficient, upon distribution thereof as appropriate (which may beoutright payment, purchases by the assignee of participations orsubparticipations, or other compensating actions, including funding, with theconsent of the Borrower and Administrative Agent, the applicable pro rata shareof Loans previously requested but not funded by the Defaulting Lender, to eachof which the applicable assignee and assignor hereby irrevocably consent), to (x) payand satisfy in full all payment liabilities then owed by such Defaulting Lenderto Administrative Agent or any Lender hereunder (and interest accrued thereon)and (y) acquire (and fund as appropriate) its full pro rata share of allLoans and participations in Letters of Credit and Swing Line Loans inaccordance with its Applicable Percentage. Notwithstanding the foregoing, in the event that any assignment ofrights and obligations of any Defaulting Lender hereunder shall becomeeffective under applicable Law without compliance with the provisions of thisparagraph, then the assignee of such interest shall be deemed to be aDefaulting Lender for all purposes of this Agreement until such complianceoccurs.

 

Subject to acceptance and recording thereof by Administrative Agentpursuant to subsection (c) of this Section, from and after the effectivedate specified in each Assignment and Assumption, the assignee thereunder shallbe a party to this Agreement and, to the extent of the interest

 

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assigned by such Assignment and Assumption, have the rights andobligations of a Lender under this Agreement, and the assigning Lenderthereunder shall, to the extent of the interest assigned by such Assignment andAssumption, be released from its obligations under this Agreement (and, in thecase of an Assignment and Assumption covering all of the assigning Lender’srights and obligations under this Agreement, such Lender shall cease to be aparty hereto) but shall continue to be entitled to the benefits of Sections3.01, 3.04, 3.05, and 10.04 with respect to facts andcircumstances occurring prior to the effective date of such assignment.  Upon request, Borrowers (at its expense)shall execute and deliver a Note to the assignee Lender.  Any assignment or transfer by a Lender ofrights or obligations under this Agreement that does not comply with thissubsection shall be treated for purposes of this Agreement as a sale by suchLender of a participation in such rights and obligations in accordance withsubsection (d) of this Section.

 

(c)           Register.  Administrative Agent, acting solely for thispurpose as an agent of Borrowers (and such agency being solely for taxpurposes), shall maintain at Administrative Agent’s Office a copy of eachAssignment and Assumption delivered to it and a register for the recordation ofthe names and addresses of the Lenders, and the Commitments of, and principalamounts of the Loans and L/C Obligations owing to, each Lender pursuant to theterms hereof from time to time (the “Register”).  The entries in the Register shall beconclusive, and Borrowers, Administrative Agent and the Lenders may treat eachPerson whose name is recorded in the Register pursuant to the terms hereof as aLender hereunder for all purposes of this Agreement, notwithstanding notice tothe contrary.  In addition,Administrative Agent shall maintain on the Register information regarding thedesignation, and revocation of designation, of any Lender as a DefaultingLender.  The Register shall be availablefor inspection by Borrowers and any Lender, at any reasonable time and fromtime to time upon reasonable prior notice.

 

(d)           Participations.  Any Lender may at any time, without theconsent of, or notice to, Borrowers or Administrative Agent, sellparticipations to any Person (other than a natural person, a Defaulting Lenderor Borrowers or any of Borrowers’ Affiliates or Subsidiaries) (each, a “Participant”)in all or a portion of such Lender’s rights and/or obligations under thisAgreement (including all or a portion of its Commitment and/or the Loans(including such Lender’s participations in L/C Obligations and/or Swing LineLoans) owing to it); provided that (i) such Lender’s obligationsunder this Agreement shall remain unchanged, (ii) such Lender shall remainsolely responsible to the other parties hereto for the performance of suchobligations and (iii) Borrowers, Administrative Agent, the L/C Issuer andthe Lenders shall continue to deal solely and directly with such Lender inconnection with such Lender’s rights and obligations under this Agreement.  Any agreement or instrument pursuant to whicha Lender sells such a participation shall provide that such Lender shall retainthe sole right to enforce this Agreement and to approve any amendment,modification or waiver of any provision of this Agreement; provided thatsuch agreement or instrument may provide that such Lender will not, without theconsent of the Participant, agree to any amendment, waiver or othermodification described in the first proviso to Section 10.01 thataffects such Participant.  Subject tosubsection (e) of this Section, Borrowers agree that each Participantshall be entitled to the benefits of Sections 3.01, 3.04 and 3.05**to the same extent as if it were a Lenderand had acquired its interest by assignment pursuant to subsection (b) ofthis Section.  To the extent permitted bylaw, each Participant also shall be entitled to the benefits of Section 10.08**as though it were a Lender, providedsuch Participant agrees to be subject to Section 2.13 as though itwere a Lender.

 

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(e)           Limitations upon ParticipantRights.  A Participant shall not beentitled to receive any greater payment under Section 3.01 or 3.04**than the applicable Lender would havebeen entitled to receive with respect to the participation sold to suchParticipant, unless the sale of the participation to such Participant is madewith Borrowers’ prior written consent.

 

(f)            Certain Pledges.  Any Lender may at any time pledge or assign asecurity 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 ReserveBank; provided that no such pledge or assignment shall release suchLender from any of its obligations hereunder or substitute any such pledgee orassignee for such Lender as a party hereto.

 

(g)           Electronic Execution ofAssignments.  The words “execution,” “signed,”“signature,” and words of like import in any Assignment and Assumption shall bedeemed to include electronic signatures or the keeping of records in electronicform, each of which shall be of the same legal effect, validity orenforceability as a manually executed signature or the use of a paper-basedrecordkeeping system, as the case may be, to the extent and as provided for inany applicable law, including the Federal Electronic Signatures in Global andNational Commerce Act, the Rhode Island Uniform Electronic Transactions Act, orany other similar state laws based on the Uniform Electronic Transactions Act.

 

(h)           Deemed Consent of Borrowers.  If the consent of Borrowers to an assignmentto an Eligible Assignee is required hereunder (including a consent to anassignment which does not meet the minimum assignment threshold specified in Section 10.06(b)(i)(B)),Borrowers shall be deemed to have given its consent five Business Days afterthe date notice thereof has been delivered to Borrowers by the assigning Lender(through Administrative Agent) unless such consent is expressly refused byBorrowers prior to such fifth Business Day.

 

(i)            Resignation as L/C Issuer orSwing Line Lender.  Notwithstandinganything to the contrary contained herein, if at any time Bank of America assignsall of its Commitment and****Loans pursuantto subsection (b) above, Bank of America may, (i) upon 30 days’notice to Borrowers and the Lenders, resign as L/C Issuer and/or (ii) upon30 days’ notice to Borrowers, resign as Swing Line Lender.  In the event of any such resignation as L/CIssuer or Swing Line Lender, Borrowers shall be entitled to appoint from amongLenders a successor L/C Issuer or Swing Line Lender hereunder; provided,however, that no failure by Borrowers to appoint any such successor shallaffect the resignation of Bank of America as L/C Issuer or Swing Line Lender,as the case may be.  If Bank of Americaresigns as L/C Issuer, it shall retain all the rights, powers, privileges andduties of the L/C Issuer hereunder with respect to all Letters of Creditoutstanding as of the effective date of its resignation as L/C Issuer and allL/C Obligations with respect thereto (including the right to require theLenders to make Base Rate Committed Loans or fund risk participations inUnreimbursed Amounts pursuant to Section 2.03(c)).  If Bank of America resigns as Swing LineLender, it shall retain all the rights of Swing Line Lender provided forhereunder with respect to Swing Line Loans made by it and outstanding as of theeffective date of such resignation, including the right to require the Lendersto make Base Rate Committed Loans or fund risk participations in outstandingSwing Line Loans pursuant to Section 2.04(c).  Upon the appointment of a successor L/CIssuer and/or Swing Line Lender, (a) such successor shall succeed to andbecome vested with all of the rights, powers, privileges and 

 

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dutiesof the retiring L/C Issuer or Swing Line Lender, as the case may be, and (b) thesuccessor L/C Issuer shall issue letters of credit in substitution for theLetters of Credit, if any, outstanding at the time of such succession or makeother arrangements satisfactory to Bank of America to effectively assume theobligations of Bank of America with respect to such Letters of Credit.

 

**10.07      Treatment ofCertain Information; Confidentiality**.  Each of Administrative Agent, Lenders and theL/C Issuer agrees to maintain the confidentiality of the Information (asdefined below), except that Information may be disclosed (a) to itsAffiliates and to its and its Affiliates’ respective partners, directors,officers, employees, agents, advisors and representatives (it being understoodthat the Persons to whom such disclosure is made will be informed of theconfidential nature of such Information and instructed to keep such Informationconfidential), (b) to the extent requested by any regulatory authority,purporting to have jurisdiction over it (including any self-regulatoryauthority, such as the National Association of Insurance Commissioners), (c) tothe extent required by applicable laws or regulations or by any subpoena orsimilar legal process, (d) to any other party hereto, (e) inconnection with the exercise of any remedies hereunder or under any other LoanDocument or any action or proceeding relating to this Agreement or any otherLoan Document or the enforcement of rights hereunder or thereunder, (f) subjectto an agreement containing provisions substantially the same as those of thisSection, to (i) any assignee of or Participant in, or any prospectiveassignee of or Participant in, any of its rights or obligations under thisAgreement, or (ii) any actual or prospective counterparty (or itsadvisors) to any swap or derivative transaction relating to Borrowers and itsobligations, (g) with the consent of Borrowers or (h) to the extentsuch Information (x) becomes publicly available other than as a result ofa breach of this Section or (y) becomes available to AdministrativeAgent, any Lender, the L/C Issuer or any of their respective Affiliates on anonconfidential basis from a source other than Borrowers.  For purposes of this Section, “Information”means all information received from Borrowers or any Subsidiary relating toBorrowers or any Subsidiary or any of their respective businesses, other thanany such information that is available to Administrative Agent, any Lender orthe L/C Issuer on a nonconfidential basis prior to disclosure by Borrowers orany Subsidiary, provided that, in the case of information received fromBorrowers or any Subsidiary after the date hereof, such information is clearlyidentified at the time of delivery as confidential.  Any Person required to maintain theconfidentiality of Information as provided in this Section shall beconsidered to have complied with its obligation to do so if such Person hasexercised the same degree of care to maintain the confidentiality of suchInformation as such Person would accord to its own confidentialinformation.  Each of AdministrativeAgent, the Lenders and the L/C Issuer acknowledges that (a) theInformation may include material non-public information concerning Borrowers ora Subsidiary, as the case may be, (b) it has developed complianceprocedures regarding the use of material non-public information and (c) itwill handle such material non-public information in accordance with applicableLaw, including Federal and state securities Laws.

 

**10.08      Right ofSetoff**.**** If an Event of Default shall have occurred andbe continuing, each Lender, the L/C Issuer and each of their respectiveAffiliates is hereby authorized at any time and from time to time, afterobtaining the prior written consent of Administrative Agent, to the fullestextent permitted by applicable law, to set off and apply any and all deposits(general or special, time or demand, provisional or final, in whatevercurrency) at any time held and other obligations (in whatever currency) at anytime owing by such Lender, the L/C Issuer or any such 

 

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Affiliateto or for the credit or the account of Borrowers or any other Loan Partyagainst any and all of the obligations of Borrowers or such Loan Party now orhereafter existing under this Agreement or any other Loan Document to suchLender or the L/C Issuer or any such Affiliate, irrespective of whether or notsuch Lender or the L/C Issuer shall have made any demand under this Agreementor any other Loan Document and although such obligations of Borrowers or suchLoan Party may be contingent or unmatured or are owed to a branch or office ofsuch Lender or the L/C Issuer different from the branch or office holding suchdeposit or obligated on such indebtedness; provided, that in the eventthat any Defaulting Lender shall exercise any such right of setoff, (x) allamounts so set off shall be paid over immediately to Administrative Agent forfurther application in accordance with the provisions of Section 2.16 and,pending such payment, shall be segregated by such Defaulting Lender from itsother funds and deemed held in trust for the benefit of Administrative Agentand the Lenders, and (y) the Defaulting Lender shall provide promptly toAdministrative Agent a statement describing in reasonable detail theObligations owing to such Defaulting Lender as to which it exercised such rightof setoff.  The rights of each Lender,the L/C Issuer and their respective Affiliates under this Section are inaddition to other rights and remedies (including other rights of setoff) thatsuch Lender, the L/C Issuer or their respective Affiliates may have.  Each Lender and the L/C Issuer agrees tonotify Borrowers and Administrative Agent promptly after any such setoff andapplication, provided that the failure to give such notice shall notaffect the validity of such setoff and application.

 

**10.09      Interest RateLimitation**.  Notwithstanding anything to the contrarycontained in any Loan Document, the interest paid or agreed to be paid underthe Loan Documents shall not exceed the maximum rate of non-usurious interestpermitted by applicable Law (the “Maximum Rate”).  If Administrative Agent or any Lender shallreceive interest in an amount that exceeds the Maximum Rate, the excessinterest shall be applied to the principal of the Loans or, if it exceeds suchunpaid principal, refunded to Borrowers. In determining whether the interest contracted for, charged, or receivedby Administrative Agent or a Lender exceeds the Maximum Rate, such Person may,to the extent permitted by applicable Law, (a) characterize any paymentthat is not principal as an expense, fee, or premium rather than interest, (b) excludevoluntary prepayments and the effects thereof, and (c) amortize, prorate,allocate, and spread in equal or unequal parts the total amount of interestthroughout the contemplated term of the Obligations hereunder.

 

**10.10      Counterparts;Integration; Effectiveness**.  This Agreement may be executed incounterparts (and by different parties hereto in different counterparts), eachof which shall constitute an original, but all of which when taken togethershall constitute a single contract.  ThisAgreement and the other Loan Documents constitute the entire contract among theparties relating to the subject matter hereof and supersede any and all previousagreements and understandings, oral or written, relating to the subject matterhereof.  Except as provided in Section 4.01,this Agreement shall become effective when it shall have been executed byAdministrative Agent and when Administrative Agent shall have receivedcounterparts hereof that, when taken together, bear the signatures of each ofthe other parties hereto.  Delivery of anexecuted counterpart of a signature page of this Agreement by telecopyshall be effective as delivery of a manually executed counterpart of thisAgreement.

 

**10.11      Survival ofRepresentations and Warranties**.**** All representations and warranties madehereunder and in any other Loan Document or other document delivered 

 

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pursuanthereto or thereto or in connection herewith or therewith shall survive theexecution and delivery hereof and thereof. Such representations and warranties have been or will be relied upon byAdministrative Agent and each Lender, regardless of any investigation made byAdministrative Agent or any Lender or on their behalf and notwithstanding thatAdministrative Agent or any Lender may have had notice or knowledge of anyDefault at the time of any Credit Extension, and shall continue in full forceand effect as long as any Loan or any other Obligation hereunder shall remainunpaid or unsatisfied or any Letter of Credit shall remain outstanding.

 

**10.12      Severability**.** **If any provision of this Agreement or the other LoanDocuments is held to be illegal, invalid or unenforceable, (a) thelegality, validity and enforceability of the remaining provisions of thisAgreement and the other Loan Documents shall not be affected or impairedthereby and (b) the parties shall endeavor in good faith negotiations toreplace the illegal, invalid or unenforceable provisions with valid provisionsthe economic effect of which comes as close as possible to that of the illegal,invalid or unenforceable provisions.  Theinvalidity of a provision in a particular jurisdiction shall not invalidate orrender unenforceable such provision in any other jurisdiction.  Without limiting the foregoing provisions ofthis Section 10.12, if and to the extent that the enforceability ofany provisions in this Agreement relating to Defaulting Lenders shall belimited by Debtor Relief Laws, as determined in good faith by AdministrativeAgent, the L/C Issuer or the Swing Line Lender, as applicable, then suchprovisions shall be deemed to be in effect only to the extent not so limited.

 

**10.13      Replacement of Lenders**.  If any Lender requests compensation under Section 3.04,or if Borrowers are required to pay any additional amount to any Lender or anyGovernmental Authority for the account of any Lender pursuant to Section 3.01,or****ifany Lender is a Defaulting Lender or ifany other circumstance exists hereunder that gives the Borrower the right toreplace a Lender as a party hereto, then Borrowers may, at their soleexpense and effort, upon notice to such Lender and Administrative Agent,require such Lender to assign and delegate, without recourse (in accordancewith 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 therelated Loan Documents to an assignee that shall assume such obligations (whichassignee may be another Lender, if a Lender accepts such assignment), providedthat:

 

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

 

(b)           suchLender shall have received payment of an amount equal to 100% of theoutstanding principal of its Loans and L/C Advances, accrued interest thereon,accrued fees and all other amounts payable to it hereunder and under the otherLoan Documents (including any amounts under Section 3.05) from theassignee (to the extent of such outstanding principal and accrued interest andfees) or the Borrower (in the case of all other amounts);

 

(c)           inthe case of any such assignment resulting from a claim for compensation under Section 3.04or payments required to be made pursuant to Section 3.01, suchassignment will result in a reduction in such compensation or paymentsthereafter; and

 

(d)           suchassignment does not conflict with applicable Laws.

 

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ALender 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, thecircumstances entitling the Borrower to require such assignment and delegationcease to apply

 

**10.14      GoverningLaw; Jurisdiction; Etc**. (a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,THE LAW OF THE STATE OF RHODE ISLAND.

 

(b)           SUBMISSION TO JURISDICTION.  BORROWERS AND EACH OTHER LOAN PARTYIRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THENONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF RHODE ISLAND SITTING INPROVIDENCE COUNTY AND OF THEUNITED STATES DISTRICT COURT OF THE STATEOF RHODE ISLAND, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANYACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHERLOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OFTHE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS INRESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED INSUCH RHODE ISLAND STATE COURTOR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERALCOURT.  EACH OF THE PARTIES HERETO AGREESTHAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BEENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNERPROVIDED BY LAW.  NOTHING IN THISAGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT AGENT, ANYLENDER OR THE L/C ISSUER MAY OTHERWISE HAVE TO BRING ANY ACTION ORPROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINSTBORROWERS OR ANY OTHER LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANYJURISDICTION.

 

(c)           WAIVER OF VENUE.  BORROWERS AND EACH OTHER LOAN PARTY IRREVOCABLYAND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OFANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANYOTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THISSECTION.  EACH OF THE PARTIES HERETOHEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION ORPROCEEDING IN ANY SUCH COURT.

 

**10.15      Waiver ofJury Trial**.  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES,TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVETO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUTOF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONSCONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHERTHEORY).  

 

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EACHPARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OFANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHERPERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THEFOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETOHAVE 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 Advisoryor Fiduciary Responsibility**.  In connection with allaspects of each transaction contemplated hereby (including in connection withany amendment, waiver or other modification hereof or of any other LoanDocument), Borrowers and each other Loan Party acknowledges and agrees andacknowledges its Affiliates’ understanding that:  (i) (A) the arranging and otherservices regarding this Agreement provided by Administrative Agent are arm’s-lengthcommercial transactions between Borrowers, each other Loan Party and theirrespective Affiliates, on the one hand, and Administrative Agent, on the other hand,(B) each of Borrowers and the other Loan Parties have consulted their ownlegal, accounting, regulatory and tax advisors to the extent they have deemedappropriate, and (C) Borrowers and each other Loan Party is capable ofevaluating and understanding, and understands and accepts, the terms, risks andconditions of the transactions contemplated hereby and by the other LoanDocuments; (ii) (A) Administrative Agent is and has been actingsolely as a principal and, except as expressly agreed in writing by therelevant parties, has not been, is not, and will not be acting as an advisor,agent or fiduciary, for Borrowers, any other Loan Party, or any of theirrespective Affiliates, or any other Person and (B) Administrative Agentdoes not have any obligation to Borrowers, any other Loan Party or any of theirAffiliates with respect to the transaction contemplated hereby except thoseobligations expressly set forth herein and in the other Loan Documents; and(iii) Administrative Agent and its Affiliates may be engaged in a broadrange of transactions that involve interests that differ from those ofBorrowers, the other Loan Parties and their respective Affiliates, andAdministrative Agent has no obligation to disclose any of such interests toBorrowers, any other Loan Party of any of their respective Affiliates.  To the fullest extent permitted by law, eachof Borrowers and the other Loan Parties hereby waive and release, any claimsthat it may have against Administrative Agent with respect to any breach or allegedbreach of agency or fiduciary duty in connection with any aspect of anytransaction contemplated hereby.

 

**10.17**      **USA PATRIOT Act Notice**.  Each Lender that is subject to the Act (ashereinafter defined) and Administrative Agent (for itself and not on behalf ofany Lender) hereby notifies Borrower that pursuant to the requirements of theUSA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26,2001)) (the “Act”), it is required to obtain, verify and recordinformation that identifies Borrower, which information includes the name andaddress of Borrower and other information that will allow such Lender orAdministrative Agent, as applicable, to identify Borrower in accordance withthe Act.

 

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**ARTICLE XI.  APPOINTMENT OF THE BORROWER REPRESENTATIVE;JOINT AND SEVERAL LIABILITY OF THE BORROWERS**

 

**11.01      BorrowerRepresentative**.  EachBorrower hereby irrevocably appoints the Borrower Representative, as the agentfor such Borrower on its behalf, to (i) request Loans from Lenders,(ii) request L/C Issuer to issue Letters of Credit, (iii) to give andreceive notices under the Loan Documents and (iv) take all other actionwhich the Borrower Representative or Borrowers are permitted or required totake under this Agreement.

 

**11.02      Joint and SeveralLiability of Borrowers**.

 

(a)           Joint and SeveralLiability.  Each Borrower herebyagrees that such Borrower is jointly and severally liable for, and herebyabsolutely and unconditionally guarantees to Administrative Agent and Lendersand their respective successors and assigns, the full and prompt payment(whether at stated maturity, by acceleration or otherwise) and performance of,all Obligations owed or hereafter owing to Administrative Agent and Lenders byeach other Borrower.  Each Borroweragrees that its guaranty obligation hereunder is a continuing guaranty ofpayment and performance and not of collection, that its obligations under this Section 11.02shall not be discharged until payment and performance, in full, of theObligations (other than contingent indemnification obligations) has occurred,and that its obligations under this Section 11.02 shall beabsolute, unconditional and irrevocable, irrespective of, and unaffected by, (i) thegenuineness, validity, regularity, enforceability or any future amendment of,or change in, this Agreement, any other Loan Document or any other agreement,document or instrument to which any Borrower is or may become a party; (ii) theabsence of any action to enforce this Agreement (including this Section 11.02)or any other Loan Document or the waiver or consent by Administrative Agent andLenders with respect to any of the provisions thereof; (iii) theinsolvency of any Borrower or Subsidiary; and (iv) any other action orcircumstances that might otherwise constitute a legal or equitable discharge ordefense of a surety or guarantor.  EachBorrower shall be regarded, and shall be in the same position, as principaldebtor with respect to the Obligations guaranteed hereunder.

 

(b)           Waiversby Borrowers.  Each Borrowerexpressly waives all rights it may have now or in the future under any statute,or at common law, or at law or in equity, or otherwise, to compelAdministrative Agent or Lenders to marshal assets or to proceed in respect ofthe Obligations guaranteed hereunder against any other Borrower or Subsidiary,any other party or against any security for the payment and performance of theObligations before proceeding against, or as a condition to proceeding against,such Borrower.  Each Borrower consentsand agrees that Administrative Agent or the Lenders may, at any time and fromtime to time, without notice or demand, whether before or after any actual orpurported termination, repudiation or revocation of this Agreement by anyBorrower, and without affecting the enforceability or continuing effectivenesshereof as to such Borrower:  (i) withthe consent of the other Borrowers, supplement, restate, modify, amend,increase, decrease, extend, renew or otherwise change the time for payment orthe terms of this Agreement or any part thereof, including any increase ordecrease of the rate(s) of interest thereon; (ii) with the consent ofthe other Borrowers, supplement, restate, modify, amend, increase, decrease, orenter into or give any agreement with respect to, this Agreement or any partthereof, or any of the Security Documents; (iii) waive, approve or consentto any action, condition, covenant, default, remedy, 

 

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right,representation or term of this Agreement or any other Loan Document;(iv) accept partial payments; (v) release, reconvey, terminate,waive, abandon, fail to perfect, subordinate, exchange, substitute, transfer orenforce any security or guarantees, and apply any security and direct the orderor manner of sale thereof as the Agents or Lenders in their sole and absolutediscretion may determine; (vi) release any person from any personalliability with respect to this Agreement or any part thereof; (vii) settle,release on terms satisfactory to the Required Lenders or by operation ofapplicable Laws or otherwise liquidate or enforce any security or guaranty inany manner, consent to the transfer of any security and bid and purchase at anysale; or (viii) consent to the merger, change or any other restructuringor termination of the corporate or partnership existence of any Borrower or anyother person, and correspondingly restructure the obligations evidenced hereby,and any such merger, change, restructuring or termination shall not affect theliability of any Borrower or the continuing effectiveness hereof, or theenforceability hereof with respect to all or any part of the obligationsevidenced hereby.  It is agreed amongeach Borrower, Administrative Agent and Lenders that the foregoing consents andwaivers are of the essence of the transaction contemplated by this Agreementand the other Loan Documents and that, but for the provisions of this Section 11.02and such waivers, Administrative Agent and Lenders would decline to enter intothis Agreement.

 

(c)           Benefitof Guaranty.  Each Borrower agreesthat the provisions of this Section 11.02 are for the benefit ofAdministrative Agent and Lenders and their respective successors, transferees,endorsees and assigns, and nothing herein contained shall impair, as betweenany other Borrower and Administrative Agent or Lenders, the obligations of suchother Borrower under the Loan Documents.

 

(d)           Waiverof Subrogation, Etc. Notwithstanding anything to the contrary in this Agreement or in anyother Loan Document, and except as set forth in Section 11.02(g),each Borrower hereby expressly and irrevocably waives any and all rights at lawor in equity to subrogation, reimbursement, exoneration, contribution,indemnification or set off and any and all defenses available to a surety,guarantor or accommodation co-obligor. Each Borrower acknowledges and agrees that this waiver is intended tobenefit Administrative Agent and Lenders and shall not limit or otherwiseaffect such Borrower’s liability hereunder or the enforceability of this Section 11.02,and that Administrative Agent, Lenders and their respective successors andassigns are intended third party beneficiaries of the waivers and agreementsset forth in this Section 11.02(d).

 

(e)           Electionof Remedies.  If Administrative Agentor any Lender may, under applicable law, proceed to realize its benefits underany of the Loan Documents, Administrative Agent or any Lender may, at its soleoption, determine which of its remedies or rights it may pursue withoutaffecting any of its rights and remedies under this Section 11.02.  If, in the exercise of any of its rights andremedies, Administrative Agent or any Lender shall forfeit any of its rights orremedies, including its right to enter a deficiency judgment against anyBorrower or any other Person, whether because of any applicable laws pertainingto “election of remedies” or the like, each Borrower hereby consents to suchaction by Administrative Agent or such Lender and waives any claim based uponsuch action, even if such action by Administrative Agent or such Lender shallresult in a full or partial loss of any rights of subrogation that eachBorrower might otherwise have had but for such action by Administrative Agentor such Lender.  Any election of remediesthat results in the denial or impairment of the right of Administrative 

 

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Agentor any Lender to seek a deficiency judgment against any Borrower shall notimpair any other Borrower’s obligation to pay the full amount of theObligations.

 

(f)            Limitation.  Notwithstanding any provision hereincontained to the contrary, each Borrower’s liability under this Section 11.02(which liability is in any event in addition to amounts for which such Borroweris primarily liable under Section 2) shall be limited to an amountnot to exceed as of any date of determination the greater of:

 

(i)            the net amount of all Loans advanced to any otherBorrower under this Agreement and then re-loaned or otherwise transferred to,or for the benefit of, such Borrower; and

 

(ii)           the amount that could be claimed by Administrative Agentand Lenders from such Borrower under this Section 11.02 withoutrendering such claim voidable or avoidable under Section 548 of theBankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act,Uniform Fraudulent Conveyance Act or similar statute or common law after takinginto account, among other things, such Borrower’s right of contribution andindemnification from each other Borrower under Section 11.02(g).

 

(g)           Contributionwith Respect to Guaranty Obligations.

 

(i)            To the extent that any Borrower shall make a paymentunder this Section 11.02 of all or any of the Obligations (otherthan Loans made to that Borrower for which it is primarily liable) (a “GuarantorPayment”) that, taking into account all other Guarantor Payments thenpreviously or concurrently made by any other Borrower, exceeds the amount thatsuch Borrower would otherwise have paid if each Borrower had paid the aggregateObligations satisfied by such Guarantor Payment in the same proportion thatsuch Borrower’s “Allocable Amount” (as defined below) (as determinedimmediately prior to such Guarantor Payment) bore to the aggregate Allocable Amountsof each of the Borrowers as determined immediately prior to the making of suchGuarantor Payment, then, following payment in full of the Obligations (otherthan contingent indemnification obligations) and termination of theCommitments, such Borrower shall be entitled to receive contribution andindemnification payments from, and be reimbursed by, each other Borrower forthe amount of such excess, pro rata based upon their respective AllocableAmounts in effect immediately prior to such Guarantor Payment.

 

(ii)           As of any date of determination, the “Allocable Amount”of any Borrower shall be equal to the maximum amount of the claim that couldthen be recovered from such Borrower under this Section 11.02without rendering such claim voidable or avoidable under Section 548 ofthe Bankruptcy Code or under any applicable state Uniform Fraudulent TransferAct, Uniform Fraudulent Conveyance Act or similar statute or common law.

 

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(iii)          This Section 11.02(g) is intended only todefine the relative rights of the Borrowers and nothing set forth in this Section 11.02(g) isintended to or shall impair the obligations of Borrowers, jointly andseverally, to pay any amounts as and when the same shall become due and payablein accordance with the terms of this Agreement, including Section 11.02(a).  Nothing contained in this Section 11.02(g) shalllimit the liability of any Borrower to pay the Loans made directly orindirectly to that Borrower and accrued interest, fees and expenses withrespect thereto for which such Borrower shall be primarily liable.

 

(iv)          The parties hereto acknowledge that the rights ofcontribution and indemnification hereunder shall constitute assets of theBorrowers to which such contribution and indemnification is owing.

 

(v)           The rights of the indemnifying Borrowers against otherBorrowers under this Section 11.02(g) shall be exercisableupon the full payment of the Obligations (other than contingent indemnificationobligations) and the termination of the Commitments.

 

(h)           LiabilityCumulative.  The liability ofBorrowers under this Section 11.02 is in addition to and shall becumulative with all liabilities of each Borrower to Administrative Agent andLenders under this Agreement and the other Loan Documents to which suchBorrower is a party or in respect of any Obligations or obligation of the otherBorrowers, without any limitation as to amount, unless the instrument oragreement evidencing or creating such other liability specifically provides tothe contrary.

 

(i)            Stayof Acceleration.  If acceleration ofthe time for payment of any amount payable by Borrowers under this Agreement isstayed upon the insolvency, bankruptcy or reorganization of any of Borrowers,all such amounts otherwise subject to acceleration under the terms of thisAgreement shall nonetheless be payable jointly and severally by Borrowershereunder forthwith on demand by Administrative Agent made at the request ofthe Required Lenders.

 

(j)            Benefitto Borrowers.  All of Borrowers andtheir Subsidiaries are engaged in related businesses and integrated to such anextent that the financial strength and flexibility of each such Person has adirect impact on the success of each other Person.  Each Borrower and each Subsidiary will derivesubstantial direct and indirect benefit from the extension of credit hereunder.

 

(The next page is the signature page.)

 

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INWITNESS WHEREOF*,*the partieshereto have caused this Agreement to be duly executed as of the date firstabove written.

 
|   | **SUMMER INFANT, INC.**        |
|--------|-------------------------------------|
|   |                                |
|   |                                |
|   | By:                                 |   |
|   |                                | Jason P. Macari, Chief Executive Officer |
|   |                                |
|   | ** **                          |
|   | **SUMMER INFANT (USA), INC.**  |
|   | ** **                          |
|   |                                |
|   | By:                                 |   |
|   |                                | Jason P. Macari, President and CEO |
|   |                                |
|   | ** **                          |
|   | **KIDDOPOTAMUS & COMPANY** |
|   | ** **                          |
|   |                                |
|   | By:                                 |   |
|   |                                | Jason P. Macari, President and CEO |

 

 

[SummerInfant/A&R Credit Agreement]

 

(Signatures continued on next page.)

 

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|   | **BANK OF AMERICA, N.A.**,  as Administrative Agent |
|--------|-----------------------------------------------------|
|   | ** **                                          |
|   |                                                |
|   | By:                                                 |   |
|   |                                                | Name: | Ken  Puro |
|   |                                                | Title: | Vice  President |

 

 

[Summer Infant/A&RCredit Agreement]

 

(Signatures continued on next page.)

 

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|   | **BANK OF AMERICA, N.A.**,  as a Lender, L/C  Issuer and Swing Line Lender |
|--------|----------------------------------------------------------------------------|
|   | ** **                                                                 |
|   |                                                                       |
|   | By:                                                                        |   |
|   |                                                                       | Name: | Donald  C. McQueen |
|   |                                                                       | Title: | Senior  Vice President |

 

 

[Summer Infant/A&RCredit Agreement]

 

(Signatures continued on next page.)

 

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|   | **LENDER AND COLLATERAL AGENT:**       |
|--------|----------------------------------------|
|   |                                   |
|   | **RBS CITIZENS, NATIONAL ASSOCIATION** |
|   | ** **                             |
|   |                                   |
|   | By:                                    |   |
|   |                                   | Name: |
|   |                                   | Title: |

 

 

[Summer Infant/A&RCredit Agreement]

 

(Signatures continued on next page.)

 

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|   | **LENDER:**            |
|--------|------------------------|
|   |                   |
|   | **BANK  RHODE ISLAND** |
|   | ** **             |
|   |                   |
|   | By:                    |   |
|   |                   | Name: | William  C. Tsonos |
|   |                   | Title: | Senior  Vice President |

 

 

[Summer Infant/A&RCredit Agreement]

 

(Signatures continued on next page.)

 

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|   | **LENDER:**                                 |
|--------|---------------------------------------------|
|   |                                        |
|   | **WELLS  FARGO BANK, NATIONAL ASSOCIATION** |
|   |                                        |
|   |                                        |
|   | By:                                         |   |
|   |                                        | Name: |
|   |                                        | Title: |

 

 

[Summer Infant/A&RCredit Agreement]

 

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*** ***

***SCHEDULE 2.01***

 

**COMMITMENTSAND APPLICABLE PERCENTAGES**

 

**Commitments**

** **
| **Lender**                             | ** ** | **Commitment** | ** ** | **Applicable  Percentage** | ** **    |
|----------------------------------------|------------|----------------|------------|----------------------------|---------------|
| Bank of America, N.A.                  |       | $              | 25,000,000 |                       | 41.666666667  | % |
| RBS Citizens, National Association     |       | $              | 12,500,000 |                       | 20.833333333  | % |
| Bank Rhode Island                      |       | $              | 10,000,000 |                       | 16.666666667  | % |
| Wells Fargo Bank, National Association |       | $              | 12,500,000 |                       | 20.833333333  | % |
| Total                                  |       | $              | 60,000,000 |                       | 100.000000000 | % |

 

----

 

***SCHEDULE 4.01(a)(iv)***

 

Landlord Waiver Sites

 
| **Landlord**                    | ** ** | **Grantor**               | ** ** | **Locations**                                   |
|---------------------------------|------------|---------------------------|------------|-------------------------------------------------|
|                            |       |                      |       |                                            |
| Dean  Warehouse Services Inc.   |       | Summer  Infant (USA),Inc. |       | 100  Higginson Avenue, Lincoln, RI 02865        |
|                            |       |                      |       |                                            |
| LIT  Commerce Distribution, LLC |       | Summer  Infant (USA),Inc. |       | 6101-6121  Peachtree Street, Commerce, CA 90040 |
|                            |       |                      |       |                                            |
| Peachtree  Commerce LLC         |       | Summer  Infant (USA),Inc. |       | 6108-6120  Peachtree Street, Commerce, CA 90040 |
|                            |       |                      |       |                                            |
| FAITH  REALTY II, LLC           |       | Summer  Infant (USA),Inc. |       | 1275  Park East Drive, Woonsocket, RI 02895     |

 

----

 

***SCHEDULE 5.09***

 

Environmental Matters

 

None

 

----

 

***SCHEDULE 5.12(D)***

 

ERISA Disclosures

 

None

 

----

 

***SCHEDULE 5.13***

 

Subsidiaries and Other Equity Investments

 

SummerInfant, Inc. has 3 wholly owned Subsidiaries

 

a.             Summer Infant (USA), Inc.

b.             Summer Infant Europe Limited

c.             Summer Infant Asia Limited

 

SummerInfant (USA), Inc. has 2 wholly owned Subsidiaries

 

a.             Kiddopotamus & Company

b.             Summer Infant Canada Limited

 

----

 

***SCHEDULE 7.01***

 

Existing Liens

 

1.             Liens in favor of AdministrativeAgent

 

2.             Leased Equipment Under CapitalizedLeases Described in Schedule 7.03

 

----

 

***SCHEDULE 7.03***

 

Existing Indebtedness

 
| **Lease  #**    | ** ** | **Lease Name**                 | ** ** | **Leased Equipment**                     | ** ** | **Current Balance**    | ** **     |
|-----------------|------------|--------------------------------|------------|------------------------------------------|------------|------------------------|----------------|
|            |       |                           |       |                                     |       |                   |           |
| 080-0808829-006 |       | Bank  of West #6               |       | Computer  Equipment                      |       | $                      | 6,512.74       |   |
|            |       |                           |       |                                     |       |                   |           |
| 080-0808829-007 |       | Bank  of West #7               |       | Computer &  Warehouse Equipment |       | 9,492.86               |           |
|            |       |                           |       |                                     |       |                   |           |
| 080-0808829-008 |       | Bank  of West #8               |       | Computer  Equipment                      |       | 12,748.12              |           |
|            |       |                           |       |                                     |       |                   |           |
| 080-0808829-009 |       | Bank  of West #9               |       | Computer &  Warehouse Equipment |       | 26,245.49              |           |
|            |       |                           |       |                                     |       |                   |           |
| 080-0808829-010 |       | Bank  of West #10              |       | Computer  Equipment                      |       | 23,757.61              |           |
|            |       |                           |       |                                     |       |                   |           |
| 080-0808829-011 |       | Bank  of West #11              |       | Computer &  Office Equipment    |       | 68,537.89              |           |
|            |       |                           |       |                                     |       |                   |           |
| 080-0808829-012 |       | Bank  of West #12              |       | Computer &  Warehouse Equipment |       | 72,841.85              |           |
|            |       |                           |       |                                     |       |                   |           |
| 080-0808829-013 |       | Bank  of West #13              |       | Computer  Equipment                      |       | 99,310.76              |           |
|            |       |                           |       |                                     |       |                   |           |
| 080-0808829-014 |       | Bank  of West #14              |       | Computer &  Office Equipment    |       | 78,892.74              |           |
|            |       |                           |       |                                     |       |                   |           |
| 080-0808829-015 |       | Bank  of West #15              |       | Computer  Equipment                      |       | 160,501.71             |           |
|            |       |                           |       |                                     |       |                   |           |
|            | ** ** | **Total**                      |       |                                     | ** ** | **$**                  | **558,841.77** | ** ** |
|            | ** ** | ** **                     |       |                                     | ** ** | ** **             | ** **     |
| 229931          |       | CSI  Leasing                   |       | New  California Warehouse Expansion      |       | 90,000.00   (approved) |           |
|            |       |                           |       |                                     |       |                   |           |
|            |       | Wells  Fargo Financial Leasing |       | 2  Konica Minolta bizzhubs               |       |                   |           |
|            |       |                           |       |                                     |       |                   |           |
|            |       | **Total**                      |       |                                     | ** ** | **$**                  | **90,000.00**  | ** ** |
|            |       | ** **                     |       |                                     | ** ** | ** **             | ** **     |
|            | ** ** | Grand  Total                   |       |                                     | ** ** | $                      | 648,841.77     | ** ** |

 

----

 

InterestSwap Contracts:

 
| **Rate**    | ** ** | **Notional Amt** | ** ** | **Eff. Date** | ** ** | **Mat. Date** | ** ** | **Mark-to-Market @ 6/30/10** | ** ** |
|-------------|------------|------------------|------------|---------------|------------|---------------|------------|------------------------------|------------|
| Swap 17.06% |       | 3,771,904        |       | 6/21/2007     |       | 6/7/2012      |       | (349,471                     | )          |
| Swap 23.50% |       | 6,000,000        |       | 5/12/2008     |       | 4/08/2011     |       | (155,638                     | )          |
| Swap 32.92% |       | 10,000,000       |       | 11/3/2008     |       | 11/01/2010    |       | (107,599                     | )          |

 

----

 

***SCHEDULE 10.02***

 

**ADMINISTRATIVEAGENT’S OFFICE,CERTAIN ADDRESSES FOR NOTICES**

 

**BORROWER:**

 

c/o Summer Infant (USA), Inc.

1275 Park East Drive

Woonsocket, Rhode Island  02895

Attention: Jason Macari

Telephone:

Telecopier:

ElectronicMail: jmacari@summerinfant.com

Website Address: www.summerinfant.com

 

U.S. Taxpayer Identification Number (Summer Infant, Inc.):20-1994619

U.S. Taxpayer Identification Number (Summer Infant(USA), Inc.): 20-8641043

U.S. Taxpayer Identification Number (Kiddopotamus &Company): 84-1448352

VAT Number (Summer Infant Europe Limited): 789 928734

Canadian Taxpayer Number (Summer Infant Canada,Limited): BN 835413212 NP

 

**ADMINISTRATIVE AGENT:**

 

*Administrative Agent’s Office**(for payments and Requests for Credit Extensions):*

 

Bankof America, N.A.

MailCode: TX1-492-14-12

901 MAIN ST

DALLAS TX 75202-3714

Attention: Arlene Minor

Telephone:214-209-9177

Telecopier: 214.290-9412

Electronic Mail: arlene.l.minor@baml.com

 
| Bank of America, N.A., New  York NY | ** **                | ** ** |
|-------------------------------------|---------------------------|------------|
| ABA  # 026009593                    |                      |       |
| Account  Name: Corporate FTA        |                      |       |
| Account  Number:                    | 1292000883                |       |   |
| Attn:                               | Arlene  Minor             |       |   |
| Ref:                                | Summer  Infant (USA) Inc. |       |   |
|                                     |                           |            |  |  |

 

*Other Notices as Administrative Agent**:*

Bankof America, N.A.Agency ManagementWA1-501-17-32

8005th Avenue, Floor 17

Seattle,Washington  98104

Attention: Brenda H. Little, Vice President

Telephone: 206.358.0048

Telecopier: 415.343.0557

Electronic Mail: brenda.h.little@baml.com

 

----

 

**L/C ISSUER:**

 

*Standby Letters of Credit:*

 
| Bank of America, N.A.    | ** **                               |
|--------------------------|------------------------------------------|
| Trade Operations         |                                     |
| One Fleet Way            |                                     |
| Mail Code: PA6-580-02-30 |                                     |
| Scranton, PA 18507       |                                     |
| Attention:               | Mary  Cooper                             |   |
|                     | Telephone:  570.330.4235                 |   |
|                     | Telecopier:  570.330.4186                |   |
|                     | Electronic  Mail: mary.j.cooper@baml.com |   |

 

*Commercial Letters of Credit*

 
| Bank of America, N.A.     | ** **                                 |
|---------------------------|--------------------------------------------|
| Trade Operations-Scranton |                                       |
| 1 Fleet Way               |                                       |
| Mail Code: PA6-580-02-30  |                                       |
| Scranton, PA 18507        |                                       |
| Attention:                | Anissa  Canova                             |   |
|                      | Telephone:  570.330.4661                   |   |
|                      | Telecopier:  570.330.3701                  |   |
|                      | Electronic  Mail: anissa.m.canova@baml.com |   |

 
| **SWING LINE LENDER:**                    |
|-------------------------------------------|
| Bank  of America, N.A.                    |
| Mail  Code: TX1-492-14-12                 |
| 901  MAIN ST                              |
| DALLAS  TX 75202-3714                     |
| Attention:  Arlene Minor                  |
| Telephone:  214-209-9177                  |
| Telecopier:  214.290-9412                 |
| Electronic  Mail: arlene.l.minor@baml.com |
|                                      |
| Bank  of America, N.A., New York NY       |
| ABA  # 026009593                          |
| Account  Name: Corporate FTA              |
| Account  Number:                          | 1292000883 |
| Attn:                                     | Arlene  Minor |
| Ref:                                      | Summer  Infant (USA) Inc. |
|                                           |  |  |

 

----

 

***EXHIBIT A***

 

**FORM OFCOMMITTED LOAN NOTICE**

 

Date:                      ,       

 

To:                             Bank ofAmerica, N.A., as Administrative Agent

 

Ladies and Gentlemen:

 

Referenceis made to that certain Amended and Restated Credit Agreement, dated as of[August 2], 2010 (as amended, restated, extended, supplemented orotherwise modified in writing from time to time, the “Agreement”; theterms defined therein being used herein as therein defined), among SummerInfant, Inc., Summer Infant (USA), Inc.,and Kiddopotamus & Company (collectively, the “Borrowers”),the Lenders from time to time party thereto, and Bank of America, N.A., asAdministrative Agent, L/C Issuer and Swing Line Lender.

 

Theundersigned hereby requests (select one):

 

A Borrowing of Committed Loans                               A conversion or continuation of Committed Loans

 

1.             On                    (aBusiness Day).

 

2.             In the amount of $                               .

 

3.             Comprised of                               .

[Type of Committed Loan requested]

 

4.             For Eurodollar Rate Loans:  with an Interest Period of                               months.

 

----

 

TheCommitted Borrowing, if any, requested herein complies with the provisos to thefirst sentence of Section 2.01 of the Agreement.

 
|   | **SUMMER INFANT, INC.**        |
|--------|-------------------------------------|
|   | ** **                          |
|   |                                |
|   | By:                                 |   |
|   |                                | Title: |   |
|   |                                |   |
|   |                                |   |
|   | **SUMMER INFANT (USA), INC.**  |
|   | ** **                          | ** ** |
|   |                                |   |
|   | By:                                 |   |
|   |                                | Title: |   |
|   |                                |   |
|   |                                |   |
|   | **KIDDOPOTAMUS & COMPANY** |
|   | ** **                          | ** ** |
|   |                                |   |
|   | By:                                 |   |
|   |                                | Title: |   |

 

----

 

***EXHIBIT B***

 

**FORM OFSWING LINE LOAN NOTICE**

 

Date:                      ,       

 

To:                             Bank ofAmerica, N.A., as Swing Line Lender

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

 

Ladies and Gentlemen:

 

Referenceis made to that certain Amended and Restated Credit Agreement, dated as of[August 2], 2010 (as amended, restated, extended, supplemented or otherwisemodified in writing from time to time, the “Agreement”; the termsdefined therein being used herein as therein defined), among Summer Infant, Inc.,Summer Infant (USA), Inc., andKiddopotamus & Company (collectively, the “Borrowers”),the Lenders from time to time party thereto, and Bank of America, N.A., asAdministrative Agent, L/C Issuer and Swing Line Lender.

 

Theundersigned hereby requests a Swing Line Loan:

 

1.             On                               (a Business Day).

 

2.             In the amount of $                               .

 

TheSwing Line Borrowing requested herein complies with the requirements of theprovisos to the first sentence of Section 2.04(a) of theAgreement.

 
|   | **SUMMER INFANT, INC.**        |
|--------|-------------------------------------|
|   | ** **                          |
|   |                                |
|   | By:                                 |   |
|   |                                | Title: |   |
|   |                                |   |
|   |                                |   |
|   | **SUMMER INFANT (USA), INC.**  |
|   | ** **                          | ** ** |
|   |                                |   |
|   | By:                                 |   |
|   |                                | Title: |   |
|   |                                |   |
|   |                                |   |
|   | **KIDDOPOTAMUS & COMPANY** |
|   | ** **                          | ** ** |
|   |                                |   |
|   | By:                                 |   |
|   |                                | Title: |   |

 

----

 

***EXHIBIT C***

 

**FORM OFNOTE**

 

**NOTE**

 

**(REVOLVINGCREDIT)**

 
| $                                    | ** ** |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|

** **

FOR VALUE RECEIVED, the undersigned (collectively, jointly andseverally, “Borrowers”), hereby jointly and severally promise to pay to                                or registered assigns (“Lender”), in accordance with the provisions ofthe Agreement (as hereinafter defined), the principal amount of                                                                    DOLLARS ($                    )or so much thereof as may be advanced, repaid and advanced by Lender toBorrowers under that certain Amended and Restated Credit Agreement, dated as ofAugust 2, 2010 (as amended, restated, extended, supplemented or otherwisemodified in writing from time to time, the “Agreement”; the termsdefined therein being used herein as therein defined), among Borrowers, theLenders from time to time party thereto, and Bank of America, N.A., as AdministrativeAgent, L/C Issuer and Swing Line Lender, together with interest thereon, or onthe amount thereof from time to time outstanding, to be computed as provided inthe Agreement.

 

Borrowerspromise jointly and severally to pay interest on the unpaid principal amount ofeach Loan from the date of such Loan until such principal amount is paid infull, at such interest rates and at such times as provided in theAgreement.  Except as otherwise providedin Section 2.04(f) of the Agreement with respect to Swing LineLoans, all payments of principal and interest shall be made to AdministrativeAgent for the account of Lender in Dollars in immediately available funds atthe Administrative Agent’s Office.  Ifany amount is not paid in full when due hereunder, such unpaid amount shallbear interest, to be paid upon demand, from the due date thereof until the dateof actual payment (and before as well as after judgment) computed at the perannum rate set forth in the Agreement.

 

ThisNote is one of the Notes referred to in the Agreement, is entitled to thebenefits thereof and may be prepaid in whole or in part subject to the termsand conditions provided therein.  This Note is also entitled to the benefits ofthe Security Agreement and is secured by the Collateral.  Upon the occurrence and continuation of oneor more of the Events of Default specified in the Agreement, all amounts thenremaining unpaid on this Note shall become, or may be declared to be,immediately due and payable all as provided in the Agreement.  Loans made by Lender shall be evidenced byone or more loan accounts or records maintained by Lender in the ordinarycourse of business.  Lender may alsoattach schedules to this Note and endorse thereon the date, amount and maturityof its Loans and payments with respect thereto.

 

Borrower,for itself, its successors and assigns, hereby waives diligence, presentment,protest and demand and notice of protest, demand, dishonor and non-payment ofthis Note.

 

----

 

THISNOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THESTATE OF RHODE ISLAND.

 

INWITNESS WHEREOF, the Borrowers have caused this Note to be duly executed as ofthe date and year first above written.

 

 
|   | **SUMMER INFANT, INC.**        |
|--------|-------------------------------------|
|   | ** **                          |
|   |                                |
|   | By:                                 |   |
|   |                                | Title: |   |
|   |                                |   |
|   |                                |   |
|   | **SUMMER INFANT (USA), INC.**  |
|   | ** **                          | ** ** |
|   |                                |   |
|   | By:                                 |   |
|   |                                | Title: |   |
|   |                                |   |
|   |                                |   |
|   | **KIDDOPOTAMUS & COMPANY** |
|   | ** **                          | ** ** |
|   |                                |   |
|   | By:                                 |   |
|   |                                | Title: |   |

 

C - 2

----

 

**LOANS ANDPAYMENTS WITH RESPECT THERETO**

** **
| **Date** | ** ** | **Type of  Loan Made** | ** ** | **Amount of  Loan Made** | ** ** | **End of  Interest  Period** | ** ** | **Amount of  Principal or  Interest  Paid This  Date** | ** ** | **Outstanding  Principal  Balance  This Date** | ** ** | **Notation  Made By** | ** ** |
|----------|------------|------------------------|------------|--------------------------|------------|------------------------------|------------|--------------------------------------------------------|------------|------------------------------------------------|------------|-----------------------|------------|
|     |       |                   |       |                     |       |                         |       |                                                   |       |                                           |       |                  |       |
|     |       |                   |       |                     |       |                         |       |                                                   |       |                                           |       |                  |       |
|     |       |                   |       |                     |       |                         |       |                                                   |       |                                           |       |                  |       |
|     |       |                   |       |                     |       |                         |       |                                                   |       |                                           |       |                  |       |

 

----

 

***EXHIBIT D***

 

**FORM OFCOMPLIANCE CERTIFICATE**

 

Financial Statement Date:              ,

 

To:                             Bank ofAmerica, N.A., as Administrative Agent

 

Ladies and Gentlemen:

 

Referenceis made to that certain Amended and Restated Credit Agreement, dated as of[August 2], 2010 (as amended, restated, extended, supplemented orotherwise modified in writing from time to time, the “Agreement;” theterms defined therein being used herein as therein defined), among SummerInfant, Inc., Summer Infant (USA), Inc.,and Kiddopotamus & Company (collectively, “Borrowers”),the Lenders from time to time party thereto, and Bank of America, N.A., asAdministrative Agent, L/C Issuer and Swing Line Lender.

 

The undersigned Responsible Officer hereby certifies as of the datehereof that he/she is the                                               ofBorrowers, and that, as such, he/she is authorized to execute and deliver thisCertificate to Administrative Agent on the behalf of Borrowers, and that:

 

*[Use following paragraph 1 for fiscal **year-end** financial statements]*

 

1.             Borrowers have delivered theyear-end audited financial statements required by Section 6.01(a) ofthe Agreement for the fiscal year of Borrowers ended as of the above date,together with the report and opinion of an independent certified publicaccountant required by such section.

 

*[Use following paragraph 1 for fiscal **quarter-end** financial statements]*

 

1.             Borrowers have delivered theunaudited financial statements required by Section 6.01(b) ofthe Agreement for the fiscal quarter of Borrowers ended as of the abovedate.  Such financial statements fairlypresent the financial condition, results of operations and cash flows ofBorrowers and their Subsidiaries in accordance with GAAP as at such date andfor such period, subject only to normal year-end audit adjustments and theabsence of footnotes.

 

2.             The undersigned has reviewed and isfamiliar with the terms of the Agreement and has made, or has caused to be madeunder his/her supervision, a detailed review of the transactions and condition(financial or otherwise) of Borrowers during the accounting period covered bysuch financial statements.

 

3.             A review of the activities ofBorrowers during such fiscal period has been made under the supervision of theundersigned with a view to determining whether during such fiscal periodBorrower performed and observed all their Obligations under the Loan Documents,and

 

----

 

***[select one:]***

 

**[to the best knowledge of the undersigned during suchfiscal period, Borrowers performed and observed each covenant and condition ofthe Loan Documents applicable to them, and no Default has occurred and iscontinuing.]**

 

**—*or—***

 

**[to the best knowledge of the undersigned, during suchfiscal period, the following covenants or conditions have not been performed orobserved and the following is a list of each such Default and its nature andstatus:]**

 

4.             The representations and warrantiesof Borrowers contained in Article V of the Agreement, and/or anyrepresentations and warranties of Borrower or any other Loan Party that arecontained in any document furnished at any time under or in connection with theLoan Documents, are true and correct on and as of the date hereof, except tothe extent that such representations and warranties specifically refer to anearlier date, in which case they are true and correct as of such earlier date,and except that for purposes of this Compliance Certificate, therepresentations and warranties contained in subsections (a) and (b) ofSection 5.05 of the Agreement shall be deemed to refer to the mostrecent statements furnished pursuant to clauses (a) and (b), respectively,of Section 6.01 of the Agreement, including the statements inconnection with which this Compliance Certificate is delivered.

 

5.             The financial covenant analyses andinformation set forth on Schedules 2 and 3 attached hereto are true andaccurate on and as of the date of this Certificate.

 

*IN WITNESS WHEREOF,* the undersigned hasexecuted this Certificate as of                           ,                                       .

 
|   | **SUMMER INFANT, INC.**        |
|--------|-------------------------------------|
|   | ** **                          |
|   |                                |
|   | By:                                 |   |
|   |                                | Title: |   |
|   |                                |   |
|   |                                |   |
|   | **SUMMER INFANT (USA), INC.**  |
|   | ** **                          | ** ** |
|   |                                |   |
|   | By:                                 |   |
|   |                                | Title: |   |
|   |                                |   |
|   |                                |   |
|   | **KIDDOPOTAMUS & COMPANY** |
|   | ** **                          | ** ** |
|   |                                |   |
|   | By:                                 |   |
|   |                                | Title: |   |

 

D-2

----

 

For the Quarter/Year ended                                     (“Statement Date”)

 

**SCHEDULE 2**to the Compliance Certificate($ in 000’s)

 
| I.      | **Section 6.12(a) —Consolidated  EBITDA.**                                                  | ** **                                                                | ** **                                                                                                                                                                                                                 | ** **                                                                            |
|---------|------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------|
|    |                                                                                                       |                                                                      |                                                                                                                                                                                                                       |                                                                                  |   |   |
|    | A.                                                                                                         | Consolidated EBITDA at  Statement Date:                                   |                                                                                                                                                                                                                       |                                                                                  |   |
|    |                                                                                                       |                                                                      |                                                                                                                                                                                                                       |                                                                                  |   |   |
|    |                                                                                                       | 1.                                                                        | net income:                                                                                                                                                                                                                |                                                                                  | $ |   |
|    |                                                                                                       |                                                                      |                                                                                                                                                                                                                       |                                                                                  |   |   |
|    |                                                                                                       | 2.                                                                        | less non-cash  income or plus non-cash loss:                                                                                                                                                                               |                                                                                  | $ |   |
|    |                                                                                                       |                                                                      |                                                                                                                                                                                                                       |                                                                                  |   |   |
|    |                                                                                                       | 3.                                                                        | plus income  taxes:                                                                                                                                                                                                        |                                                                                  | $ |   |
|    |                                                                                                       |                                                                      |                                                                                                                                                                                                                       |                                                                                  |   |   |
|    |                                                                                                       | 4.                                                                        | plus Consolidated  Interest Charges:                                                                                                                                                                                       |                                                                                  | $ |   |
|    |                                                                                                       |                                                                      |                                                                                                                                                                                                                       |                                                                                  |   |   |
|    |                                                                                                       | 5.                                                                        | plus  depreciation, depletion and amortization:                                                                                                                                                                            |                                                                                  | $ |   |
|    |                                                                                                       |                                                                      |                                                                                                                                                                                                                       |                                                                                  |   |   |
|    |                                                                                                       | 6.                                                                        | equals Consolidated  EBITDA:                                                                                                                                                                                               |                                                                                  | $ |   |
|    |                                                                                                       |                                                                      |                                                                                                                                                                                                                       |                                                                                  |   |   |
|    | B.                                                                                                         | *1.*                                                                      | *Minimum  Required Consolidated EBITDA:*                                                                                                                                                                                   |                                                                                  | $ |   |
|    |                                                                                                       |                                                                      |                                                                                                                                                                                                                       |                                                                                  |   |   |
|    | C.                                                                                                         | Excess (deficient) for  covenant compliance (Line I.A.6 less I.B.1): |                                                                                                                                                                                                                       | $                                                                                     |   |
|    |                                                                                                       |                                                                      |                                                                                                                                                                                                                       |                                                                                  |   |   |
| **II.** | **Section 6.12(b) — Consolidated Funded  Indebtedness to****Consolidated****EBITDA Ratio.** |                                                                      |                                                                                                                                                                                                                       |                                                                                  |
|    |                                                                                                       |                                                                      |                                                                                                                                                                                                                       |                                                                                  |   |   |
|    | A.                                                                                                         | Consolidated  Funded Indebtedness                                         |                                                                                                                                                                                                                       |                                                                                  |   |
|    |                                                                                                       |                                                                      |                                                                                                                                                                                                                       |                                                                                  |   |   |
|    |                                                                                                       | 1.                                                                        | all outstanding  liabilities for borrowed money plus other interest-bearing  liabilities, including current and long-term liabilities:                                                                                     |                                                                                  | $ |   |
|    |                                                                                                       |                                                                      |                                                                                                                                                                                                                       |                                                                                  |   |   |
|    |                                                                                                       | 2.                                                                        | less the  non-current portion of Subordinated Liabilities: ($                          ) |                                                                                  |   |   |
|    |                                                                                                       |                                                                      |                                                                                                                                                                                                                       |                                                                                  |   |   |
|    |                                                                                                       | 3.                                                                        | Total Consolidated Funded  Indebtedness:                                                                                                                                                                                   |                                                                                  | $ |   |
|    |                                                                                                       |                                                                      |                                                                                                                                                                                                                       |                                                                                  |   |   |
|    | B.                                                                                                         | 1.                                                                        | Consolidated EBITDA From  I.B.1. (above)                                                                                                                                                                                   |                                                                                  | $ |   |
|    |                                                                                                       |                                                                      |                                                                                                                                                                                                                       |                                                                                  |   |   |
|    | C.                                                                                                         | Ratio (Line II.A.3  ̧ Line  II.B.1):                                  |                                                                                                                                                                                                                       |              to  1.0 |   |
|    |                                                                                                       |                                                                      |                                                                                                                                                                                                                       |                                                                                  |   |
|    | Minimum Required:                                                                                          |                                                                      | 3.25  to 1.00                                                                                                                                                                                                              |                                                                                  |

 

----

 
| **III.**   | **Section 6.12(c) —  Basic Fixed Charge Coverage Ratio.** |                                       |                                                                                                 |                                   |
|------------|--------------------------------------------------------------------------|--------------------------------------------|------------------------------------------------------------------------------------------------------|----------------------------------------|
| ** ** |                                                                     |                                       |                                                                                                 |                                   |   |
| ** ** | A.                                                                       | Consolidated EBITDA                        |                                                                                                 |                                   |   |
| ** ** |                                                                     |                                       |                                                                                                 |                                   |   |
| ** ** |                                                                     | 1.                                         | Consolidated EBITDA from  I.B.1 above:                                                               |                                   | $ |   |
| ** ** |                                                                     |                                       |                                                                                                 |                                   |   |   |
| ** ** |                                                                     | 2.                                         | plus lease  expense and rent expense:                                                                |                                   | $ |   |
| ** ** |                                                                     |                                       |                                                                                                 |                                   |   |   |
| ** ** |                                                                     | 3.                                         | minus income tax,  unfinanced capital expenditures, dividends, withdrawals and other  distributions: |                                   | ($                           | ) |
| ** ** |                                                                     |                                       |                                                                                                 |                                   |   |   |
| ** ** |                                                                     | 4.                                         | Total:                                                                                               |                                   | $ |   |
| ** ** |                                                                     |                                       |                                                                                                 |                                   |   |   |
| ** ** | B.                                                                       | Fixed Charges                              |                                                                                                 |                                   |   |
| ** ** |                                                                     |                                       |                                                                                                 |                                   |   |   |
| ** ** |                                                                     | 1.                                         | Consolidated Interest  Charges:                                                                      |                                   | $ |   |
| ** ** |                                                                     |                                       |                                                                                                 |                                   |   |   |
| ** ** |                                                                     | 2.                                         | plus lease and  rent expense:                                                                        |                                   | $ |   |
| ** ** |                                                                     |                                       |                                                                                                 |                                   |   |   |
| ** ** |                                                                     | 3.                                         | plus the current  portion of long term liabilities:                                                  |                                   | $ |   |
| ** ** |                                                                     |                                       |                                                                                                 |                                   |   |   |
| ** ** |                                                                     | 4.                                         | plus the current  portion of capitalized lease obligations:                                          |                                   | $ |   |
| ** ** |                                                                     |                                       |                                                                                                 |                                   |   |   |
| ** ** |                                                                     | 5.                                         | Total Fixed Charges:                                                                                 |                                   | $ |   |
| ** ** |                                                                     |                                       |                                                                                                 |                                   |   |   |
| ** ** | C.                                                                       | Ratio (Line III.A.4  ̧ Line  III.B.5): |                                                                                                 |      to  1.00 |   |
| ** ** |                                                                     |                                       |                                                                                                 |                                   |   |   |
| ** ** | Minimum Required:                                                        |                                       | 1.50  to 1.00                                                                                        |                                   |

 

D-2

----

 

***EXHIBIT E***

 

**FORM**

 

**OF**

 

**ASSIGNMENT AND ASSUMPTION**

 

ThisAssignment and Assumption (this “Assignment and Assumption”) is dated asof the Effective Date set forth below and is entered into by and between **[the][each] Assignor** identified in item 1below ([the][each, an]  “Assignor”)and **[the][each] Assignee identified in item 2below ([the][each, an] “Assignee”). [It is understood and agreed that therights and obligations of [the Assignors][the Assignees] hereunder are severaland not joint.]**.  Capitalizedterms used but not defined herein shall have the meanings given to them in theCredit Agreement identified below (the “Credit Agreement”), receipt of acopy of which is hereby acknowledged by the Assignee.  The Standard Terms and Conditions set forthin Annex 1 attached hereto are hereby agreed to and incorporated herein byreference and made a part of this Assignment and Assumption as if set forthherein in full.

 

Foran agreed consideration, [the][each] Assignor hereby irrevocably sells andassigns to [the Assignee][the respective Assignees], and [the][each] Assigneehereby irrevocably purchases and assumes from [the Assignor][the respectiveAssignors], subject to and in accordance with the Standard Terms and Conditionsand the Credit Agreement, as of the Effective Date inserted by AdministrativeAgent as contemplated below (i) all of [the Assignor’s][the respectiveAssignors’] rights and obligations in [its capacity as a Lender][theirrespective capacities as Lenders] under the Credit Agreement and any other documentsor instruments delivered pursuant thereto to the extent related to the amountand percentage interest identified below of all of such outstanding rights andobligations of [the Assignor][the respective Assignors] under the respectivefacilities identified below (including, without limitation, the Letters ofCredit and Swing Line Loans included in such facilities) and (ii) to theextent permitted to be assigned under applicable law, all claims, suits, causesof action and any other right of [the Assignor (in its capacity as aLender)][the respective Assignors (in their respective capacities as Lenders)]against any Person, whether known or unknown, arising under or in connectionwith the Credit Agreement, any other documents or instruments delivered pursuantthereto or the loan transactions governed thereby or in any way based on orrelated to any of the foregoing, including, but not limited to, contractclaims, tort claims, malpractice claims, statutory claims and all other claimsat law or in equity related to the rights and obligations sold and assignedpursuant to clause (i) above (the rights and obligations sold and assignedby [the][any] Assignor to [the][any] Assignee pursuant to clauses (i) and (ii) abovebeing referred to herein collectively as, [the][an] “Assigned Interest”).  Each such sale and assignment is withoutrecourse to [the][any] Assignor and, except as expressly provided in thisAssignment and Assumption, without representation or warranty by [the][any]Assignor.

 

1.                                      Assignor[s]:                                                             

 

2.                                      Assignee[s]:                                                              **for each Assignee, indicate Affiliate of[identify Lender]]**

 

----

 

3.                                      Borrower(s):  Summer Infant, Inc., Summer Infant (USA), Inc.,Summer Infant Europe Limited, Summer Infant Asia Limited and Summer InfantCanada, Limited

 

4.                                      AdministrativeAgent:  Bank of America, N.A., as theadministrative agent under the Credit Agreement

 

5.                                      CreditAgreement:  Amended and Restated Credit Agreement, dated as of [August 2,2010], among Summer Infant, Inc., Summer Infant (USA), Inc.,and Kiddopotamus & Company,the Lenders from time to time party thereto, Bank of America, N.A., asAdministrative Agent, L/C Issuer and Swing Line Lender

 

6.             Assigned Interest[s]:

 
| **Assignor[s]** | ** ** | **Assignee[s]** | ** ** | **Facility  Assigned** | ** ** | **Aggregate  Amount of  Commitment/Loans  for all Lenders** | ** ** | **Amount of  Commitment/Loans  Assigned** | ** ** | **Percentage  Assigned of  Commitment/Loans** | ** ** | **CUSIP  No.** | ** ** |
|-----------------|------------|-----------------|------------|------------------------|------------|-------------------------------------------------------------|------------|-------------------------------------------|------------|-----------------------------------------------|------------|----------------|------------|
|            |       |            |       |                   |       |                                                        |       |                                      |       |                                          |       |           |       |
|            |       |            |       |                   |       | $                                                           |       |                                      | $          |                                          |       |           | %          |   |   |
|            |       |            |       |                   |       | $                                                           |       |                                      | $          |                                          |       |           | %          |   |   |
|            |       |            |       |                   |       | $                                                           |       |                                      | $          |                                          |       |           | %          |   |   |

 

**[7.          TradeDate:                                       ]**

 

EffectiveDate:                                    ,20     **[TO BE INSERTED BYADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OFTRANSFER IN THE REGISTER THEREFOR.]**

 

Theterms set forth in this Assignment and Assumption are hereby agreed to:

 
|   | ASSIGNOR               |
|--------|------------------------|
|   | **[NAME OF ASSIGNOR]** |
|   | ** **             |
|   | ** **             |
|   | By:                    |   |
|   |                   | Title: |
|   |                   |
|   | ASSIGNEE               |
|   | **[NAME OF ASSIGNEE**] |
|   | ** **             |
|   | ** **             |
|   | By:                    |   |
|   |                   | Title: |

 

----

 
| **[Consented to and**] Accepted: |   |
|----------------------------------|--------|
|                             |   |
| Bank  of America, N. A., as      |   |
| Administrative Agent             |   |
|                             |   |
|                             |   |
| By:                              |   |   |
|                             | Title: |   |
|                             |   |
| **[Consented to:]**              |   |
| ** **                       |   |
|                             |   |
| By:                              |   |   |
|                             | Title: |   |

 

----

 

***ANNEX 1 TO ASSIGNMENT AND ASSUMPTION***

 

**STANDARD TERMS AND CONDITIONS FOR ASSIGNMENT ANDASSUMPTION**

 

1.             Representations and Warranties.

 

1.1.         Assignor.  [The][Each] Assignor (a) represents andwarrants that (i) it is the legal and beneficial owner of [the][therelevant] Assigned Interest, (ii) [the][such] Assigned Interest is freeand clear of any lien, encumbrance or other adverse claim and (iii) it hasfull power and authority, and has taken all action necessary, to execute anddeliver this Assignment and Assumption and to consummate the transactionscontemplated hereby; and (b) assumes no responsibility with respect to (i) anystatements, warranties or representations made in or in connection with theCredit Agreement or any other Loan Document, (ii) the execution, legality,validity, enforceability, genuineness, sufficiency or value of the LoanDocuments or any collateral thereunder, (iii) the financial condition ofBorrower, any of its Subsidiaries or Affiliates or any other Person obligatedin respect of any Loan Document or (iv) the performance or observance byBorrower, any of its Subsidiaries or Affiliates or any other Person of any oftheir respective obligations under any Loan Document.

 

1.2.         Assignee.  [The][Each] Assignee (a) represents andwarrants that (i) it has full power and authority, and has taken allaction necessary, to execute and deliver this Assignment and Assumption and toconsummate the transactions contemplated hereby and to become a Lender underthe Credit Agreement, (ii) it meets all the requirements to be an assigneeunder Section 10.06(b)(iii),(v) and (vi) of the Credit Agreement(subject to such consents, if any, as may be required under Section 10.06(b)(iii) ofthe Credit Agreement), (iii) from and after the Effective Date, it shallbe bound by the provisions of the Credit Agreement as a Lender thereunder and,to the extent of [the][the relevant] Assigned Interest, shall have theobligations of a Lender thereunder, and (iv) it is sophisticated withrespect to decisions to acquire assets of the type represented by [the][such]Assigned Interest and either it, or the Person exercising discretion in makingits decision to acquire [the][such] Assigned Interest, is experienced inacquiring assets of such type, (v) it has received a copy of the CreditAgreement, and has received or has been accorded the opportunity to receivecopies of the most recent financial statements delivered pursuant to Section **[    ]** thereof, asapplicable, and such other documents and information as it deems appropriate tomake its own credit analysis and decision to enter into this Assignment andAssumption and to purchase [the][such] Assigned Interest ,and (vi) it hasindependently and without reliance upon Administrative Agent or any otherLender and based on such documents and information as it has deemedappropriate, made its own credit analysis and decision to enter into thisAssignment and Assumption and to purchase [the][such] Assigned Interest; and (b) agreesthat (i) it will, independently and without reliance upon AdministrativeAgent, [the][any] Assignor or any other Lender, and based on such documents andinformation as it shall deem appropriate at the time, continue to make its owncredit decisions in taking or not taking action under the Loan Documents, and (ii) itwill perform in accordance with their terms all of the obligations which by theterms of the Loan Documents are required to be performed by it as a Lender.

 

----

 

2.             Payments.  From and after the Effective Date,Administrative Agent shall make all payments in respect of [the][each] AssignedInterest (including payments of principal, interest, fees and other amounts) to[the][the relevant] Assignor for amounts which have accrued to but excludingthe Effective Date and to [the][the relevant] Assignee for amounts which haveaccrued from and after the Effective Date.

 

3.             General Provisions.  This Assignment and Assumption shall be bindingupon, and inure to the benefit of, the parties hereto and their respectivesuccessors and assigns.  This Assignmentand Assumption may be executed in any number of counterparts, which togethershall constitute one instrument. Delivery of an executed counterpart of a signature page of thisAssignment and Assumption by telecopy shall be effective as delivery of amanually executed counterpart of this Assignment and Assumption.  This Assignment and Assumption shall begoverned by, and construed in accordance with, the law of the State of RhodeIsland.

 

----