CREDIT
AGREEMENT








DATED AS
OF NOVEMBER 3, 2008








AMONG




RC2
Corporation,


Learning
Curve Brands, Inc.,


Learning
Curve Canada Limited,


RC2
(Asia) Limited


RC2
(Australia) Pty., Ltd.,


RC2
Deutschland GmbH,


Racing
Champions International Limited,


Racing
Champions Worldwide Limited









the
Guarantors from time to time parties hereto,




the
Lenders from time to time parties hereto,




and




Bank
of Montreal,


as
Administrative Agent









BMO
Capital Markets, as Sole Lead Arranger and Sole Book Runner




National
City Bank, as Syndication Agent
















TABLE
OF CONTENTS










Section
              
              Heading
              
              Page
  Section 1.
              
              The
      Credit Facilities
              1Section 1.1.
              Term
      Loan Commitments
              1Section 1.2.
              Revolving
      Credit Commitments
              1Section 1.3.
              Letters of
      Credit
              2Section 1.4.
              Applicable Interest
      Rates
              6Section 1.5.
              Minimum Borrowing
      Amounts; Maximum Eurocurrency Loans
              6Section 1.6.
              Manner of Borrowing
      Loans and Designating Applicable Interest Rates
              6Section 1.7.
              Interest
      Periods
              8Section 1.8.
              Maturity of
      Loans
              10Section 1.9.
              Prepayments
              10Section 1.10.
              Default
    Rate
              12Section 1.11.
              Evidence of
      Indebtedness
              13Section 1.12.
              Funding
      Indemnity
              13Section 1.13.
              Commitment
      Terminations
              14Section 1.14.
              Substitution of
      Lenders
              15Section 1.15.
              Appointment of the
      Company as Agent for Borrowers
              15Section 1.16.
              Swing
Loans
              15Section 1.17.
              Increase in
      Revolving Credit Commitments, Additional Term Loans
              17Section 1.18.
              Defaulting
      Lenders
              18Section 2.
              Fees
              18Section 2.1.
              Fees
              18Section 3.
              
              Place
      and Application of Payments
              19Section 3.1.
              Place and
      Application of Payments
              19Section 3.2.
              Account
    Debit
              21Section 4.
              
              The
      Collateral and  Guaranties
              21Section 4.1.
              Collateral
              21Section 4.2.
              Guaranties
              22Section 4.3.
              Joint and Several
      Obligors
              22Section 4.4.
              Further
      Assurances
              22Section 5.
              
              Definitions;
      Interpretation
              23Section 5.1.
              Definitions
              23Section 5.2.
              Interpretation
              40Section 5.3.
              Change in Accounting
      Principles
              40








i










Section 6.
            
            Representations
      and Warranties
            40Section 6.1.
            Organization and
      Qualification
            40Section 6.2.
            Subsidiaries
            40Section 6.3.
            Authority and
      Validity of Obligations
            41Section 6.4.
            Use of Proceeds;
      Margin Stock
            42Section 6.5.
            Financial
      Reports
            42Section 6.6.
            No Material Adverse
      Change
            42Section 6.7.
            Full
      Disclosure
            42Section 6.8.
            Trademarks,
      Franchises, and Licenses
            43Section 6.9.
            Governmental
      Authority and Licensing
            43Section 6.10.
            Good Title
            43Section 6.11.
            Litigation and Other
      Controversies
            43Section 6.12.
            Taxes
            43Section 6.13.
            Approvals
            43Section 6.14.
            Affiliate
      Transactions
            44Section 6.15.
            Investment
      Company
            44Section 6.16.
            ERISA
            44Section 6.17.
            Compliance with
      Laws
            44Section 6.18.
            Other
      Agreements
            44Section
      6.19.
            Solvency
            44Section 6.20.
            No Default
            44Section 6.21.
            No Broker
    Fees
            44Section 7.
            
            Conditions
      Precedent
            45Section 7.1.
            All Credit
      Events
            45Section
      7.2.
            Initial Credit
      Event
            45Section 8.
            
            Covenants
            48Section 8.1.
            Maintenance of
      Business
            48Section 8.2.
            Maintenance of
      Properties
            48Section 8.3.
            Taxes and
      Assessments
            48Section 8.4.
            Insurance
            48Section 8.5.
            Financial
      Reports
            49Section 8.6.
            Inspection
            51Section 8.7.
            Borrowings and
      Guaranties
            51Section 8.8.
            Liens
            52Section 8.9.
            Investments,
      Acquisitions, Loans and Advances
            53Section 8.10.
            Mergers,
      Consolidations and Sales
            54Section 8.11.
            Maintenance of
      Subsidiaries
            55Section 8.12.
            Dividends and
      Certain Other Restricted Payments
            55Section 8.13.
            ERISA
            56Section 8.14.
            Compliance with
      Laws
            56Section 8.15.
            Burdensome Contracts
      With Affiliates
            56Section 8.16.
            No Changes in Fiscal
      Year
            56Section 8.17.
            Formation of
      Subsidiaries
            57Section 8.18.
            Change in the Nature
      of Business
            57Section 8.19.
            Use of Loan
      Proceeds
            57Section 8.20.
            No
      Restrictions
            57Section 8.21.
            Financial
      Covenants
            57


















































ii











Section 9.
            
            Events
      of Default and Remedies
            58Section 9.1.
            Events of
      Default
            58Section 9.2.
            Non-Bankruptcy
      Defaults
            60Section 9.3.
            Bankruptcy
      Defaults
            60Section 9.4.
            Collateral for
      Undrawn Letters of Credit
            61Section 9.5.
            Notice of
      Default
            61Section 9.6.
            Expenses
            61Section 10.
            
            Change
      in Circumstances
            62Section 10.1.
            Change of
    Law
            62Section 10.2.
            Unavailability of
      Deposits or Inability to Ascertain, or Inadequacy of, LIBOR
            62Section 10.3.
            Increased Cost and
      Reduced Return
            62Section 10.4.
            Lending
      Offices
            64Section 10.5.
            Discretion of Lender
      as to Manner of Funding
            64Section 11.
            
            The
      Administrative Agent
            64Section 11.1.
            Appointment and
      Authorization of Administrative Agent
            64Section 11.2.
            Administrative Agent
      and its Affiliates
            65Section 11.3.
            Action by
      Administrative Agent
            65Section 11.4.
            Consultation with
      Experts
            65Section 11.5.
            Liability of
      Administrative Agent; Credit Decision
            65Section 11.6.
            Indemnity
            66Section 11.7.
            Resignation of
      Administrative Agent and Successor Administrative Agent
            67Section 11.8.
            L/C Issuer and Swing
      Line Lender
            67Section 11.9.
            Hedging Liability
      and Funds Transfer and Deposit Account Liability Arrangements
            68Section 11.10.
            Designation of
      Additional Agents
            68Section 11.11.
            Authorization to
      Release or Subordinate or Limit Liens
            68Section 11.12.
            Authorization to
      Enter into, and Enforcement of, the Collateral Documents
            68Section 12.
            
            The
      Guarantees; Joint and Several Obligations
            69Section 12.1.
            The
    Guarantees
            69Section 12.2.
            Guarantee
      Unconditional
            69Section 12.3.
            Discharge Only upon
      Payment in Full; Reinstatement in Certain Circumstances
            70Section 12.4.
            Subrogation
            71Section 12.5.
            Waivers
            71Section 12.6.
            Limit on
      Recovery
            71Section 12.7.
            Stay of
      Acceleration
            71Section 12.8.
            Benefit to
      Guarantors
            71Section
      12.9.
            Guarantor
      Covenants
            72Section 12.10.
            Joint and Several
      Obligors
            72


















iii






























Section 13.
            
            Miscellaneous
            73Section 13.1.
            Withholding
      Taxes
            73Section 13.2.
            No Waiver,
      Cumulative Remedies
            74Section 13.3.
            Non-Business
      Days
            74Section 13.4.
            Documentary
      Taxes
            74Section 13.5.
            Survival of
      Representations
            74Section 13.6.
            Survival of
      Indemnities
            75Section 13.7.
            Sharing of
      Set-Off
            75Section 13.8.
            Notices
            75Section 13.9.
            Counterparts
            76Section 13.10.
            Successors and
      Assigns
            76Section 13.11.
            Participants
            76Section 13.12.
            Assignments
            77Section 13.13.
            Amendments
            79Section 13.14.
            Headings
            80Section 13.15.
            Costs and Expenses;
      Indemnification
            80Section 13.16.
            Set-off
            81Section 13.17.
            Entire
      Agreement
            82Section 13.18.
            Governing
    Law
            82Section 13.19.
            Severability of
      Provisions
            82Section 13.20.
            Excess
      Interest
            82Section 13.21.
            Construction
            83Section 13.22.
            Lender’s and L/C
      Issuer’s Obligations Several; Lenders and their Affiliates
            83Section 13.23.
            Intentionally
      Omitted
            83Section 13.24.
            Submission to
      Jurisdiction; Waiver of Jury Trial
            83Section 13.25.
            USA Patriot
      Act
            83Section 13.26.
            Confidentiality
            84Signature
      Page








Exhibit A
            -
            Notice of Payment
      RequestExhibit B
            -
            Notice of
      BorrowingExhibit C
            -
            Notice of
      Continuation/ConversionExhibit D-1
            -
            Term NoteExhibit D-2
            -
            Revolving
    NoteExhibit D-3
            -
            Swing
  NoteExhibit E
            -
            Compliance
      CertificateExhibit F
            -
            Additional Guarantor
      SupplementExhibit G
            -
            Assignment and
      AcceptanceExhibit
      H
            -
            Commitment Amount
      Increase RequestSchedule
      1
            -
            CommitmentsSchedule 6.2
            -
            Subsidiaries









iv





CREDIT
AGREEMENT




This
Credit Agreement is entered into as of November 3, 2008 by and among RC2
Corporation, a Delaware corporation (the “Company”), Learning Curve
Brands, Inc., a Delaware corporation (“LCBI”), Learning Curve
Canada Limited, a corporation incorporated under the laws of Ontario, Canada
(“LCCL”), RC2 (Asia)
Limited, a company incorporated in Hong Kong (“RC2 Asia”), RC2 (Australia)
Pty., Ltd., a proprietary company duly incorporated in Victoria, Australia
(“RC2 Australia”), RC2
Deutschland GmbH, a private company duly incorporated and registered under the
laws of Germany (“RC2
Germany”), Racing Champions International Limited, a corporation
organized under the laws of England and Wales  (“RC2 UK”), Racing Champions
Worldwide Limited, a corporation organized under the laws of England and Wales
(“Racing Champions”;
and together with the Company, LCBI, LCCL, RC2 Asia, RC2 Australia, RC2 Germany,
RC2 UK, and Racing Champions collectively, the “Borrowers” and individually,
a “Borrower”), the
Subsidiaries of the Company from time to time party to this Agreement, as
Guarantors, the several financial institutions from time to time party to this
Agreement, as Lenders, and Bank of Montreal, as Administrative Agent as provided
herein.  All capitalized terms used herein without definition shall
have the same meanings herein as such terms are defined in Section 5.1
hereof.







PRELIMINARY
STATEMENT




The
Borrowers have requested, and the Lenders have agreed to extend, certain credit
facilities on the terms and conditions of this Agreement.




Now, Therefore, in
consideration of the mutual agreements contained herein, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:







Section 1.     The
Credit Facilities.




Section 1.1.  Term
Loan Commitments.  Subject to the terms and conditions hereof,
each Lender, by its acceptance hereof, severally agrees to make a loan
(individually a “Term
Loan” and collectively for all the Lenders the “Term Loans”) in
U.S. Dollars to the Borrowers in the amount of such Lender’s Term Loan
Commitment.  The Term Loans shall be advanced in a single Borrowing on
the Closing Date and shall be made ratably by the Lenders in proportion to their
respective Term Loan Percentages, at which time the Term Loan Commitments shall
expire.  As provided in Section 1.6(a) hereof, the Company, on
behalf of the Borrowers, may elect that the Term Loans be outstanding as Base
Rate Loans or Eurocurrency Loans.  No amount repaid or prepaid on any
Term Loan may be borrowed again.




Section 1.2.Revolving Credit
Commitments.  Subject to the terms and conditions hereof, each
Lender, by its acceptance hereof, severally agrees to make a loan or loans
(individually a “Revolving
Loan” and collectively the “Revolving Loans”) in U.S.
Dollars to the Borrowers from time to time on a revolving basis up to the amount
of such Lender’s Revolving Credit Commitment, subject to any reductions thereof
pursuant to the terms hereof, before the Revolving Credit Termination
Date.  The sum of the aggregate principal amount of Revolving Loans,
Swing Loans,and
L/C Obligations at any time outstanding shall not exceed the Revolving Credit
Commitments in effect at such time.  Each Borrowing of Revolving Loans
shall be made ratably by the Lenders in proportion to their respective Revolver
Percentages.  As provided in Section 1.6(a) hereof, the Company,
on behalf of the applicable Borrower, may elect that each Borrowing of Revolving
Loans be either Base Rate Loans or Eurocurrency Loans.  Revolving
Loans may be repaid and the principal amount thereof reborrowed before the
Revolving Credit Termination Date, subject to the terms and conditions
hereof.






1




Section 1.3.  Letters
of Credit.  (a)  General
Terms.  Subject to the terms and conditions hereof, as part of
the Revolving Credit, the L/C Issuer shall issue standby letters of credit (each
a “Letter of Credit”)
for the account of the applicable Borrower of an aggregate undrawn face amount
up to the L/C Sublimit.  Each Letter of Credit shall be issued by the
L/C Issuer, but each Lender shall be obligated to reimburse the L/C Issuer for
such Lender’s Revolver Percentage of the amount of each drawing thereunder and,
accordingly, each Letter of Credit shall constitute usage of the Revolving
Credit Commitment of each Lender pro rata in an amount equal to its Revolver
Percentage of the L/C Obligations then
outstanding.  Notwithstanding anything contained herein to the
contrary, each of the Existing L/Cs shall constitute a “Letter of Credit” herein for
all purposes of this Agreement to the same extent, and with the same force and
effect, as if the Existing L/Cs had been issued at the request of the Company
hereunder.




(b)  Applications.  At
any time before the Revolving Credit Termination Date, the L/C Issuer shall, at
the request of the Company, which is acting on behalf of the Borrowers, issue
one or more Letters of Credit in U.S. Dollars,in a form satisfactory
to the L/C Issuer, with expiration dates no later than the earlier of 12 months
from the date of issuance (or which are cancelable not later than 12 months from
the date of issuance and each renewal) or 30 days prior to the Revolving
Credit Termination Date, in an aggregate face amount as set forth above, upon
the receipt of an application duly executed by the Company, on behalf of the
applicable Borrower,for the relevant Letter
of Credit in the form then customarily prescribed by the L/C Issuer for the
Letter of Credit requested (each an “Application”).  Notwithstanding
anything contained in any Application to the contrary:  (i) the
Borrowers shall pay fees in connection with each Letter of Credit as set forth
in Section 2.1 hereof, (ii) except as otherwise provided in
Section 1.9 or 1.18 hereof,before the occurrence of
a Default or an Event of Default, the L/C Issuer will not call for the funding
by the Borrowers of any amount under a Letter of Credit before being presented
with a drawing thereunder, and (iii) if the L/C Issuer is not timely
reimbursed for the amount of any drawing under a Letter of Credit on the date
such drawing is paid, the Borrowers’ obligation to reimburse the L/C Issuer for
the amount of such drawing shall bear interest (which the Borrowers hereby
promise to pay) from and after the date such drawing is paid at a rate per
annum, equal to the sum of the Base Rate from time to time in effect (computed
on the basis of a year of 365 or 366 days, as the case may be, and the actual
number of days elapsed) plus the Applicable Margin
for Base Rate Loans.  If the L/C Issuer issues any Letter of Credit
with an expiration date that is automatically extended unless the L/C Issuer
gives notice that the expiration date will not so extend beyond its then
scheduled expiration date, unless the Required Lenders instruct the L/C Issuer
otherwise, the L/C Issuer will give such notice of non-renewal before the time
necessary to prevent such automatic extension if before such required notice
date:  (i) the expiration date of such Letter of Credit if so
extended would be after the Revolving Credit Termination Date, (ii) the
Revolving Credit Commitments have been terminated, or (iii) a Default or an
Event of Default exists and the Administrative Agent, at the request or with the
consent of the Required Lenders, has given the L/C Issuer instructions not to so
permit the extension of the expiration date of such Letter of
Credit.  The L/C Issuer agrees to issue amendments to the Letter(s) of
Credit increasing the amount, or extending the expiration date, thereof at the
request of the Company, on behalf of the applicable Borrower, subject to the
conditions of Section 7 hereof and the other terms of this
Section 1.3.  Notwithstanding anything contained herein to the
contrary, the L/C Issuer shall be under no obligation to issue, extend or amend
any Letter of Credit if a default of any Lender’s obligations to fund under
Section 1.3(e) exists or any Lender is at such time a Defaulting Lender
hereunder, unless the L/C Issuer has entered into arrangements with Borrower or
such Lender satisfactory to the L/C Issuer to eliminate the L/C Issuer’s risk
with respect to such Lender.






2




(c)  The Reimbursement
Obligations.  Subject to Section 1.3(b) hereof, the
obligation of the Borrowers to reimburse the L/C Issuer for all drawings under a
Letter of Credit (such obligation of the Borrowers being herein referred to as a
“Reimbursement
Obligation”) shall be governed by the Application related to such Letter
of Credit, except that reimbursement shall be made in immediately available
funds by no later than 12:00 Noon (Chicago time) on the date when each drawing
is to be paid if the Company, on behalf of the applicable Borrower, has been
informed of such drawing by the L/C Issuer on or before9:00 a.m. (Chicago
time) (including the day before such drawing is to be paid) on the date when
such drawing is to be paid or, if notice of such drawing is given to the
Company, on behalf of the applicable Borrower, after 9:00 a.m. (Chicago
time) on the date when such drawing is to be paid, by the end of such day in
immediately available funds, at the Administrative Agent’s principal office in
Chicago, Illinois or such other office as the Administrative Agent may designate
in writing to the Company, on behalf of the applicable Borrower (and the
Administrative Agent shall thereafter cause to be distributed to the L/C Issuer
such amount(s) in like funds).  If the Borrowers do not make any such
reimbursement payment on the date due and the Participating Lenders fund their
participations therein in the manner set forth in Section 1.3(e) below,
then all payments thereafter received by the Administrative Agent in discharge
of any of the relevant Reimbursement Obligations shall be distributed in
accordance with Section 1.3(e) below.




(d)  Obligations
Absolute.  The Borrowers’ obligation to reimburse L/C
Obligations as provided in subsection (c) of this Section shall be
absolute, unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Agreement and the relevant Application under
any and all circumstances whatsoever and irrespective of (i) any lack of
validity or enforceability of any Letter of Credit or this Agreement, or any
term or provision therein, (ii) any draft or other document presented under a
Letter of Credit proving to be forged, fraudulent or invalid in any respect or
any statement therein being untrue or inaccurate in any respect, (iii) payment
by the L/C Issuer under a Letter of Credit against presentation of a draft
or other document that does not strictly comply with the terms of such Letter of
Credit, or (iv) any other event or circumstance whatsoever, whether or not
similar to any of the foregoing, that might, but for the provisions of this
Section, constitute a legal or equitable discharge of, or provide a right of
setoff against, the Borrowers obligations hereunder. None of the Administrative
Agent, the Lenders, or the L/C Issuer shall have any liability or
responsibility by reason of or in connection with the issuance or transfer of
any Letter of Credit or any payment or failure to make any payment thereunder
(irrespective of any of the circumstances referred to in the preceding
sentence), or any error, omission, interruption, loss or delay in transmission
or delivery of any draft, notice or other communication under or relating to any
Letter of Credit (including any document required to make a drawing thereunder),
any error in interpretation of technical terms or any consequence arising from
causes beyond the control of the L/C Issuer; provided that the foregoing
shall not be construed to excuse the L/C Issuer from liability to the
Borrowers to the extent of any direct damages (as opposed to consequential
damages, claims in respect of which are hereby waived by the Borrowers to the
extent permitted by applicable law) suffered by a Borrower that are caused by
the L/C Issuer ’s failure to exercise care when determining whether drafts
and other documents presented under a Letter of Credit comply with the terms
thereof.  The parties hereto expressly agree that, in the absence of
gross negligence or willful misconduct on the part of the L/C Issuer (as
finally determined by a court of competent jurisdiction), the L/C Issuer
shall be deemed to have exercised care in each such determination.  In
furtherance of the foregoing and without limiting the generality thereof, the
parties agree that, with respect to documents presented which appear on their
face to be in substantial compliance with the terms of a Letter of Credit, the
L/C Issuer may, in its sole discretion, either accept and make payment upon
such documents without responsibility for further investigation, regardless of
any notice or information to the contrary, or refuse to accept and make payment
upon such documents if such documents are not in strict compliance with the
terms of such Letter of Credit.






3




(e)  The Participating
Interests.  Each Lender (other than the Lender acting as L/C
Issuer in issuing the relevant Letter of Credit), by its acceptance hereof,
severally agrees to purchase from the L/C Issuer, and the L/C Issuer hereby
agrees to sell to each such Lender (a “Participating Lender”), an
undivided percentage participating interest (a “Participating Interest”), to
the extent of its Revolver Percentage, in each Letter of Credit issued by, and
each Reimbursement Obligation owed to, the L/C Issuer.  Upon any
failure by a Borrower to pay any Reimbursement Obligation at the time required
on the date the related drawing is to be paid, as set forth in
Section 1.3(c) above, or if the L/C Issuer is required at any time to
return to any Borrower or to a trustee, receiver, liquidator, custodian or other
Person any portion of any payment of any Reimbursement Obligation, each
Participating Lender shall, not later than the Business Day it receives a
certificate in the form of Exhibit A hereto from the L/C Issuer (with a
copy to the Administrative Agent) to such effect, if such certificate is
received before 1:00 p.m. (Chicago time), or not later than 1:00 p.m.
(Chicago time)the
following Business Day, if such certificate is received after such time, pay to
the Administrative Agent for the account of the L/C Issuer an amount equal to
such Participating Lender’s Revolver Percentage of such unpaid or recaptured
Reimbursement Obligation together with interest on such amount accrued from the
date the related payment was made by the L/C Issuer to the date of such payment
by such Participating Lender at a rate per annum equal
to:  (i) from the date the related payment was made by the L/C
Issuer to the date 2 Business Days after payment by such Participating
Lender is due hereunder, the Federal Funds Rate for each day and (ii) from
the date 2 Business Days after the date such payment is due from such
Participating Lender to the date such payment is made by such Participating
Lender, the Base Rate in effect for each such day.  Each such
Participating Lender shall thereafter be entitled to receive its Revolver
Percentage of each payment received in respect of the relevant Reimbursement
Obligation and of interest paid thereon, with the L/C Issuer retaining its
Revolver Percentage thereof as a Lender hereunder.  The several
obligations of the Participating Lenders to the L/C Issuer under this
Section 1.3 shall be absolute, irrevocable, and unconditional under any and
all circumstances whatsoever and shall not be subject to any set-off,
counterclaim or defense to payment which any Participating Lender may have or
have had against the Borrower, the L/C Issuer, the Administrative Agent, any
Lender or any other Person whatsoever.  Without limiting the
generality of the foregoing, such obligations shall not be affected by any
Default or Event of Default or by any reduction or termination of the Commitment
of any Lender after the issuance of the applicable Letter of Credit, and each
payment by a Participating Lender under this Section 1.3 shall be made
without any offset, abatement, withholding or reduction
whatsoever.






4




(f)  Indemnification.  The
Participating Lenders shall, to the extent of their respective Revolver
Percentages, indemnify the L/C Issuer (to the extent not reimbursed by the
applicable Borrower) against any cost, expense (including reasonable counsel
fees and disbursements), claim, demand, action, loss or liability (except such
as result from the L/C Issuer’s gross negligence or willful misconduct) that the
L/C Issuer may suffer or incur in connection with any Letter of Credit issued by
it.  The obligations of the Participating Lenders under this
Section 1.3(f) and all other parts of this Section 1.3 shall survive
termination of this Agreement and of all Applications, Letters of Credit, and
all drafts and other documents presented in connection with drawings
thereunder.




(g)  Manner of Requesting a Letter of
Credit.  The Company, on behalf of the applicable Borrower,
shall provide at least five (5) Business Days’ advance written notice to
the Administrative Agent of each request for the issuance of a Letter of Credit,
such notice in each case to be accompanied by an Application for such Letter of
Credit properly completed and executed by the Company, on behalf of the
applicable Borrower, and, in the case of an extension or an increase in the
amount of a Letter of Credit, a written request therefor, in a form acceptable
to the Administrative Agent and the L/C Issuer, in each case, together with
the fees called for by this Agreement.  The Administrative Agent shall
promptly notify the L/C Issuer of the Administrative Agent’s receipt of
each such notice (andthe L/C Issuer
shall be entitled to assume that the conditions precedent to any such issuance,
extension, amendment or increase have been satisfied unless notified to the
contrary by the Administrative Agent or the Required Lenders) and the
L/C Issuer shall promptly notify the Administrative Agent and the Lenders
of the issuance of the Letter of Credit so requested.




(h)  Replacement of the
L/C Issuer.  The L/C Issuer may be replaced at any
time by written agreement among the Company, on behalf of the Borrowers, the
Administrative Agent, the replaced L/C Issuer and the successor
L/C Issuer.  The Administrative Agent shall notify the Lenders of
any such replacement of the L/C Issuer.  At the time any such
replacement shall become effective, the Borrowers shall pay all unpaid fees
accrued for the account of the replaced L/C Issuer.  From and
after the effective date of any such replacement (i) the successor
L/C Issuer shall have all the rights and obligations of the L/C Issuer
under this Agreement with respect to Letters of Credit to be issued thereafter
and (ii) references herein to the term “L/C Issuer ” shall be deemed
to refer to such successor or to any previous L/C Issuer, or to such
successor and all previous L/C Issuer s, as the context shall
require.  After the replacement of a L/C Issuer hereunder, the
replaced L/C Issuer shall remain a party hereto and shall continue to have
all the rights and obligations of a L/C Issuer under this Agreement with
respect to Letters of Credit issued by it prior to such replacement, but shall
not be required to issue additional Letters of Credit.






5




Section 1.4.  Applicable
Interest Rates.  (a) Base Rate
Loans.  Each Base Rate Loan made or maintained by a Lender
shall bear interest during each Interest Period it is outstanding (computed on
the basis of a year of 365 or 366 days, as the case may be, and the actual
days elapsed) on the unpaid principal amount thereof from the date such Loan is
advanced, continued or created by conversion from a Eurocurrency Loan, until
maturity (whether by acceleration or otherwise) at a rate per annum equal to the
sum of the Applicable Margin plus the Base Rate from time to time in effect,
payable by the Borrowers on the last day of each Interest Period and at maturity
(whether by acceleration or otherwise).




(b)  Eurocurrency
Loans.  Each Eurocurrency Loan made or maintained by a Lender
shall bear interest during each Interest Period it is outstanding (computed on
the basis of a year of 360 days and actual days elapsed) on the unpaid principal
amount thereof from the date such Loan is advanced, continued or created by
conversion from a Base Rate Loan until maturity (whether by acceleration or
otherwise) at a rate per annum equal to the sum of the Applicable Margin plus
the Adjusted LIBOR applicable for such Interest Period, payable on the last day
of the Interest Period and at maturity (whether by acceleration or otherwise),
and, if the applicable Interest Period is longer than three months, on each day
occurring every three months after the commencement of such Interest
Period.




(c)  Rate Determinations.The
Administrative Agent shall determine each interest rate applicable to the Loans
and the Reimbursement Obligations hereunder, and its determination thereof shall
be conclusive and binding except in the case of manifest error.




Section 1.5.  Minimum
Borrowing Amounts; Maximum Eurocurrency Loans.  Each Borrowing
of Base Rate Loans shall be in an amount not less than $2,000,000 or such
greater amount which is an integral multiple of $100,000.  Each
Borrowing of Eurocurrency Loans shall be in an amount not less than $4,000,000
or such greater amount which is an integral multiple of
$100,000.  Without the Administrative Agent’s consent, there shall not
be more than ten(10) Borrowings of
Eurocurrency Loans outstanding hereunderat any one time.




Section 1.6.  Manner
of Borrowing Loans and Designating Applicable Interest
Rates.  (a) Notice to the Administrative
Agent. The Company, on behalf of the Borrowers, shall give notice to
the AdministrativeAgent by no later than
12:00 noon (Chicago time):  (i) at least 3 Business
Days before the date on which the Company, on behalf of the applicable Borrower,
requests the Lenders to advance a Borrowing of Eurocurrency Loans and
(ii) on the date the Company, on behalf of the applicable Borrower,
requests the Lenders to advance a Borrowing of Base Rate Loans.  The
Loans included in each Borrowing shall bear interest initially at the type of
rate specified in such notice of a new Borrowing.  Thereafter, subject
to the terms and conditions hereof, the Company, on behalf of the applicable
Borrower, may from time to time elect to change or continue the type of interest
rate borne by each Borrowing or, subject to the minimum amount requirement
contained in Section 1.5 for each outstanding Borrowing, a portion thereof, as
follows:  (i) if such Borrowing is of Eurocurrency Loans, on the
last day of the Interest Period applicable thereto, the Company, on behalf of
the applicable Borrower, may (subject to the notice requirement set forth
herein) continue part or all of such Borrowing as Eurocurrency Loans or convert
part or all of such Borrowing into Base Rate Loans or (ii) if such
Borrowing is of Base Rate Loans, on any Business Day, the Company, on behalf of
the applicable Borrower, may convert all or part of such Borrowing into
Eurocurrency Loans for an Interest Period or Interest Periods specified by the
Company.  The Company, on behalf of the applicable Borrower, shall
give all such notices requesting the advance, continuation or conversion of a
Borrowing to the AdministrativeAgent by telephone or
telecopy (which notice shall be irrevocable once given and, if by telephone,
shall be promptly confirmed in writing), substantially in the form attached
hereto as Exhibit B (Notice of Borrowing) or Exhibit C (Notice of
Continuation/Conversion), as applicable, or in such other form acceptable to the
AdministrativeAgent.  Notice
of the continuation of a Borrowing of Eurocurrency Loans for an additional
Interest Period or of the conversion of part or all of a Borrowing of Base Rate
Loans into Eurocurrency Loans must be given by no later than 10:00 a.m.
(Chicago time) at least 3 Business Days before the date of the requested
continuation or conversion.  All such notices concerning the advance,
continuation or conversion of a Borrowing shall specify the date of the
requested advance, continuation or conversion of a Borrowing (which shall be a
Business Day), the amount of the requested Borrowing to be advanced, continued
or converted, the type of Loans to comprise such new, continued or converted
Borrowing and, if such Borrowing is to be comprised of Eurocurrency Loans, the
currency and the Interest Period applicable thereto.  Upon notice to
the Company by the Administrative Agent or the Required Lenders, no Borrowing of
Eurocurrency Loans shall be advanced, continued, or created by conversion if any
Default or Event of Default then exists.  The Borrowers agree that the
Administrative Agent may rely on any such telephonic or telecopy notice given by
any person the Administrative Agent in good faith believes is an Authorized
Representative of the Company without the necessity of independent
investigation, and in the event any such notice by telephone conflicts with any
written confirmation such telephonic notice shall govern if the Administrative
Agent has acted in reliance thereon.






6




(b)  Notice to the
Lenders.  The Administrative Agent shall give prompt telephonic
or telecopy notice to each Lender of any notice from the Company received
pursuant to Section 1.6(a) above and, if such notice requests the Lenders
to make Eurocurrency Loans, the Administrative Agent shall give notice to the
Company and each Lender by like means of the interest rate applicable thereto
promptly after the Administrative Agent has made such
determination.




(c)  Company’s Failure to Notify;
Automatic Continuations and Conversions.  Any outstanding
Borrowing of Base Rate Loans shall automatically be continued for an additional
Interest Period on the last day of its then current Interest Period unless the
Company, on behalf of the applicable Borrower, has notified the Administrative
Agent within the period required by Section 1.6(a) that such Borrower
intends to convert such Borrowing into a Borrowing of Eurocurrency Loans or such
Borrowing is prepaid in accordance with Section 1.9(a).  If the
Company, on behalf of the applicable Borrower, fails to give notice pursuant to
Section 1.6(a) above of the continuation or conversion of any outstanding
principal amount of a Borrowing of Eurocurrency Loans before the last day of its
then current Interest Period within the period required by Section 1.6(a)
and such Borrowing is not prepaid in accordance with Section 1.9(a), such
Borrowing shall automatically be converted into a Borrowing of Base Rate
Loans.  In the event the Company, on behalf of the applicable
Borrower, fails to give notice pursuant to Section 1.6(a) above of a
Borrowing equal to the amount of a Reimbursement Obligation and has not notified
the Administrative Agent by 12:00 noon (Chicago time) on the day such
Reimbursement Obligation becomes due that it intends to repay such Reimbursement
Obligation through funds not borrowed under this Agreement, the relevant
Borrower shall be deemed to have requested a Borrowing of Base Rate Loans under
the Revolving Credit (or, at the option of the Administrative Agent, under the
Swing Line) on such day in the amount of the Reimbursement Obligation then due,
which Borrowing shall be applied to pay the Reimbursement Obligation then
due.






7




(d)  Disbursement of
Loans.  Not later than 1:00 p.m. (Chicago time) on the
date of any requested advance of a new Borrowing, subject to Section 7
hereof, each Lender shall make available its Loan comprising part of such
Borrowing in funds immediately available at the principal office of the
Administrative Agent (or its Affiliate’s) in Chicago, Illinois.  The
Administrative Agent shall make the proceeds of each new Borrowing available to
the relevant Borrower at the Administrative Agent’s principal office in Chicago,
Illinois, by depositing such proceeds to the credit of such Borrower’s
Designated Disbursement Account or as the Company, on behalf of the relevant
Borrower, and the Administrative Agent may otherwise agree.




(e)  Administrative Agent Reliance on
Lender Funding.  Unless the Administrative Agent shall have
been notified by a Lender prior to (or, in the case of a Borrowing of Base Rate
Loans, by 1:00 p.m. (Chicago time) on the date on which such Lender is
scheduled to make payment to the Administrative Agent of the proceeds of a Loan
(which notice shall be effective upon receipt) that such Lender does not intend
to make such payment, the Administrative Agent may assume that such Lender has
made such payment when due and the Administrative Agent may in reliance upon
such assumption (but shall not be required to) make available to the applicable
Borrower the proceeds of the Loan to be made by such Lender and, if any Lender
has not in fact made such payment to the Administrative Agent, such Lender
shall, on demand, pay to the Administrative Agent the amount made available to
the applicable Borrower attributable to such Lender together with interest
thereon in respect of each day during the period commencing on the date such
amount was made available to the applicable Borrower and ending on (but
excluding) the date such Lender pays such amount to the Administrative Agent at
a rate per annum equal to:  (i) from the date the related advance
was made by the Administrative Agent to the date 2 Business Days after payment
by such Lender is due hereunder, the Federal Funds Rate in effect for each such
day and (ii) from the date 2 Business Days after the date such payment is
due from such Lender to the date such payment is made by such Lender, the Base
Rate in effect for each such day.  If such amount is not received from
such Lender by the Administrative Agent immediately upon demand, the Borrowers
will, on demand, repay to the Administrative Agent the proceeds of the Loan
attributable to such Lender with interest thereon at a rate per annum equal to
the interest rate applicable to the relevant Loan, but without such payment
being considered a payment or prepayment of a Loan under Section 1.12
hereof so that the Borrowers will have no liability under such Section with
respect to such payment.




Section 1.7.  Interest
Periods.  As provided in Section 1.6(a) hereof, at the
time of each request to advance, continue or create by conversion a Borrowing of
Eurocurrency Loans or Swing Loans, the Company, on behalf of the applicable
Borrower, shall select an Interest Period applicable to such Loans from among
the available options.  The term “Interest Period” means the
period commencing on the date a Borrowing of Loans is advanced, continued or
created by conversion and ending:  (a) in the case of Base Rate
Loans and Swing Loans bearing interest at the Base Rate, on the last day of the
calendar quarter (i.e.,
the last day of March, June, September or December, as applicable) in which such
Borrowing is advanced, continued or created by conversion (or on the last day of
the following calendar quarter if such Loan is advanced, continued or created by
conversion on the last day of a calendar quarter), (b) in the case of a
Eurocurrency Loan, one, two, three or six months thereafter, and (c) in the
case of a Swing Loan bearing interest at the Swing Loan Lender’s Quoted Rate, on
the date one to five days thereafter as mutually agreed to by the Company, on
behalf of the applicable Borrower, and the Administrative Agent; provided, however,that:






8




(i)any Interest Period for a Borrowing of
Revolving Loans consisting of Base Rate Loans that otherwise would end after the
Revolving Credit Termination Date shall end on the Revolving Credit Termination
Date, and any Interest Period for a Borrowing of Term Loans consisting of Base
Rate Loans that otherwise would end after the final maturity date of the Term
Loans shall end on the final maturity date of the Term Loans;




(ii)no Interest Period with respect to any
portion of the Revolving Loans consisting of Eurocurrency Loans shall extend
beyond the Revolving Credit Termination Date and no Interest Period with respect
to any portion of the Term Loans shall extend beyond the final maturity date of
the Term Loans;




(iii)no Interest Period with respect to any
portion of the Term Loans consisting of Eurocurrency Loans shall extend beyond a
date on which the Borrowers are required to make a scheduled payment of
principal on the Term Loans unless the sum of (a) the aggregate principal
amount of Term Loans that are Base Rate Loans plus(b) the aggregate
principal amount of Term Loans that are Eurocurrency Loans with Interest Periods
expiring on or before such date equals or exceeds the principal amount to be
paid on the Term Loans on such payment date;




(iv)whenever the last day of any Interest
Period would otherwise be a day that is not a Business Day, the last day of such
Interest Period shall be extended to the next succeeding Business Day, provided
that, if such extension would cause the last day of an Interest Period for a
Borrowing of Eurocurrency Loans to occur in the following calendar month, the
last day of such Interest Period shall be the immediately preceding Business
Day; and




(v)for purposes of determining an Interest
Period for a Borrowing of Eurocurrency Loans, a month means a period starting on
one day in a calendar month and ending on the numerically corresponding day in
the next calendar month; provided, however, that if there is no numerically
corresponding day in the month in which such an Interest Period is to end or if
such an Interest Period begins on the last Business Day of a calendar month,
then such Interest Period shall end on the last Business Day of the calendar
month in which such Interest Period is to end.






9




Section 1.8.  Maturity
of Loans.  (a) Scheduled Payments of Term
Loans.  The Borrowers shall make principal payments on the Term
Loans in quarterly installments on the last day of each March, June, September,
and December in each year, commencing with the quarter ending
March 31, 2009, with the amount of each such principal installment to
equal the amount set forth in Column B below shown opposite of the relevant
due date as set forth in Column A below:




Column A
              
              
              Payment
      Date
            Column B
              
              Scheduled
      Principal
              Payment
      on Term Loans03/31/09
            $3,750,00006/30/09
            $3,750,00009/30/09
            $3,750,00012/31/09
            $3,750,00003/31/10
            $3,750,00006/30/10
            $3,750,00009/30/10
            $3,750,00012/31/10
            $3,750,00003/31/11
            $3,750,00006/30/11
            $3,750,00009/30/11
            $3,750,00011/01/11
            $33,750,000




; it
being agreed that the final payment of both principal and interest not sooner
paid on the Term Loans shall be due and payable on November 1, 2011 the
final maturity thereof.  Each such principal payment shall be applied
to the Lenders holding the Term Loans pro rata based upon their
Term Loan Percentages; provided, however, that if any
additional Term Loans are advanced pursuant to Section 1.17 hereof, each
scheduled installment due from and after the date of such advance through
September 30, 2011 shall be increased by an amount equal to the product of (A)
such additional Term Loan advance multiplied by (b) an amount (expressed as
a percentage), the numerator of which is the amount of the scheduled installment
for such period (without giving effect to such additional Term Loan) and the
denominator of which is the outstanding principal balance of the Term Loans
(without giving effect to such additional Term Loans).




(b)  Revolving Loans and Swing
Loans.  Each Revolving Loan and Swing Loan, both for principal
and interest not sooner paid, shall mature and become due and payable by the
Borrowers on the Revolving Credit Termination Date.




Section 1.9.  Prepayments(a)Optional.   The
Borrowers may prepay in whole or in part (but, if in part,
then:  (i) if such Borrowing is of Base Rate Loans, in an amount
not less than $500,000, (ii) if such Borrowing is of Eurocurrency Loans, in
an amount not less than $1,000,000, and (iii) in each case, in an amount
such that the minimum amount required for a Borrowing pursuant to
Sections 1.5 and 1.16 hereof remains outstanding) any Borrowing of
(y) Eurocurrency Loans at any time upon 3 Business Days prior notice
by the Company, on behalf of the Borrowers, to the Administrative Agent, or
(z) Base Rate Loans, at any time upon notice delivered by the Company, on
behalf of the Borrowers, to the Administrative Agent no later than
10:00 a.m. (Chicago time) on the date of prepayment (or, in any case, such
shorter period of time then agreed to by the Administrative Agent), such
prepayment to be made by the payment of the principal amount to be prepaid and,
in the case of any Term Loans or Eurocurrency Loans or Swing Loans, accrued
interest thereon to the date fixed for prepayment plus any amounts due the
Lenders under Section 1.12 hereof.






10




(b)  Mandatory.  (i) Dispositions or Event of
Loss.If the Company or any Subsidiary shall at any time or
from time to time make or agree to make a Disposition or shall suffer an Event
of Loss resulting in Net Cash Proceeds in excess of $10,000,000 individually or
on a cumulative basis in any fiscal year of the Borrowers, then (x) the
Company shall promptly notify the Administrative Agent of such proposed
Disposition or Event of Loss (including the amount of the estimated Net
Cash  Proceeds to be received by such Person in respect thereof) and
(y) promptly upon receipt by such Person of such Net Cash Proceeds in
excess of $10,000,000 from such Disposition or Event of Loss, the Company shall
cause such Person to prepay the Term Loans (or all outstanding Loans and
L/C Obligations if an Event of Default exists) in an aggregate amount equal
to 100% of the amount of all such Net Cash Proceeds in excess of $10,000,000;
provided that in the
case of each Disposition or Event of Loss, if the Company states in its notice
of such event that such Person intends to reinvest, within 360 days of the
applicable Disposition or Event of Loss, the Net Cash Proceeds thereof in assets
similar to the assets which were subject to such Disposition or Event of Loss,
then so long as no Default or Event of Default then exists, such Person shall
not be required to make a mandatory prepayment under this Section in respect of
such Net Cash Proceeds to the extent such Net Cash Proceeds are actually
reinvested in such similar assets with such 360-day period.  The
amount of each such prepayment shall be applied first to the outstanding Term
Loans until paid in full, then to the outstanding principal amount of Revolving
Loans until paid in full and then to cash collateralized Letters of Credit in
accordance with Section 9.4 hereof.




(ii)Debt Issuance.If
after the Closing Date the Company or any Subsidiary shall issue any
Indebted­ness for Borrowed Money, other than Indebtedness for Borrowed Money
permitted by Section 8.7 hereof, the Company shall promptly notify the
Administrative Agent of the estimated Net Cash Proceeds of such issuance to be
received by or for the account of such Person in respect
thereof.  Promptly upon receipt by such Person of Net Cash Proceeds of
such issuance, the Company shall cause such Person to prepay the Term Loans (or
all outstanding Loans and L/C Obligations if an Event of Default exists) in an
aggregate amount equal to 100% of the amount of such Net Cash
Proceeds.  The amount of each such prepayment shall be applied first
to the outstanding Term Loans until paid in full, then to the outstanding
principal amount of Revolving Loans until paid in full and then to cash
collateralized Letters of Credit in accordance with Section 9.4
hereof.  The Borrowers and Guarantors acknowledge that their
performance hereunder shall not limit the rights and remedies of the Lenders for
any breach of Section 8.7 hereof or any other terms of this
Agreement.






11




(iii)Commitment
Terminations.  The Borrowers shall, on each date the Revolving
Credit Commitments are reduced pursuant to Section 1.13 hereof, prepay the
Revolving Credit Loans and Swing Loans, and, if necessary, prefund the L/C
Obligations by the amount, if any, necessary to reduce the sum of the aggregate
principal amount of Revolving Credit Loans and Swing Loans and L/C Obligations
then outstanding to the amount to which the Revolving Credit Commitments have
been so reduced.




(iv)Application of
Prepayments.  Unless the Company, on behalf of the Borrowers,
otherwise directs, prepayments made under this Section 1.9(b) shall be
applied first to Borrowings of Base Rate Loans until payment in full thereof
with any balance applied to Borrowings of Eurocurrency Loans in the order in
which their Interest Periods expire.  Each prepayment of Loans under
this Section 1.9(b) shall be made by the payment of the principal amount to
be prepaid and, in the case of any Term Loans or Eurocurrency Loans or Swing
Loans, accrued interest thereon to the date of prepayment together with any
amounts due the Lenders under Section 1.12 hereof.  Each
prefunding of L/C Obligations shall be made in accordance with Section  9.4
hereof.




(c)Notice;
Reborrowing.  The Administrative Agent will promptly advise
each Lender of any notice of prepayment it receives from the
Borrowers.  Any amount of Revolving Loans and Swing Loans paid or
prepaid before the Revolving Credit Termination Date may, subject to the terms
and conditions of this Agreement, be borrowed, repaid and borrowed again. No
amount of the Term Loans paid or prepaid may be reborrowed, and, in the case of
any partial prepayment, such prepayment shall be applied to the remaining
amortization payments on the Term Loans on a ratable basis among all such
remaining amortization payments based on the principal amounts
thereof.




Section 1.10.Default
Rate.  Notwithstanding anything to the contrary contained in
Section 1.3 hereof, while any Event of Default exists or after
acceleration, the Borrowers shall, jointly and severally, pay interest (after as
well as before entry of judgment thereon to the extent permitted by law) on the
principal amount of all Loans and Reimbursement Obligations and letter of credit
fees at a rate per annum equal to:




(a)for any Base Rate Loan or Swing Loans
bearing interest at the Base Rate, the sum of 2.0% plus the Applicable Margin
plus the Base Rate from time to time in effect;




(b)for any Eurocurrency Loan or Swing
Loans bearing interest at the Swing Line Lender’s Quoted Rate, the sum of 2.0%
plus the rate of
interest in effect thereon at the time of such default until the end of the
Interest Period applicable thereto and, thereafter, at a rate per annum equal to
the sum of 2.0% plus
the Applicable Margin for Base Rate Loans plus the Base Rate from time
to time in effect;




(c)for any Reimbursement Obligation, the
sum of 2.0% plus the
amounts due under Section 1.3 with respect to such Reimbursement
Obligation; and






12




(d)for any Letter of Credit, the sum of
2.0% plus the letter of
credit fee due under Section  2.1 with respect to such Letter of
Credit;




provided, however,that in the absence of acceleration, any adjustments pursuant to
this Section shall be made at the election of the Administrative Agent, acting
at the request or with the consent of the Required Lenders, with written notice
to the Borrowers.  While any Event of Default exists or after
acceleration, interest shall be paid on demand of the Administrative Agent at
the request or with the consent of the Required Lenders.




Section 1.11.  Evidence
of Indebtedness.  (a) Each Lender shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrowers to such Lender resulting from each Loan made by
such Lender from time to time, including the amounts of principal and interest
payable and paid to such Lender from time to time hereunder.




(b)  The
Administrative Agent shall also maintain accounts in which it will record
(i) the amount of each Loan made hereunder, the type thereof and the
Interest Period with respect thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrowers to each
Lender hereunder and (iii) the amount of any sum received by the
Administrative Agent hereunder from the Borrowers and each Lender’s share
thereof.




(c)  The
entries maintained in the accounts maintained pursuant to paragraphs (a)
and (b) above shall be prima
facie evidence of the existence and amounts of the Obligations therein
recorded absent manifest error; provided, however,that the
failure of the Administrative Agent or any Lender to maintain such accounts or
any error therein shall not in any manner affect the obligation of the Borrowers
to repay the Obligations in accordance with their terms.




(d)  Any
Lender may request that its Loans be evidenced by a promissory note or notes in
the forms of Exhibit D-1 (in the case of its Term Loan and referred to herein as
a “Term Note”), D-2 (in
the case of its Revolving Loans and referred to herein as a “Revolving Note”), or D-3 (in
the case of its Swing Loans and referred to herein as a “Swing Note”), as applicable
(the Term Notes, Revolving Notes, and Swing Note being hereinafter referred to
collectively as the “Notes” and individually as a
“Note”).  In
such event, the Borrowers shall execute and deliver to such Lender a Note
payable to such Lender or its registered assigns in the amount of the Term Loan,
Commitment, or Swing Line Sublimit, as applicable.  Thereafter, the
Loans evidenced by such Note or Notes and interest thereon shall at all times
(including after any assignment pursuant to Section 13.12) be represented
by one or more Notes payable to the order of the payee named therein or any
assignee pursuant to Section 13.12, except to the extent that any such
Lender or assignee subsequently returns any such Note for cancellation and
requests that such Loans once again be evidenced as described in
subsections (a) and (b) above.




Section 1.12.  Funding
Indemnity.  If any Lender shall incur any loss, cost or expense
(including, without limitation, any loss of profit, and any loss, cost or
expense incurred by reason of the liquidation or re-employment of deposits or
other funds acquired by such Lender to fund or maintain any Eurocurrency Loan or
Swing Loanor the
relending or reinvesting of such deposits or amounts paid or prepaid to such
Lender) as a result of:






13




(a)any payment, prepayment or conversion
of a Eurocurrency Loan or Swing Loan on a date other than the last day of its
Interest Period,




(b)any failure (because of a failure to
meet the conditions of Section 7 or otherwise) by any Borrower to borrow or
continue a Eurocurrency Loan or Swing Loan, or to convert a Base Rate Loan into
a Eurocurrency Loanor Swing Loan on the
date specified in a notice given pursuant to Section 1.6(a) or 1.16hereof,




(c)any failure by a Borrower to make any
payment of principal on any Eurocurrency Loanor Swing Loan when due
(whether by acceleration or otherwise), or




(d)any acceleration of the maturity of a
Eurodollar Loan or Swing Loan as a result of the occurrence of any Event of
Default hereunder,




then,
within 15 days after the demand by such Lender, the Borrowers shall pay to such
Lender such amount as will reimburse such Lender for such loss, cost or
expense.  If any Lender makes such a claim for compensation, it shall
provide to the Company, on behalf of the Borrowers, with a copy to the
Administrative Agent, a certificate setting forth the amount of such loss, cost
or expense in reasonable detail (including an explanation of the basis for and
the computation of such loss, cost or expense) and the amounts shown on such
certificate shall be deemed prime facie correct, absent
manifest error.




Section 1.13.  Commitment
Terminations.  (a) Optional Revolving Credit
Terminations.The Borrowers shall have the right at any time
and from time to time, upon 5 Business Days prior written notice given by
the Company to the Administrative Agent (or such shorter period of time agreed
to by the Administrative Agent), to terminate the Revolving Credit Commitments
without premium or penalty and in whole or in part, any partial termination to
be (i) in an amount not less than $5,000,000 and (ii) allocated
ratably among the Lenders in proportion to their respective Revolver
Percentages, provided that the Revolving Credit Commitments may not be reduced
to an amount less than the sum of the aggregate principal amount of Revolving
Loans, Swing Loans, and all L/C Obligations then
outstanding.  Any termination of the Revolving Credit Commitments
below the L/C Sublimit or Swing Line Sublimit then in effect shall reduce
the L/C Sublimit and Swing Line Sublimit, as applicable, to an amount equal
to the reduced aggregate amount of the Revolving Credit
Commitments.  The Administrative Agent shall give prompt notice to
each Lender of any such termination of the Revolving Credit
Commitments.




(b)  Mandatory Revolving Credit
Termination.  If at any time Net Cash Proceeds or other amounts
remain after the prepayment of the Term Loans in full pursuant to
Section 1.9(b)(i) or (ii) hereof, the Revolving Credit Commitments shall
ratably terminate by an amount equal to 100% of such excess (i) to the
extent the Revolving Credit Commitments in effect at such time exceed
$50,000,000; provided,that in the absence of an Event of Default that has occurred and is
continuing, such termination shall not reduce the Revolving Credit Commitments
below $50,000,000 and (ii) to the extent that the Revolving Credit
Commitments in effect at such time are $50,000,000 or less, then the Revolving
Credit Commitments shall only be terminated if an Event of Default has occurred
and is continuing.






14




(c)  No
Reinstatement.  Any termination of the Revolving Credit
Commitments pursuant to this Section 1.13 may not be
reinstated.




Section 1.14.  Substitution
of Lenders.  In the event (a) the Borrowers receive a
claim from any Lender for compensation under Section 10.3 or 13.1 hereof,
(b) the Borrowers receive a notice from any Lender of any illegality
pursuant to Section 10.1 hereof, (c) any Lender is then a Defaulting
Lender or such Lender is a Subsidiary or Affiliate of a Person who has been
deemed insolvent or becomes the subject of a bankruptcy or insolvency proceeding
or a receiver or conservator has been appointed for any such Person, or
(d) a Lender fails to consent to an amendment or waiver requested under
Section 13.13 hereof at a time when the Required Lenders have approved such
amendment or waiver (any such Lender referred to in clause (a), (b), (c) or
(d) above being hereinafter referred to as an “Affected Lender”), the
Borrowers may, in addition to any other rights the Borrowers may have hereunder
or under applicable law, require, at the Borrowers’ expense, any such Affected
Lender to assign, at par plus accrued interest and fees, without recourse, all
of its interest, rights, and obligations hereunder (including all of its
Commitments and the Loans and participation interests in Letters of Credit and
other amounts at any time owing to it hereunder and the other Loan Documents) to
an Eligible Assignee, provided that (i) such
assignment shall not conflict with or violate any law, rule or regulation or
order of any court or other governmental authority, (ii) the Borrowers
shall have received the written consent of the Administrative Agent, which
consent shall not be unreasonably withheld, to such assignment, (iii) the
Borrowers shall have paid to the Affected Lender all monies (together with
amounts due such Affected Lender under Section 1.12 hereof as if the Loans
owing to it were prepaid rather than assigned except if such Lender is being
replaced pursuant to clause (c) above) other than such principal owing to it
hereunder, and (iv) the assignment is entered into in accordance with the
other requirements of Section 13.12 hereof (provided any assignment fees
and reimbursable expenses due thereunder shall be paid by the Borrower).




Section 1.15.  Appointment
of the Company as Agent for Borrowers.  Each Borrower hereby
irrevocably appoints the Company as its agent hereunder to make requests on such
Borrower’s behalf under Section 1 hereof for Borrowings, to request on such
Borrower’s behalf Letters of Credit and to execute all Applications therefor,
and to take any other action contemplated by the Loan Documents with respect to
the credit extended hereunder to such Borrower.  The Administrative
Agent and the Lenders shall be entitled to conclusively presume that any action
by the Company under the Loan Documents is taken on behalf of all of the
Borrowers whether or not the Company so indicates.




Section 1.16.Swing Loans (a) Generally.  Subject
to the terms and conditions hereof, as part of the Revolving Credit, the Swing
Line Lender may, in its discretion, make loans in U.S. Dollars to the
Borrowers, or any of them, under the Swing Line (individually a “Swing Loan” and collectively
the “Swing Loans”)
which shall not in the aggregate at any time outstanding exceed the Swing Line
Sublimit.  Swing Loans may be availed by the Borrowers from time to
time and borrowings thereunder may be repaid and used again during the period
ending on the Revolving Credit Termination Date; provided,that each Swing
Loan must be repaid on the last day of the Interest Period applicable
thereto.  Each Swing Loan shall be in a minimum amount of $250,000 or
such greater amount which is an integral multiple of
$50,000.




(b)  Interest on Swing
Loans.  Each Swing Loan shall bear interest until maturity
(whether by acceleration or otherwise) at a rate per annum equal to (i) the
sum of the Base Rate plus the Applicable Margin for Base Rate Loans as from time
to time in effect (computed on the basis of a year of 365 or 366 days, as the
case may be, for the actual number of days elapsed) or (ii) the Swing Line
Lender’s Quoted Rate (computed on the basis of a year of 360 days for the
actual number of days elapsed).  Interest on each Swing Loan shall be
due and payable on the last day of its Interest Period and at maturity (whether
by acceleration or otherwise).






15




(c)  Requests for Swing
Loans.  The Company, on behalf of the applicable Borrower,
shall give the Administrative Agent prior notice (which may be written or oral)
no later than 12:00 Noon (Chicago time) on the date upon which a Borrower
requests that any Swing Loan be made, of the amount and date of such Swing Loan,
and the Interest Period requested therefor.  The Administrative Agent
shall promptly advise the Swing Line Lender of any such notice received from the
Company, on behalf of the applicable Borrower.  After receiving such
notice, the Swing Line Lender shall in its discretion quote an interest rate
(which shall never be less than the Administrative Agent’s cost of funds) to the
Company, on behalf of the applicable Borrower, at which the Swing Line Lender
would be willing to make such Swing Loan available to such Borrower for the
Interest Period so requested (the rate so quoted for a given Interest Period
being herein referred to as “Swing Line Lender’s Quoted
Rate”).  The Borrowers acknowledge and agree that the interest
rate quote is given for immediate and irrevocable acceptance.  If the
Company, on behalf of the applicable Borrower, does not so immediately accept
the Swing Line Lender’s Quoted Rate for the full amount requested by such
Borrower for such Swing Loan, the Swing Line Lender’s Quoted Rate shall be
deemed immediately withdrawn and such Swing Loan shall bear interest at the rate
per annum determined by adding the Applicable Margin for Base Rate Loans under
the Revolving Credit to the Base Rate as from time to time in
effect.  Subject to the terms and conditions hereof, the proceeds of
each Swing Loan extended to the Borrowers shall be deposited or otherwise wire
transferred to such Borrower’s Designated Disbursement Account or as the
Company, on behalf of the relevant Borrower, the Administrative Agent, and the
Swing Line Lender may otherwise agree.  Anything contained in the
foregoing to the contrary notwithstanding, the undertaking of the Swing Line
Lender to make Swing Loans shall be subject to all of the terms and conditions
of this Agreement (provided that the Swing Line Lender shall be entitled to
assume that the conditions precedent to an advance of any Swing Loan have been
satisfied unless notified to the contrary by the Administrative Agent or the
Required Lenders).




(d)  Refunding
Loans.  In its sole and absolute discretion, the Swing Line
Lender may at any time, on behalf of the Borrowers (which hereby irrevocably
authorize the Swing Line Lender to act on their behalf for such purpose) and
with notice to the Company, on behalf of the Borrowers, and the Administrative
Agent, request each Lender to make a Revolving Loan in the form of a Base Rate
Loan in an amount equal to such Lender’s Revolver Percentage of the amount of
the Swing Loans outstanding on the date such notice is given.  Unless
an Event of Default described in Section 9.1(j) or 9.1(k) exists with
respect to any Borrower, regardless of the existence of any other Event of
Default, each Lender shall make the proceeds of its requested Revolving Loan
available to the Administrative Agent for the account of the Swing Line Lender),
in immediately available funds, at the Administrative Agent’s (or its
Affiliate’s) office in Chicago, Illinois (or such other location designated by
the Administrative Agent), before 12:00 Noon (Chicago time) on the Business Day
following the day such notice is given.  The Administrative Agent
shall promptly remit the proceeds of such Borrowing to the Swing Line Lender to
repay the outstanding Swing Loans.






16




(e)  Participations.If
any Lender refuses or otherwise fails to make a Revolving Loan when requested by
the Swing Line Lender pursuant to Section 1.16(d) above (because an Event
of Default described in Section 9.1(j) or 9.1(k) exists with respect to a
Borrower or otherwise), such Lender will, by the time and in the manner such
Revolving Loan was to have been funded to the Swing Line Lender, purchase from
the Swing Line Lender an undivided participating interest in the outstanding
Swing Loans in an amount equal to its Revolver Percentage of the aggregate
principal amount of Swing Loans that were to have been repaid with such
Revolving Loans.  Each Lender that so purchases a participation in a
Swing Loan shall thereafter be entitled to receive its Revolver Percentage of
each payment of principal received on the Swing Loan and of interest received
thereon accruing from the date such Lender funded to the Swing Line Lender its
participation in such Loan.  The several obligations of the Lenders
under this Section shall be absolute, irrevocable, and unconditional under any
and all circumstances whatsoever and shall not be subject to any set-off,
counterclaim or defense to payment which any Lender may have or have had against
any Borrower, any other Lender, or any other Person
whatsoever.  Without limiting the generality of the foregoing, such
obligations shall not be affected by any Default or Event of Default or by any
reduction or termination of the Commitments of any Lender, and each payment made
by a Lender under this Section shall be made without any offset, abatement,
withholding, or reduction whatsoever.




Section 1.17.  Increase
in Revolving Credit Commitments, Additional Term Loans.  The
Company, on behalf of the Borrowers, may from time to time in consultation with
the Administrative Agent, on any Business Day prior to the Revolving Credit
Termination Date so long as no Event of Default exists, increase the aggregate
outstanding amount of the Revolving Credit Commitments and/or increase the
aggregate outstanding principal amount of the Term Loans, by delivering a
Commitment Amount Increase Request substantially in the form attached hereto as
Exhibit H or in such other form reasonably acceptable to the Administrative
Agent at least ten (10) Business Days prior to the stated effective date of such
increase (the “Commitment
Amount Increase”) identifying any additional Lender(s) (or additional
Revolving Credit Commitment or Term Loans for existing Lender(s)) and the amount
of its Revolving Credit Commitment or Term Loans (or additional amount of its
Revolving Credit Commitment(s) or Term Loans); provided, however, that
(i) any increase shall be in an amount not less than $10,000,000 and for
all such increases shall not exceed $50,000,000 in the aggregate, (ii) any
additional Term Loans advanced hereunder shall be on the same terms and
conditions as the Term Loans except that the Borrowers and the Lenders providing
such additional Term Loans may determine the interest rate applicable to such
additional Term Loans, and (iii) if the Borrowers invite additional Lenders to
join this Agreement, such additional Lenders shall enter into such joinder
agreements to give effect thereto as the Administrative Agent may reasonably
request.  The effective date of any Commitment Amount Increase shall
be agreed upon by the Borrowers and the Administrative Agent.  It
shall be a condition to such effectiveness that either no Eurocurrency Loans be
outstanding on the date of such effectiveness or the Borrowers pay any
applicable breakage cost under Section 1.12 incurred by any Lender
resulting from the repayment of the applicable Loans.  The Borrowers
agree to pay any reasonable expenses of the Administrative Agent relating to any
Commitment Amount Increase.  Notwithstanding anything herein to the
contrary, no Lender shall have any obligation to increase its Revolving Credit
Commitment or advance additional Term Loans and no Lender’s Revolving Credit
Commitment shall be increased without its consent thereto, and each Lender may
at its option, unconditionally and without cause, decline to increase its
Revolving Credit Commitment or advance additional Term Loans.  Any
additional Term Loan advanced under this Section 1.17 shall be a “Term Loan” for all purposes
of this Agreement.






17




Section 1.18.  Defaulting
Lenders.  Anything contained herein to the contrary
notwithstanding, in the event that any Lender at any time is a Defaulting
Lender, then (a) during any Default Period with respect to such Defaulting
Lender, such Defaulting Lender shall be deemed not to be a “Lender” for purposes of
voting on any matters (including the granting of any consents or waivers) with
respect to any of the Loan Documents; (b) to the extent permitted by applicable
law, until such time as the Default Excess with respect to such Defaulting
Lender shall have been reduced to zero, any voluntary prepayment of the Loans
shall, if the Administrative Agent so directs at the time of receiving such
voluntary prepayment, be applied to the Loans of the other Lenders as if such
Defaulting Lender had no Loans outstanding; (c) such Defaulting Lender’s
Commitments and outstanding Loans shall be excluded for purposes of calculating
any commitment fee payable to Lenders pursuant to Section 2.1 in respect of
any day during any Default Period with respect to such Defaulting Lender, and
such Defaulting Lender shall not be entitled to receive any fee pursuant to
Section 2.1 with respect to such Defaulting Lender’s Commitment in respect
of any Default Period with respect to such Defaulting Lender (and any Letter of
Credit fee otherwise payable to a Lender who is a Defaulting Lender shall
instead be paid to the Company in the event that the Company has delivered to
the L/C Issuer cash collateral pursuant to clause (e) below or, if such cash
collateral has not been delivered, to the L/C Issuer for its use and benefit);
(d) the utilization of Commitments as at any date of determination shall be
calculated as if such Defaulting Lender had funded all Loans of such Defaulting
Lender; and (e) if so requested by the L/C Issuer at any time during the
Default Period with respect to such Defaulting Lender, the Borrowers shall
deliver to the Administrative Agent cash collateral in an amount equal to such
Defaulting Lender’s Percentage of L/C Obligations then outstanding (to be held
by the Administrative Agent as set forth in Section 9.4
hereof).  No Commitment of any Lender shall be increased or otherwise
affected, and, except as otherwise expressly provided in this Section 1.18,
performance by the Borrowers of their obligations hereunder and the other Loan
Documents shall not be excused or otherwise modified as a result of the
operation of this Section 1.18.  The rights and remedies against
a Defaulting Lender under this Section 1.18 are in addition to other rights
and remedies which the Borrowers may have against such Defaulting Lender and
which the Administrative Agent or any Lender may have against such Defaulting
Lender.





SECTION 2.   FEES.




Section 2.1.  Fees.  (a) Revolving Credit Commitment
Fee.  The Borrowers shall pay to the Administrative Agent for
the ratable account of the Lenders in accordance with their Revolver Percentages
a commitment fee at the rate per annum equal to the Applicable Margin (computed
on the basis of a year of 360 days and the actual number of days elapsed)
on the average daily Unused Revolving Credit Commitments.  Such
commitment fee shall be payable quarter-annually in arrears on the last day of
each March, June, September, and December in each year (commencing on the first
such date occurring after the date hereof) and on the Revolving Credit
Termination Date, unless the Revolving Credit Commitments are terminated in
whole on an earlier date, in which event the commitment fee for the period to
the date of such termination in whole shall be paid on the date of such
termination.






18




(b)  Letter of Credit
Fees.  On the date of issuance or extension, or increase in the
amount, of any Letter of Credit pursuant to Section 1.3 hereof, the
applicable Borrower shall pay to the L/C Issuer for its own account a fronting
fee equal to 0.25% of the face amount of (or of the increase in the face amount
of) such Letter of Credit.  Quarterly in arrears, on the last day of
each March, June, September, and December, commencing on the first such date
occurring after the date hereof, the Borrower shall pay to the Administrative
Agent, for the ratable benefit of the Lenders in accordance with their Revolver
Percentages, a letter of credit fee at a rate per annum equal to the Applicable
Margin (computed on the basis of a year of 360 days and the actual number
of days elapsed) in effect during each day of such quarter applied to the daily
average face amount of Letters of Credit outstanding during such
quarter.  In addition, the applicable Borrower shall pay to the L/C
Issuer for its own account the L/C Issuer’s standard issuance, drawing,
negotiation, amendment, assignment, and other administrative fees for each
Letter of Credit established by the L/C Issuer from time to time.




(c)  Upfront Fees.  On
the Closing Date, the Borrowers shall pay to the Administrative Agent, for the
account of the Lenders, upfront fees in the amounts previously agreed to by the
Borrowers, the Lenders and the Administrative Agent.




(d)  Administrative Agent
Fees.  The Borrowers shall pay to the Administrative Agent, for
its own use and benefit, the arrangement fees and administrative fees agreed to
between the Administrative Agent and the Borrowers in a fee letter dated as of
October 17, 2008 or as otherwise agreed to in writing between them.




(e)  Audit Fees.  The
Borrowers shall pay to the Administrative Agent for its own use and benefit
charges for audits of the Collateral performed by the Administrative Agent or
its agents or representatives in such amounts as the Administrative Agent may
from time to time request (the Administrative Agent acknowledging and agreeing
that such charges shall be computed in the same manner as it at the time
customarily uses for the assessment of charges for similar collateral audits);
provided, however, that
in the absence of any Default and Event of Default, the Borrowers shall not be
required to pay the Administrative Agent for more than one such audit per
calendar year.





SECTION 3.PLACE
AND APPLICATION OF PAYMENTS.




Section 3.1.Place and Application of
Payments.  All payments of principal of and interest on the
Loans and the Reimbursement Obligations, and of all other Obligations payable by
the Borrowers under this Agreement and the other Loan Documents, shall be made
by the Borrowers to the Administrative Agent by no later than 12:00 Noon
(Chicago time) on the due date thereof at the office of the Administrative Agent
in Chicago, Illinois (or such other location as the Administrative Agent may
designate to the Company, on behalf of the Borrowers), for the benefit of the
Lender or Lenders entitled thereto.  Any payments received after such
time shall be deemed to have been received by the Administrative Agent on the
next Business Day.  All such payments shall be made in U.S. Dollars,
in immediately available funds at the place of payment, in each case without
set-off or counterclaim.  The Administrative Agent will promptly
thereafter cause to be distributed like funds relating to the payment of
principal or interest on Loans and on Reimbursement Obligations in which the
Lenders have purchased Participating Interests ratably to the Lenders and like
funds relating to the payment of any other amount payable to any Lender to such
Lender, in each case to be applied in accordance with the terms of this
Agreement.  If the Administrative Agent causes amounts to be
distributed to the Lenders in reliance upon the assumption that the Borrowers
will make a scheduled payment and such scheduled payment is not so made, each
Lender shall, on demand, repay to the Administrative Agent the amount
distributed to such Lender together with interest thereon in respect of each day
during the period commencing on the date such amount was distributed to such
Lender and ending on (but excluding) the date such Lender repays such amount to
the Administrative Agent, at a rate per annum equal to:  (i) from
the date the distribution was made to the date 2 Business Days after payment by
such Lender is due hereunder, the Federal Funds Rate for each such day and
(ii) from the date 2 Business Days after the date such payment is due from
such Lender to the date such payment is made by such Lender, the Base Rate in
effect for each such day.






19




Anything
contained herein to the contrary notwithstanding (including, without limitation,
Section 1.9(b) hereof), all payments and collections received in respect of
the Obligations and all proceeds of the Collateral received, in each instance,
by the Administrative Agent or any of the Lenders after acceleration or the
final maturity of the Obligations or termination of the Commitments as a result
of an Event of Default shall be remitted to the Administrative Agent and
distributed as follows:




(a)first, to the payment of any
outstanding costs and expenses incurred by the Administrative Agent, and any
security trustee therefor, in monitoring, verifying, protecting, preserving or
enforcing the Liens on the Collateral,in protecting,
preserving or enforcing rights under the Loan Documents, and in any event
including all costs and expenses of a character which the Borrowers have agreed
to pay the Administrative Agent or the Lenders under Section 13.15 hereof
(such funds to be retained by the Administrative Agent for its own account
unless it has previously been reimbursed for such costs and expenses by the
Lenders, in which event such amounts shall be remitted to the Lenders to
reimburse them for payments theretofore made to the Administrative
Agent);




(b)second, to the payment of the Swing
Loans, both for principal and accrued but unpaid interest;




(c)third, to the payment of any
outstanding interest and fees due under the Loan Documents to be allocated pro
rata in accordance with the aggregate unpaid amounts owing to each holder
thereof;




(d)fourth, to the payment of principal on
the Loans (other than Swing Loans), unpaid Reimbursement Obligations, together
with amounts to be held by the Administrative Agent as collateral security for
any outstanding L/C Obligations pursuant to Section 9.4 hereof (until
the Administrative Agent is holding an amount of cash equal to the then
outstanding amount of all such L/C Obligations), and Hedging Liability, the
aggregate amount paid to, or held as collateral security for, the Lenders and
L/C Issuer and, in the case of Hedging Liability, their Affiliates to be
allocated pro rata in accordance with the aggregate unpaid amounts owing to each
holder thereof;






20




(e)fifth, to the payment of all other
unpaid Obligations and all other indebtedness, obligations, and liabilities of
the Borrowers and their Subsidiaries secured by the Loan Documents (including,
without limitation, Funds Transfer and Deposit Account Liability) to be
allocated pro rata in accordance with the aggregate unpaid amounts owing to each
holder thereof; and




(f)finally, to the Company, on behalf of
the Borrowers, or whoever else may be lawfully entitled thereto.




Section 3.2.  Account
Debit.  Each Borrower hereby irrevocably authorizes the
Administrative Agent to charge any of such Borrower’s deposit accounts
maintained with the Administrative Agent for the amounts from time to time
necessary to pay any then due Obligations; provided thatthe Borrowers
acknowledge and agree that the Administrative Agent shall not be under an
obligation to do so and the Administrative Agent shall not incur any liability
to the Borrowers or any other Person for the Administrative Agent’s failure to
do so.





SECTION 4.  THE
COLLATERAL AND GUARANTIES.




Section 4.1.  Collateral.  The
Obligations, Hedging Liability, and Funds Transfer and Deposit Account Liability
shall be secured by (a) valid, perfected and enforceable Liens on all
right, title, and interest of the Company and each Subsidiary in all capital
stock and other equity interests held by such Person in each of its
Subsidiaries, whether now owned or hereafter formed or acquired, and all
proceeds thereof, and (b) valid, perfected, and enforceable Liens on all
right, title, and interest of the Company and each Domestic Subsidiary in all of
their accounts, chattel paper, instruments, documents, general intangibles,
letter-of-credit rights, supporting obligations, deposit accounts, investment
property, inventory, equipment, fixtures, commercial tort claims and certain
other Property, whether now owned or hereafter acquired or arising, and all
proceeds thereof (the “Collateral”); provided, however,that:  (i) until a Default or Event of Default has
occurred and is continuing and thereafter until otherwise required by the
Administrative Agent or the Required Lenders, Liens on local petty cash accounts
maintained by the Company and its Subsidiaries in proximity to their operations
need not be perfected, provided that the total
amount on deposit at any one time not so perfected shall not exceed $1,000,000
in the aggregate and Liens on payroll accounts maintained by the Company and its
Subsidiaries need not be perfected provided the total amount on deposit at any
time does not exceed the current amount of their payroll obligations,
(ii) unless otherwise required by the Administrative Agent or the Required
Lenders during the existence of any Event of Default, Liens on the Voting Stock
of a Foreign Subsidiary which, if granted, would cause a material adverse effect
on the Company’s federal income tax liability shall be limited to 65% of the
total outstanding Voting Stock of such Foreign Subsidiary, (iii) unless
otherwise required by the Administrative Agent or the Required Lenders during
the existence of any Event of Default, Liens need not be granted on the
Collateral of a Foreign Subsidiary which, if granted, would cause a material
adverse effect on the Company’s federal income tax liability, (iv) unless
otherwise required by the Administrative Agent or the Required Lenders, Foreign
Subsidiaries need not grant to the Administrative Agent Liens on the capital
stock or other equity interests held by such Foreign Subsidiary in another
Foreign Subsidiary, and (v) until a Default or Event of Default has
occurred and is continuing and thereafter until otherwise required by the
Administrative Agent or the Required Lenders, Liens on U.S. general intangibles,
to the extent perfected by recording an instrument with the U.S. Patent and
Trademark Office, need only be perfected on material U.S. general
intangibles.  The Borrowers and Guarantors acknowledge and agree that
the Liens on the Collateral shall be granted to the Administrative Agent for the
benefit of the holders of the Obligations, the Hedging Liability, and the Funds
Transfer and Deposit Account Liability and shall be valid and perfected first
priority Liens subject however, to the proviso appearing at the end of the
preceding sentence and to Liens permitted by Section 8.8 hereof, in each
case, pursuant to one or more Collateral Documents from such Persons, each in
form and substance satisfactory to the Administrative Agent.






21




Section 4.2.  Guaranties.  The
payment and performance of the Obligations, Hedging Liability, and Funds
Transfer and Deposit Account Liability shall at all times be guaranteed by each
direct and indirect Subsidiary of the Company (other than the Borrowers)
pursuant to Section 12 hereof or pursuant to one or more guaranty
agreements in form and substance acceptable to the Administrative Agent, as the
same may be amended, modified, or supplemented from time to time (individually a
“Guaranty” and
collectively, the “Guaranties”, and the Company
and each such Subsidiary executing and delivering this Agreement as a Guarantor
(including any Subsidiary hereafter executing and delivering an Additional
Guarantor Supplement in the form called for by Section 12 hereof) or a separate
Guaranty being referred to herein as a “Guarantor” and collectively
the “Guarantors”);
provided, however, that
unless otherwise required by the Administrative Agent or the Required Lenders
during the existence of any Event of Default, a Foreign Subsidiary shall not be
required to be a guarantor hereunder if providing such Guaranty would cause a
material adverse effect on the Company’s federal income tax
liability.




Section 4.3.  Joint
and Several Obligors.  The payment and performance of the
Obligations, Hedging Liability and Funds Transfer and Deposit Account Liability
shall at all times be a joint and several obligation of each Borrower pursuant
to Section 12.10 hereof.




Section 4.4.  Further
Assurances.  The Company and each other Borrower agree that
each shall, and shall cause each of its Subsidiaries to, from time to time at
the request of the Administrative Agent or the Required Lenders, execute and
deliver such documents and do such acts and things as the Administrative Agent
or the Required Lenders may reasonably request in order to provide for and
maintain the guarantees contemplated by this Section 4.  In the
event the Company, any other Borrower or any other Subsidiary of the Company
forms or acquires any Subsidiary after the date hereof, except as otherwise
provided in Section 4.1 and 4.2 above, the Company and the other Borrowers
shall promptly upon such formation or acquisition cause such newly formed or
acquired Subsidiary to execute a Guaranty and such Collateral Documents as are
required by this Section 4 and as the Administrative Agent may then
require, and the Company and the Borrowers shall also deliver to the
Administrative Agent, or cause such Subsidiary to deliver to the Administrative
Agent, at the Borrowers’ cost and expense, such other instruments, documents,
certificates, and opinions reasonably required by the Administrative Agent in
connection therewith.






22





SECTION 5.  DEFINITIONS;
INTERPRETATION.





Section 5.1.  Definitions.  The
following terms when used herein shall have the following meanings:




“Acquired Business” means the
entity or assets acquired by the Company or any Subsidiary in an Acquisition
after the date hereof.




“Acquisition” means any
transaction or series of related transactions for the purpose of or resulting,
directly or indirectly, in (a) the acquisition of all or substantially all
of the assets of a Person, or of any business or division of a Person,
(b) the acquisition of in excess of 50% of the capital stock, partnership
interests, membership interests or equity of any Person (other than a Person
that is a Subsidiary), or otherwise causing any Person to become a Subsidiary,
or (c) a merger or consolidation or any other combination with another
Person (other than a Person that is a Subsidiary) provided that a Borrower or a
Subsidiary of a Borrower is the surviving entity.




“Additional Guarantor
Supplement” means a letter to the Administrative Agent in the form
attached hereto as Exhibit F executed by a Subsidiary of the Company after
the date hereof whereby it acknowledges that it is a party hereto as a Guarantor
and is liable for the Obligations pursuant to Section 12
hereof.




“Adjusted EBITDA” means, with
reference to any period, the sum of (a) the EBITDA of the Company and its
Subsidiaries for such period, plus (without duplication)
(b) EBITDA of any Person and its subsidiaries acquired pursuant to
Section 8.9(k) hereof for such period (as if any such Permitted Acquisition
had occurred on the first day of such period), plus(c) adjustments
associated with any Permitted Acquisition to the extent reasonably acceptable to
the Administrative Agent, plus(d) non-recurring costs and extraordinary expenses incurred during the
fiscal year ended December 31, 2007 in connection with the recall of specific
components from the Thomas and Friends product line in an aggregate amount not
to exceed $28,300,000, plus(e) other fees, costs and expenses incurred or provided for (minus
rebates and other reimbursements) related to the recall of specific components
from the Thomas and Friends product line not to exceed $5,000,000 during the
fiscal year ending December 31, 2008, plus(f) non-recurring
costs in connection with the settlement of claims with HIT Entertainment in an
aggregate amount not to exceed $15,000,000, plus (g) losses on the
sale, transfer or disposition of Property during such period, plus(h) non-recurring
costs in connection with the termination of the purchase agreement for the
children’s book division of Publications International, Limited in an aggregate
amount not to exceed $2,000,000, plus(i) non-cash charges
relating to the write-down of the Company’s investment in Meteor the Monster
Truck, Inc. not to exceed $2,100,000 in the aggregate, minus (j) gains on the sale
or transfer of Property during such period, minus(k) EBITDA of any
Person and its subsidiaries sold, transferred or otherwise disposed of during
such period (as if any such sale, transfer or disposition had occurred on the
first day of such period).






23




“Adjusted LIBOR” means, for
any Borrowing of Eurocurrency Loans, a rate per annum determined in accordance
with the following formula:








Adjusted
      LIBOR      =
            LIBOR1 -
      Eurocurrency Reserve Percentage




“Administrative Agent”means
Bank of Montreal and any successor pursuant to Section 11.7
hereof.




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




“Affiliate” means any Person
directly or indirectly controlling or controlled by, or under direct or indirect
common control with, another Person.  A Person shall be deemed to
control another Person for the purposes of this definition if such Person
possesses, directly or indirectly, the power to direct, or cause the direction
of, the management and policies of the other Person, whether through the
ownership of voting securities, common directors, trustees or officers, by
contract or otherwise; provided that, in any event
for purposes of this definition, any Person that owns, directly or indirectly,
10% or more of the securities having the ordinary voting power for the election
of directors or governing body of a corporation or 10% or more of the
partnership or other ownership interest of any other Person (other than as a
limited partner of such other Person) will be deemed to control such corporation
or other Person.




“Agreement” means this Credit
Agreement, as the same may be amended, modified, restated or supplemented from
time to time pursuant to the terms hereof.




“Applicable Margin” means,
with respect to Loans, Reimbursement Obligations, and the commitment fees and
letter of credit fees payable under Section 2.1 hereof until the first
Pricing Date, the rates per annum shown opposite Level IV below, and
thereafter from one Pricing Date to the next the Applicable Margin means the
rates per annum determined in accordance with the following
schedule:




Level
            Leverage
      Ratio
              for
      Such Pricing
              Date
            Applicable
      Margin for
              Base
      Rate Loans under
              revolving
      credit and Term
              Credit
      and Reimbursement
              Obligations
      shall be:
            Applicable
      Margin for
              Eurodollar
      Loans under
              Revolving
      credit and Term
              Credit
      and Letter of
              credit
      Fee Shall Be:
            Applicable
      Margin for
              Commitment
      Fee Shall Be:V
            Greater
      than or equal to
              2.25
      to 1.0
            2.25%
            3.25%
            0.50%IV
            Less
      than 2.25 to 1.0, but
              greater
      than or equal to
              1.75
      to 1.0
            2.00%
            3.00%
            0.50%III
            Less
      than 1.75 to 1.0, but
              greater
      than or equal to
              1.25
      to 1.0
            1.75%
            2.75%
            0.50%II
            Less
      than 1.25 to 1.0, but
              greater
      than or equal
              to
      0.75 to 1.0
            1.50%
            2.50%
            0.50%I
            Less
      than 0.75 to 1.0
            1.25%
            2.25%
            0.45%






24




For
purposes hereof, the term “Pricing Date” means, for any
fiscal quarter of the Borrowers ending on or after December 31, 2008, the date
on which the Administrative Agent is in receipt of the Borrowers’ most recent
financial statements (and, in the case of the year-end financial statements,
audit report) for the fiscal quarter then ended, pursuant to
Section 8.5 hereof.  The Applicable Margin shall be
established based on the Leverage Ratio for the most recently completed fiscal
quarter and the Applicable Margin established on a Pricing Date shall remain in
effect until the next Pricing Date.  If the Borrowers have not
delivered their financial statements by the date such financial statements (and,
in the case of the year-end financial statements, audit report) are required to
be delivered under Section 8.5 hereof, until such financial statements and
audit report are delivered, the Applicable Margin shall be the highest
Applicable Margin (i.e., Level V shall
apply).  If the Borrowers subsequently deliver such financial
statements before the next Pricing Date, the Applicable Margin established by
such late delivered financial statements shall take effect from the date of
delivery until the next Pricing Date.  In all other circumstances, the
Applicable Margin established by such financial statements shall be in effect
from the Pricing Date that occurs immediately after the end of the fiscal
quarter covered by such financial statements until the next Pricing
Date.  Each determination of the Applicable Margin made by the
Administrative Agent in accordance with the foregoing shall be conclusive and
binding on the Borrowers and the Lenders if reasonably
determined.




Notwithstanding
the foregoing, in the event that any financial statement or compliance
certificate delivered pursuant to Section 8.5(j) hereof is shown to be
inaccurate at any time this Agreement is in effect (due to an error made by the
Company, and not as a result of a change in GAAP) and as a result of such
inaccuracy the Company is required to restate such financial statements
(regardless of whether (i) the Revolving Credit Commitments are in effect
or (ii) any Loan or other extension of credit is outstanding when such
inaccuracy is discovered or such financial statement or compliance certificate
was delivered), and such inaccuracy, if corrected, would have led to the
application of a higher Applicable Margin for any period (an “Applicable Period”) than the
Applicable Margin applied for such Applicable Period, then (x) the
Borrowers shall promptly deliver to the Administrative Agent a correct
compliance certificate for such Applicable Period, (y) the Applicable
Margin for such Applicable Period shall be determined as if the Leverage Ratio
in the corrected compliance certificate were applicable for such Applicable
Period, and (z) the Borrowers shall promptly, but in any event within five
(5) Business Days, pay to the Lenders the accrued additional interest (but not
overdue interest) owing as a result of such increased Applicable Margin for such
Applicable Period.






25




“Application” is defined in
Section 1.3(b) hereof.




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




“Assignment and Acceptance”
means an assignment and acceptance entered into by a Lender and an Eligible
Assignee (with the consent of any party whose consent is required by
Section 13.12 hereof), and accepted by the Administrative Agent, in
substantially the form of Exhibit G or any other form approved by the
Administrative Agent.




“Authorized Representative”
means those persons shown on the list of officers provided by the Borrowers
pursuant to Section 7.2 hereof or on any update of any such list provided
by the Borrowers to the Administrative Agent, or any further or different
officers of any Borrower so named by any Authorized Representative of such
Borrower in a written notice to the Administrative Agent.




“Base Rate” means for any day
the greatest of:  (i) the rate of interest announced or otherwise
established by the Administrative Agent from time to time as its prime
commercial rate, or its equivalent, for U.S. Dollar loans to borrowers located
in the United Statesas in effect on such
day, with any change in the Base Rate resulting from a change in said prime
commercial rate to be effective as of the date of the relevant change in said
prime commercial rate (it being acknowledged and agreed that such rate may not
be the Administrative Agent’s best or lowest rate), (ii) the sum of
(x) the rate determined by the Administrative Agent to be the average
(rounded upward, if necessary, to the next higher 1/100 of 1%) of the rates per
annum quoted to the Administrative Agent at approximately 10:00 a.m.
(Chicago time) (or as soon thereafter as is practicable) on such day (or, if
such day is not a Business Day, on the immediately preceding Business Day) by
two or more Federal funds brokers selected by the Administrative Agent for sale
to the Administrative Agent at face value of Federal funds in the secondary
market in an amount equal or comparable to the principal amount for which such
rate is being determined, plus (y) 1/2 of 1%, and
(iii) the LIBOR Quoted Rate for such day plus 1.00%.  As
used herein, the term “LIBOR
Quoted Rate” means, for any date, the rate per annum determined by a
fraction, the numerator of which is the rate per annum (rounded upwards, if
necessary, to the next higher one hundred-thousandth of a percentage point) for
deposits in U.S. Dollars for an Interest Period equal to one month, which
appears on the LIBOR01 Page as of 11:00 a.m. (London, England time) on such date
and the denominator of which is 1 minus the Eurodollar Reserve
Percentage.






26




“Base Rate Loan” means a Loan
bearing interest at a rate specified in Section 1.4(a) hereof.




“Borrowers” is defined in the
introductory paragraph of this Agreement.




“Borrowing” means the total
of Loans of a single type advanced, continued for an additional Interest Period,
or converted from a different type into such type by the Lenders under a Credit
on a single date and, in the case of Eurocurrency Loans, for a single Interest
Period.  Borrowings of Loans are made and maintained ratably from each
of the Lenders under a Credit according to their Percentages of such
Credit.  A Borrowing is “advanced” on the day Lenders
advance funds comprising such Borrowing to the applicable Borrower, is “continued” on the date a new
Interest Period for the same type of Loans commences for such Borrowing, and is
“converted” when such
Borrowing is changed from one type of Loans to the other, all as requested by
the Company, on behalf of the Borrowers, pursuant to Section 1.6(a)
hereof.  Borrowings of Swing Loans are made by the Swing Line Lender
in accordance with the procedures set forth in Section 1.16
hereof.




“Business Day” means any day
(other than a Saturday or Sunday) on which banks are not authorized or required
to close in Chicago, Illinois and, if the applicable Business Day relates to the
advance or continuation of, or conversion into, or payment of a Eurocurrency
Loan, on which banks are dealing in U.S. Dollar deposits in the interbank
Eurocurrency market in London, England and Nassau, Bahamas.




“Capital Expenditures” means,
with respect to any period, the aggregate amount of all expenditures (whether
paid in cash or accrued as a liability) by the Company and its Subsidiaries
during that period for the acquisition or leasing (pursuant to a Capital Lease)
of fixed or capital assets or additions to property, plant, or equipment
(including replacements, capitalized repairs, and improvements) which should be
capitalized on the balance sheet of the Company and its Subsidiaries in
accordance with GAAP.




“Capital Lease” means any
lease of Property which in accordance with GAAP is required to be capitalized on
the balance sheet of the lessee.




“Capitalized Lease
Obligation” means, for any Person, the amount of the liability shown on
the balance sheet of such Person in respect of a Capital Lease determined in
accordance with GAAP.




“CERCLA”means the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C.
§§9601 et seq., and any future
amendments.




“Change of Control” means any
of (a) the acquisition by any “person” or “group” (as such terms are
used in sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended) at any time of beneficial ownership of 33-1/3% or more of the
outstanding capital stock or other equity interest of the Company on a
fully-diluted basis, (b) the failure of the Company to own 100% of the
Voting Stock of any Borrower, (c) the failure of individuals who are
members of the board of directors (or similar governing body) of the Company or
any Borrower on the Closing Date (together with any new or replacement directors
whose initial nomination for election was approved by a majority of the
directors who were either directors on the Closing Date or previously so
approved) to constitute a majority of the board of directors (or similar
governing body) of the Company or such Borrower, as the case may be, or
(d) any “Change of Control” (or words of like import), as defined in any
agreement or indenture relating to any issue of Indebtedness for Borrowed Money
shall occur.






27




“Closing Date” means the date
of this Agreement or such later Business Day upon which each condition described
in Section 7.2 shall be satisfied or waived in a manner acceptable to the
Administrative Agent in its discretion.




“Code” means the Internal
Revenue Code of 1986, as amended, and any successor statute
thereto.




“Collateral” means all
properties, rights, interests, and privileges from time to time subject to the
Liens granted to the Administrative Agent, or any security trustee therefor, by
the Collateral Documents.




“Collateral Account” is
defined in Section 9.4 hereof.




“Collateral Documents”means
the Security Agreement, and all other security agreements, pledge agreements,
assignments, financing statements and other documents as shall from time to time
secure or relate to the Obligations, the Hedging Liability, and the Funds
Transfer and Deposit Account Liability or any part thereof.




“Commitment Amount Increase”
is defined in Section 1.17 hereof.




“Commitment Amount Increase
Request” means a Commitment Amount Increase Request in the form of
Exhibit H hereto.




“Commitments” means the
Revolving Credit Commitments and Term Loan Commitments.




“Company” is defined in the
introductory paragraph of this Agreement.




“Controlled Group” means all
members of a controlled group of corporations and all trades or businesses
(whether or not incorporated) under common control which, together with the
Borrower, are treated as a single employer under Section 414 of the
Code.




“Credit” means any of the
Revolving Credit, the Term Credit or the Swing Line.




“Credit Event” means the
advancing of any Loan, or extension of the expiration date or increase in the
amount of, any Letter of Credit.




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






28




“Default” means any event or
condition the occurrence of which would, with the passage of time or the giving
of notice, or both, constitute an Event of Default.




“Designated Disbursement
Account” means collectively, the accounts of each Borrower maintained
with the Administrative Agent or its Affiliate and designated in writing to the
Administrative Agent as such Borrower’s Designated Disbursement Account (or such
other account as the Company, on behalf of such Borrower, and the Administrative
Agent may otherwise agree).




“Defaulting Lender” means any
Lender that (a) has failed to fund any portion of the Loans, participations
in L/C Obligations or participations in Swing Loans required to be funded by it
hereunder (herein, a “Defaulted Loan”) within
two (2) Business Days of the date required to be funded by it hereunder
unless such failure has been cured, (b) has otherwise failed to pay over to
the Administrative Agent or any other Lender any other amount required to paid
by it hereunder within two (2) Business Days of the date when due, unless
the subject of a good faith dispute or unless such failure has been cured, or
(c) has been deemed insolvent or become the subject of a bankruptcy or
insolvency proceeding or a receiver or conservator has been appointed for such
Lender.




“Default Excess” means, with
respect to any Defaulting Lender, the excess, if any, of such Defaulting
Lender’s Percentage of the aggregate outstanding principal amount of Loans of
all Lenders (calculated as if all Defaulting Lenders other than such Defaulting
Lender had funded all of their respective Defaulted Loans) over the aggregate
outstanding principal amount of all Loans of such Defaulting
Lender.




“Defaulting Lender” has the
meaning set forth in Section 1.18.




“Default Period” means, with
respect to any Defaulting Lender, the period commencing on the date upon which
such Lender first became a Defaulting Lender and ending on the earliest of the
following dates:  (i) the date on which all Commitments are
cancelled or terminated and/or the Obligations are declared or become
immediately due and payable and (ii) the date on which (a) the Default
Excess with respect to such Defaulting Lender shall have been reduced to zero
(whether by the funding by such Defaulting Lender of any Defaulted Loans of such
Defaulting Lender or otherwise) and (b) such Defaulting Lender shall have
delivered to the Company and the Administrative Agent a written reaffirmation of
such Defaulting Lender’s intention to honor its obligations hereunder with
respect to its Commitments.




“Disposition” means the sale,
lease, conveyance or other disposition of Property, other than sales or other
dispositions expressly permitted under subsections (a) through (f) of
Section 8.10 hereof.




“Domestic Borrower” means
collectively the Company and each Borrower that is a Domestic
Subsidiary.




“Domestic Subsidiary” means
each Subsidiary that is not a Foreign Subsidiary.






29




“EBITDA” means, for any
Person and with reference to any period, Net Income of such Person and its
subsidiaries for such period plus the sum of all amounts
deducted in arriving at such Net Income amount in respect of (a) Interest
Expense of such Person and its subsidiaries for such period, (b) federal,
state, and local income taxes for such period of such Person and its
subsidiaries for such period, (c) depreciation of fixed assets and
amortization of intangible assets of such Person and its subsidiaries for such
period, and (d) non-cash expenses related to equity awards.




“Eligible Assignee”means
(a) a Lender, (b) an Affiliate of a Lender, (c) an Approved Fund,
and (d) any other Person (other than a natural person) approved by
(i) the Administrative Agent, (ii) in the case of any assignment of a
Revolving Credit Commitment, the L/C Issuer, and (iii) unless an Event
of Default has occurred and is continuing, the Borrowers (each such approval not
to be unreasonably withheld or delayed); provided that notwithstanding
the foregoing, “Eligible Assignee” shall not include any Borrower or Guarantor
or any of such Borrower’s or Guarantor’s Affiliates or
Subsidiaries.




“Eligible Line of Business”
means any business engaged in as of the date of this Agreement by the Credit
Parties or any of their Subsidiaries or any business substantially similar
thereto.




“Environmental Law” means any
current or future Legal Requirement pertaining to (a) the protection of health,
safety and the indoor or outdoor environment, (b) the conservation, management
or use of natural resources and wildlife, (c) the protection or use of surface
water or groundwater, (d) the management, manufacture, possession, presence,
use, generation, transportation, treatment, storage, disposal, release,
threatened release, abatement, removal, remediation or handling of, or exposure
to, any Hazardous Material or (e) pollution (including any release to air, land,
surface water or groundwater), and any amendment, rule, regulation, order or
directive issued thereunder.




“ERISA” means the Employee
Retirement Income Security Act of 1974, as amended, or any successor statute
thereto.




“Eurocurrency Loan” means a
Loan bearing interest at the rate specified in Section 1.4(b)
hereof.




“Eurocurrency Reserve
Percentage” means, for any Borrowing of Eurocurrency Loans, the daily
average for the applicable Interest Period of the maximum rate, expressed as a
decimal, at which reserves (including, without limitation, any supplemental,
marginal, and emergency reserves) are imposed during such Interest Period by the
Board of Governors of the Federal Reserve System (or any successor) on “eurocurrency liabilities”,
as defined in such Board’s Regulation D (or in respect of any other
category of liabilities that includes deposits by reference to which the
interest rate on Eurocurrency Loans is determined or any category of extensions
of credit or other assets that include loans by non-United States offices of any
Lender to United States residents), subject to any amendments of such reserve
requirement by such Board or its successor, taking into account any transitional
adjustments thereto.  For purposes of this definition, the
Eurocurrency Loans shall be deemed to be “eurocurrency liabilities” as
defined in Regulation D without benefit or credit for any prorations,
exemptions or offsets under Regulation D.







30




“Event of Default” means any
event or condition identified as such in Section 9.1 hereof.




“Event of Loss” means, with
respect to any Property consisting of real estate, furniture, fixtures,
equipment or other fixed assets, any of the following:  (a) any
loss, destruction or damage of such Property or (b) any condemnation,
seizure, or taking, by exercise of the power of eminent domain or otherwise, of
such Property, or confiscation of such Property or the requisition of the use of
such Property.




“Existing Credit Agreement”
means that certain Amended and Restated Credit Agreement dated as of September
15, 2004, as amended, by and among LCBI, Learning Curve International, Inc., The
First Years Inc., Racing Champions Worldwide Limited, the Guarantors party
thereto, the lenders party thereto and Harris N.A., as administrative
agent.




“Existing L/Cs” means the
letters of credit issued and outstanding under the Existing Credit
Agreement.




“Federal Funds Rate” means
the fluctuating interest rate per annum described in part (x) of clause (ii) of
the definition of Base Rate.




“Fixed Charge Coverage Ratio”
means, at any time the same is to be determined, the ratio of (a) Adjusted
EBITDA of the Company for the four consecutive fiscal quarters of the Company
then ended minus
Capital Expenditures during the same four fiscal quarters then ended to
(b) Fixed Charges made during the same four fiscal quarters then
ended.




“Fixed Charges” means, with
reference to any period, the sum of (a) all scheduled payments of principal
during such period with respect to Indebtedness for Borrowed Money of the
Company and its Subsidiaries, (b) cash Interest Expense for the Company and
its Subsidiaries for such period, (c) federal, state, and local income
taxes paid or payable in cash by the Company and its Subsidiaries during such
period, net of cash refunds received or receivable by the Company or any
Subsidiary during such period, all as disclosed on the Company’s cash flow
statement, and (d) Restricted Payments permitted by Section 8.12(iii)hereof paid in cash
during such period.




“Foreign Borrower” means each
Borrower that is a Foreign Subsidiary.




“Foreign Subsidiary” means
each Subsidiary which (a) is organized under the laws of a jurisdiction
other than the United States of America or any state thereof or the District of
Columbia, (b) conducts substantially all of its business outside of the
United States of America, and (c) has substantially all of its assets
outside of the United States of America.




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






31




“Funds Transfer and Deposit Account
Liability” means the liability of a Borrower or any of its Subsidiaries
owing to any of the Lenders, or any Affiliates of such Lenders, arising out of
(a) the execution or processing of electronic transfers of funds by
automatic clearing house transfer, wire transfer or otherwise to or from the
deposit accounts of a Borrower and/or any Subsidiary now or hereafter maintained
with any of the Lenders or their Affiliates, (b) the acceptance for deposit
or the honoring for payment of any check, draft or other item with respect to
any such deposit accounts, and (c) any other deposit, disbursement, and
cash management services afforded to a Borrower or any Subsidiary by any of such
Lenders or their Affiliates.




“GAAP” means generally
accepted accounting principles set forth from time to time in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board (or agencies with similar functions of comparable
stature and authority within the U.S. accounting profession), which are
applicable to the circumstances as of the date of determination.




“Guarantor”and “Guarantors” each is defined
in Section 4.2 hereof.




“Guaranty” and “Guaranties” each is defined
in Section 4.2 hereof.




“Hazardous Material”means
any substance, chemical, compound, product, solid, gas, liquid, waste,
byproduct, pollutant, contaminant or material which is hazardous or toxic, and
includes, without limitation, (a) asbestos, polychlorinated biphenyls and
petroleum (including crude oil or any fraction thereof) and (b) any material
classified or regulated as “hazardous” or “toxic” or words of like import
pursuant to an Environmental Law.




“Hedging Liability” means the
liability of a Borrower or any Subsidiary to any of the Lenders, or any
Affiliates of such Lenders, in respect of any interest rate swap agreements,
interest rate cap agreements, interest rate collar agreements, interest rate
floor agreements, interest rate exchange agreements, foreign currency contracts,
currency swap contracts, or other similar interest rate or currency hedging
arrangements as such Borrower or such Subsidiary, as the case may be, may from
time to time enter into with any one or more of the Lenders party to this
Agreement or their Affiliates.




“Hostile Acquisition” means
the acquisition of the capital stock or other equity interests of a Person
through a tender offer or similar solicitation of the owners of such capital
stock or other equity interests which has not been approved (prior to such
acquisition) by resolutions of the Board of Directors of such Person or by
similar action if such Person is not a corporation, and as to which such
approval has not been withdrawn.




“Indebtedness for Borrowed
Money” means for any Person (without duplication) (a) all
indebtedness of such Person for borrowed money, whether current or funded, or
secured or unsecured, (b) all indebtedness for the deferred purchase price
of Property or services, (c) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to Property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of a default are limited to
repossession or sale of such Property), (d) all indebtedness secured by a
purchase money mortgage or other Lien to secure all or part of the purchase
price of Property subject to such mortgage or Lien, (e) all obligations
under leases which shall have been or must be, in accordance with GAAP, recorded
as Capital Leases in respect of which such Person is liable as lessee,
(f) any liability in respect of banker’s acceptances or letters of credit,
and (g) any indebtedness, whether or not assumed, secured by Liens on
Property acquired by such Person at the time of acquisition thereof, it being
understood that the term “Indebtedness for Borrowed Money” shall not include
trade payables arising in the ordinary course of business.






32




“Interest Expense” means, for
any Person with reference to any period, the sum of all interest charges
(including imputed interest charges with respect to Capitalized Lease
Obligations and all amortization of debt discount and expense) of such Person
and its subsidiaries for such period determined on a consolidated basis in
accordance with GAAP.




“Interest Period” is defined
in Section 1.7 hereof.




“L/C Issuer” means (i) with
respect to the Existing L/Cs, Harris N.A. and (ii) with respect to all other
L/Cs, the Administrative Agent, or any other Lender requested by the Company, on
behalf of the Borrowers, and approved by the Administrative Agent in its
reasonable discretion with respect to any Letter of Credit.




“L/C Obligations” means the
aggregate undrawn face amounts of all outstanding Letters of Credit and all
unpaid Reimbursement Obligations.




“L/C Sublimit” means
$20,000,000, as reduced pursuant to the terms hereof.




“Legal Requirement” means any
treaty, convention, statute, law, regulation, ordinance, license, permit,
governmental approval, injunction, judgment, order, consent decree or other
requirement of any governmental authority, whether federal, state, or
local.




“Lenders” means and includes
each financial institution party hereto and the other financial institutions
from time to time party to this Agreement, including each assignee Lender
pursuant to Section 13.12 hereof and, unless the context otherwise
requires, the Swing Line Lender.




“Lending Office” is defined
in Section 10.4 hereof.




“Letter of Credit” is defined
in Section 1.3(a) hereof.




“Leverage Ratio” means, at
any time the same is to be determined, the ratio of (i) Total Funded Debt
of the Company and its Subsidiaries as of the last day of the most recently
completed fiscal quarter of the Company to (ii) Adjusted EBITDA of the
Company and its Subsidiaries for the period of four fiscal quarters then
ended.




“LIBOR” means, for an
Interest Period for a Borrowing of Eurocurrency Loans, (a) the LIBOR Index
Rate for such Interest Period, if such rate is available, and (b) if the
LIBOR Index Rate cannot be determined, the arithmetic average of the rates of
interest per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
at which deposits in U.S. Dollars in immediately available funds are offered to
the Administrative Agent at 11:00 a.m. (London, England time) two
(2) Business Days before the beginning of such Interest Period by three (3)
or more major banks in the interbank eurocurrency market selected by the
Administrative Agent for delivery on the first day of and for a period equal to
such Interest Period and in an amount equal or comparable to the principal
amount of the Eurodollar Loan scheduled to be made as part of such
Borrowing.






33




“LIBOR Index Rate” means, for
any Interest Period, the rate per annum (rounded upwards, if necessary, to the
next higher one hundred-thousandth of a percentage point) for deposits in U.S.
Dollars for a period equal to such Interest Period, which appears on the
appropriate page on the Reuters Service in the relevant currency (London,
England time) on the day 2 Business Days before the commencement of such
Interest Period.




“Lien”means any mortgage,
lien, security interest, pledge, charge or encumbrance of any kind in respect of
any Property, including the interests of a vendor or lessor under any
conditional sale, Capital Lease or other title retention
arrangement.




“Loan” means any Revolving
Loan, Swing Loan or Term Loan, whether outstanding as a Base Rate Loan or
Eurocurrency Loan or otherwise, each of which is a “type” of Loan
hereunder.




“Loan Documents” means this
Agreement, the Notes (if any), the Applications, the Collateral Documents, the
Guaranties and each other instrument or document to be delivered hereunder or
thereunder or otherwise in connection therewith.




“Material Adverse Effect”
means (a) a material adverse change in, or material adverse effect upon, the
operations, business, Property or, condition (financial or otherwise) of any
Borrower or of the Borrowers and their Subsidiaries taken as a whole, (b) a
material impairment of the ability of any Credit Party to perform its
obligations under any Loan Document or (c) a material adverse effect upon
(i) the legality, validity, binding effect or enforceability against any Credit
Party of any Loan Document or the rights and remedies of the Administrative
Agent and the Lenders thereunder or (ii) the perfection or priority of any Lien
granted under any Collateral Document.




“Moody’s” means Moody’s
Investors Service, Inc.




“Net Cash Proceeds” means, as
applicable, (a) with respect to any Disposition by a Person, cash and cash
equivalent proceeds received by or for such Person’s account, net of (i)
reasonable direct costs relating to such Disposition and (ii) sale, use or other
transactional taxes paid or payable by such Person as a direct result of such
Disposition; (b) with respect to any Event of Loss of a Person, cash and
cash equivalent proceeds received by or for such Person’s account (whether as a
result of payments made under any applicable insurance policy therefor or in
connection with condemnation proceedings or otherwise), net of
(i) reasonable direct costs incurred in connection with the collection of
such proceeds, awards or other payments, (ii) sale or other transactional
taxes paid or payable by such Person as a direct result of such Event of Loss,
and (iii) amounts required to be applied to repay principal of, premium, if
any, and interest on any Indebtedness for Borrowed Money secured by a Lien on
the Property (or portion thereof) so damaged or taken (other than the
Obligations hereunder) which is required to be and is repaid in connection with
such Event of Loss; and (c) with respect to any offering of equity
securities of a Person or the issuance of any Indebtedness for Borrowed Money by
a Person,  cash and cash equivalent proceeds received by or for such
Person’s account, net of reasonable legal, underwriting, and other fees and
expenses incurred as a direct result thereof.






34




“Net Income” means, for any
Person and with reference to any period, the net income (or net loss) of such
Person and its subsidiaries for such period computed on a consolidated basis in
accordance with GAAP; provided that there shall be
excluded from Net Income (a) the net income (or net loss) of any Person
accrued prior to the date it becomes a subsidiary of, or has merged into or
consolidated with, such Person or another subsidiary of such Person, and
(b) the net income (or net loss) of any other Person (other than a
subsidiary of such Person) in which such Person or any subsidiary of such Person
has an equity interest in, except to the extent of the amount of dividends or
other distributions actually paid to such Person or such subsidiary during such
period.




“Note” and “Notes” each is defined in
Section 1.11 hereof.




“Obligations” means all
obligations of the Borrowers, or any of them, to pay principal and interest on
the Loans, all Reimbursement Obligations owing under the Applications, all fees
and charges payable hereunder, and all other payment obligations of any Credit
Party arising under or in relation to any Loan Document, in each case whether
now existing or hereafter arising, due or to become due, direct or indirect,
absolute or contingent, and howsoever evidenced, held or acquired.




“Participating Interest” is
defined in Section 1.3(e) hereof.




“Participating Lender” is
defined in Section 1.3(e) hereof.




“PBGC” means the Pension
Benefit Guaranty Corporation or any Person succeeding to any or all of its
functions under ERISA.




“Percentage” means for any
Lender its Revolver Percentage or Term Loan Percentage, as applicable; and where
the term “Percentage”is applied on an aggregate basis (including, without limitation,
Section 11.6 hereof), such aggregate percentage shall be calculated by
aggregating the separate components of the Revolver Percentage and Term Loan
Percentage, and expressing such components on a single percentage
basis.




“Permitted Acquisition” means
any Acquisition with respect to which all of the following conditions shall have
been satisfied:






35




(a)the Total Consideration for the
Acquired Business does not exceed $15,000,000 and the Total Consideration for
all Acquired Businesses does not exceed $30,000,000 in the aggregate for all
Acquisitions completed after the Closing Date;




(b)the Acquired Business is an Eligible
Line of Business;




(c)the Acquisition shall not be a Hostile
Acquisition;




(d)the financial statements of the
Acquired Business shall have been audited by a nationally recognized accounting
firm or such financial statements shall have undergone review of a scope
satisfactory to the Administrative Agent;




(e)in the event of a merger involving the
Company, the Company must be the entity surviving the merger;




(f)if a new Subsidiary is formed or
acquired as a result of or in connection with the Acquisition, the Borrowers
shall have complied with the requirements of Section 4 hereof in connection
therewith;




(g)the Borrowers shall have delivered to
the Administrative Agent evidence reasonably satisfactory to the Administrative
Agent that the Borrowers would have a Leverage Ratio as of the last day of the
last fiscal quarter for which financial statements have been delivered on a
pro forma basis that is
at least 0.25:1.00 below the then maximum Leverage Ratio permitted by
Section 8.21(i) (assuming the indebtedness incurred at the time of such
Acquisition was incurred on the first day of such 12-month period and on a pro formabasis after giving
effect to such Acquisition);




(h)immediately prior to and after giving
effect to the Acquisition and any Credit Event in connection therewith, no
Default or Event of Default shall exist, including with respect to the financial
covenants contained in Section 8.21 hereof on a pro forma basis;
and




(i)after giving effect to the Acquisition
and any Credit Event in connection therewith, the Borrower shall have not less
than $35,000,000 of Unused Revolving Credit
Commitments.




“Person” means an individual,
partnership, corporation, limited liability company, association, trust,
unincorporated organization or any other entity or organization, including a
government or agency or political subdivision thereof.




“Plan” means any employee
pension benefit plan covered by Title IV of ERISA or subject to the minimum
funding standards under Section 412 of the Code that either (a) is
maintained by a member of the Controlled Group for employees of a member of the
Controlled Group or (b) is maintained pursuant to a collective bargaining
agreement or any other arrangement under which more than one employer makes
contributions and to which a member of the Controlled Group is then making or
accruing an obligation to make contributions or has within the preceding five
plan years made contributions.






36




“Property” means, as to any
Person, all types of real, personal, tangible, intangible or mixed property
owned by such Person whether or not included in the most recent balance sheet of
such Person and its subsidiaries under GAAP.




“Reimbursement Obligation” is
defined in Section 1.3(c) hereof.




“Required Lenders” means, as
of the date of determination thereof, Lenders whose outstanding Loans and
interests in Letters of Credit and Unused Revolving Credit Commitments
constitute more than 50% of the sum of the total outstanding Loans, interests in
Letters of Credit, and Unused Revolving Credit Commitments of the
Lenders.




“Restricted Payments” is
defined in Section 8.12 hereof.




“Revolver Percentage” means,
for each Lender, the percentage of the Revolving Credit Commitments represented
by such Lender’s Revolving Credit Commitment or, if the Revolving Credit
Commitments have been terminated, the percentage held by such Lender (including
through participation interests in Reimbursement Obligations) of the aggregate
principal amount of all Revolving Credit Loans and L/C Obligations then
outstanding.




“Revolving Credit” means the
credit facility for making Revolving Loans and Swing Loans and issuing Letters
of Credit described in Sections 1.2, 1.3 and 1.16 hereof.




“Revolving Credit Commitment”
means, as to any Lender, the obligation of such Lender to make Revolving Loans
and to participate in Swing Loans and Letters of Credit issued for the account
of any Borrower hereunder in an aggregate principal or face amount at any one
time outstanding not to exceed the amount set forth opposite such Lender’s name
on Schedule 1 attached hereto and made a part hereof, as the same may be
increased, reduced or modified at any time or from time to time pursuant to the
terms hereof.  The Borrowers and the Lenders acknowledge and agree
that the Revolving Credit Commitments of the Lenders aggregate $70,000,000 on
the date hereof.




“Revolving Credit Termination
Date” means November 1, 2011, or such earlier date on which the
Revolving Credit Commitments are terminated in whole pursuant to
Section 1.13, 9.2 or 9.3 hereof.




“Revolving Loan”is defined
in Section 1.2 hereof and, as so defined, includes a Base Rate Loan or a
Eurocurrency Loan, each of which is a “type” of Revolving Loan
under the Revolving Credit.




“Revolving Note” is defined
in Section 1.11 hereof.




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






37


“SEC” means the U.S.
Securities and Exchange Commission or any successor agency.




“Security Agreement” means
that certain Security Agreement dated the date of this Agreement among the
Domestic Borrowers, the Guarantors and the Administrative Agent, as the same may
be amended, modified, supplemented or restated from time to time.




“Subsidiary” means, as to any
particular parent corporation or organization, any other corporation or
organization more than 50% of the outstanding Voting Stock of which is at the
time directly or indirectly owned by such parent corporation or organization or
by any one or more other entities which are themselves subsidiaries of such
parent corporation or organization.  Unless otherwise expressly noted
herein, the term “Subsidiary” means a
subsidiary of the Company or any other Credit Party or of any of their direct or
indirect Subsidiaries, as applicable.




“Swing Line”means the
credit facility for making one or more Swing Loans described in
Section 1.16 hereof.




“Swing Line Lender” means BMO
Capital Markets Financing, Inc., acting in its capacity as the Lender of Swing
Loans hereunder, or any successor Lender acting in such capacity appointed
pursuant to Section 13.12 hereof.




“Swing Line Lender’s Quoted
Rate” is defined in Section 1.16(c) hereof.




“Swing Line Sublimit” means
$10,000,000, as reduced pursuant to the terms hereof.




“Swing Loan”and “Swing Loans” each is defined
in Section 1.16 hereof.




“Swing Note” is defined in
Section 1.11 hereof.




“Term Credit”means the
credit facility for the Term Loans described in Section 1.1(a)
hereof.




“Term Loan”is defined in
Section 1.1(a) hereof and, as so defined, includes a Base Rate Loan or a
Eurocurrency Loan, each of which is a “type” of Term Loan
hereunder.




“Term Loan Commitment” means,
as to any Lender, the obligation of such Lender to make its Term Loan on the
Closing Date or thereafter pursuant to Section 1.17 hereof in the principal
amount not to exceed the amount set forth opposite such Lender’s name on
Schedule 1 attached hereto and made a part hereof.  The Borrowers
and the Lenders acknowledge and agree that the Term Loan Commitments of the
Lenders aggregate $75,000,000 on the date hereof.




“Term Loan Percentage” means,
for each Lender, the percentage of the Term Loan Commitments represented by such
Lender’s Term Loan Commitment or, if the Term Loan Commitments have been
terminated or have expired, the percentage held by such Lender of the aggregate
principal amount of all Term Loans then outstanding.






38




“Term Note” is defined in
Section 1.11 hereof.




“Total Consideration” means
the total amount (but without duplication) of (a) cash paid in connection
with any Acquisition, plus (b) indebtedness payable to the seller in
connection with such Acquisition, plus (c) the fair market value of any
equity securities, including any warrants or options therefor, delivered in
connection with any Acquisition, plus (d) the present value of covenants
not to compete entered into in connection with such Acquisition or other future
payments which are required to be made over a period of time and are not
contingent upon the Company or any Subsidiary meeting financial performance
objectives (exclusive of salaries paid in the ordinary course of business)
(discounted at the Base Rate), but only to the extent not included in
clause (a), (b) or (c) above, plus (e) the amount of indebtedness
assumed in connection with such Acquisition.




“Total Funded Debt” means, at
any time the same is to be determined, the aggregate of (but without
duplication) all Indebtedness for Borrowed Money of the Company and its
Subsidiaries at such time, including all Indebtedness for Borrowed Money of any
other Person which is directly or indirectly guaranteed by the Company or any
Subsidiary or which the Company or any Subsidiary has agreed (contingently or
otherwise) to purchase or otherwise acquire or in respect of which the Company
or any Subsidiary has otherwise assured a creditor against loss.




“Unfunded Vested
Liabilities”means,
for any Plan at any time, the amount (if any) by which the present value of all
vested nonforfeitable accrued benefits under such Plan exceeds the fair market
value of all Plan assets allocable to such benefits, all determined as of the
then most recent valuation date for such Plan, but only to the extent that such
excess represents a potential liability of a member of the Controlled Group to
the PBGC or the Plan under Title IV of ERISA.




“Unused Revolving Credit
Commitments” means, at any time, the difference between the Revolving
Credit Commitments then in effect and the aggregate outstanding principal amount
of Revolving Loans and L/C Obligations.




“U.S. Dollars” and “$” each means the lawful
currency of the United States of America.




“Voting Stock” of any Person
means capital stock or other equity interests of any class or classes (however
designated) having ordinary power for the election of directors or other similar
governing body of such Person, other than stock or other equity interests having
such power only by reason of the happening of a contingency.




“Welfare Plan” means a
“welfare plan” as defined in Section 3(1) of ERISA.




“Wholly-owned Subsidiary”
means a Subsidiary of which all of the issued and outstanding shares of capital
stock (other than directors’ qualifying shares as required by law) or other
equity interests are owned by any Borrower and/or one or more Wholly-owned
Subsidiaries within the meaning of this definition.






39




Section 5.2.  Interpretation.  The
foregoing definitions are equally applicable to both the singular and plural
forms of the terms defined.  The words “hereof”, “herein”, and “hereunder”and words of like
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement.  All references to
time of day herein are references to Chicago, Illinois, time unless otherwise
specifically provided.  Where the character or amount of any asset or
liability or item of income or expense is required to be determined or any
consolidation or other accounting computation is required to be made for the
purposes of this Agreement, it shall be done in accordance with GAAP except
where such principles are inconsistent with the specific provisions of this
Agreement.




Section 5.3.  Change
in Accounting Principles.  If, after the date of this
Agreement, there shall occur any change in GAAP from those used in the
preparation of the financial statements referred to in Section 6.5 hereof
and such change shall result in a change in the method of calculation of any
financial covenant, standard or term found in this Agreement, either the
Borrowers or the Required Lenders may by notice to the Lenders and the
Borrowers, respectively, require that the Lenders and the Borrowers negotiate in
good faith to amend such covenants, standards, and term so as equitably to
reflect such change in accounting principles, with the desired result being that
the criteria for evaluating the financial condition of the Borrowers and their
Subsidiaries shall be the same as if such change had not been
made.  No delay by the Borrowers or the Required Lenders in requiring
such negotiation shall limit their right to so require such a negotiation at any
time after such a change in accounting principles.  Until any such
covenant, standard, or term is amended in accordance with this Section 5.3,
financial covenants shall be computed and determined in accordance with GAAP in
effect prior to such change in accounting principles.  Without
limiting the generality of the foregoing, the Borrowers shall neither be deemed
to be in compliance with any financial covenant hereunder nor out of compliance
with any financial covenant hereunder if such state of compliance or
noncompliance, as the case may be, would not exist but for the occurrence of a
change in accounting principles after the date hereof.





SECTION 6.  REPRESENTATIONS
AND WARRANTIES.





To induce
the Lenders to enter into this Agreement and to make the extensions of credit
contemplated hereby, each of the Credit Parties represents and warrants to the
Administrative Agent and the Lenders as follows:




Section 6.1.  Organization
and Qualification.  Each Credit Party is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization, has full and adequate power to own its Property and conduct its
business as now conducted, and is duly licensed or qualified and in good
standing in each jurisdiction in which the nature of the business conducted by
it or the nature of the Property owned or leased by it requires such licensing
or qualifying, except where the failure to do so would not have a Material
Adverse Effect.




Section 6.2.  Subsidiaries.  The
Company holds 100% of the issued and outstanding stock of each of the other
Borrowers.  Each Subsidiary of the Borrowers is duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it is organized has full and adequate power to own its Property and
conduct its business as now conducted, and is duly licensed or qualified and in
good standing in each jurisdiction in which the nature of the business conducted
by it or the nature of the Property owned or leased by it requires such
licensing or qualifying, except where the failure to do so would not have a
Material Adverse Effect.  Schedule 6.2 hereto identifies each
Subsidiary, the jurisdiction of its incorporation or organization, as the case
may be, the percentage of issued and outstanding shares of each class of its
capital stock or other equity interests owned by any Borrower and the other
Subsidiaries and, if such percentage is not 100% (excluding directors’
qualifying shares as required by law), a description of each class of its
authorized capital stock and other equity interests and the number of shares of
each class issued and outstanding.  All of the outstanding shares of
capital stock and other equity interests of each Subsidiary are validly issued
and outstanding and fully paid and nonassessable and all such shares and other
equity interests indicated on Schedule 6.2 as owned by a Borrower or
another Subsidiary are owned, beneficially and of record, by such Borrower or
such Subsidiary, as the case may be, free and clear of all Liens other than the
Liens granted in favor of the Administrative Agent pursuant to the Collateral
Documents.  There are no outstanding commitments or other obligations
of any Subsidiary to issue, and no options, warrants or other rights of any
Person to acquire, any shares of any class of capital stock or other equity
interests of any Subsidiary.






40




Section 6.3.  Authority
and Validity of Obligations.  Each Borrower has full right and
authority to enter into this Agreement and the other Loan Documents executed by
it, to make the borrowings herein provided for, to issue its Notes in evidence
thereof, to grant to the Administrative Agent the Liens described in the
Collateral Documents executed by it, and to perform all of its obligations
hereunder and under the other Loan Documents executed by it.  Each
Guarantor has full right and authority to enter into the Loan Documents executed
by it, to guarantee the Obligations, Hedging Liability, and Funds Transfer and
Deposit Account Liability, to grant to the Administrative Agent the Liens
described in the Collateral Documents executed by it, and to perform all of its
obligations under the Loan Documents executed by it.  The Loan
Documents delivered by each Credit Party have been duly authorized, executed,
and delivered by such Credit Party and constitute valid and binding obligations
of such Credit Party enforceable against it in accordance with their terms,
except as enforceability may be limited by bankruptcy, insolvency, fraudulent
conveyance or similar laws affecting creditors’ rights generally and general
principles of equity (regardless of whether the application of such principles
is considered in a proceeding in equity or at law); and this Agreement and the
other Loan Documents do not, nor does the performance or observance by any
Credit Party of any of the matters and things herein or therein provided for,
(a) contravene or constitute a default under any provision of law or any
judgment, injunction, order or decree binding upon any Credit Party or any
provision of the organizational documents (e.g., charter, certificate or
articles of incorporation and by-laws, certificate or articles of association
and operating agreement, partnership agreement or other organizational document)
of any Credit Party, (b) contravene or constitute a default under any covenant,
indenture or agreement of or affecting any Credit Party or any of its Property,
in each case where such contravention or default, individually or in the
aggregate,  could reasonably be expected to have a Material Adverse
Effect or (c) result in the creation or imposition of any Lien on any
Property of any Credit Party other than the Liens granted in favor of the
Administrative Agent pursuant to the Collateral Documents.






41


Section 6.4.  Use of
Proceeds; Margin Stock.  The Borrowers shall use the proceeds
of the Term Loans and the Revolving Credit to refinance existing indebtedness
and to fund a portion of the fees and expenses incurred or otherwise required to
be paid in connection with the consummation of the transactions contemplated by
this Agreement; and the Borrowers shall use the proceeds of the Revolving Credit
to finance Permitted Acquisitions, to finance Capital Expenditures, to finance
Restricted Payments permitted by Section 8.12 hereof (other than Restricted
Payments permitted by Section 8.12(iii)), for its general working capital
purposes, and for such other legal and proper purposes as are consistent with
all applicable laws.  None of the Borrowers or Subsidiaries are
engaged in the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System), and no part of the proceeds of any
Loan or any other extension of credit made hereunder will be used to purchase or
carry any such margin stock or to extend credit to others for the purpose of
purchasing or carrying any such margin stock.  Margin stock (as
hereinabove defined) constitutes less than 25% of the assets of each Borrower
and its Subsidiaries which are subject to any limitation on sale, pledge or
other restriction hereunder.




Section 6.5.  Financial
Reports.   The consolidated balance sheet of the Company
and its Subsidiaries as at December 31, 2007, and the related consolidated
statements of income, retained earnings and cash flows of the Company and its
Subsidiaries for the fiscal year then ended, and accompanying notes thereto,
which financial statements are accompanied by the audit report of KPMG LLP,
independent public accountants, and the unaudited interim consolidated balance
sheet of the Company and its Subsidiaries as at September 30, 2008, and the
related consolidated statements of income, retained earnings and cash flows of
the Company and its Subsidiaries for the three months then ended, heretofore
furnished to the Administrative Agent and the Lenders, fairly present the
consolidated financial condition of the Company and its Subsidiaries as at said
dates and the consolidated results of their operations and cash flows for the
periods then ended in conformity with GAAP applied on a consistent
basis.  None of the Borrowers or Subsidiaries have contingent
liabilities which are material to it other than as indicated on such financial
statements or, with respect to future periods, on the financial statements
furnished pursuant to Section 8.5 hereof.




Section 6.6.  No
Material Adverse Change.Since December 31, 2007, there has
been no change in the condition (financial or otherwise) of the Company or any
Subsidiary except those occurring in the ordinary course of business, none of
which individually or in the aggregate have had a Material Adverse
Effect.




Section 6.7.  Full
Disclosure.  The statements and information furnished to the
Administrative Agent and the Lenders in connection with the negotiation of this
Agreement and the other Loan Documents and the commitments by the Lenders to
provide all or part of the financing contemplated hereby do not contain any
untrue statements of a material fact or omit a material fact necessary to make
the material statements contained herein or therein not misleading, the
Administrative Agent and the Lenders acknowledging that as to any projections
furnished to the Administrative Agent and the Lenders, the Credit Parties only
represent that the same were prepared on the basis of information and estimates
the Credit Parties believed to be reasonable.






42




Section 6.8.  Trademarks,
Franchises, and Licenses.  Each Credit Party and its
Subsidiaries own, possess, or have the right to use all necessary patents,
licenses, franchises, trademarks, trade names, trade styles, copyrights, trade
secrets, know how, and confidential commercial and proprietary information to
conduct their businesses as now conducted, without known conflict with any
patent, license, franchise, trademark, trade name, trade style, copyright or
other proprietary right of any other Person.




Section 6.9.  Governmental
Authority and Licensing.  Each Credit Party and its
Subsidiaries have received all licenses, permits, and approvals of all federal,
state, and local governmental authorities, if any, necessary to conduct their
businesses, in each case where the failure to obtain or maintain the same could
reasonably be expected to have a Material Adverse Effect.  No
investigation or proceeding which, if adversely determined, could reasonably be
expected to result in revocation or denial of any material license, permit or
approval is pending or, to the knowledge of any Credit Party,
threatened.




Section 6.10.  Good
Title.  Each Credit Party and its Subsidiaries have good and
defensible title (or valid leasehold interests) to their assets as reflected on
the most recent consolidated balance sheet furnished to the Administrative Agent
and the Lenders (except for sales of assets in the ordinary course of business),
subject to no Liens other than such thereof as are permitted by
Section 8.8hereof.




Section 6.11.  Litigation
and Other Controversies.  There is no litigation or arbitration
or governmental proceeding or labor controversy pending, nor to the knowledge of
any Credit Party threatened, against any Credit Party or any Subsidiary which if
adversely determined, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.




Section 6.12.  Taxes.  All
tax returns required to be filed by any Credit Party (to the best of such Credit
Party’s knowledge with respect to any local tax returns) or any Subsidiary in
any jurisdiction have, in fact, been filed, and all taxes, assessments, fees,
and other governmental charges upon any Credit Party or any Subsidiary or upon
any of its Property, income or franchises, which are shown to be due and payable
in such returns, have been paid, except such taxes, assessments, fees and
governmental charges, if any, as are being contested in good faith and by
appropriate proceedings which prevent enforcement of the matter under contest
and as to which adequate reserves established in accordance with GAAP have been
provided.  No Credit Party knows of any proposed additional tax
assessment against it or its Subsidiaries for which adequate provisions in
accordance with GAAP have not been made on their accounts.  Adequate
provisions in accordance with GAAP for taxes on the books of each Credit Party
and its Subsidiaries have been made for all open years, and for each such
Person’s current fiscal period.




Section 6.13.  Approvals.  No
authorization, consent, license or exemption from, or filing or registration
with, any court or governmental department, agency or instrumentality, nor any
approval or consent of any other Person, is or will be necessary to the valid
execution, delivery or performance by any Credit Party of any Loan Document,
except for such approvals which have been obtained prior to the date of this
Agreement and remain in full force and effect and except where failure to obtain
such authorization, consent, license, exemption, registration or approval would
not have a Material Adverse Effect.






43




Section 6.14.  Affiliate
Transactions.  Neither any Credit Party nor any Subsidiary is a
party to any contracts or agreements with any of its Affiliates (other than with
Wholly-owned Subsidiaries)on terms and conditions
which are less favorable to such Credit Party or such Subsidiary than would be
usual and customary in similar contracts or agreements between Persons not
affiliated with each other.




Section 6.15.  Investment
Company.  Neither any Credit Party nor any Subsidiary is an
“investment company” or a company “controlled” by an “investment company” within
the meaning of the Investment Company Act of 1940, as amended.




Section 6.16.  ERISA.  Each
Credit Party and each other member of its Controlled Group has fulfilled its
obligations under the minimum funding standards of and is in compliance in all
material respects with ERISA and the Code to the extent applicable to it and has
not incurred any liability to the PBGC or a Plan under Title IV of ERISA
other than a liability to the PBGC for premiums under Section 4007 of
ERISA.  Neither any Credit Party nor any Subsidiary has any contingent
liabilities with respect to any post-retirement benefits under a Welfare Plan,
other than liability for continuation coverage described in article 6 of
Title I of ERISA.




Section 6.17.  Compliance
with Laws.  The Credit Parties and their Subsidiaries are in
compliance with the requirements of all federal, state and local laws, rules and
regulations applicable to or pertaining to their Property or business operations
(including, without limitation, the Occupational Safety and Health Act of 1970,
the Americans with Disabilities Act of 1990, and Environmental Laws), where any
such non-compliance, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.  Neither any Credit Party
nor any Subsidiary has received notice to the effect that its operations are not
in compliance with any of the requirements of applicable federal, state or local
environmental, health, and safety statutes and regulations or is the subject of
any governmental investigation evaluating whether any remedial action is needed
to respond to a release of any toxic or hazardous waste or substance into the
environment, where any such non-compliance or remedial action, individually or
in the aggregate, could reasonably be expected to have a Material Adverse
Effect.




Section 6.18.  Other
Agreements.  Neither any Credit Party nor any Subsidiary is in
default under the terms of any covenant, indenture or agreement of or affecting
such Person or any of its Property, which default if uncured could reasonably be
expected to have a Material Adverse Effect.




Section
6.19.  Solvency.  Each Credit Party and its
Subsidiaries are solvent, able to pay their debts as they become due, and have
sufficient capital to carry on their business and all businesses in which they
are about to engage.




Section 6.20.  No
Default.No Default or Event of Default has occurred and is
continuing.




Section 6.21.  No
Broker Fees.  No broker’s or finder’s fee or commission will be
payable by the Credit Parties with respect hereto or any of the transactions
contemplated hereby; and the Credit Parties hereby agree to indemnify the
Administrative Agent and the Lenders against, and agree that they will hold the
Administrative Agent and the Lenders harmless from, any claim, demand, or
liability for any such broker’s or finder’s fees alleged to have been incurred
in connection herewith or therewith and any expenses (including reasonable
attorneys’ fees) arising in connection with any such claim, demand, or
liability.






44





SECTION 7.  CONDITIONS
PRECEDENT





Section 7.1.  All
Credit Events.  At the time of each Credit Event
hereunder:




(a)each of the representations and
warranties set forth herein shall be and remain true and correct as of said
time, except to the extent the same expressly relate to an earlier
date;




(b)each Credit Party and each Subsidiary
shall be in compliance with all of the terms and conditions hereof and of the
other Loan Documents, and no Default or Event of Default shall have occurred and
be continuing or would occur as a result of such Credit Event;




(c)in the case of a Borrowing, the
Administrative Agent shall have received the notice required by Section 1.5
hereof, in the case of the issuance of any Letter of Credit the L/C Issuer
shall have received a duly completed Application for such Letter of Credit
together with any fees called for by Section 2.1 hereof, and, in the case
of an extension or increase in the amount of a Letter of Credit, a written
request therefor in a form acceptable to the L/C Issuer together with fees
called for by Section 2.1 hereof; and




(d)such Credit Event shall not violate any
order, judgment or decree of any court or other authority or any provision of
law or regulation applicable to the Administrative Agent or any Lender
(including, without limitation, Regulation U of the Board of Governors of
the Federal Reserve System) as then in effect.




Each
request for a Borrowing hereunder and each request for the issuance of, increase
in the amount of, or extension of the expiration date of, a Letter of Credit
shall be deemed to be a representation and warranty by the Borrowers on the date
of such Credit Event as to the facts specified in subsections (a) through
(c), both inclusive, of this Section; provided, however,that the
Lenders may continue to make advances under the Revolving Credit, in the sole
discretion of the Lenders with Revolving Credit Commitments, notwithstanding the
failure of any Borrower to satisfy one or more of the conditions set forth above
and any such advances so made shall not be deemed a waiver of any Default or
Event of Default or other condition set forth above that may then
exist.







Section 7.2.  Initial
Credit Event.  Before or concurrently with the initial Credit
Event:




(a)the Administrative Agent shall have
received for each Lender this Agreement duly executed by the Borrowers, the
Guarantors party hereto and the Lenders;






45




(b)if requested by any Lender, the
Administrative Agent shall have received for such Lender such Lender’s duly
executed Notes of the Borrowers dated the date hereof and otherwise in
compliance with the provisions of Section 1.11 hereof;




(c)the Administrative Agent shall have
received the Security Agreement duly executed by each Credit Party party
thereto, together with (i) original stock certificates or other similar
instruments or securities representing the issued and outstanding shares of
capital stock or other equity interests in each Subsidiary to the extent
required by Section 4.1 hereof, (ii) stock powers for the Collateral
consisting of the stock or other equity interest in each Subsidiary executed in
blank and undated, (iii) UCC financing statements to be filed against the
Company and each Subsidiary, as debtor, in favor of the Administrative Agent, as
secured party, (iv) patent, trademark, and copyright collateral assignments
to the extent requested by the Administrative Agent, (v) deposit account,
securities account, and commodity account control agreements to the extent
requested by the Administrative Agent and (vi) landlord’s and
warehouseman’s lien waivers to the extent required by the Security
Agreement;




(d)the Administrative Agent shall have
received evidence of insurance required to be maintained under the Loan
Documents, naming the Administrative Agent as lender’s loss payee;




(e)the Administrative Agent shall have
received copies of each Credit Party’s articles of incorporation and bylaws (or
comparable organizational documents) and any amendments thereto, certified in
each instance by its Secretary or Assistant Secretary (or officer or manager
holding a comparable office);




(f)the Administrative Agent shall have
received copies of resolutions of each Credit Party’s Board of Directors (or
similar governing body) authorizing the execution, delivery and performance of
this Agreement and the other Loan Documents to which it is a party and the
consummation of the transactions contemplated hereby and thereby, together with
specimen signatures of the persons authorized to execute such documents on such
Credit Party’s behalf, all certified in each instance by its Secretary or
Assistant Secretary (or officer or manager holding a comparable
office);




(g)the Administrative Agent shall have
received copies of the certificates of good standing for each Credit Party
(dated no earlier than 30 days prior to the date hereof) from the office of the
secretary of the state of its incorporation or organization and of each state in
which it is qualified to do business as a foreign corporation or
organization;




(h)the Administrative Agent shall have
received a list of the Borrowers’ Authorized Representatives;




(i)there shall be no injunction, temporary
restraining order or other legal action in effect which would prohibit the
consummation of the transaction contemplated under this Agreement and the
initial Credit Event;






46




(j)the Administrative Agent shall have
received a certificate regarding the solvency of the Company and its
Subsidiaries, after giving effect to the initial Credit Event, executed by the
chief financial officer of the Company;




(k)the Administrative Agent shall have
received for itself and for the Lenders the initial fees called for by Section
2.1 hereof;




(l)the Administrative Agent shall have a
confirmation that (i) the Company’s Adjusted EBITDA for the twelve-month
period ended September 30, 2008 was at least $64,000,000 and (ii) the
Leverage Ratio is not greater than 2.2 to 1.0, for the period ended
September 30, 2008, each calculated based on pro forma consolidated
Adjusted EBITDA for the twelve-month period ended September 30, 2008, and
after giving effect to the initial Credit Event;




(m)no material adverse change in the
business, condition (financial or otherwise), operations, performance,
Properties or prospects of any Borrower or Subsidiary from that reflected in the
financial statements as December 31, 2007 shall have occurred;




(n)each Lender shall have received such
evaluations and certifications as it may reasonably require in order to satisfy
itself as to the financial condition of the Borrowers and their Subsidiaries,
and the lack of material contingent liabilities of the Borrowers and their
Subsidiaries;




(o)the Administrative Agent shall have
received financing statement, tax, and judgment lien search results against the
Property of the Company, LCBI and each Guarantor evidencing the absence of Liens
on its Property except as permitted by Section 8.8 hereof;




(p)the Administrative Agent shall have
received pay-off and lien release letters from secured creditors of each Credit
Party setting forth, among other things, the total amount of indebtedness
outstanding and owing to them (or outstanding letters of credit issued for their
account) and containing an undertaking to cause to be delivered to the
Administrative Agent (or authorizing the Administrative Agent to file) UCC
termination statements and any other lien release instruments necessary to
release such secured creditor’s Liens on the assets of each Credit Party, which
pay-off and lien release letters shall be in form and substance acceptable to
the Administrative Agent;




(q)the Administrative Agent shall have
received for each Lender the favorable written opinion of counsel to each of the
Credit Parties, in form and substance satisfactory to the Administrative Agent;




(r)the Administrative Agent shall have
received an Internal Revenue Service Form W-9, or Form W-8, as applicable, duly
executed by each Credit Party in form and  substance acceptable to the
Administrative Agent;






47




(s)after giving effect to the initial
Credit Event hereunder, the aggregate amount of Loans and L/C Obligations
outstanding shall not exceed $130,000,000;




(t)the Administrative Agent shall have
received certificates of merger evidencing the merger of (i) The First Years,
Inc., a Delaware corporation with and into The First Years, Inc., a
Massachusetts corporation (“TFY(MA)”) with TFY(MA) as
the surviving corporation and (ii) TFY(MA) with and into LCBI with LCBI being
the surviving corporation; and




(u)the Administrative Agent shall have
received for the account of the Lenders such other agreements, instruments,
documents, certificates, and opinions as the Administrative Agent may reasonably
request.





SECTION 8.  COVENANTS.




The
Credit Parties agree that, so long as any credit is available to or in use by
the Borrowers, or any of them, hereunder, except to the extent compliance in any
case or cases is waived in writing pursuant to the terms of Section 13.13
hereof:




Section 8.1.Maintenance of
Business.  (a)  Each Credit Party shall, and shall cause
each Subsidiary to, preserve and maintain its existence, except as otherwise
provided in Section 8.10(c) hereof.




(b)  Each
Credit Party shall, and shall cause each Subsidiary to, preserve and keep in
force and effect all licenses, permits, franchises, approvals, patents,
trademarks, trade names, trade styles, copyrights, and other proprietary rights
necessary to the proper conduct of its business where the failure to do so could
reasonably be expected to have a Material Adverse Effect.




Section 8.2.  Maintenance
of Properties.  Each Credit Party shall, and shall cause each
Subsidiary to, maintain, preserve, and keep its Property, plant, and equipment
used or useful in its business in good repair, working order and condition
(ordinary wear and tear excepted), and shall from time to time make all needful
and proper repairs, renewals, replacements, additions, and betterments thereto
so that at all times the efficiency thereof shall be fully preserved and
maintained.




Section 8.3.  Taxes
and Assessments.  Each Credit Party shall duly pay and
discharge, and shall cause each Subsidiary to duly pay and discharge, all taxes,
rates, assessments, fees, and governmental charges upon or against it or its
Property, in each case before the same become delinquent and before penalties
accrue thereon, unless and to the extent that the same are being contested in
good faith and by appropriate proceedings which prevent enforcement of the
matter under contest and adequate reserves are provided therefor and except to
the extent that failure to so pay or discharge would not have a Material Adverse
Effect.




Section 8.4.  Insurance.  Each
Credit Party shall insure and keep insured, and shall cause each Subsidiary to
insure and keep insured, with good and responsible insurance companies, all
insurable Property owned by it which is of a character usually insured by
Persons similarly situated and operating like Properties against loss or damage
from such hazards and risks, and in such amounts, as are insured by Persons
similarly situated and operating like Properties; and each Credit Party shall
insure, and shall cause each Subsidiary to insure, such other hazards and risks
(including, without limitation, employers’ and public liability risks) with good
and responsible insurance companies as and to the extent usually insured by
Persons similarly situated and conducting similar businesses. The Credit Parties
shall in any event maintain, and cause each Subsidiary to maintain, insurance on
the Collateral to the extent required by the Collateral
Documents.  Each Credit Party shall, upon the request of the
Administrative Agent, furnish to the Administrative Agent and the Lenders a
certificate setting forth in summary form the nature and extent of the insurance
maintained pursuant to this Section.






48




Section 8.5.  Financial
Reports.  The Company shall, and shall cause each Subsidiary
to, maintain a standard system of accounting in accordance with
GAAP.  The Company and each Borrower shall furnish to the
Administrative Agent, each Lender and each of their duly authorized
representatives such information respecting the business and financial condition
of the Borrowers and their respective Subsidiaries as the Administrative Agent
or such Lender may reasonably request; and without any request, the Company and
the Borrowers shall furnish to the Administrative Agent and the
Lenders:




(a)as soon as available, and in any event
within 45 days after the close of each fiscal quarter of each fiscal year
of the Company (or such shorter period as may be required by the SEC for filing
quarterly reports with the SEC), a copy of the consolidated and consolidating
balance sheet of the Company and its Subsidiaries as of the last day of such
fiscal quarter and the consolidated and consolidating statements of income,
retained earnings, and cash flows of the Company and its Subsidiaries for the
fiscal quarter and for the fiscal year-to-date period then ended, each in
reasonable detail showing in comparative form the figures for the corresponding
date and period in the previous fiscal year, prepared by the Company in
accordance with GAAP (subject to the absence of footnote disclosures and
year-end audit adjustments) and certified to by its chief financial officer or
another officer of the Company acceptable to the Administrative
Agent;




(b)as soon as available, and in any event
within 90 days after the close of each fiscal year of the Company (or such
shorter period as may be required by the SEC for filing annual reports with the
SEC), a copy of the consolidated and consolidating balance sheet of the Company
and its Subsidiaries as of the last day of the fiscal year then ended and the
consolidated and consolidating statements of income, retained earnings, and cash
flows of the Company and its Subsidiaries for the fiscal year then ended, and
accompanying notes thereto, each in reasonable detail showing in comparative
form the figures for the previous fiscal year, accompanied by an unqualified
opinion of a firm of independent public accountants of recognized national
standing, selected by the Company and reasonably satisfactory to the
Administrative Agent and the Required Lenders, to the effect that the
consolidated financial statements have been prepared in accordance with GAAP and
present fairly in accordance with GAAP the consolidated financial condition of
the Company and its Subsidiaries as of the close of such fiscal year and the
results of their operations and cash flows for the fiscal year then ended and
that an examination of such accounts in connection with such financial
statements has been made in accordance with generally accepted auditing
standards and, accordingly, such examination included such tests of the
accounting records and such other auditing procedures as were considered
necessary in the circumstances;






49




(c)within the period provided in
subsection (b) above, the written statement of the accountants who
certified the audit report thereby required that in the course of their audit
they have obtained no knowledge of any Default or Event of Default, or, if such
accountants have obtained knowledge of any such Default or Event of Default,
they shall disclose in such statement the nature and period of the existence
thereof;




(d)promptly after receipt thereof, any
additional written reports, management letters or other detailed information
contained in writing concerning significant aspects of the Company’s or any
Subsidiary’s operations and financial affairs given to it by its independent
public accountants;




(e)promptly after the sending or filing
thereof, copies of each financial statement, report, notice or proxy statement
sent by the Company or any Subsidiary to its stockholders or other equity
holders, and copies of each regular, periodic or special report, registration
statement or prospectus (including all Form 10-K, Form 10-Q and Form 8-K
reports) filed by the Company or any Subsidiary with any securities exchange or
the SEC;




(f)promptly after receipt thereof, a copy
of each audit made by any regulatory agency of the books and records of the
Company or any Subsidiary or of notice of any material noncompliance with any
applicable law, regulation or guideline relating to the Company or any
Subsidiary, or its business;




(g)as soon as available, and in any event
within 60 days after the end of each fiscal year of the Company, a copy of the
Company’s consolidated and consolidating operating budget for the following
fiscal year, in reasonable detail prepared by the Company and in form
satisfactory to the Administrative Agent (which shall include a summary of all
assumptions made in preparing such operating budget);




(h)notice of any Change in Control;




(i)promptly after knowledge thereof shall
have come to the attention of any responsible officer of any Credit Party,
written notice of (i) any threatened or pending litigation or governmental
proceeding or labor controversy against the Company or any Subsidiary which, if
adversely determined, could reasonably be expected to have a Material Adverse
Effect, (ii) of the occurrence of any Default or Event of Default hereunder, or
(iii) upon the occurrence of or any condition exists that could reasonably be
expected to have a Material Adverse Effect; and




(j)with each of the financial statements
furnished to the Lenders pursuant to subsections (a) and (b) above, a
written certificate in the form attached hereto as Exhibit E signed by the
chief financial officer of the Company or another officer of the Company
acceptable to the Administrative Agent to the effect that to the best of such
officer’s knowledge and belief no Default or Event of Default has occurred
during the period covered by such statements or, if any such Default or Event of
Default has occurred during such period, setting forth a description of such
Default or Event of Default and specifying the action, if any, taken by the
Credit Parties or any Subsidiary to remedy the same.  Such certificate
shall also set forth the calculations in respect of Section 8.9(h) hereof and
supporting such statements in respect of Section 8.21 hereof.






50




Section 8.6.  Inspection.  The
Credit Parties shall, and shall cause each Subsidiary to, permit the
Administrative Agent, each Lender, the L/C Issuer and each of their duly
authorized representatives and agents to visit and inspect any of its Property,
corporate books, and financial records, to examine and make copies of its books
of accounts and other financial records, and to discuss its affairs, finances,
and accounts with, and to be advised as to the same by, its officers, employees
and independent public accountants (and by this provision each Credit Party
hereby authorizes such accountants to discuss with the Administrative Agent,
such Lenders and the L/C Issuer the finances and affairs of such Credit Party
and its Subsidiaries) at such reasonable times and intervals as the
Administrative Agent or any such Lender or the L/C Issuer may designate and, so
long as no Default or Event of Default exists, with reasonable prior notice to
the Borrowers.




Section 8.7.  Borrowings
and Guaranties.The Credit Parties shall not, nor shall they permit any
Subsidiary to, issue, incur, assume, create or have outstanding any Indebtedness
for Borrowed Money, or be or become liable as endorser, guarantor, surety or
otherwise for any debt, obligation or undertaking of any other Person, or
otherwise agree to provide funds for payment of the obligations of another, or
supply funds thereto or invest therein or otherwise assure a creditor of another
against loss, or apply for or become liable to the issuer of a letter of credit
which supports an obligation of another, or subordinate any claim or demand it
may have to the claim or demand of any other Person; provided, however, that the
foregoing shall not restrict nor operate to prevent:




(a)the Obligations, Hedging Liability, and
Funds Transfer and Deposit Account Liability of the Borrowers and their
Subsidiaries owing to the Administrative Agent and the Lenders (and their
Affiliates in the case of Hedging Liability);




(b)the Guaranties;




(c)purchase money indebtedness and
Capitalized Lease Obligations of the Borrower and its Subsidiaries in an amount
not to exceed $500,000 in the aggregate at any one time
outstanding;




(d)endorsement of items for deposit or
collection of commercial paper received in the ordinary course of business;






51




(e)unsecured intercompany indebtedness
among the Company and its Domestic Subsidiaries, provided that any such
indebtedness shall be fully subordinated to the Obligations on terms reasonably
satisfactory to the Administrative Agent;




(f)unsecured intercompany indebtedness
among the Company, the Domestic Subsidiaries and the Foreign Subsidiaries, provided that any such
indebtedness (i) shall be fully subordinated to the Obligations on terms
reasonably satisfactory to the Administrative Agent and (ii) is permitted by
Section 8.9(h) hereof;




(g)the Company’s guarantee of the
obligations of LCBI with respect to its licensing arrangements with Disney
Enterprises, Inc.; and




(h)a guaranty by a Credit Party of
indebtedness of another Credit Party permitted by this Section 8.7;
and




(i)Indebtedness for Borrowed Money and
other contingent obligations other than those which are permitted by the
foregoing subsections (a) through (f) provided such Indebtedness
and other contingent obligations do not exceed $10,000,000 at any time
outstanding for the Company and its Subsidiaries in the aggregate.




Section 8.8.  Liens.  The
Credit Parties shall not, nor shall they permit any Subsidiary to, create, incur
or permit to exist any Lien of any kind on any Property owned by any such
Person; provided,
however, that the foregoing shall not apply to nor operate to
prevent:




(a)Liens arising by statute in connection
with worker’s compensation, unemployment insurance, old age benefits, social
security obligations, taxes, assessments, statutory obligations or other similar
charges (other than Liens arising under ERISA), good faith cash deposits in
connection with tenders, contracts or leases to which any Credit Party or any
Subsidiary is a party or other cash deposits required to be made in the ordinary
course of business, provided in each case that the obligation is not for
borrowed money and that the obligation secured is not overdue or, if overdue, is
being contested in good faith by appropriate proceedings which prevent
enforcement of the matter under contest and adequate reserves have been
established therefor;




(b)mechanics’, workmen’s, materialmen’s,
landlords’, carriers’ or other similar Liens arising in the ordinary course of
business with respect to obligations which are not due or which are being
contested in good faith by appropriate proceedings which prevent enforcement of
the matter under contest;




(c)judgment liens and judicial attachment
liens not constituting an Event of Default under Section 9.1(g) hereof and
the pledge of assets for the purpose of securing an appeal, stay or discharge in
the course of any legal proceeding, provided that the aggregate amount of such
judgment liens and attachments and liabilities of the Credit Parties and their
Subsidiaries secured by a pledge of assets permitted under this subsection,
including interest and penalties thereon, if any, shall not be in excess of
$1,000,000 at any one time outstanding;






52




(d)Liens on Property of any Credit Party
or any Subsidiary created solely for the purpose of securing indebtedness
permitted by Section 8.7(c) hereof, representing or incurred to finance the
purchase price of Property, provided that no such Lien
shall extend to or cover other Property of such Credit Party or such Subsidiary
other than the respective Property so acquired, and the principal amount of
indebtedness secured by any such Lien shall at no time exceed the purchase price
of such Property, as reduced by repayments of principal thereon;




(e)any interest or title of a lessor under
any operating lease;




(f)easements, rights-of-way, restrictions,
and other similar encumbrances against real property incurred in the ordinary
course of business which, in the aggregate, are not substantial in amount and
which do not materially detract from the value of the Property subject thereto
or materially interfere with the ordinary conduct of the business of the
Borrower or any Subsidiary; and




(g)the Liens granted in favor of the
Administrative Agent pursuant to the Collateral Documents; and




(h)Liens other than those permitted by any
of the foregoing subsections (a) through (g) provided such Liens do not
extend to any Collateral and provided furtherthat such
Liens secure obligations not exceeding $10,000,000 in the aggregate for the
Company and its Subsidiaries.




Section 8.9.  Investments,
Acquisitions, Loans and Advances.  The Credit Parties shall
not, nor shall they permit any Subsidiary to, directly or indirectly, make,
retain or have outstanding any investments (whether through purchase of stock or
obligations or otherwise) in, or loans or advances to, any other Person, or
acquire all or any substantial part of the assets or business of any other
Person or division thereof; provided, however, that the
foregoing shall not apply to nor operate to prevent:




(a)  investments
in direct obligations of the United States of America or of any agency or
instrumentality thereof whose obligations constitute full faith and credit
obligations of the United States of America, provided that any such obligations
shall mature within one year of the date of issuance thereof;




(b)  investments
in commercial paper rated at least P-1 by Moody’s and at least A-1 by S&P
maturing within one year of the date of issuance thereof;




(c)  investments
in certificates of deposit issued by any Lender or by any United States
commercial bank having capital and surplus of not less than $100,000,000 which
have a maturity of one year or less;




(d)  investments
in repurchase obligations with a term of not more than seven days for underlying
securities of the types described in subsection (a) above entered into with
any bank meeting the qualifications specified in subsection (c) above,
provided all such agreements require physical delivery of the securities
securing such repurchase agreement, except those delivered through the Federal
Reserve Book Entry System;






53




(e)  investments
in money market funds that invest solely, and which are restricted by their
respective charters to invest solely, in investments of the type described in
the immediately preceding subsections (a), (b), (c), and (d)
above;




(f)  the
Company’s investments from time to time in its Domestic Subsidiaries, and
investments made from time to time by any such Domestic Subsidiary in one or
more of its Domestic Subsidiaries;




(g)  intercompany
advances made from time to time from the Company or any Domestic Subsidiary to
any one or more Domestic Subsidiaries in the ordinary course of business to
finance working capital needs;




(h)  intercompany advances and
loans made from time to time by the Company and its Domestic Subsidiaries to any
one or more Foreign Subsidiaries (net of intercompany advances and loans made
from time to time by any one or more Foreign Subsidiaries to the Company and its
Domestic Subsidiaries) in an aggregate net amount not to exceed $53,000,000 as
of the last day of each fiscal quarter of the Company (it being acknowledged
that the net amount of such advances and loans was $42,737,304 as of September
30, 2008), as such limitation shall be reduced dollar-for-dollar by the amount
of any investment made after the Closing Date by the Company or any Domestic
Subsidiary in the common stock or paid-in-capital of any Foreign
Subsidiary;




(i) investments made from time to time by
any Foreign Subsidiary in one or more of its Foreign Subsidiaries;




(j)  intercompany
advances and loans made from time to time from any Foreign Subsidiary to any one
or more Foreign Subsidiaries in the ordinary course of business to finance
working capital needs;




(k)  Permitted
Acquisitions; and




(l)  other
investments, loans, and advances in addition to those otherwise permitted by
this Section provided
that such investments, loans and advances do not exceed $7,500,000 individually
or $15,000,000 in the aggregate at any one time outstanding.




In
determining the amount of investments, acquisitions, loans, and advances
permitted under this Section, investments and acquisitions shall always be taken
at the original cost thereof (regardless of any subsequent appreciation or
depreciation therein), and loans and advances shall be taken at the principal
amount thereof then remaining unpaid.




Section 8.10.  Mergers,
Consolidations and Sales.  The Credit Parties shall not, nor
shall they permit any Subsidiary to, be a party to any merger or consolidation,
or sell, transfer, lease or otherwise dispose of all or any part of its
Property, including any disposition of Property as part of a sale and leaseback
transaction, or in any event sell or discount (with or without recourse) any of
its notes or accounts receivable; provided, however, that this
Section shall not apply to nor operate to prevent:






54




(a)  the
sale or lease of inventory in the ordinary course of business;




(b)  the
sale, transfer, lease or other disposition of Property of any Credit Party and
its Subsidiaries to one another in the ordinary course of its business; provided that any sale,
transfer, lease or other disposition of Property to a Foreign Subsidiary for
less than fair market value shall be deemed an investment in such Foreign
Subsidiary to the extent of such deficiency and shall utilize the basket set
forth in Section 8.9(h) hereof;




(c)  the
merger of a Credit Party or any Subsidiary of a Credit Party with and into any
Credit Party or any other Subsidiary of a Credit Party, provided that, in the case of
any merger involving a Credit Party, such Credit Party is the corporation
surviving the merger and, in the case of any merger of a Borrower and a
Guarantor, such Borrower is the corporation surviving the merger;




(d)  the
sale of delinquent notes or accounts receivable in the ordinary course of
business for purposes of collection only (and not for the purpose of any bulk
sale or securitization transaction);




(e)  the
sale, transfer or other disposition of any tangible personal property that, in
the reasonable business judgment of the relevant Credit Party or its Subsidiary,
has become obsolete or worn out, and which is disposed of in the ordinary course
of business; and




(f)  the
sale, transfer, lease or other disposition of Property of any Credit Party or
any Subsidiary (including any disposition of Property as part of a sale and
leaseback transaction) aggregating for the Credit Parties and their Subsidiaries
not more than $10,000,000 during any fiscal year of the Credit
Parties.




Section 8.11.  Maintenance
of Subsidiaries.  The Credit Parties shall not assign, sell or
transfer, nor shall it permit any Subsidiary to issue, assign, sell or transfer,
any shares of capital stock or other equity interests of a Subsidiary; provided, however, that the
foregoing shall not operate to prevent (a) the issuance, sale, and transfer
to any person of any shares of capital stock of a Subsidiary solely for the
purpose of qualifying, and to the extent legally necessary to qualify, such
person as a director of such Subsidiary, and (b) any transaction permitted
by Section 8.10(c) above.




Section 8.12.  Dividends
and Certain Other Restricted Payments.  The Credit Parties
shall not, nor shall they permit any Subsidiary to, (a) declare or pay any
dividends on or make any other distributions in respect of any class or series
of its capital stock or other equity interests or (b) directly or
indirectly purchase, redeem, or otherwise acquire or retire any of its capital
stock or other equity interests or any warrants, options, or similar instruments
to acquire the same; provided,
however, that the foregoing shall not operate to prevent the following
(all of which are referred to collectively as “Restricted Payments”):
(i) the making of dividends or distributions by any Wholly-owned Subsidiary
of any Credit Party to its parent corporation, (ii) dividends payable
solely in the same class of capital stock of such Person, (iii) the making of
regularly scheduled dividends to the Company’s shareholders, provided that(A) no Default
or Event of Default has occurred and is continuing at such time or would be
directly or indirectly caused as a result thereof and (B) such dividends shall
be paid out of Net Income, and (iv) the Company’s repurchase of shares of
its capital stock on the open market or non-scheduled, non-recurring dividends,
provided that (A)
no Default or Event of Default has occurred and is continuing at such time or
would be directly or indirectly caused as a result thereof on an actual or pro forma basis, (B) after
giving effect to such repurchase or dividend, the Borrowers would have a
Leverage Ratio on a pro
forma basis of at least 0.25:1.00 below the then maximum Leverage Ratio
permitted by Section 8.21(i), (C) after giving effect to such repurchase or
dividend, there shall be at least $35,000,000 in Unused Revolving Credit
Commitments and (D) the aggregate amount for such share repurchase or
non-scheduled, non-recurring dividend shall not exceed $5,000,000 for each
fiscal year of the Company and $15,000,000 during the term of the
facilities.






55




Section 8.13.  ERISA.  The
Credit Parties shall, and shall cause each Subsidiary to, promptly pay and
discharge all obligations and liabilities arising under ERISA of a character
which if unpaid or unperformed could reasonably be expected to result in the
imposition of a Lien against any of its Property.  The Credit Parties
shall, and shall cause each Subsidiary to, promptly notify the Administrative
Agent and each Lender of:  (a) the occurrence of any reportable
event (as defined in ERISA) with respect to a Plan, (b) receipt of any
notice from the PBGC of its intention to seek termination of any Plan or
appointment of a trustee therefor, (c) its intention to terminate or
withdraw from any Plan, and (d) the occurrence of any event with respect to
any Plan which would result in the incurrence by any Credit Party or any
Subsidiary of any material liability, fine or penalty, or any material increase
in the contingent liability of any Credit Party or any Subsidiary with respect
to any post-retirement Welfare Plan benefit.




Section 8.14.  Compliance
with Laws.  Each Credit Party shall, and shall cause each
Subsidiary to, comply in all respects with all Legal Requirements applicable to
or pertaining to its Property or business operations, where any such
non-compliance, individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect or result in a Lien upon any of its
Property.




Section 8.15.  Burdensome
Contracts With Affiliates.The Credit Parties shall not, nor shall they
permit any Subsidiary to, enter into any contract, agreement or business
arrangement with any of its Affiliates (other than with Wholly-owned
Subsidiaries) on terms and conditions which are less favorable to such Credit
Party or such Subsidiary than would be usual and customary in similar contracts,
agreements or business arrangements between Persons not affiliated with each
other.




Section 8.16.  No
Changes in Fiscal Year.  The fiscal year of the Company and its
Subsidiaries ends on December 31 of each year; and the Company shall not,
nor shall it permit any Subsidiary to, change its fiscal year from its present
basis.






56




Section 8.17.  Formation
of Subsidiaries.  Promptly upon the formation or acquisition of
any Subsidiary of the Company (whether direct or indirect), the Company shall
provide the Administrative Agent and the Lenders notice thereof (at which time
Schedule 6.2 shall be deemed amended to include reference to such
Subsidiary) and, in the case of the formation or acquisition of a Domestic
Subsidiary of the Company, comply with the requirements of Section 4 hereof
on a timely basis.




Section 8.18.  Change
in the Nature of Business.The Credit Parties shall not, nor
shall they permit any Subsidiary to, engage in any business or activity if as a
result the general nature of the business of such Credit Party or such
Subsidiary would be changed in any material respect from the general nature of
the business engaged in by it as of the Closing Date.




Section 8.19.  Use of
Loan Proceeds.  The Borrowers shall use the credit extended
under this Agreement solely for the purposes set forth in, or otherwise
permitted by, Section 6.4 hereof.




Section 8.20.  No
Restrictions.  Except as provided herein, the Credit Parties
shall not, nor shall they permit any Subsidiary to, directly or indirectly
create or otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of such Credit Party or
such Subsidiary to:  (a) pay dividends or make any other
distribution on any Subsidiary’s capital stock or other equity interests owned
by such Credit Party or such Subsidiary, (b) pay any indebtedness owed to
any Borrower or any Subsidiary, (c) make loans or advances to any Borrower
or any Subsidiary, (d) transfer any of its Property to any Borrower or any
Subsidiary or (e) guarantee the Obligations, Hedging Liability and Funds
Transfer and Deposit Account Liability, and/or grant Liens on its assets to the
Administrative Agent as required by the Loan Documents.




Section 8.21.  Financial
Covenants.  (i) Leverage
Ratio.  The Company shall not, as of the last day of each
fiscal quarter of the Company, permit the Leverage Ratio to be greater than 2.50
to 1.0.




(ii)  Fixed Charge Coverage
Ratio.  The Company shall not, as of the last day of each
fiscal quarter of the Company, permit the Fixed Charge Coverage Ratio to be less
than 1.25 to 1.0.




(iii)  Operating
Leases.  The Company shall not, nor shall it permit any
Subsidiary to, acquire the use or possession of any Property under a lease or
similar arrangement, whether or not the Company or any Subsidiary has the
express or implied right to acquire title to or purchase such Property, at any
time if, after giving effect thereto, the aggregate amount of fixed rentals and
other consideration payable by the Company and its Subsidiaries under all such
leases and similar arrangements would exceed $10,000,000 during any fiscal year
of the Company.  Capital Leases shall not be included in computing
compliance with this Section to the extent the Company’s and its
Subsidiaries’ liability in respect of the same is permitted by
Section 8.7(c) hereof.




(iv)  Clean-Down.  For a
period of 60 consecutive days occurring between January 1 and April 30
of each year, the aggregate principal amount of Revolving Loans, Swing Loans and
L/C Obligations shall not exceed (A) $30,000,000 for the fiscal year ending
December 31, 2009, (B) $27,500,000 for the fiscal year ending December 31, 2010
and (C) $25,000,000 for the fiscal year ending December 31, 2011.






57




Section 8.22.Post-Closing
Covenants.  (i)  Deposit Account Control
Agreements.Not later than 30 days after the Closing Date
(as such date may be extended by the Administrative Agent in its sole
discretion) and subject to Section 4.1 hereof, the Company shall, and shall
cause each domestic Credit Party to, deliver to the Administrative Agent account
control agreements with respect to each deposit account of the Company and
domestic Credit Parties on terms reasonably acceptable to the Administrative
Agent.




(ii)  Opinions of
Counsel.Not later than 5 Business Days after the Closing Date
(as such date may be extended by the Administrative Agent in its sole
discretion), each Foreign Borrower shall deliver an opinion of counsel in form
and substance satisfactory to the Administrative
Agent.  Notwithstanding anything else contained herein to the
contrary, the Company may not request a Borrowing on behalf of any Foreign
Borrower that has not delivered an opinion of counsel in form and substance
satisfactory to the Administrative Agent and the Lenders shall not be obligated
to advance any Borrowing to such Foreign Borrower until receipt of such
opinion.





SECTION 9.  EVENTS
OF DEFAULT AND REMEDIES.





Section 9.1.  Events of
Default.  Any one or more of the following shall constitute an
“Event of Default” hereunder:




(a)default in the payment when due of all
or any part of the principal of any Loan (whether at the stated maturity thereof
or at any other time provided for in this Agreement) or of any Reimbursement
Obligation, or default for a period of 3 Business Days in the payment when
due of anyinterest, fee or other
Obligation payable hereunder or under any other Loan Document;




(b)default in the observance or
performance of any covenant set forth in Section 8.1(a), 8.4, 8.5, 8.7,
8.8, 8.9, 8.10, 8.11, 8.12, 8.21 or 8.22 hereof or of any provision in any Loan
Document dealing with the use, disposition or remittance of the proceeds of
Collateral or requiring the maintenance of insurance thereon;




(c)default in the observance or
performance of any other provision hereof or of any other Loan Document which is
not remedied within 30 days after the earlier of (i) the date on which
such failure shall first become known to any officer of any Borrower or
(ii) written notice thereof is given to the Borrowers by the Administrative
Agent;




(d)any representation or warranty made
herein or in any other Loan Document or in any certificate furnished to the
Administrative Agent or the Lenders pursuant hereto or thereto or in connection
with any transaction contemplated hereby or thereby proves untrue in any
material respect as of the date of the issuance or making or deemed making
thereof;






58




(e)any event occurs or condition exists
(other than those described in subsections (a) through (d) above) which is
specified as an event of default under any of the other Loan Documents, or any
of the Loan Documents shall for any reason not be or shall cease to be in full
force and effect or is declared to be null and void, or any of the Collateral
Documents shall for any reason fail to create a valid and perfected first
priority Lien in favor of the Administrative Agent in any Collateral purported
to be covered thereby except as expressly permitted by the terms thereof, or any
Credit Party takes any action for the purpose of terminating, repudiating or
rescinding any Loan Document executed by it or any of its obligations
thereunder;




(f)default shall occur under any
Indebtedness for Borrowed Money issued, assumed or guaranteed by any Credit
Party or any Subsidiary aggregating in excess of $1,000,000, or under any
indenture, agreement or other instrument under which the same may be issued, and
such default shall continue for a period of time sufficient to permit the
acceleration of the maturity of any such Indebtedness for Borrowed Money
(whether or not such maturity is in fact accelerated), or any such Indebtedness
for Borrowed Money shall not be paid when due (whether by demand, lapse of time,
acceleration or otherwise);




(g)any judgment or judgments, writ or
writs or warrant or warrants of attachment, or any similar process or processes,
shall be entered or filed against any Credit Party or any Subsidiary, or against
any of its Property, in an aggregate amount in excess of $1,000,000 (except to
the extent fully covered by insurance pursuant to which the insurer has accepted
liability therefor in writing), and which remains undischarged, unvacated,
unbonded or unstayed for a period of 30 days;




(h)any Credit Party or any Subsidiary, or
any member of its Controlled Group, shall fail to pay when due an amount or
amounts aggregating in excess of $1,000,000 which it shall have become liable to
pay to the PBGC or to a Plan under Title IV of ERISA; or notice of intent
to terminate a Plan or Plans having aggregate Unfunded Vested Liabilities in
excess of $1,000,000 (collectively, a “Material Plan”) shall be
filed under Title IV of ERISA by any Credit Party or any Subsidiary, or any
other member of its Controlled Group, any plan administrator or any combination
of the foregoing; or the PBGC shall institute proceedings under Title IV of
ERISA to terminate or to cause a trustee to be appointed to administer any
Material Plan or a proceeding shall be instituted by a fiduciary of any Material
Plan against any Credit Party Borrower or any Subsidiary, or any member of its
Controlled Group, to enforce Section 515 or 4219(c)(5) of ERISA and such
proceeding shall not have been dismissed within 30 days thereafter; or a
condition shall exist by reason of which the PBGC would be entitled to obtain a
decree adjudicating that any Material Plan must be terminated;




(i)any Change of Control shall
occur;




(j)any Credit Party or any Subsidiary
shall (i) have entered involuntarily against it an order for relief under
the United States Bankruptcy Code, as amended, (ii) not pay, or admit in
writing its inability to pay, its debts generally as they become due,
(iii) make an assignment for the benefit of creditors, (iv) apply for,
seek, consent to or acquiesce in, the appointment of a receiver, custodian,
trustee, examiner, liquidator or similar official for it or any substantial part
of its Property, (v) institute any proceeding seeking to have entered
against it an order for relief under the United States Bankruptcy Code, as
amended, to adjudicate it insolvent, or seeking dissolution, winding up,
liquidation, reorganization, arrangement, adjustment or composition of it or its
debts under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors or fail to file an answer or other pleading denying the
material allegations of any such proceeding filed against it, (vi) take any
action in furtherance of any matter described in parts (i) through (v)
above, or (vii) fail to contest in good faith any appointment or proceeding
described in Section 9.1(k) hereof; or






59




(k)a custodian, receiver, trustee,
examiner, liquidator or similar official shall be appointed for any Credit Party
or any Subsidiary, or any substantial part of any of its Property, or a
proceeding described in Section 9.1(j)(v) shall be instituted against any
Credit Party or any Subsidiary, and such appointment continues undischarged or
such proceeding continues undismissed or unstayed for a period of
60 days.




Section 9.2.  Non-Bankruptcy
Defaults.  When any Event of Default other than those described
in subsection (j) or (k) of Section 9.1 hereof has occurred and is
continuing, the Administrative Agent shall, by written notice to the
Borrowers:  (i) if so directed by the Required Lenders, terminate
the remaining Commitments and all other obligations of the Lenders hereunder on
the date stated in such notice (which may be the date thereof); (ii) if so
directed by the Required Lenders, declare the principal of and the accrued
interest on all outstanding Loans to be forthwith due and payable and thereupon
all outstanding Loans, including both principal and interest thereon, shall be
and become immediately due and payable together with all other amounts payable
under the Loan Documents without further demand, presentment, protest or notice
of any kind; and (iii) if so directed by the Required Lenders, demand that
the Borrowers immediately pay to the Administrative Agent the full amount then
available for drawing under each or any Letter of Credit, and the Borrowers
agree to immediately make such payment and acknowledge and agree that the
Lenders would not have an adequate remedy at law for failure by the Borrowers to
honor any such demand and that the Administrative Agent, for the benefit of the
Lenders, shall have the right to require the Borrowers to specifically perform
such undertaking whether or not any drawings or other demands for payment have
been made under any Letter of Credit.  The Administrative Agent, after
giving notice to the Borrowers pursuant to Section 9.1(c) or this
Section 9.2, shall also promptly send a copy of such notice to the other
Lenders, but the failure to do so shall not impair or annul the effect of such
notice.




Section 9.3.  Bankruptcy
Defaults.  When any Event of Default described in
subsections (j) or (k) of Section 9.1 hereof has occurred and is
continuing, then all outstanding Loans shall immediately become due and payable
together with all other amounts payable under the Loan Documents without
presentment, demand, protest or notice of any kind, the obligation of the
Lenders to extend further credit pursuant to any of the terms hereof shall
immediately terminate and the Borrowers shall immediately pay to the
Administrative Agent the full amount then available for drawing under all
outstanding Letters of Credit, the Borrowers acknowledging and agreeing that the
Lenders would not have an adequate remedy at law for failure by the Borrowers to
honor any such demand and that the Lenders, and the Administrative Agent on
their behalf, shall have the right to require the Borrowers to specifically
perform such undertaking whether or not any draws or other demands for payment
have been made under any of the Letters of Credit.






60




Section 9.4.  Collateral
for Undrawn Letters of Credit.  (a) If the prepayment of
the amount available for drawing under any or all outstanding Letters of Credit
is required under Section 1.8(b), Section 1.18, Section 9.2 or
9.3 above, the Borrowers shall forthwith pay the amount required to be so
prepaid, to be held by the Administrative Agent as provided in
subsection (b) below.




(b)  All
amounts prepaid pursuant to subsection (a) above shall be held by the
Administrative Agent in one or more separate collateral accounts (each such
account, and the credit balances, properties, and any investments from time to
time held therein, and any substitutions for such account, any certificate of
deposit or other instrument evidencing any of the foregoing and all proceeds of
and earnings on any of the foregoing being collectively called the “Collateral Account”) as
security for, and for application by the L/C Issuer (to the extent available)
to, the reimbursement of any payment under any Letter of Credit then or
thereafter made by the Administrative Agent, and to the payment of the unpaid
balance of all other Obligations (and to all Hedging Liability and Funds
Transfer and Deposit Account Liability).  The Collateral Account shall
be held in the name of and subject to the exclusive dominion and control of the
Administrative Agent for the benefit of the Administrative Agent, the Lenders,
and the L/C Issuer.  If and when requested by the Company, on behalf
of the Borrowers, the Administrative Agent shall invest funds held in the
Collateral Account from time to time in direct obligations of, or obligations
the principal of and interest on which are unconditionally guaranteed by, the
United States of America with a remaining maturity of one year or less, provided that the
Administrative Agent is irrevocably authorized to sell investments held in the
Collateral Account when and as required to make payments out of the Collateral
Account for application to amounts due and owing from the Borrowers to the L/C
Issuer, the Administrative Agent or the Lenders; provided, however, that if
(i) the Borrowers shall have made payment of all such obligations referred
to in subsection (a) above, (ii) all relevant preference or other
disgorgement periods relating to the receipt of such payments have passed, and
(iii) no Letters of Credit, Commitments, Loans or other Obligations,
Hedging Liability or Funds Transfer and Deposit Account Liability remain
outstanding hereunder, then the Administrative Agent shall release to the
Company, on behalf of the Borrowers, any remaining amounts held in the
Collateral Account.




Section 9.5.  Notice
of Default.  The Administrative Agent shall give notice to the
Borrowers under Section 9.1(c) hereof promptly upon being requested to do
so by any Lender and shall thereupon notify all the Lenders
thereof.




Section 9.6.  Expenses.  The
Borrowers jointly and severally agree to pay to the Administrative Agent and
each Lender, and any other holder of any Note outstanding hereunder, all costs
and expenses incurred or paid by the Administrative Agent and such Lender or any
such holder, including reasonable attorneys’ fees and court costs, in connection
with any Default or Event of Default hereunder or in connection with the
enforcement of any of the Loan Documents (including all such costs and expenses
incurred in connection with any proceeding under the United States Bankruptcy
Code involving any Borrower or any Subsidiary as a debtor
thereunder).






61





SECTION 10.CHANGE IN CIRCUMSTANCES.




Section 10.1.Change of
Law.  Notwithstanding any other provisions of this Agreement or
any other Loan Document, if at any time any change in applicable law or
regulation or in the interpretation thereof makes it unlawful for any Lender to
make or continue to maintain any Eurocurrency Loans or to perform its
obligations as contemplated hereby, such Lender shall promptly give notice
thereof to the Borrowers and such Lender’s obligations to make or maintain
Eurocurrency Loans under this Agreement shall be suspended until it is no longer
unlawful for such Lender to make or maintain Eurocurrency Loans.  The
applicable Borrower shall prepay on demand the outstanding principal amount of
any such affected Eurocurrency Loans, together with all interest accrued thereon
and all other amounts then due and payable to such Lender under this Agreement;
provided, however,
subject to all of the terms and conditions of this Agreement, the Company, on
behalf of the applicable Borrower, may then elect to borrow the principal amount
of the affected Eurocurrency Loans from such Lender by means of Base Rate Loans
from such Lender, which Base Rate Loans shall not be made ratably by the Lenders
but only from such affected Lender.





Section 10.2.  Unavailability
of Deposits or Inability to Ascertain, or Inadequacy of,
LIBOR.  If on or prior to the first day of any Interest Period
for any Borrowing of Eurocurrency Loans:




(a)the Administrative Agent determines
that deposits in U.S. Dollars (in the applicable amounts) are not being offered
to it in the interbank Eurocurrency market for such Interest Period, or that by
reason of circumstances affecting the interbank Eurocurrency market adequate and
reasonable means do not exist for ascertaining the applicable LIBOR,
or




(b)the Required Lenders advise the
Administrative Agent that (i) LIBOR as determined by the Administrative Agent
will not adequately and fairly reflect the cost to such Lenders of funding their
Eurocurrency Loans for such Interest Period or (ii) that the making or funding
of Eurocurrency Loans become impracticable,




then the
Administrative Agent shall forthwith give notice thereof to the Borrowers and
the Lenders, whereupon until the Administrative Agent notifies the Borrowers
that the circumstances giving rise to such suspension no longer exist, the
obligations of the Lenders to make Eurocurrency Loans shall be
suspended.




Section 10.3.  Increased
Cost and Reduced Return.  (a) If, on or after the date
hereof, the adoption of any applicable law, rule or regulation, or any change
therein, or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender (or its
Lending Office) or the L/C Issuer with any request or directive (whether or
not having the force of law) of any such authority, central bank or comparable
agency:






62





(i)shall subject any Lender (or its
Lending Office) or the L/C Issuer to any tax, duty or other charge with
respect to its Eurodollar Loans, its Notes, its Letter(s) of Credit, or its
participation in any thereof, any Reimbursement Obligations owed to it or its
obligation to make Eurodollar Loans, issue a Letter of Credit, or to participate
therein, or shall change the basis of taxation of payments to any Lender (or its
Lending Office) or the L/C Issuer of the principal of or interest on its
Eurodollar Loans, Letter(s) of Credit, or participations therein or any other
amounts due under this Agreement or any other Loan Document in respect of its
Eurodollar Loans, Letter(s) of Credit, any participation therein, any
Reimbursement Obligations owed to it, or its obligation to make Eurodollar
Loans, or issue a Letter of Credit, or acquire participations therein (except
for changes in the rate of tax on the overall net income of such Lender or its
Lending Office or the L/C Issuer imposed by the jurisdiction in which such
Lender’s or the L/C Issuer’s principal executive office or Lending Office
is located); or




(ii)shall impose, modify or deem applicable
any reserve, special deposit or similar requirement (including, without
limitation, any such requirement imposed by the Board of Governors of the
Federal Reserve System, but excluding with respect to any Eurodollar Loans any
such requirement included in an applicable Eurodollar Reserve Percentage)
against assets of, deposits with or for the account of, or credit extended by,
any Lender (or its Lending Office) or the L/C Issuer or shall impose on any
Lender (or its Lending Office) or the L/C Issuer or on the interbank market
any other condition affecting its Eurodollar Loans, its Notes, its Letter(s) of
Credit, or its participation in any thereof, any Reimbursement Obligation owed
to it, or its obligation to make Eurodollar Loans, or to issue a Letter of
Credit, or to participate therein;




and the
result of any of the foregoing is to increase the cost to such Lender (or its
Lending Office) or the L/C Issuer of making or maintaining any Eurodollar
Loan, issuing or maintaining a Letter of Credit, or participating therein, or to
reduce the amount of any sum received or receivable by such Lender (or its
Lending Office) or the L/C Issuer under this Agreement or under any other
Loan Document with respect thereto, by an amount deemed by such Lender or
L/C Issuer to be material, then, within 15 days after demand by such
Lender or L/C Issuer (with a copy to the Administrative Agent), the
Borrowers shall be obligated to pay to such Lender or L/C Issuer such
additional amount or amounts as will compensate such Lender or L/C Issuer
for such increased cost or reduction.  Any demand on the Borrowers by
a Lender under this Section shall be accompanied by a certificate setting forth
the amount of such increased cost or reduced sum in reasonable detail (including
an explanation of the basis for and computation of such increased cost or
reduced return).




(b)If, after the date hereof, any Lender,
the L/ C Issuer, or the Administrative Agent shall have determined that the
adoption of any applicable law, rule or regulation regarding capital adequacy,
or any change therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any Lender
(or its Lending Office) or the L/C Issuer or any corporation controlling
such Lender or L/C Issuer with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency, has had the effect of reducing the rate of return on
such Lender’s or L/C Issuer ’s or such corporation’s capital as a
consequence of its obligations hereunder to a level below that which such Lender
or L/C Issuer or such corporation could have achieved but for such
adoption, change or compliance (taking into consideration such Lender’s or
L/C Issuer ’s or such corporation’s policies with respect to capital
adequacy) by an amount deemed by such Lender or L/C Issuer to be material,
then from time to time, within 15 days after demand by such Lender or
L/C Issuer (with a copy to the Administrative Agent), the Borrower shall
pay to such Lender or L/C Issuer, as applicable, such additional amount or
amounts as will compensate such Lender or L/C Issuer for such
reduction.  Any demand on the Borrowers by a Lender under this Section
shall be accompanied by a certificate setting forth the amount of such reduced
return in reasonable detail (including an explanation of the basis for and the
computation of such reduced return).






63




(c)A certificate of a Lender or
L/C Issuer claiming compensation under this Section 10.3 and setting
forth the additional amount or amounts to be paid to it hereunder shall be
conclusive, absent manifest error, if reasonably determined.  In
determining such amount, such Lender or L/C Issuer may use any reasonable
averaging and attribution methods.




Section 10.4.  Lending
Offices.  Each Lender may, at its option, elect to make its
Loans hereunder at the branch, office or affiliate specified on the appropriate
signature page hereof (each a “Lending Office”) for each
type of Loan available hereunder or at such other of its branches, offices or
affiliates as it may from time to time elect and designate in a written notice
to the Borrower and the Administrative Agent.  To the extent
reasonably possible, a Lender shall designate an alternative branch or funding
office with respect to its Eurocurrency Loans to reduce any liability of the
Borrowers to such Lender under Section 10.3 hereof or to avoid the
unavailability of Eurocurrency Loans under Section 10.2 hereof, so long as
such designation is not otherwise disadvantageous to the Lender.




Section 10.5.  Discretion
of Lender as to Manner of Funding.  Notwithstanding any other
provision of this Agreement, each Lender shall be entitled to fund and maintain
its funding of all or any part of its Loans in any manner it sees fit, it being
understood, however, that for the purposes of this Agreement all determinations
hereunder with respect to Eurocurrency Loans shall be made as if each Lender had
actually funded and maintained each Eurocurrency Loan through the purchase of
deposits in the interbank Eurocurrency market having a maturity corresponding to
such Loan’s Interest Period, and bearing an interest rate equal to LIBOR for
such Interest Period.





Section 11.The
Administrative Agent.




Section 11.1.  Appointment
and Authorization of Administrative Agent.    Each
Lender and the L/C Issuer hereby appoints Bank of Montreal as the
Administrative Agent under the Loan Documents and hereby authorizes the
Administrative Agent to take such action as Administrative Agent on its behalf
and to exercise such powers under the Loan Documents as are delegated to the
Administrative Agent by the terms thereof, together with such powers as are
reasonably incidental thereto.  The Lenders and L/C Issuer
expressly agree that the Administrative Agent is not acting as a fiduciary of
the Lenders or the L/C Issuer in respect of the Loan Documents, the
Borrower or otherwise, and nothing herein or in any of the other Loan Documents
shall result in any duties or obligations on the Administrative Agent or any of
the Lenders or L/C Issuer except as expressly set forth
herein.






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Section 11.2.  Administrative
Agent and its Affiliates.  The Administrative Agent shall have
the same rights and powers under this Agreement and the other Loan Documents as
any other Lender and may exercise or refrain from exercising such rights and
power as though it were not the Administrative Agent, and the Administrative
Agent and its Affiliates may accept deposits from, lend money to, and generally
engage in any kind of business with any Borrower or any Affiliate of such
Borrower as if it were not the Administrative Agent under the Loan
Documents.  The term “Lender” as used herein and
in all other Loan Documents, unless the context otherwise clearly requires,
includes the Administrative Agent in its individual capacity as a Lender (if
applicable).




Section 11.3.  Action
by Administrative Agent.  If the Administrative Agent receives
from any Borrower a written notice of an Event of Default pursuant to
Section 8.5 hereof, the Administrative Agent shall promptly give each of
the Lenders and L/C Issuer written notice thereof.  The
obligations of the Administrative Agent under the Loan Documents are only those
expressly set forth therein.  Without limiting the generality of the
foregoing, the Administrative Agent shall not be required to take any action
hereunder with respect to any Default or Event of Default, except as expressly
provided in Sections 9.2 and 9.5.  Upon the occurrence of an
Event of Default, the Administrative Agent shall take such action to enforce its
Lien on the Collateral and to preserve and protect the Collateral as may be
directed by the Required Lenders.  Unless and until the Required
Lenders give such direction, the Administrative Agent may (but shall not be
obligated to) take or refrain from taking such actions as it deems appropriate
and in the best interest of all the Lenders and L/C Issuer.  In
no event, however, shall the Administrative Agent be required to take any action
in violation of applicable law or of any provision of any Loan Document, and the
Administrative Agent shall in all cases be fully justified in failing or
refusing to act hereunder or under any other Loan Document unless it first
receives any further assurances of its indemnification from the Lenders that it
may require, including prepayment of any related expenses and any other
protection it requires against any and all costs, expense, and liability which
may be incurred by it by reason of taking or continuing to take any such
action.  The Administrative Agent shall be entitled to assume that no
Default or Event of Default exists unless notified in writing to the contrary by
a Lender, the L/C Issuer, or the Company or a Borrower.  In all
cases in which the Loan Documents do not require the Administrative Agent to
take specific action, the Administrative Agent shall be fully justified in using
its discretion in failing to take or in taking any action
thereunder.  Any instructions of the Required Lenders, or of any other
group of Lenders called for under the specific provisions of the Loan Documents,
shall be binding upon all the Lenders and the holders of the
Obligations.




Section 11.4.  Consultation
with Experts.  The Administrative Agent may consult with legal
counsel, independent public accountants, and other experts selected by it in
good faith and shall not be liable for any action taken or omitted to be taken
by it in good faith in accordance with the advice of such counsel, accountants
or experts.




Section 11.5.  Liability
of Administrative Agent; Credit Decision.  Neither the
Administrative Agent nor any of its directors, officers, agents or employees
shall be liable for any action taken or not taken by it in connection with the
Loan Documents:  (i) with the consent or at the request of the
Required Lenders or (ii) in the absence of its own gross negligence or
willful misconduct.  Neither the Administrative Agent nor any of its
directors, officers, agents or employees shall be responsible for or have any
duty to ascertain, inquire into or verify:  (i) any statement,
warranty or representation made in connection with this Agreement, any other
Loan Document or any Credit Event; (ii) the performance or observance of
any of the covenants or agreements of the Credit Parties or any Subsidiary
contained herein or in any other Loan Document; (iii) the satisfaction of
any condition specified in Section 7 hereof, except receipt of items
required to be delivered to the Administrative Agent; or (iv) the validity,
effectiveness, genuineness, enforceability, perfection, value, worth or
collectibility hereof or of any other Loan Document or of any other documents or
writing furnished in connection with any Loan Document or of any Collateral; and
the Administrative Agent makes no representation of any kind or character with
respect to any such matter mentioned in this sentence.  The
Administrative Agent may execute any of its duties under any of the Loan
Documents by or through employees, agents, and attorneys-in-fact and shall not
be answerable to the Lenders, the L/C Issuer, the Credit Parties, or any
other Person for the default or misconduct of any such agents or
attorneys-in-fact selected with reasonable care.  The Administrative
Agent shall not incur any liability by acting in reliance upon any notice,
consent, certificate, other document or statement (whether written or oral)
reasonably believed by it to be genuine or to be sent by the proper party or
parties.  In particular and without limiting any of the foregoing, the
Administrative Agent shall have no responsibility for confirming the accuracy of
any compliance certificate or other document or instrument received by it under
the Loan Documents.  The Administrative Agent may treat the payee of
any Obligation as the holder thereof until written notice of transfer shall have
been filed with the Administrative Agent signed by such payee in form
satisfactory to the Administrative Agent.  Each Lender and
L/C Issuer acknowledges that it has independently and without reliance on
the Administrative Agent or any other Lender or L/C Issuer, and based upon
such information, investigations and inquiries as it deems appropriate, made its
own credit analysis and decision to extend credit to the Borrowers in the manner
set forth in the Loan Documents.  It shall be the responsibility of
each Lender and L/C Issuer to keep itself informed as to the
creditworthiness of the Borrowers and their Subsidiaries, and the Administrative
Agent shall have no liability to any Lender or L/C Issuer with respect
thereto.






65




Section 11.6.  Indemnity.  The
Lenders shall ratably, in accordance with their respective Percentages,
indemnify and hold the Administrative Agent, and its directors, officers,
employees, agents, and representatives harmless from and against any
liabilities, losses, costs or expenses suffered or incurred by it under any Loan
Document or in connection with the transactions contemplated thereby, regardless
of when asserted or arising, except to the extent they are promptly reimbursed
for the same by the Borrowers and except to the extent that any event giving
rise to a claim was caused by the gross negligence or willful misconduct of the
party seeking to be indemnified.  The obligations of the Lenders under
this Section shall survive termination of this Agreement.  The
Administrative Agent shall be entitled to offset amounts received for the
account of a Lender under this Agreement against unpaid amounts due from such
Lender to the Administrative Agent hereunder (whether as fundings of
participations, indemnities or otherwise), but shall not be entitled to offset
against amounts owed to the Administrative Agent by any Lender arising outside
of this Agreement and the other Loan Documents.






66




Section 11.7.  Resignation
of Administrative Agent and Successor Administrative
Agent.  The Administrative Agent may resign at any time by
giving written notice thereof to the Lenders, the L/C Issuer, and the
Borrowers and may be removed by the Required Lenders upon twenty (20) days prior
written notice to the Borrowers, the Administrative Agent, the L/C Issuers and
the Lenders.  Upon any such resignation or removal of the
Administrative Agent, the Required Lenders shall have the right to appoint a
successor Administrative Agent, which appointment shall be with the Borrowers’
consent if no Event of Default exists.  If no successor Administrative
Agent shall have been so appointed by the Required Lenders, and shall have
accepted such appointment after the Administrative Agent has delivered its
notice of resignation, within 30 days after the retiring Administrative
Agent’s giving of notice of resignation then the retiring Administrative Agent
may, on behalf of the Lenders, appoint a successor Administrative Agent, which
may be any Lender hereunder or any commercial bank, or an Affiliate of a
commercial bank, having an office in the United States of America and having a
combined capital and surplus of at least $200,000,000, which appointment shall
be with the Borrowers’ consent if no Event of Default exists.  Upon
the acceptance of its appointment as the Administrative Agent hereunder, such
successor Administrative Agent shall thereupon succeed to and become vested with
all the rights and duties of the retiring Administrative Agent under the Loan
Documents, and the retiring Administrative Agent shall be discharged from its
duties and obligations thereunder.  The removal of the Administrative
Agent hereunder shall become effective 20 days after receipt of such notice of
removal, and upon the effectiveness of such removal, the removed Administrative
Agent shall be discharged from its duties and obligations under the Loan
Documents.  After any retiring or removed Administrative Agent’s
resignation or removal (as the case may be) hereunder as Administrative Agent,
the provisions of this Section 11 and all protective provisions of the
other Loan Documents shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Administrative Agent, but no successor
Administrative Agent shall in any event be liable or responsible for any actions
of its predecessor.  If the Administrative Agent resigns or is removed
and no successor is appointed, the rights and obligations of such Administrative
Agent shall be automatically assumed by the Required Lenders and (i) the
Borrowers shall be directed to make all payments due each Lender and
L/C Issuer hereunder directly to such Lender or L/C Issuer and
(ii) the Administrative Agent’s rights in the Collateral Documents shall be
assigned without representation, recourse or warranty to the Lenders and
L/C Issuer as their interests may appear.




Section 11.8.  L/C
Issuer and Swing Line Lender.  The L/C Issuer shall act on
behalf of the Lenders with respect to any Letters of Credit issued by it and the
documents associated therewith, and the Swing Line Lender shall act on behalf of
the Lenders with respect to the Swing Loans made hereunder.  The
L/C Issuer and the Swing Line Lender shall each have all of the benefits
and immunities (i) provided to the Administrative Agent in this
Section 11 with respect to any acts taken or omissions suffered by the
L/C Issuer in connection with Letters of Credit issued by it or proposed to
be issued by it and the Applications pertaining to such Letters of Credit or by
the Swing Line Lender in connection with Swing Loans made or to be made
hereunder as fully as if the term “Administrative Agent”, as used in this
Section 11, included the L/C Issuer and the Swing Line Lender with
respect to such acts or omissions and (ii) as additionally provided in this
Agreement with respect to such L/C Issuer or Swing Line Lender, as
applicable.






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Section 11.9.  Hedging
Liability and Funds Transfer and Deposit Account Liability
Arrangements.  By virtue of a Lender’s execution of this
Agreement or an assignment agreement pursuant to Section 13.12 hereof, as
the case may be, any Affiliate of such Lender with whom any Borrower or any
Subsidiary has entered into an agreement creating Hedging Liability or Funds
Transfer and Deposit Account Liability shall be deemed a Lender party hereto for
purposes of any reference in a Loan Document to the parties for whom the
Administrative Agent is acting, it being understood and agreed that the rights
and benefits of such Affiliate under the Loan Documents consist exclusively of
such Affiliate’s right to share in payments and collections out of the
Collateral and the Guaranties as more fully set forth in Section 3.1
hereof.  In connection with any such distribution of payments and
collections, or any request for the release of the Guaranties and the
Administrative Agent’s Liens in connection with the termination of the
Commitments and the payment in full of the Obligations, the Administrative Agent
shall be entitled to assume no amounts are due to any Lender or its Affiliate
with respect to Hedging Liability or Funds Transfer and Deposit Account
Liability unless such Lender has notified the Administrative Agent in writing of
the amount of any such liability owed to it or its Affiliate prior to such
distribution or payment or release of Guaranties and Liens.




Section 11.10.  Designation
of Additional Agents.  The Administrative Agent shall have the
continuing right, for purposes hereof, at any time and from time to time to
designate one or more of the Lenders (and/or its or their Affiliates) as
“syndication agents,” “documentation agents,” “arrangers,” or other designations
for purposes hereto, but such designation shall have no substantive effect, and
such Lenders and their Affiliates shall have no additional powers, duties or
responsibilities as a result thereof.




Section 11.11.  Authorization
to Release or Subordinate or Limit Liens.  The Administrative Agent
is hereby irrevocably authorized by each of the Lenders and the L/C Issuer
to (a) release any Lien covering any Collateral that is sold, transferred,
or otherwise disposed of in accordance with the terms and conditions of this
Agreement and the relevant Collateral Documents (including a sale, transfer, or
disposition permitted by the terms of Section 8.10 hereof or which has
otherwise been consented to in accordance with Section 13.13 hereof),
(b) release or subordinate any Lien on Collateral consisting of goods
financed with purchase money indebtedness or under a Capital Lease to the extent
such purchase money indebtedness or Capitalized Lease Obligation, and the Lien
securing the same, are permitted by Sections 8.7(c) and 8.8(d) hereof,
(c) reduce or limit the amount of the indebtedness secured by any
particular item of Collateral to an amount not less than the estimated value
thereof to the extent necessary to reduce mortgage registry, filing and similar
tax, and (d) release Liens on the Collateral following termination or
expiration of the Commitments and payment in full in cash of the Obligations
and, if then due, Hedging Liability and Funds Transfer and Deposit Account
Liability.




Section 11.12.  Authorization
to Enter into, and Enforcement of, the Collateral
Documents.  The Administrative Agent is hereby irrevocably
authorized by each of the Lenders and the L/C Issuer to execute and deliver
the Collateral Documents on behalf of each of the Lenders and their Affiliates
and the L/C Issuer and to take such action and exercise such powers under
the Collateral Documents as the Administrative Agent considers appropriate,
provided the
Administrative Agent shall not amend the Collateral Documents unless such
amendment is agreed to in writing by the Required Lenders.  Each
Lender and L/C Issuer acknowledges and agrees that it will be bound by the
terms and conditions of the Collateral Documents upon the execution and delivery
thereof by the Administrative Agent.  Except as otherwise specifically
provided for herein, no Lender (or its Affiliates) or L/C Issuer, other
than the Administrative Agent, shall have the right to institute any suit,
action or proceeding in equity or at law for the foreclosure or other
realization upon any Collateral or for the execution of any trust or power in
respect of the Collateral or for the appointment of a receiver or for the
enforcement of any other remedy under the Collateral Documents; it being
understood and intended that no one or more of the Lenders (or their Affiliates)
or L/C Issuer shall have any right in any manner whatsoever to affect,
disturb or prejudice the Lien of the Administrative Agent (or any security
trustee therefor) under the Collateral Documents by its or their action or to
enforce any right thereunder, and that all proceedings at law or in equity shall
be instituted, had, and maintained by the Administrative Agent (or its security
trustee) in the manner provided for in the relevant Collateral Documents for the
benefit of the Lenders, the L/C Issuer, and their Affiliates.






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SECTION 12.  THE
GUARANTEES; JOINT AND SEVERAL OBLIGATIONS.




Section 12.1.  The
Guarantees.  To induce the Lenders and L/C Issuer to
provide the credits described herein and in consideration of benefits expected
to accrue to the Borrowers by reason of the Commitments and for other good and
valuable consideration, receipt of which is hereby acknowledged, the Company and
each Domestic Subsidiary party hereto (including any Subsidiary executing an
Additional Guarantor Supplement in the form attached hereto as Exhibit F or
such other form acceptable to the Administrative Agent) hereby unconditionally
and irrevocably guarantees jointly and severally to the Administrative Agent,
the Lenders, and the L/C Issuer and their Affiliates, the due and punctual
payment of all present and future Obligations, Hedging Liability, and Funds
Transfer and Deposit Account Liability, including, but not limited to, the due
and punctual payment of principal of and interest on the Loans, the
Reimbursement Obligations, and the due and punctual payment of all other
Obligations now or hereafter owed by the Borrowers, or any of them, under the
Loan Documents and the due and punctual payment of all Hedging Liability and
Funds Transfer and Deposit Account Liability, in each case as and when the same
shall become due and payable, whether at stated maturity, by acceleration, or
otherwise, according to the terms hereof and thereof (including all interest,
costs, fees, and charges after the entry of an order for relief against any
Borrower or such other obligor in a case under the United States Bankruptcy Code
or any similar proceeding, whether or not such interest, costs, fees and charges
would be an allowed claim against any Borrower or any such obligor in any such
proceeding).  In case of failure by a Borrower or other obligor
punctually to pay any Obligations, Hedging Liability, or Funds Transfer and
Deposit Account Liability guaranteed hereby, each Guarantor hereby
unconditionally agrees to make such payment or to cause such payment to be made
punctually as and when the same shall become due and payable, whether at stated
maturity, by acceleration, or otherwise, and as if such payment were made by
such Borrower.




Section 12.2.  Guarantee
Unconditional.  The obligations of each Guarantor under this
Section 12 shall be unconditional and absolute and, without limiting the
generality of the foregoing, shall not be released, discharged, or otherwise
affected by:






69




(a)  any
extension, renewal, settlement, compromise, waiver, or release in respect of any
obligation of any Borrower or of any other Guarantor under this Agreement or any
other Loan Document or by operation of law or otherwise;




(b)  any
modification or amendment of or supplement to this Agreement or any other Loan
Document or any agreement relating to Hedging Liability or Funds Transfer and
Deposit Account Liability;




(c)  any
change in the corporate existence, structure, or ownership of, or any
insolvency, bankruptcy, reorganization, or other similar proceeding affecting,
any Borrower, any other Guarantor, or any of their respective assets, or any
resulting release or discharge of any obligation of any Borrower or of any other
Guarantor contained in any Loan Document;




(d)  the
existence of any claim, set-off, or other rights which any Borrower or any other
Guarantor may have at any time against the Administrative Agent, any Lender, the
L/C Issuer or any other Person, whether or not arising in connection
herewith;




(e)  any
failure to assert, or any assertion of, any claim or demand or any exercise of,
or failure to exercise, any rights or remedies against any Borrower, any other
Guarantor, or any other Person or Property;




(f)  any
application of any sums by whomsoever paid or howsoever realized to any
obligation of any Borrower, regardless of what obligations of the Borrowers
remain unpaid;




(g)  any
invalidity or unenforceability relating to or against any Borrower or any other
Guarantor for any reason of this Agreement or of any other Loan Document or any
agreement relating to Hedging Liability or Funds Transfer and Deposit Account
Liability or any provision of applicable law or regulation purporting to
prohibit the payment by any Borrower or any other Guarantor of the principal of
or interest on any Loan or any Reimbursement Obligation or any other amount
payable under the Loan Documents or any agreement relating to Hedging Liability
or Funds Transfer and Deposit Account Liability; or




(h)  any
other act or omission to act or delay of any kind by the Administrative Agent,
any Lender, the L/C Issuer or any other Person or any other circumstance
whatsoever that might, but for the provisions of this paragraph, constitute a
legal or equitable discharge of the obligations of the Borrowers under this
Section 12.




Section 12.3.  Discharge
Only upon Payment in Full; Reinstatement in Certain
Circumstances.  Each Guarantor’s obligations under this
Section 12 shall remain in full force and effect until the Commitments are
terminated, all Letters of Credit have expired, and the principal of and
interest on the Loans and all other amounts payable by the Borrowers and the
Guarantors under this Agreement and all other Loan Documents and, if then
outstanding and unpaid, all Hedging Liability and Funds Transfer and Deposit
Account Liability, shall have been paid in full.  If at any time any
payment of the principal of or interest on any Loan or any Reimbursement
Obligation or any other amount payable by any Borrower or any Guarantor under
the Loan Documents or any agreement relating to Hedging Liability or Funds
Transfer and Deposit Account Liability is rescinded or must be otherwise
restored or returned upon the insolvency, bankruptcy, or reorganization of any
Borrower or of any Guarantor, or otherwise, each Guarantor’s obligations under
this Section 12 with respect to such payment shall be reinstated at such
time as though such payment had become due but had not been made at such
time.






70




Section 12.4.  Subrogation.  Each
Guarantor agrees it will not exercise any rights which it may acquire by way of
subrogation by any payment made hereunder, or otherwise, until all the
Obligations, Hedging Liability, and Funds Transfer and Deposit Account Liability
shall have been paid in full subsequent to the termination of the Commitments
and expiration of all Letters of Credit.  If any amount shall be paid
to a Guarantor on account of such subrogation rights at any time prior to the
later of (x) the payment in full of the Obligations, Hedging Liability, and
Funds Transfer and Deposit Account Liability and all other amounts payable by
the Borrowers hereunder and the other Loan Documents and (y) the
termination of the Commitments and expiration of all Letters of Credit, such
amount shall be held in trust for the benefit of the Administrative Agent, the
Lenders, and the L/C Issuers (and their Affiliates) and shall forthwith be paid
to the Administrative Agent for the benefit of the Lenders the L/C Issuers (and
their Affiliates) or be credited and applied upon the Obligations, Hedging
Liability, and Funds Transfer and Deposit Account Liability, whether matured or
unmatured, in accordance with the terms of this Agreement.




Section 12.5.  Waivers.  Each
Guarantor irrevocably waives acceptance hereof, presentment, demand, protest,
and any notice not provided for herein, as well as any requirement that at any
time any action be taken by the Administrative Agent, any Lender, the L/C Issuer
or any other Person against any Borrower, another Guarantor, or any other
Person.




Section 12.6.  Limit
on Recovery.  Notwithstanding any other provision hereof, the
right of recovery against each Guarantor under this Section 12 shall not
exceed $1.00 less than the lowest amount which would render such Guarantor’s
obligations under this Section 12 void or voidable under applicable law,
including, without limitation, fraudulent conveyance law.




Section 12.7.  Stay
of Acceleration.  If acceleration of the time for payment of
any amount payable by any Borrower under this Agreement or any other Loan
Document, or under any agreement establishing Hedging Liability or Funds
Transfer and Deposit Account Liability, is stayed upon the insolvency,
bankruptcy or reorganization of any Borrower, all such amounts otherwise subject
to acceleration under the terms of this Agreement or the other Loan Documents,
or under any agreement establishing Hedging Liability or Funds Transfer and
Deposit Account Liability, shall nonetheless be payable by the Guarantors
hereunder forthwith on demand by the Administrative Agent made at the request of
the Required Lenders.




Section 12.8.  Benefit
to Guarantors.  Each Guarantor will derive substantial direct
and indirect benefit from the extensions of credit hereunder.






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Section 12.9.  Guarantor
Covenants.  Each Guarantor shall take such action as the
Borrowers are required by this Agreement to cause such Guarantor to take, and
shall refrain from taking such action as the Borrowers are required by this
Agreement to prohibit such Guarantor from taking.




Section 12.10.  Joint and
Several Obligors  (a) Each Borrower agrees that it is jointly
and severally liable for all the Obligations, Hedging Liability and Funds
Transfer and Deposit Account Liability of each other Borrower; provided, however,no Foreign
Borrower shall be liable (whether as a joint and several obligor or as a
guarantor) for the Obligations, Hedging Liability and Funds Transfer and Deposit
Account Liability of any Domestic Borrower.  Each Borrower further
acknowledges and agrees that its joint and several liability on the Loans and on
all other Obligations, Hedging Liability and Funds Transfer and Deposit Account
Liability owed by any Borrower or Borrowers is absolute and unconditional and
shall not in any manner be affected or impaired by any acts or omissions
whatsoever by the Lenders or the Administrative Agent, and without limiting the
generality of the foregoing, each Borrower’s joint and several liability on the
Obligations, Hedging Liability and Funds Transfer and Deposit Account Liability
of the Borrowers shall not be impaired by any acceptance by the Administrative
Agent or the Lenders of any other security for or guarantors upon the
Obligations, Hedging Liability and Funds Transfer and Deposit Account Liability
or by any failure, neglect or omission on the Lenders’ or the Administrative
Agent’s part to resort to any one or all of the Borrowers for payment of the
Obligations, Hedging Liability and Funds Transfer and Deposit Account Liability
or to realize upon or protect any collateral security therefor.  Each
Borrower’s joint and several liability on the Obligations, Hedging Liability and
Funds Transfer and Deposit Account Liability of each Borrower shall not in any
manner be impaired or affected by who receives or uses the proceeds of the Loans
or for what purposes such proceeds are used, and each Borrower waives notice of
borrowing requests issued by, and loans made to, other
Borrowers.  Such joint and several liability of each Borrower shall
also not be impaired or affected by any sale, pledge, surrender, compromise,
settlement, release, renewal, extension, indulgence, alteration, substitution,
exchange, change in, modification or disposition of any collateral security for
the Obligations, Hedging Liability and Funds Transfer and Deposit Account
Liability or of any guaranty thereof.  In order to enforce payment of
the Obligations, Hedging Liability and Funds Transfer and Deposit Account
Liability, foreclose or otherwise realize on any collateral security therefor,
and to exercise the rights granted to the Administrative Agent hereunder and
thereunder and under applicable law, the Administrative Agent shall be under no
obligation at any time to first resort to any collateral security, property,
liens or any other rights or remedies whatsoever, and the Lenders shall have the
right to enforce the Obligations, Hedging Liability and Funds Transfer and
Deposit Account Liability irrespective of whether or not other proceedings or
steps are pending seeking resort to or realization upon or from any of the
foregoing.  By its acceptance below, each Borrower hereby expressly
waives and surrenders any defense to its joint and several liability on the
Obligations, Hedging Liability and Funds Transfer and Deposit Account Liability
of each Borrower based upon any of the foregoing.  In furtherance
thereof, each Borrower agrees that wherever in this Agreement it is provided
that a Borrower is liable for a payment such obligation is the joint and several
obligation of each Borrower; provided, however,no Foreign
Borrower shall be liable (whether as a joint and several obligor or as a
guarantor) for the Obligations, Hedging Liability and Funds Transfer and Deposit
Account Liability of any Domestic Borrower.






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SECTION 13.  MISCELLANEOUS.




Section 13.1.  Withholding
Taxes.  (a) Payments Free of
Withholding.  Except as otherwise required by law and subject
to Section 13.1(b) hereof, each payment by any Borrower and the Guarantors
under this Agreement or the other Loan Documents shall be made without
withholding for or on account of any present or future taxes (other than overall
net income taxes on the recipient) imposed by or within the jurisdiction in
which such Borrower or such Guarantor is domiciled, any jurisdiction from which
such Borrower or such Guarantor makes any payment, or (in each case) any
political subdivision or taxing authority thereof or therein.  If any
such withholding is so required, the relevant Borrower or such Guarantor shall
make the withholding, pay the amount withheld to the appropriate governmental
authority before penalties attach thereto or interest accrues thereon and
forthwith pay such additional amount as may be necessary to ensure that the net
amount actually received by each Lender, the L/C Issuer and the Administrative
Agent free and clear of such taxes (including such taxes on such additional
amount) is equal to the amount which that Lender, L/C Issuer or the
Administrative Agent (as the case may be) would have received had such
withholding not been made.  If the Administrative Agent, the L/C
Issuer, or any Lender pays any amount in respect of any such taxes, penalties or
interest, the Borrowers or such Guarantor shall reimburse the Administrative
Agent, or L/C Issuer or such Lender for that payment on demand in the currency
in which such payment was made.  If any Borrower or such Guarantor
pays any such taxes, penalties or interest, it shall deliver official tax
receipts evidencing that payment or certified copies thereof to the Lender, the
L/C Issuer or Administrative Agent on whose account such withholding was made
(with a copy to the Administrative Agent if not the recipient of the original)
on or before the thirtieth day after payment.




(b)  U.S. Withholding Tax
Exemptions.  Each Lender or L/C Issuer that is not a
United States person (as such term is defined in Section 7701(a)(30) of the
Code) shall submit to the Borrower and the Administrative Agent on or before the
date the initial Credit Event is made hereunder or, if later, the date such
financial institution becomes a Lender or L/C Issuer hereunder, two duly
completed and signed copies of (i) either Form W-8 BEN (relating to
such Lender or L/C Issuer and entitling it to a complete exemption from
withholding under the Code on all amounts to be received by such Lender or
L/C Issuer, including fees, pursuant to the Loan Documents and the
Obligations) or Form W-8 ECI (relating to all amounts to be received by
such Lender or L/C Issuer, including fees, pursuant to the Loan Documents
and the Obligations) of the United States Internal Revenue Service or (ii)
solely if such Lender is claiming exemption from United States withholding tax
under Section 871(h) or 881(c) of the Code with respect to payments of
“portfolio interest”, a Form W-8 BEN, or any successor form prescribed by
the Internal Revenue Service, and a certificate representing that such Lender is
not a bank for purposes of Section 881(c) of the Code, is not a 10-percent
shareholder (within the meaning of Section 871(h)(3)(B) of the Code) of any
Borrower and is not a controlled foreign corporation related to any Borrower
(within the meaning of Section 864(d)(4) of the
Code).  Thereafter and from time to time, each Lender and
L/C Issuer shall submit to the Borrowers and the Administrative Agent such
additional duly completed and signed copies of one or the other of such Forms
(or such successor forms as shall be adopted from time to time by the relevant
United States taxing authorities) and such other certificates as may be
(i) requested by the Company, on behalf of Borrowers, in a written notice,
directly or through the Administrative Agent, to such Lender or L/C Issuer
and (ii) required under then-current United States law or regulations to
avoid or reduce United States withholding taxes on payments in respect of all
amounts to be received by such Lender or L/C Issuer, including fees,
pursuant to the Loan Documents or the Obligations.  Upon the request
of the Company, on behalf of the Borrowers, or the Administrative Agent, each
Lender and L/C Issuer that is a United States person (as such term is
defined in Section 7701(a)(30) of the Code) shall submit to the Company and
the Administrative Agent a certificate to the effect that it is such a United
States person.






73




(c)  Inability of Lender to Submit
Forms.  If any Lender or L/C Issuer determines, as a
result of any change in applicable law, regulation or treaty, or in any official
application or interpretation thereof, that it is unable to submit to the
Borrowers or the Administrative Agent any form or certificate that such Lender
or L/C Issuer is obligated to submit pursuant to subsection (b) of
this Section 13.1 or that such Lender or L/C Issuer is required to
withdraw or cancel any such form or certificate previously submitted or any such
form or certificate otherwise becomes ineffective or inaccurate, such Lender or
L/C Issuer shall promptly notify the Borrowers and Administrative Agent of
such fact and the Lender or L/C Issuer shall to that extent not be
obligated to provide any such form or certificate and will be entitled to
withdraw or cancel any affected form or certificate, as applicable.




Section 13.2.  No
Waiver, Cumulative Remedies.  No delay or failure on the part
of the Administrative Agent, the L/C Issuer or any Lender or on the part of the
holder or holders of any of the Obligations in the exercise of any power or
right under any Loan Document shall operate as a waiver thereof or as an
acquiescence in any default, nor shall any single or partial exercise of any
power or right preclude any other or further exercise thereof or the exercise of
any other power or right.  The rights and remedies hereunder of the
Administrative Agent, the Lenders and of the holder or holders of any of the
Obligations are cumulative to, and not exclusive of, any rights or remedies
which any of them would otherwise have.




Section 13.3.  Non-Business
Days.  If any payment hereunder becomes due and payable on a
day which is not a Business Day, the due date of such payment shall be extended
to the next succeeding Business Day on which date such payment shall be due and
payable.  In the case of any payment of principal falling due on a day
which is not a Business Day, interest on such principal amount shall continue to
accrue during such extension at the rate per annum then in effect, which accrued
amount shall be due and payable on the next scheduled date for the payment of
interest.




Section 13.4.  Documentary
Taxes.  The Borrowers jointly and severally agree to pay on
demand any documentary, stamp or similar taxes payable in respect of this
Agreement or any other Loan Document, including interest and penalties, in the
event any such taxes are assessed, irrespective of when such assessment is made
and whether or not any is then in use or available hereunder.




Section 13.5.  Survival
of Representations.  All representations and warranties made
herein or in any other Loan Document or in certificates given pursuant hereto or
thereto shall survive the execution and delivery of this Agreement and the other
Loan Documents, and shall continue in full force and effect with respect to the
date as of which they were made as long as any credit is in use or available
hereunder.






74




Section 13.6.  Survival
of Indemnities.  All indemnities and other provisions relative
to reimbursement to the Lenders and L/C Issuer of amounts sufficient to
protect the yield of the Lenders and L/C Issuer with respect to the Loans
and Letters of Credit, including, but not limited to, Sections 1.12, 10.3,
and 13.15 hereof, shall survive the termination of this Agreement and the other
Loan Documents and the payment of the Obligations.




Section 13.7.  Sharing
of Set-Off.  Each Lender agrees with each other Lender a party
hereto that if such Lender shall receive and retain any payment, whether by
set-off or application of deposit balances or otherwise, on any of the Loans or
Reimbursement Obligations in excess of its ratable share of payments on all such
Obligations then outstanding to the Lenders, then such Lender shall purchase for
cash at face value, but without recourse, ratably from each of the other Lenders
such amount of the Loans or Reimbursement Obligations, or participations
therein, held by each such other Lenders (or interest therein) as shall be
necessary to cause such Lender to share such excess payment ratably with all the
other Lenders; provided,
however, that if any such purchase is made by any Lender, and if such
excess payment or part thereof is thereafter recovered from such purchasing
Lender, the related purchases from the other Lenders shall be rescinded ratably
and the purchase price restored as to the portion of such excess payment so
recovered, but without interest.  For purposes of this Section,
amounts owed to or recovered by the L/C Issuer in connection with Reimbursement
Obligations in which Lenders have been required to fund their participation
shall be treated as amounts owed to or recovered by the L/C Issuer as a Lender
hereunder.




Section 13.8.  Notices.  Except
as otherwise specified herein, all notices hereunder and under the other Loan
Documents shall be in writing (including, without limitation, notice by
telecopy) and shall be given to the relevant party at its address or telecopier
number set forth below, or such other address or telecopier number as such party
may hereafter specify by notice to the Administrative Agent and the Borrowers
given by courier, by United States certified or registered mail, by telecopy or
by other telecommunication device capable of creating a written record of such
notice and its receipt.  Notices under the Loan Documents to any
Lender shall be addressed to its address or telecopier number set forth on its
Administrative Questionnaire; and notices under the Loans Documents to the
Borrowers, any Guarantor, the Administrative Agent or L/C Issuer shall be
addressed to its respective address or telecopier number set forth
below:




to
      any Borrower or any Guarantor:
              
              RC2
      Corporation
              1111
      West 22nd Street, Suite 320
              Oak
      Brook, Illinois  60523
              Attention:   
       Curt Stoelting
              Telephone:  
      (630) 573-7200,
              ext.
      7326
              Telecopy:     
      (630) 573-7578
            to
      the Administrative Agent and L/C Issuer :
              Bank
      of Montreal
              115
      South LaSalle Street
              Chicago,
      Illinois  60603
              Attention:      
      Mr. Paul R. Feaser III
              Telephone:     
      (312) 461-4170
              Telecopy:  
      (312)
    765-1624








75





with a
copy to:




James M.
Bedore, Esq.


Reinhart
Boerner Van Deuren, S.C.


1000
North Water Street


Milwaukee,
Wisconsin  53202


Telephone:   (414)
298-8196


Facsimile:   (414)
298-8097




Each such
notice, request or other communication shall be effective (i) if given by
telecopier, when such telecopy is transmitted to the telecopier number specified
in this Section or in the relevant Administrative Questionnaire and a
confirmation of such telecopy has been received by the sender, (ii) if
given by mail, 5 days after such communication is deposited in the mail,
certified or registered with return receipt requested, addressed as aforesaid or
(iii) if given by any other means, when delivered at the addresses
specified in this Section or in the relevant Administrative Questionnaire; providedthatany notice given
pursuant to Section 1 hereof shall be effective only upon
receipt.




Section 13.9.  Counterparts.  This
Agreement may be executed in any number of counterparts, and by the different
parties hereto on separate counterpart signature pages, and all such
counterparts taken together shall be deemed to constitute one and the same
instrument.




Section 13.10.  Successors
and Assigns.  This Agreement shall be binding upon the
Borrowers and the Guarantors and their successors and assigns, and shall inure
to the benefit of the Administrative Agent, the L/C Issuer, and each of the
Lenders, and the benefit of their respective successors and assigns, including
any subsequent holder of any of the Obligations.  The Borrowers and
the Guarantors may not assign any of their rights or obligations under any Loan
Document without the written consent of all of the Lenders and, with respect to
any Letter of Credit or the Application therefor, the
L/C Issuer.




Section 13.11.  Participants.  Each
Lender shall have the right at its own cost to grant participations (to be
evidenced by one or more agreements or certificates of participation) in the
Loans made and Reimbursement Obligations and/or Commitment held by such Lender
at any time and from time to time to one or more other Persons; provided that no
such participation shall relieve any Lender of any of its obligations under this
Agreement, and, provided, further that no such participant shall have any rights
under this Agreement except as provided in this Section, and the Administrative
Agent shall have no obligation or responsibility to such
participant.  Any agreement pursuant to which such
participation  is granted shall provide that the granting Lender shall
retain the sole right and responsibility to enforce the obligations of the
Borrowers under this Agreement and the other Loan Documents including, without
limitation, the right to approve any amendment, modification or waiver of any
provision of the Loan Documents, except that such agreement may provide that
such Lender will not agree to any modification, amendment or waiver of the Loan
Documents that would reduce the amount of or postpone any fixed date for payment
of any Obligation in which such participant has an interest.  Any
party to which such a participation has been granted shall have the benefits of
Section 1.12 and Section 10.3 hereof.  The Borrowers
authorize each Lender to disclose to any participant or prospective participant
under this Section any financial or other information pertaining to any Borrower
or any Subsidiary.






76




Section 13.12.  Assignments.  (a) Any
Lender may at any time assign to one or more Eligible Assignees all or a portion
of such Lender’s rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans at the time owing to it); provided that
any such assignment shall be subject to the following conditions:




(i)  Minimum
Amounts.  (A) In the case of an assignment of the entire
remaining amount of the assigning Lender’s Commitment and the Loans and
participation interest in L/C Obligations at the time owing to it or in the case
of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no
minimum amount need be assigned; and (B) in any case not described in subsection
(a)(i)(A) of this Section, the aggregate amount of the Commitment (which for
this purpose includes Loans and participation interest in L/C Obligations
outstanding thereunder) or, if the applicable Commitment is not then in effect,
the principal outstanding balance of the Loans and participation interest in L/C
Obligations of the assigning Lender subject to each such assignment (determined
as of the date the Assignment and Acceptance with respect to such assignment is
delivered to the Administrative Agent or, if “Effective Date” is specified in
the Assignment and Acceptance, as of the Effective Date) shall not be less than
$5,000,000, in the case of any assignment in respect of the Revolving Credit, or
$5,000,000, in the case of any assignment in respect of any Term Loan, unless
each of the Administrative Agent and, so long as no Event of Default has
occurred and is continuing, the Borrowers otherwise consent (each such consent
not to be unreasonably withheld or delayed);




(ii)  Proportionate
Amounts.  Each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender’s rights and
obligations under this Agreement with respect to the Loan or the Commitment
assigned, except that this clause (ii) shall not prohibit any Lender from
assigning all or a portion of its rights and obligations among separate Credits
on a non-pro rata
basis.




(iii)  Required
Consents.  No consent shall be required for any assignment
except to the extent required by Section 13.12(a)(i)(B) and, in
addition:




(a)  the
consent of the Borrowers (such consent not to be unreasonably withheld or
delayed) shall be required unless (x) an Event of Defaulthas occurred and is
continuing at the time of such assignment or (y) such assignment is to a Lender,
an Affiliate of a Lender or an Approved Fund;




(b)  the
consent of the Administrative Agent (such consent not to be unreasonably
withheld or delayed) shall be required for assignments in respect of
(i) the Revolving Credit if such assignment is to a Person that is not a
Lender with a Commitment in respect of such facility, an Affiliate of such
Lender or an Approved Fund with respect to such Lender or (ii) the Term
Loans to a Person who is not a Lender, an Affiliate of a Lender or an Approved
Fund;






77




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




(d)  the
consent of the Swing Line Lender (such consent not to be unreasonably withheld
or delayed) shall be required for any assignment that increases the obligation
of the assignee to participate in exposure under one or more Swing Loans
(whether or not then outstanding).




(iv)  Assignment and
Acceptance.  The parties to each assignment shall execute and
deliver to the Administrative Agent an Assignment and Acceptance, together with
a processing and recordation fee of $3,500, and the assignee, if it is not a
Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire.




(v)  No Assignment to any
Borrower.  No such assignment shall be made to any Borrower or
any of its Affiliates or Subsidiaries.




(vi)  No Assignment to Natural
Persons.  No such assignment shall be made to a natural
person.




Subject
to acceptance and recording thereof by the Administrative Agent pursuant to
Section 13.12(b) hereof, from and after the effective date specified in
each Assignment and Acceptance, the assignee thereunder shall be a party to this
Agreement and, to the extent of the interest assigned by such Assignment and
Acceptance, have the rights and obligations of a Lender under this Agreement,
and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Acceptance, be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance covering
all of the assigning Lender’s rights and obligations under this Agreement, such
Lender shall cease to be a party hereto) but shall continue to be entitled to
the benefits of Sections 13.6 and 13.15 with respect to facts and
circumstances occurring prior to the effective date of such
assignment.  Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this Section shall be
treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with Section 13.11
hereof.




(b)  Register.  The
Administrative Agent, acting solely for this purpose as an agent of the
Borrowers, shall maintain at one of its offices in Chicago, Illinois, a copy of
each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitments of,
and principal amounts of the Loans owing to, each Lender pursuant to the terms
hereof from time to time (the “Register”).  The
entries in the Register shall be conclusive, and the Borrowers, the
Administrative Agent, and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement, notwithstanding notice to the
contrary.  The Register shall be available for inspection by any
Borrower and any Lender, at any reasonable time and from time to time upon
reasonable prior notice.






78




(c)  Any Lender may at any
time pledge or grant a security interest in all or any portion of its rights
under this Agreement to secure obligations of such Lender, including any such
pledge or grant to a Federal Reserve Bank, and this Section shall not apply to
any such pledge or grant of a security interest; provided that no such pledge
or grant of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or secured party for such
Lender as a party hereto; provided further, however,
the right of any such pledgee or grantee (other than any Federal Reserve Bank)
to further transfer all or any portion of the rights pledged or granted to it,
whether by means of foreclosure or otherwise, shall be at all times subject to
the terms of this Agreement.




(d)  Notwithstanding
anything to the contrary herein, if at any time the Swing Line Lender assigns
all of its Revolving Credit Commitments and Revolving Loans pursuant to
subsection (a) above, the Swing Line Lender may terminate the Swing
Line.  In the event of such termination of the Swing Line, the
Borrowers shall be entitled to appoint another Lender to act as the successor
Swing Line Lender hereunder (with such Lender’s consent); provided, however, that the
failure of the Company to appoint a successor shall not affect the resignation
of the Swing Line Lender.  If the Swing Line Lender terminates the
Swing Line, it shall retain all of the rights of the Swing Line Lender provided
hereunder with respect to Swing Loans made by it and outstanding as of the
effective date of such termination, including the right to require Lenders to
make Revolving Loans or fund participations in outstanding Swing Loans pursuant
to Section 1.16 hereof.




Section 13.13.  Amendments.  Any
provision of this Agreement or the other Loan Documents may be amended or waived
if, but only if, such amendment or waiver is in writing and is signed by (a) the
Borrowers, (b) the Required Lenders, and (c) if the rights or duties of the
Administrative Agent, the L/C Issuer, or the Swing Line Lender are affected
thereby, the Administrative Agent, the L/C Issuer, or the Swing Line
Lender, as applicable; provided that:




(i)  no
amendment or waiver pursuant to this Section 13.13 shall (A) increase
any Commitment of any Lender without the consent of such Lender, (B) reduce
the amount of or postpone the date for any scheduled payment of any principal of
or interest on any Loan or of any Reimbursement Obligation or of any fee payable
hereunder or of any indemnity or other provision relative to reimbursement to
the Lenders of amounts sufficient to protect the yield of the Lenders with
respect to Loans and Letters of Credit (including, but not limited to
Sections 1.12, 10.3 and 13.5 hereof), in each case, without the consent of
the Lender to which such payment is owing or which has committed to make such
Loan or Letter of Credit (or participate therein) hereunder, (C) amend,
modify or waive the application of proceeds set forth in Section 3.1
without the consent of each Lender affected thereby, or (D) amend or
modify, the pro rata application of prepayments set forth in Section 1.9
without the consent of each Lender affected thereby;




(ii)  no
amendment or waiver pursuant to this Section 13.13 shall, unless signed by
each Lender, extend the Revolving Credit Termination Date, change the definition
of Required Lenders, increase the amount of Total Consideration set forth in
clause (a) of the defined term Permitted Acquisition, increase the
limitations set forth in Section 8.12(iv), increase the amount of the
Clean-Down set forth in Section 8.21(iv), amend Section 13.11 or
Section 13.12 to impose additional restrictions or requirements, change the
provisions of this Section 13.13, release all or substantially all of the
Guarantorsor all
or substantial all of the Collateral (except as otherwise provided for in the
Loan Documents), or affect the number of Lenders required to take any action
hereunder or under any other Loan Document; and






79




(iii)  no
amendment to Section 12 hereof shall be made without the consent of the
Borrowers or the Guarantors affected thereby.




Section 13.14.  Headings.
Section headings used in this Agreement are for reference only and shall not
affect the construction of this Agreement.




Section 13.15.  Costs
and Expenses; Indemnification.   (a) The Borrowers
jointly and severally agree to pay all costs and expenses of the Administrative
Agent in connection with the preparation, negotiation, syndication, and
administration of the Loan Documents, including, without limitation, the
reasonable fees and disbursements of counsel to the Administrative Agent, in
connection with the preparation and execution of the Loan Documents, and any
amendment, waiver or consent related thereto, whether or not the transactions
contemplated herein are consummated, together with any fees and charges suffered
or incurred by the Administrative Agent in connection with periodic
environmental audits, fixed asset appraisals, title insurance policies,
collateral filing fees and lien searches.  The Borrowers jointly and
severally agree to pay to the Administrative Agent, the L/C Issuer and each
Lender, and any other holder of any Obligations outstanding hereunder, all costs
and expenses reasonably incurred or paid by the Administrative Agent, the
L/C Issuer, such Lender, or any such holder, including reasonable
attorneys’ fees and disbursements and court costs, in connection with any
Default or Event of Default hereunder or in connection with the enforcement of
any of the Loan Documents (including all such costs and expenses incurred in
connection with any proceeding under the United States Bankruptcy Code involving
any Borrower or any Guarantor as a debtor thereunder).  The Borrowers
further jointly and severally agree to indemnify the Administrative Agent, the
L/C Issuer, each Lender, and any security trustee therefor, and their
respective directors, officers, employees, agents, financial advisors, and
consultants (each such Person being called an “Indemnitee”) against all losses,
claims, damages, penalties, judgments, liabilities and expenses (including,
without limitation, all reasonable fees and disbursements of counsel for any
such Indemnitee and all reasonable expenses of litigation or preparation
therefor, whether or not the Indemnitee is a party thereto, or any settlement
arrangement arising from or relating to any such litigation) which any of them
may pay or incur arising out of or relating to any Loan Document or any of the
transactions contemplated thereby or the direct or indirect application or
proposed application of the proceeds of any Loan or Letter of Credit, other than
those which arise from the gross negligence or willful misconduct of the party
claiming indemnification.  The Borrowers, upon demand by the
Administrative Agent, the L/C Issuer or a Lender at any time, shall
reimburse the Administrative Agent, the L/C Issuer or such Lender for any
reasonable legal or other expenses (including, without limitation, all
reasonable fees and disbursements of counsel for any such Indemnitee) incurred
in connection with investigating or defending against any of the foregoing
(including any settlement costs relating to the foregoing) except if the same is
directly due to the gross negligence or willful misconduct of the party to be
indemnified.  To the extent permitted by applicable law, no Borrower
nor any Guarantor shall assert, and each such Person hereby waives, any claim
against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement or the
other Loan Documents or any agreement or instrument contemplated hereby or
thereby, the transactions contemplated hereby or thereby, any Loan or Letter of
Credit or the use of the proceeds thereof.  The obligations of the
Borrowers under this Section shall survive the termination of this
Agreement.






80




(b)  Each
Borrower unconditionally agrees to forever indemnify, defend and hold harmless,
and covenants not to sue for any claim for contribution against, each Indemnitee
for any damages, costs, loss or expense, including without limitation, response,
remedial or removal costs and all fees and disbursements of counsel for any such
Indemnitee, arising out of any of the following:  (i) any presence,
release, threatened release or disposal of any hazardous or toxic substance or
petroleum by any Borrower or any Subsidiary or otherwise occurring on or with
respect to its Property (whether owned or leased), (ii) the operation or
violation of any Environmental Law by any Borrower or any Subsidiary or
otherwise occurring on or with respect to its Property (whether owned or
leased), (iii) any claim for personal injury or property damage in connection
with any Borrower or any Subsidiary or otherwise occurring on or with respect to
its Property (whether owned or leased), and (iv) the inaccuracy or breach of any
environmental representation, warranty or covenant by any Borrower or any
Subsidiary made herein or in any other Loan Document evidencing or securing any
Obligations or setting forth terms and conditions applicable thereto or
otherwise relating thereto, except for damages arising from the willful
misconduct or gross negligence of the relevant Indemnitee.  This
indemnification shall survive the payment and satisfaction of all Obligations
and the termination of this Agreement, and shall remain in force beyond the
expiration of any applicable statute of limitations and payment or satisfaction
in full of any single claim under this indemnification.  This
indemnification shall be binding upon the successors and assigns of the
Borrowers and shall inure to the benefit of each Indemnitee and its successors
and assigns.




Section 13.16.   Set-off.  In
addition to any rights now or hereafter granted under the Loan Documents or
applicable law and not by way of limitation of any such rights, upon the
occurrence of any Event of Default, each Lender, the L/C Issuer, each
subsequent holder of any Obligation, and each of their respective affiliates, is
hereby authorized by each Borrower and each Guarantor at any time or from time
to time, without notice to any Borrower, any Guarantor or to any other Person,
any such notice being hereby expressly waived, to set-off and to appropriate and
to apply any and all deposits (general or special, including, but not limited
to, indebtedness evidenced by certificates of deposit, whether matured or
unmatured, and in whatever currency denominated, but not including trust
accounts) and any other indebtedness at any time held or owing by that Lender,
L/C Issuer, subsequent holder, or affiliate, to or for the credit or the
account of such Borrower or such Guarantor, whether or not matured, against and
on account of the Obligations of such Borrower or such Guarantor to that Lender,
L/C Issuer, or subsequent holder under the Loan Documents, including, but
not limited to, all claims of any nature or description arising out of or
connected with the Loan Documents, irrespective of whether or not (a) that
Lender, L/C Issuer, or subsequent holder shall have made any demand
hereunder or (b) the principal of or the interest on the Loans and other
amounts due hereunder shall have become due and payable pursuant to
Section 9 and although said obligations and liabilities, or any of them,
may be contingent or unmatured.






81




Section 13.17.  Entire
Agreement.  The Loan Documents constitute the entire
understanding of the parties thereto with respect to the subject matter thereof
and any prior agreements, whether written or oral, with respect thereto are
superseded hereby.




Section 13.18.  Governing
Law.  This Agreement and the other Loan Documents, and the
rights and duties of the parties hereto, shall be construed and determined in
accordance with the internal laws of the State of Illinois; provided, however, that
nothing herein or in any other Loan Document shall prevent any Credit Party from
contesting or raising defenses to any confession of judgment obtained pursuant
to 735 ILCS 5/2-1301(c).




Section 13.19.  Severability
of Provisions.  Any provision of any Loan Document which is
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction.  All rights, remedies and powers provided
in this Agreement and the other Loan Documents may be exercised only to the
extent that the exercise thereof does not violate any applicable mandatory
provisions of law, and all the provisions of this Agreement and other Loan
Documents are intended to be subject to all applicable mandatory provisions of
law which may be controlling and to be limited to the extent necessary so that
they will not render this Agreement or the other Loan Documents invalid or
unenforceable.




Section 13.20.  Excess
Interest.  Notwithstanding any provision to the contrary
contained herein or in any other Loan Document, no such provision shall require
the payment or permit the collection of any amount of interest in excess of the
maximum amount of interest permitted by applicable law to be charged for the use
or detention, or the forbearance in the collection, of all or any portion of the
Loans or other obligations outstanding under this Agreement or any other Loan
Document (“Excess
Interest”).  If any Excess Interest is provided for, or is
adjudicated to be provided for, herein or in any other Loan Document, then in
such event (a) the provisions of this Section shall govern and control,
(b) neither any Borrower nor any Guarantor or endorser shall be obligated
to pay any Excess Interest, (c) any Excess Interest that the Administrative
Agent or any Lender may have received hereunder shall, at the option of the
Administrative Agent, be (i) applied as a credit against the then
outstanding principal amount of Obligations hereunder and accrued and unpaid
interest thereon (not to exceed the maximum amount permitted by applicable law),
(ii) refunded to the Company, on behalf of the Borrowers, or (iii) any
combination of the foregoing, (d) the interest rate payable hereunder or
under any other Loan Document shall be automatically subject to reduction to the
maximum lawful contract rate allowed under applicable usury laws (the “Maximum Rate”), and this
Agreement and the other Loan Documents shall be deemed to have been, and shall
be, reformed and modified to reflect such reduction in the relevant interest
rate, and (e) neither any Borrower nor any Guarantor or endorser shall have
any action against the Administrative Agent or any Lender for any damages
whatsoever arising out of the payment or collection of any Excess
Interest.  Notwithstanding the foregoing, if for any period of time
interest on any of Borrowers’ Obligations is calculated at the Maximum Rate
rather than the applicable rate under this Agreement, and thereafter such
applicable rate becomes less than the Maximum Rate, the rate of interest payable
on the Borrowers’ Obligations shall remain at the Maximum Rate until the Lenders
have received the amount of interest which such Lenders would have received
during such period on the Borrowers’ Obligations had the rate of interest not
been limited to the Maximum Rate during such period.






82




Section 13.21.  Construction.  The
parties acknowledge and agree that the Loan Documents shall not be construed
more favorably in favor of any party hereto based upon which party drafted the
same, it being acknowledged that all parties hereto contributed substantially to
the negotiation of the Loan Documents.  Nothing contained herein shall
be deemed or construed to permit any act or omission which is prohibited by the
terms of any Collateral Document, the covenants and agreements contained herein
being in addition to and not in substitution for the covenants and agreements
contained in the Collateral Documents.




Section 13.22.  Lender’s
and L/C Issuer’s Obligations Several; Lenders and their
Affiliates.  The obligations of the Lenders and L/C Issuer
hereunder are several and not joint.  Nothing contained in this
Agreement and no action taken by the Lenders or L/C Issuer pursuant hereto shall
be deemed to constitute the Lenders and L/C Issuer a partnership, association,
joint venture or other entity.  Each Lender, L/C Issuer and its
Affiliates may accept deposits from, lend money to, and generally engage in any
kind of business with any Borrower or any Affiliate of any Borrower as if it
were not a Lender hereunder; provided, however, that the
foregoing shall not be deemed to permit any Credit Party to do that which is
otherwise prohibited by the Loan Documents.




Section13.23.Intentionally Omitted.  Intentionally
Omitted.




Section 13.24.  Submission
to Jurisdiction; Waiver of Jury Trial.  The Borrowers and the
Guarantors hereby submit to the nonexclusive jurisdiction of the United States
District Court for the Northern District of Illinois and of any Illinois State
court sitting in the City of Chicago for purposes of all legal proceedings
arising out of or relating to this Agreement, the other Loan Documents or the
transactions contemplated hereby or thereby.  The Borrowers and the
Guarantors irrevocably waive, to the fullest extent permitted by law, any
objection which they may now or hereafter have to the laying of the venue of any
such proceeding brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an inconvenient
forum.  The
Borrowers, the Guarantors, the Administrative Agent, the L/C Issuer and the
Lenders hereby irrevocably waive any and all right to trial by jury in any legal
proceeding arising out of or relating to any Loan Document or the transactions
contemplated thereby.




Section 13.25.  USA
Patriot Act.Each
Lender and L/C Issuer that is subject to the requirements of the USA
Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001))
(the “Act”) hereby
notifies the Borrowers that pursuant to the requirements of the Act, it is
required to obtain, verify, and record information that identifies the
Borrowers, which information includes the name and address of the Borrowers and
other information that will allow such Lender or L/C Issuer to identify the
Borrowers in accordance with the Act.






83




Section
13.26.   Confidentiality.  Each of the
Administrative Agent, the Lenders, and the L/C Issuer severally agrees to
maintain the confidentiality of the Information (as defined below), except that
Information may be disclosed (a) to its and its Affiliates’ directors,
officers, employees and agents, including accountants, legal counsel and other
advisors to the extent any such Person has a need to know such Information (it
being understood that the Persons to whom such disclosure is made will first be
informed of the confidential nature of such Information and instructed to keep
such Information confidential), (b) to the extent requested by any
regulatory authority (including any self-regulatory authority, such as the
National Association of Insurance Commissioners), (c) to the extent
required by applicable laws or regulations or by any subpoena or similar legal
process, (d) to any other party hereto, (e) in connection with the
exercise of any remedies hereunder or under any other Loan Document or any suit,
action or proceeding relating to this Agreement or any other Loan Document or
the enforcement of rights hereunder or thereunder, (f) subject to an
agreement containing provisions substantially the same as those of this Section,
to (A) any assignee of or participant in, or any prospective assignee of or
participant in, any of its rights or obligations under this Agreement or
(B) any actual or prospective counterparty (or its advisors) to any swap or
derivative transaction relating to any Borrower or any Subsidiary and its
obligations, (g) with the prior written consent of the Company, on behalf
of the Borrowers, (h) to the extent such Information (A) becomes
publicly available other than as a result of a breach of this Section or
(B) becomes available to the Administrative Agent, any Lender or the
L/C Issuer on a non-confidential basis from a source other than any
Borrower or any Subsidiary or any of their directors, officers, employees or
agents, including accountants, legal counsel and other advisors, (i) to rating
agencies if requested or required by such agencies in connection with a rating
relating to the Loans or Commitments hereunder, or (j) to entities which compile
and publish information about the syndicated loan market, provided that only basic
information about the pricing and structure of the transaction evidenced hereby
may be disclosed pursuant to this subsection (j).For purposes of
this Section, “Information” means all
information received from any Borrower or any of the Subsidiaries or from any
other Person on behalf of any Borrower or any Subsidiary relating to any
Borrower or any Subsidiary or any of their respective businesses, other than any
such information that is available to the Administrative Agent, any Lender or
the L/C Issuer on a non-confidential basis prior to disclosure by any
Borrower or any of the Subsidiaries or from any other Person on behalf of any
Borrower or any of the Subsidiaries.




[Signature
Pages to Follow]





84










This
Agreement is entered into between us for the uses and purposes hereinabove set
forth as of the date first above written.




“Borrowers”




RC2
Corporation


Learning
Curve Brands, Inc.


Learning
Curve Canada Limited


RC2
(Australia) Pty., Ltd.


RC2
Deutschland GmbH


R acing
Champions International Limited


Racing
Champions Worldwide Limited




By
      /s/  Curt
      Stoelting


Name  Curt
      Stoelting


Title    CEO





RC2
      (ASIA) LIMITED





By
      /s/  Lo
      Siu Fen
      Helena


Name  Lo
      Siu Fen Helena


Title    Director







“Guarantors”




RCE
Holdings, LLC


Learning
Curve International, Inc.


Learningcurveshop.com,
Inc.


Learning
Curve Canada Holdco, Inc.




By
      /s/  Curt
      Stoelting


Name  Curt
      Stoelting


Title    CEO





S-1







“Lenders”




Bank of Montreal,
      in its individual capacity as an L/C Issuer and as Administrative
      Agent




By
      /s/  Paul
      R. Feaser
      III


Name  Paul
      R. Feaser III


Title    Vice
      President




Harris N.A., as
      an L/C Issuer




By
      /s/  Paul
      R. Feaser
      III


Name  Paul
      R. Feaser III


Title    Vice
      President








S-2





BMO Capital Markets
      Financing, Inc.,as a Lender and Swing Line
  Lender




By
      /s/  Paul
      R. Feaser
      III


Name  Paul  R.
      Feaser III


Title    Vice
      President








S-3







National City
      Bank, as a Lender




By
      /s/  Stephanie
      Kline


Name  Stephanie
      Kline


Title    Senior
      Vice President





S-4







U.S. Bank National
      Association, as a Lender




By
      /s/  Barry
      Litwin


Name  Barry
      Litwin


Title    Senior
      Vice President





S-5







Fifth Third Bank
      (Chicago), a
              MICHIGAN BANKING
      CORPORATION, as a Lender




By
      /s/  Kim
      Puszczewicz


Name  Kim
      Puszczewicz


Title    Vice
      President





S-6







The Northern Trust
      Company, as a Lender




By
      /s/  Jeffrey
      Clark


Name  Jeffrey
      Clark


Title    Senior
      Vice President





S-7







The Private Bank and
      Trust Company, as a Lender




By
      /s/  Michael
      F.
      Perry


Name  Michael
      F. Perry


Title    Associate
      Managing Director





S-8





EXHIBIT A





NOTICE
OF PAYMENT REQUEST




[Date]




[Name of
Lender]


[Address]




Attention:




Reference
is made to the Credit Agreement, dated as of November 3, 2008, among
RC2 Corporation, Learning Curve Brands, Inc., Learning Curve Canada
Limited, RC2 (Asia) Limited, RC2 (Australia) Pty., Ltd., RC2 Deutschland GmbH,
Racing Champions International Limited, Racing Champions Worldwide Limited, the
Guarantors party thereto, the Lenders party thereto, and Bank of Montreal, as
Administrative Agent (the “Credit
Agreement”).  Capitalized terms used herein and not defined
herein have the meanings assigned to them in the Credit
Agreement.  [________________, as Borrower, has
failed to pay its Reimbursement Obligation in the amount of
$______________.  Your Revolver Percentage of the unpaid Reimbursement
Obligation is $______________]or[__________________________ has been
required to return a payment by ________________, as Borrower of a Reimbursement
Obligation in the amount of $______________.  Your Revolver Percentage
of the returned Reimbursement Obligation is
$______________.]







Very
truly yours,





BANK OF
MONTREAL, as L/C Issuer








By____________________________________






















EXHIBIT B





NOTICE
OF BORROWING




Date:
___________, _____




To:
            Bank
      of Montreal, as Administrative Agent for the Lenders parties to the Credit
      Agreement dated as of November 3, 2008 (as extended, renewed, amended
      or restated from time to time, the “Credit Agreement”),
      among RC2 Corporation, Learning Curve Brands, Inc., Learning Curve Canada
      Limited, RC2 (Asia) Limited, RC2 (Australia) Pty., Ltd., RC2 Deutschland
      GmbH, Racing Champions International Limited, Racing Champions Worldwide
      Limited, the Guarantors party thereto, the Lenders party thereto, and Bank
      of Montreal, as Administrative
Agent




Ladies
and Gentlemen:




The
undersigned, RC2 Corporation, refers to the Credit Agreement, the terms defined
therein being used herein as therein defined, and hereby gives you notice
irrevocably, pursuant to Section 1.6 of the Credit Agreement, of the
Borrowing specified below:




1.  The Business Day of the
proposed Borrowing is ___________, ____.




2.  The aggregate amount of the
proposed Borrowing is $______________.




3.  The applicable Borrower shall be
_______________________________.




4.  The Borrowing is being
advanced under the [Revolving]
[Term]Credit.




5.  The Borrowing is to be comprised of
$___________ of [Base Rate]
[Eurocurrency] Loans.




[6.The duration of the Interest Period for
the Eurocurrency Loans included in the Borrowing shall be _________________
months.]




The
undersigned hereby certifies that the following statements are true on the date
hereof, and will be true on the date of the proposed Borrowing, before and after
giving effect thereto and to the application of the proceeds
therefrom:





(a)  the
representations and warranties contained in Section 6 of the Credit
Agreement are true and correct as though made on and as of such date (except to
the extent such representations and warranties relate to an earlier date, in
which case they are true and correct as of such date); and


(b)  no
Default or Event of Default has occurred and is continuing or would result from
such proposed Borrowing.





RC2
CORPORATION





By_____________________________________


Name________________________________


Title
_________________________________











EXHIBIT C





NOTICE
OF CONTINUATION/CONVERSION




Date:  ____________,
____




To:
            Bank
      of Montreal, as Administrative Agent for the Lenders parties to the Credit
      Agreement dated as of November 3, 2008 (as extended, renewed, amended
      or restated from time to time, the “Credit Agreement”)
      among RC2 Corporation, Learning Curve Brands, Inc., Learning Curve Canada
      Limited, RC2 (Asia) Limited, RC2 (Australia) Pty., Ltd., RC2 Deutschland
      GmbH, Racing Champions International Limited, Racing Champions Worldwide
      Limited, the Guarantors party thereto, the Lenders party thereto, and Bank
      of Montreal, as Administrative
Agent




Ladies
and Gentlemen:




The
undersigned, RC2 Corporation, refers to the Credit Agreement, the terms defined
therein being used herein as therein defined, and hereby gives you notice
irrevocably, pursuant to Section 1.6 of the Credit Agreement, of the [conversion] [continuation] of
the Loans specified herein, that:




1.  The applicable Borrower is
___________________.




2.  The conversion/continuation
Date is __________, ____.




3.  The aggregate amount of the [Revolving] [Term]Loans to be
[converted] [continued]
is $______________.




4.  The Loans are to be [converted into] [continued as] [Base
Rate] [Eurocurrency Loans].




5.  [If
applicable:]  The duration of the Interest Period for the [Revolving] [Term]Loans
included in the [conversion]
[continuation] shall be _________ months.




The
undersigned hereby certifies that the following statements are true on the date
hereof, and will be true on the proposed conversion/continuation date, before
and after giving effect thereto and to the application of the proceeds
therefrom:




(a)  the
representations and warranties contained in Section 6 of the Credit
Agreement are true and correct as though made on and as of such date (except to
the extent such representations and warranties relate to an earlier date, in
which case they are true and correct as of such date); provided, however, that this
condition shall not apply to the conversion of an outstanding Eurocurrency Loan
to a Base Rate Loan; and
















(b)  no
Default or Event of Default has occurred and is continuing, or would result from
such proposed [conversion]
[continuation].





RC2
CORPORATION





By_____________________________________


Name________________________________


Title
_________________________________











2





EXHIBIT D-1





TERM
NOTE




U.S.
$________________November 3,
2008




For Value Received, the
undersigned, RC2 Corporation, a Delaware corporation (the “Company”), Learning Curve
Brands, Inc., a Delaware corporation (“LCBI”), Learning Curve
Canada Limited, a corporation incorporated under the laws of Ontario, Canada
(“LCCL”), RC2 (Asia)
Limited, a company incorporated in Hong Kong (“RC2 Asia”), RC2 (Australia)
Pty., Ltd., a proprietary company duly incorporated in Victoria, Australia
(“RC2 Australia”), RC2
Deutschland GmbH, a private company duly incorporated and registered under the
laws of Germany (“RC2
Germany”), Racing Champions International Limited, a corporation
organized under the laws of England and Wales  (“RC2 UK”), Racing Champions
Worldwide Limited, a corporation organized under the laws of England and
Wales  (“Racing
Champions”; and together with the Company, LCBI, LCCL, RC2 Asia, RC2
Australia, RC2 Germany and RC2 UK collectively, the “Borrowers” and individually,
a “Borrower”), hereby
jointly and severally promise to pay to the order of
____________________________________ (the “Lender”) at the principal
office of Bank of Montreal, as Administrative Agent, in Chicago, Illinois, in
immediately available funds, the aggregate unpaid principal amount of all Term
Loans made or maintained by the Lender to the Borrowers pursuant to the Credit
Agreement, in installments in the amounts called for by Section 1.8(a) of
the Credit Agreement, together with interest on the principal amount of such
Term Loan from time to time outstanding hereunder at the rates, and payable in
the manner and on the dates, specified in the Credit
Agreement.




This Note
is one of the Term Notes referred to in the Credit Agreement dated as of
November 3, 2008, among the Borrowers, Bank of Montreal, as Administrative
Agent and the Lenders party thereto (as extended, renewed, amended or restated
from time to time, the “Credit
Agreement”), and this Note and the holder hereof are entitled to all the
benefits and security provided for thereby or referred to therein, to which
Credit Agreement reference is hereby made for a statement
thereof.  All defined terms used in this Note, except terms otherwise
defined herein, shall have the same meaning as in the Credit Agreement.




This Note
shall be governed by and construed in accordance with the internal laws of the
State of Illinois; provided,
however, that nothing herein or in any other Loan Document shall prevent
any Credit Party from contesting or raising defenses to any confession of
judgment obtained pursuant to 735 ILCS 5/2-1301(c).




Voluntary
prepayments may be made hereon, certain prepayments are required to be made
hereon, and this Note may be declared due prior to the expressed maturity
hereof, all in the events, on the terms and in the manner as provided for in the
Credit Agreement.











Each
Borrower hereby waives demand, presentment, protest or notice of any kind
hereunder.




RC2
CORPORATION


LEARNING
CURVE BRANDS, INC.


LEARNING
CURVE CANADA LIMITED


RC2
(ASIA) LIMITED


RC2
(AUSTRALIA) PTY, LTD.


RC2
DEUTSCHLAND GMBH


RACING
CHAMPIONS WORLDWIDE LIMITED


RACING
CHAMPIONS INTERNATIONAL LIMITED








By___________________________________


Name______________________________


Title
_______________________________








D-1-2





EXHIBIT D-2





REVOLVING
NOTE




November 3,
2008




For Value Received, the
undersigned, RC2 Corporation, a Delaware corporation (the “Company”), Learning Curve
Brands, Inc., a Delaware corporation (“LCBI”), Learning Curve
Canada Limited, a corporation incorporated under the laws of Ontario, Canada
(“LCCL”), RC2 (Asia)
Limited, a company incorporated in Hong Kong (“RC2 Asia”), RC2 (Australia)
Pty., Ltd., a proprietary company duly incorporated in Victoria, Australia
(“RC2 Australia”), RC2
Deutschland GmbH, a private company duly incorporated and registered under the
laws of Germany (“RC2
Germany”), Racing Champions International Limited, a corporation
organized under the laws of England and Wales  (“RC2 UK”), Racing Champions
Worldwide Limited, a corporation organized under the laws of England and
Wales  (“Racing
Champions”; and together with the Company, LCBI, LCCL, RC2 Asia, RC2
Australia, RC2 Germany and RC2 UK collectively, the “Borrowers” and individually,
a “Borrower”), hereby
jointly and severally promise to pay to the order of
_______________________________________ (the “Lender”) on the Revolving
Credit Termination Date of the hereinafter defined Credit Agreement, at the
principal office of Bank of Montreal, as Administrative Agent, in Chicago,
Illinois in U.S. Dollars in accordance with Section 3.1 of the Credit
Agreement, the aggregate unpaid principal amount of all Revolving Loans made by
the Lender to the Borrower pursuant to the Credit Agreement, together with
interest on the principal amount of each Revolving Loan from time to time
outstanding hereunder at the rates, and payable in the manner and on the dates,
specified in the Credit Agreement.




This Note
is one of the Notes referred to in the Credit Agreement dated as of
November 3, 2008, among the Borrowers, certain Guarantors party thereto,
Bank of Montreal, as Administrative Agent, and the Lenders party thereto (as
extended, renewed, amended or restated from time to time, the “Credit Agreement”), and this
Note and the holder hereof are entitled to all the benefits and security
provided for thereby or referred to therein, to which Credit Agreement reference
is hereby made for a statement thereof.  All defined terms used in
this Note, except terms otherwise defined herein, shall have the same meaning as
in the Credit Agreement.




This Note
shall be governed by and construed in accordance with the internal laws of the
State of Illinois; provided,
however, that nothing herein or in any other Loan Document shall prevent
any Credit Party from contesting or raising defenses to any confession of
judgment obtained pursuant to 735 ILCS 5/2-1301(c).




Voluntary
prepayments may be made hereon, certain prepayments are required to be made
hereon, and this Note may be declared due prior to the expressed maturity
hereof, all in the events, on the terms and in the manner as provided for in the
Credit Agreement.











Each
Borrower hereby waives demand, presentment, protest or notice of any kind
hereunder.




RC2
CORPORATION


LEARNING
CURVE BRANDS, INC.


LEARNING
CURVE CANADA LIMITED


RC2
(ASIA) LIMITED


RC2
(AUSTRALIA) PTY, LTD.


RC2
DEUTSCHLAND GMBH


RACING
CHAMPIONS WORLDWIDE LIMITED


RACING
CHAMPIONS INTERNATIONAL LIMITED





By_________________________________


Name____________________________


Title
_____________________________











D-2-2





EXHIBIT D-3





SWING
NOTE




November 3,
2008




For Value Received, RC2
Corporation, a Delaware corporation (the “Company”), Learning Curve
Brands, Inc., a Delaware corporation (“LCBI”), Learning Curve
Canada Limited, a corporation incorporated under the laws of Ontario, Canada
(“LCCL”), RC2 (Asia)
Limited, a company incorporated in Hong Kong (“RC2 Asia”), RC2 (Australia)
Pty., Ltd., a proprietary company duly incorporated in Victoria, Australia
(“RC2 Australia”), RC2
Deutschland GmbH, a private company duly incorporated and registered under the
laws of Germany (“RC2
Germany”), Racing Champions International Limited, a corporation
organized under the laws of England and Wales  (“RC2 UK”), Racing Champions
Worldwide Limited, a corporation organized under the laws of England and
Wales  (“Racing
Champions”; and together with the Company, LCBI, LCCL, RC2 Asia, RC2
Australia, RC2 Germany and RC2 UK collectively, the “Borrowers” and individually,
a “Borrower”), hereby
jointly and severally promise to pay to the order of BMO Capital Markets
Financing, Inc. (the “Lender”) on the Revolving
Credit Termination Date of the hereinafter defined Credit Agreement, at the
principal office of Bank of Montreal, as Administrative Agent, in Chicago,
Illinois, in immediately available funds, the aggregate unpaid principal amount
of all Swing Loans made by the Lender to the Borrowers, or any of them, pursuant
to the Credit Agreement, together with interest on the principal amount of each
Swing Loan from time to time outstanding hereunder at the rates, and payable in
the manner and on the dates, specified in the Credit Agreement.




This Note
is the Swing Note referred to in the Credit Agreement dated as of
November 3, 2008, among the Borrowers, the Guarantors party thereto, the
Lenders party thereto, and Bank of Montreal, as Administrative Agent for the
Lenders (as extended, renewed, amended or restated from time to time, the “Credit Agreement”), and this
Note and the holder hereof are entitled to all the benefits and security
provided for thereby or referred to therein, to which Credit Agreement reference
is hereby made for a statement thereof.  All defined terms used in
this Note, except terms otherwise defined herein, shall have the same meaning as
in the Credit Agreement.




This Note
shall be governed by and construed in accordance with the internal laws of the
State of Illinois; provided,
however, that nothing herein or in any other Loan Document shall prevent
any Credit Party from contesting or raising defenses to any confession of
judgment obtained pursuant to 735 ILCS 5/2-1301(c).




Voluntary
prepayments may be made hereon, certain prepayments are required to be made
hereon, and this Note may be declared due prior to the expressed maturity
hereof, all in the events, on the terms and in the manner as provided for in the
Credit Agreement.











Each
Borrower hereby waives demand, presentment, protest or notice of any kind
hereunder.




RC2
CORPORATION


LEARNING
CURVE BRANDS, INC.


LEARNING
CURVE CANADA LIMITED


RC2
(ASIA) LIMITED


RC2
(AUSTRALIA) PTY, LTD.


RC2
DEUTSCHLAND GMBH


RACING
CHAMPIONS WORLDWIDE LIMITED


RACING
CHAMPIONS INTERNATIONAL LIMITED





By_________________________________


Name____________________________


Title
_____________________________











D-3-2





EXHIBIT E





RACING
CHAMPIONS





COMPLIANCE
CERTIFICATE




To:
            Bank
      of Montreal, as Administrative
              Agent
      under, and the Lenders party to,
              the
      Credit Agreement described below




This
Compliance Certificate is furnished to the Administrative Agent and the Lenders
pursuant to that certain Credit Agreement dated as of November 3, 2008,
among RC2 Corporation, Learning Curve Brands, Inc., Learning Curve Canada
Limited, RC2 (Asia) Limited, RC2 (Australia) Pty., Ltd., RC2 Deutschland GmbH,
Racing Champions Worldwide Limited, Racing Champions International Limited, the
Guarantors party thereto, the Lenders party thereto, and Bank of Montreal, as
Administrative Agent (as extended, renewed, amended or restated from time to
time, the “Credit
Agreement”).  Unless otherwise defined herein, the terms used
in this Compliance Certificate have the meanings ascribed thereto in the Credit
Agreement.




The
Undersigned hereby certifies that:




1.  I
am the duly elected _______________________ of RC2 Corporation;




2.  have
reviewed the terms of the Credit Agreement and I have made, or have caused to be
made under my supervision, a detailed review of the transactions and conditions
of the Borrowers and their Subsidiaries during the accounting period covered by
the attached financial statements;




3.  The examinations described
in paragraph 2 did not disclose, and I have no knowledge of, the existence
of any condition or the occurrence of any event which constitutes a Default or
Event of Default during or at the end of the accounting period covered by the
attached financial statements or as of the date of this Compliance Certificate,
except as set forth below;




4.  The financial statements
required by Section 8.5 of the Credit Agreement and being furnished to you
concurrently with this Compliance Certificate are true, correct and complete as
of the date and for the periods covered thereby; and




5.  The Schedules I and II
hereto sets forth financial data and other computations evidencing the
Borrowers’ compliance with certain covenants of the Credit Agreement, all of
which data and computations are, to the best of my knowledge, true, complete and
correct and have been made in accordance with the relevant Sections of the
Credit Agreement.














Described
below are the exceptions, if any, to paragraph 3 by listing, in detail, the
nature of the condition or event, the period during which it has existed and the
action which the Borrowers have taken, are taking, or propose to take with
respect to each such condition or event:


____________________________________________________________


____________________________________________________________


____________________________________________________________


____________________________________________________________




The
foregoing certifications, together with the computations set forth in
Schedule I hereto and the financial statements delivered with this
Certificate in support hereof, are made and delivered this 3rd day of November,
2008.








RC2
CORPORATION





By_____________________________________


Name________________________________


Title
_________________________________














E-2





SCHEDULE
I


TO
COMPLIANCE CERTIFICATE





_________________________________________________





COMPLIANCE
CALCULATIONS


FOR
CREDIT AGREEMENT DATED AS OF NOVEMBER 3, 2008




Calculations
as of _____________, 2008









A.
            Total
      Funded Debt (Section 8.21(a))1.
            Total
      Funded Debt of the Company and its Subsidiaries
            $___________2.
            Net
      Income of the Company and its Subsidiaries for past 4
    quarters
            ___________3.
            Interest
      Expense of the Company and its Subsidiaries for past 4
      quarters
            ___________4.
            Income
      taxes of the Company and its Subsidiaries for past 4
    quarters
            ___________5.
            Depreciation
      and amortization expense of the Company and its Subsidiaries for past 4
      quarters
            ___________6.
            Non-Cash
      expenses related to equity awards of the Company and its Subsidiaries for
      past 4 quarters7.
            Sum
      of Lines A2, A3, A4, A5 and A6 (the Company’s “EBITDA”)
            ___________8.
            EBITDA
      of any Person (and is subsidiaries) acquired pursuant to
      Section 8.9(i) hereof for such period
            ___________9.
            Authorized
      adjustments associated with Permitted Acquisitions during such
      period
            ___________10.
            Non-recurring
      costs and extraordinary expenses incurred in connection with the recall of
      specific components from the Thomas and Friends product line not to exceed
      $28,300,000
            ___________11.
            Other
      fees, costs and expenses incurred (net of rebates and other
      reimbursements), related to the recall of specific components from the
      Thomas and Friends product line not to exceed $5,000,000 during the fiscal
      year ended December 31, 2008
            ___________   
  12.
            Non-recurring
      costs in connection with the settlement of claims with HIT Entertainment
      in an aggregate amount not to exceed $15,000,000
            ___________13.
            Losses
      on the sale, transfer or disposition of Property of the Company and its
      Subsidiaries during the past 4 fiscal quarters
            ___________14.
            Non-recurring
      costs in connection with the termination of Publications acquisition not
      to exceed $2,000,000 in the aggregate
            ___________15.
            Non-cash
      charges related to the write-down of the Company’s investment in Meteor
      the Monster Truck, Inc. not to exceed $2,100,000 in the
      aggregate
            ___________16.
            Sum
      of Lines A8, A9, A10, A11, A12, A13, A14 and A15 (“Adjusted
      EBITDA”)
            ___________17.
            Gains
      on the Sale or transfer of Property of the Company and its Subsidiaries
      during the past 4 quarters
            ___________18.
            EBITDA
      of any Person and its subsidiaries sold, transferred or otherwise disposed
      of during such period
            ___________19.
            Sum
      of lines A17 and A18
            ___________20.
            Line
      A16 minus A19 (“Adjusted EBITDA”)
            ___________21.
            Ratio
      of Line A1 to Line A20
            ____
      : 1.022.
            Line
      A21 ratio must not exceed
            2.50
      : 1.023.
            The
      Company is in compliance (circle yes or no)
            yes/noB.
            Fixed Charge Coverage
      Ratio (Section 8.21(b))1.
            Adjusted
      EBITDA (Line A20)
            $___________2.
            Capital
      Expenditures of the Company and its Subsidiaries during past 4
      quarters
            $___________3.
            Line
      B1 minus Line B2
            $___________4.
            Scheduled
      payments of principal of the Company and its Subsidiaries for past 4
      quarters
            $___________5.
            Cash
      Interest Expense of the Company and its Subsidiaries for past 4
      quarters
            $___________6.
            Income
      taxes of the Company and its Subsidiaries for past 4
    quarters.
            $___________7.
            Restricted
      Payments permitted by Section 8.12(iii) for past 4
quarters
            $___________   2
  8.
            Sum
      of Lines B4, B5, B6 and B7
            $___________9.
            Ratio
      of Line B3 to Line B8
            ____
      : 1.010.
            Line
      B9 ratio must not be less than
            1.25
      : 1.011.
            The
      Company is in compliance (circle yes or no)
            yes/noC.
            Operating Leases
      (Section 8.21(c))1.
            Aggregate
      amount of fixed rentals and other consideration payable by the Company and
      its Subsidiaries under all leases and similar arrangements
            $___________2.
            Maximum
      permitted amount
            $10,000,0003.
            The
      Company is in compliance (circle yes or no)
            yes/no














3





SCHEDULE
II


TO
COMPLIANCE CERTIFICATE





_________________________________________________





COMPLIANCE
CALCULATIONS


FOR
SECTION 8.9(H) OF THE


CREDIT
AGREEMENT DATED AS OF ________________, 2008





Calculations
as of _____________, _______










To
      / (From)
            Learning
      Curve Brands, Inc.
            RC2
      Corporation1
            Investments
      by the Company in the common stock or paid-in-capital of any Foreign
      Subsidiary after the Closing Date
            $
            $2
            $53,000,000
      minus Line 1
            $
            $3
            Learning
      Curve Canada Limited
            $
            $4
            RC2
      Hong Kong
            $
            $5
            Racing
      Champions Worldwide Limited
            $
            $6
            RC2
      Deutschland GmbH
            $
            $7
            RC2
      (Asia) Limited
            $
            $8
            RC2
      (Australia) Pty., Ltd.
            $
            $9
            Sum
      of Lines 3 through 8 Above
            $10
            Is
      Line 2 greater than Line 9 (Circle yes or no)
            Yes
      / No











EXHIBIT F





ADDITIONAL
GUARANTOR SUPPLEMENT




November 3,
2008




Bank of
Montreal,as
Administrative Agent for the Lenders named in the Credit Agreement identified
and defined below




Ladies
and Gentlemen:




Reference
is made to the Credit Agreement dated as of November 3, 2008, among
RC2 Corporation, Learning Curve Brands, Inc., Learning Curve Canada
Limited, RC2 (Asia) Limited, RC2 (Australia) Pty., Ltd., RC2 Deutschland GmbH,
Racing Champions Worldwide Limited, Racing Champions International Limited, as
Borrowers, the Guarantors referred to therein, the Lenders from time to time
party thereto, and the Administrative Agent (as extended, renewed, amended or
restated from time to time, the “Credit
Agreement”).  Terms not defined herein which are defined in the
Credit Agreement shall have for the purposes hereof the meaning provided
therein.




The
undersigned, [name of
Subsidiary Guarantor], a [jurisdiction of incorporation or
organization] hereby elects to be a “Guarantor” for all purposes
of the Credit Agreement, effective from the date hereof.  The
undersigned confirms that the representations and warranties set forth in
Section 6 of the Credit Agreement are true and correct as to the
undersigned as of the date hereof and the undersigned shall comply with each of
the covenants set forth in Section 8 of the Credit Agreement applicable to
it.




Without
limiting the generality of the foregoing, the undersigned hereby agrees to
perform all the obligations of a Guarantor under, and to be bound in all
respects by the terms of, the Credit Agreement, including without limitation
Section 12 thereof, to the same extent and with the same force and effect
as if the undersigned were a signatory party thereto.




The
undersigned acknowledges that this Agreement shall be effective upon its
execution and delivery by the undersigned to the Administrative Agent, and it
shall not be necessary for the Administrative Agent or any Lender, or any of
their Affiliates entitled to the benefits hereof, to execute this Agreement or
any other acceptance hereof.  This Agreement shall be construed in
accordance with and governed by the internal laws of the State of
Illinois.







Very
truly yours,





[NAME
OF SUBSIDIARY GUARANTOR]





By
________________________________


Name
___________________________


Title
____________________________











EXHIBIT G





ASSIGNMENT
AND ACCEPTANCE





Dated
November 3, 2008




Reference
is made to the Credit Agreement dated as of November 3, 2008 (as extended,
renewed, amended or restated from time to time, the “Credit Agreement”) among
RC2 Corporation, Learning Curve Brands, Inc., Learning Curve Canada
Limited, RC2 (Asia) Limited, RC2 (Australia) Pty., Ltd., RC2 Deutschland GmbH,
Racing Champions Worldwide Limited, Racing Champions International Limited, the
Guarantors party thereto, the Lenders and L/C Issuer parties thereto, and
Bank of Montreal, as Administrative Agent (the “Administrative
Agent”).  Terms defined in the Credit Agreement are used herein
with the same meaning.




______________________________________________________
(the “Assignor”) and
_________________________ (the “Assignee”) agree as
follows:




1.  The Assignor hereby sells and assigns
to the Assignee, and the Assignee hereby purchases and assumes from the
Assignor, the amount and specified percentage interest shown on Annex I
hereto of the Assignor’s rights and obligations under the Credit Agreement as of
the Effective Date (as defined below), including, without limitation, the
Assignor’s Commitments as in effect on the Effective Date and the Loans, if any,
owing to the Assignor on the Effective Date and the Assignor’s Revolver
Percentage of any outstanding L/C Obligations.




2.  The Assignor
(i) represents and warrants that it is the legal and beneficial owner of
the interest being assigned by it hereunder and that such interest is free and
clear of any adverse claim, lien, or encumbrance of any kind; (ii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Credit Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement or any other
instrument or document furnished pursuant thereto; and (iii) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower or any Subsidiary or the performance or
observance by the Borrower or any Subsidiary of any of their respective
obligations under the Credit Agreement or any other instrument or document
furnished pursuant thereto.




3.  The Assignee
(i) confirms that it has received a copy of the Credit Agreement, together
with copies of the most recent financial statements delivered to the Lenders
pursuant to Section 8.5(a) and (b)thereof and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Acceptance;
(ii) agrees that it will, independently and without reliance upon the
Administrative Agent, the Assignor or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Credit
Agreement; (iii) appoints and authorizes the Administrative Agent to take
such action as Administrative Agent on its behalf and to exercise such powers
under the Credit Agreement and the other Loan Documents as are delegated to the
Administrative Agent by the terms thereof, together with such powers as are
reasonably incidental thereto; (iv) agrees that it will perform in
accordance with their terms all of the obligations which by the terms of the
Credit Agreement are required to be performed by it as a Lender; and
(v) specifies as its lending office (and address for notices) the offices
set forth on its Administrative Questionnaire.











4.  As consideration for the assignment and
sale contemplated in Annex I hereof, the Assignee shall pay to the Assignor
on the Effective Date in Federal funds the amount agreed upon between
them.  It is understood that commitment and/or letter of credit fees
accrued to the Effective Date with respect to the interest assigned hereby are
for the account of the Assignor and such fees accruing from and including the
Effective Date are for the account of the Assignee.  Each of the
Assignor and the Assignee hereby agrees that if it receives any amount under the
Credit Agreement which is for the account of the other party hereto, it shall
receive the same for the account of such other party to the extent of such other
party’s interest therein and shall promptly pay the same to such other
party.




5.  The effective date for this
Assignment and Acceptance shall be ___________ (the
“Effective
Date”).  Following the execution of this Assignment and
Acceptance, it will be delivered to the Administrative Agent for acceptance and
recording by the Administrative Agent and, if required, the
Borrower.




6.  Upon such acceptance and recording, as
of the Effective Date, (i) the Assignee shall be a party to the Credit
Agreement and, to the extent provided in this Assignment and Acceptance, have
the rights and obligations of a Lender thereunder and (ii) the Assignor
shall, to the extent provided in this Assignment and Acceptance, relinquish its
rights and be released from its obligations under the Credit
Agreement.




7.  Upon such acceptance and
recording, from and after the Effective Date, the Administrative Agent shall
make all payments under the Credit Agreement in respect of the interest assigned
hereby (including, without limitation, all payments of principal, interest and
commitment fees with respect thereto) to the Assignee.  The Assignor
and Assignee shall make all appropriate adjustments in payments under the Credit
Agreement for periods prior to the Effective Date directly between
themselves.





2







8.  This Assignment and
Acceptance shall be governed by, and construed in accordance with, the laws of
the State of Illinois.









[ASSIGNOR
LENDER]


Name
___________________________


Title
____________________________





[ASSIGNEE
LENDER]








By
________________________________


Name
___________________________


Title
____________________________


Accepted
and consented this
 ____ day
of _____________








RC2
Corporation


Learning
Curve Brands, Inc.


Learning
Curve Canada Limited


RC2
(Asia) Limited


RC2
(Australia) Pty., Ltd.


RC2
Deutschland GmbH


Racing
Champions Worldwide Limited


Racing
Champions International Limited







By
________________________________


Name
___________________________


Title
____________________________ 
 Accepted
and consented to by the Administrative






Bank
of Montreal, as
Administrative Agent and L/C Issuer















By
________________________________


Name
___________________________


Title
____________________________











Annex
I





to
Assignment and Acceptance




The
assignee hereby purchases and assumes from the assignor the following interest
in and to all of the Assignor’s rights and obligations under the Credit
Agreement as of the effective date.




Facility
      Assigned
            Aggregate
              Commitment/Loans
              For
      All Lenders
            Amount
      of
              Commitment/Loans
              Assigned
            Percentage
      Assigned
              of
      Commitment/LoansRevolving
      Credit
            $_____________
            $_____________
            _____%Term
      Loan
            $_____________
            $_____________
            _____%














Exhibit H





Commitment
Amount Increase Request




November 3.
2008




Bank
      of Montreal, as Administrative Agent (the “Administrative Agent”)
      for the Lenders referred to below


111
      West Monroe Street


Chicago,
      Illinois  60603




Attention:  Agency
      Services




Re:
            Credit
      Agreement dated as of November 3, 2008 (together with all amendments, if
      any, hereafter from time to time made thereto, the “Credit Agreement”) by
      and among RC2 Corporation, Learning Curve Brands, Inc., Learning Curve
      Canada Limited, RC2 (Asia) Limited, RC2 (Australia) Pty., Ltd., RC2
      Deutschland GmbH, Racing Champions International Limited, Racing Champions
      Worldwide Limited, the Guarantors party thereto, the Lenders party thereto
      and the Administrative Agent




Ladies
and Gentlemen:




In
accordance with the Credit Agreement, the Borrowers hereby request that the
Administrative Agent consent to an increase in [an increase in the aggregate
Revolving Credit Commitments] or [increase the aggregate outstanding
principal amount of the Term Loans](the “Commitment Amount
Increase”), in accordance with Section 1.17 of the Credit Agreement,
to be effected by [an increase
in the Revolving Credit Commitment] or [an increase in the outstanding Term
Loans] of [name of existing Lender(s)] [and] [the addition of [each of] [name of
each new Lender] (the [each a]“New
Lender”) as a Lender
under the terms of the Credit Agreement].  Capitalized terms
used herein without definition shall have the same meanings herein as such terms
have in the Credit Agreement.













After
giving effect to such Commitment Amount Increase, the [Revolving Credit Commitment] /
[outstanding Term  Loans]of the [Lender(s)] [New Lenders] shall be [$_____________.] [as
follows:




Lender/New
      Lender
            Revolving
      Credit Commitment Amount / Outstanding Term Loans_______________________________
            $______________________________________________
            $_______________]




[Include
paragraphs 1-4 for a New Lender]




1.  The New Lender hereby
confirms that it has received a copy of the Loan Documents and the exhibits
related thereto, together with copies of the documents which were required to be
delivered under the Credit Agreement as a condition to the making of the [Revolving Loans] / [Term Loans]and other extensions of credit thereunder.  The [Each] New Lender acknowledges
and agrees that it has made and will continue to make, independently and without
reliance upon the Administrative Agent or any other Lender and based on such
documents and information as it has deemed appropriate, its own credit analysis
and decisions relating to the Credit Agreement.  The [Each] New Lender further
acknowledges and agrees that the Administrative Agent has not made any
representations or warranties about the creditworthiness of the Borrower or any
other party to the Credit Agreement or any other Loan Document or with respect
to the legality, validity, sufficiency or enforceability of the Credit Agreement
or any other Loan Document or the value of any security therefor.




2.  Except as otherwise
provided in the Credit Agreement, effective as of the date of acceptance hereof
by the Administrative Agent, the [each] New Lender
(i) shall be deemed automatically to have become a party to the Credit
Agreement and have all the rights and obligations of a “Lender” under the Credit
Agreement as if it were an original signatory thereto and (ii) agrees to be
bound by the terms and conditions set forth in the Credit Agreement as if it
were an original signatory thereto.




3.  The [Each] New Lender hereby
advises you of the following administrative details with respect to its [Revolving Loans and Revolving Credit
Commitment] / [Term Loan]:




(A)     Notices:




Institution
Name:_________________


Address:  _______________________


_______________________


Telephone:
______________________


Facsimile:  ______________________




(B)      Payment
Instructions:






2




[4.     The
[Each] New Lender has delivered, if appropriate, to the Borrowers and the
Administrative Agent (or is delivering to the Borrowers and the Administrative
Agent concurrently herewith) the tax forms referred to in Section 13.1 of the
Credit Agreement.]*




This
Agreement shall be deemed to be a contractual obligation under, and shall be
governed by and construed in accordance with, the laws of the State of
Illinois.




The Commitment Amount Increase shall be effective when the executed consent of
the Administrative Agent is received or otherwise in accordance with Section
1.17, of the Credit Agreement, but not in any case prior to ___________________,
____.  It shall be a condition to the effectiveness of the Commitment
Amount Increase that all expenses referred to in Section 1.17 of the Credit
Agreement shall have been paid.


The
Borrower hereby certifies that no Default or Event of Default has occurred and
is continuing.





Please
indicate the Administrative Agent’s consent to such Commitment Amount Increase
by signing the enclosed copy of this letter in the space provided
below.





Very
truly yours,


RC2
Corporation


Learning
Curve Brands, Inc.


Learning
Curve Canada Limited


RC2
(Asia) Limited


RC2
(Australia) Pty, Ltd.


RC2
Deutschland GmbH


Racing
Champions Worldwide Limited


Racing
Champions International Limited





By
___________________________________


Name:
Curtis W. Stoelting


Title:
______________________________





[New
Lender/Lender Increasing its


Commitment]


By
___________________________________


Name:
_____________________________


Title:
______________________________




*
              Insertbracketed
      paragraph if New Lender is organized under the law of a jurisdiction other
      than the United States of America or a state
  thereof.





3





The
undersigned hereby consents on this __ day of
 _____________,
_____ to the above-requested
 Commitment
Amount Increase






Bank of Montreal,as
Administrative Agent







By_________________________________


Name____________________________


Title
_____________________________

















4





Schedule 1





Commitments





Name
      of Lender
            Term
      Loan
              Commitment
            Revolving
      Credit
              CommitmentBMO
      Capital Markets Financing, Inc.
            $20,689,655.17
            $19,310,344.83National
      City Bank
            $15,517,241.38
            $14,482,758.62U.S.
      Bank National Association
            $12,931,034.48
            $12,068,965.52Fifth
      Third Bank
            $10,344,827.59
            $9,655,172.41The
      Northern Trust Company
            $7,758,620.69
            $7,241,379.31The
      PrivateBank and Trust Company
            $7,758,620.69
            $7,241,379.31Total
            $75,000,000.00
            $70,000,000




















Schedule 6.2





Subsidiaries





Name
      of Subsidiary
            Jurisdiction
      of
              Incorporation
            No.
      of
              Shares
            Class
            Owner
            Certificate
      No.
            Percentage
      of
              Subsidiary’s
              StockLearning
      Curve Brands, Inc.
            Delaware
            1,000
            Common
            Company
            8
            100%Racing
      Champions Worldwide Limited
            United
      Kingdom
            100
            Ordinary
            Company
            1,
      2
            100%Learningcurveshop.com,
      Inc.
            Delaware
            100
            Common
            Company
            1
            100%Learning
      Curve International, Inc.
            Delaware
            100
            Common
            Company
            1
            100%RCE
      Holdings, LLC
            Delaware
            N/A
            N/A
            Company
            N/A
            100%Learning
      Curve Canada Limited
            Ontario,
      Canada
            
            N/A
            Company
            
            100%RC2
      (H.K.) Limited (f.k.a Racing Champions Limited)
            Hong
      Kong
            1,000
            N/A
            Company
            5,
      6
            100%RC2
      (Asia) Limited
            Hong
      Kong
            N/A
            N/A
            Company
            N/A
            100%Learning
      Curve Mexico, S. de R.L. de C.V.
            Mexico
            2,999
            N/A
            Company
            N/A
            99.97%Learning
      Curve Services Mexico, S. de R.L. De C.V.
            Mexico
            [___]
            N/A
            Company
            N/A
            [___%]Learning
      Curve Canada Holdco. Inc.
            Delaware
            100
            Common
            Learning
      Curve International, Inc
            1
            100%RC2
      Australia Pty., Ltd.
            Australia
            100
            Ordinary
            Learning
      Curve International, Inc
            7,
      8
            100%RC2
      Canada Corporation
            Nova
      Scotia
            N/A
            N/A
            Learning
      Curve Canada Holdco, Inc.
            N/A
            100%RC2
      Deutschland GmbH
            Germany
            
            
            Racing
      Champions Worldwide Ltd.Racing
      Champions International Limited
            United
      Kingdom
            
            
            Racing
      Champions Worldwide Ltd.Bondco
      988 Limited
            United
      Kingdom
            
            
            Racing
      Champions International LimitedAcre
      689 Limited
            United
      Kingdom
            
            
            Bondco
      988 Limited