Exhibit 10.1


$700,000,000.00


AMENDED AND RESTATED CREDIT AGREEMENT


dated as of May 24, 2007,


among


LINENS ‘N THINGS, INC.

and

LINENS ‘N THINGS CENTER, INC.,

as US Borrowers,


LINENS ‘N THINGS CANADA CORP.,

as Canadian Borrower,


LINENS HOLDING CO.

and

THE OTHER GUARANTORS PARTY HERETO,

as Guarantors,


THE LENDERS PARTY HERETO,


UBS SECURITIES LLC, 

as Arranger and Bookmanager,


UBS AG, STAMFORD BRANCH,

as an Issuing Bank, US Administrative Agent and US Co-Collateral Agent,


UBS AG CANADA BRANCH,

as Canadian Co-Collateral Agent,


WACHOVIA BANK, NATIONAL ASSOCIATION,

as US Co-Collateral Agent, Co-Documentation Agent and an Issuing Bank,


WACHOVIA CAPITAL FINANCE CORPORATION (CANADA),

as Canadian Administrative Agent, Canadian Co-Collateral Agent and Canadian
Swingline

Lender,


UBS LOAN FINANCE LLC,

as US Swingline Lender,


UBS SECURITIES LLC and BEAR, STEARNS & CO. INC.,

as Joint Book-Runners,


BEAR, STEARNS & CO. INC.,

as Co-Syndication Agent,


WELLS
FARGO RETAIL FINANCE, LLC,


as Co-Documentation Agent,


and


THE CIT GROUP/BUSINESS CREDIT, INC.,

as Co-Syndication Agent
















TABLE OF
CONTENTS


	
  

  	
   

  	
   

  	
  Page

  
	
  ARTICLE I. DEFINITIONS

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 1.01.

  	
  Defined Terms

  	
   

  	
  2

  
	
  Section 1.02.

  	
  Classification of Loans and Borrowings

  	
   

  	
  55

  
	
  Section 1.03.

  	
  Terms Generally

  	
   

  	
  55

  
	
  Section 1.04.

  	
  Accounting Terms; GAAP

  	
   

  	
  56

  
	
  Section 1.05.

  	
  Resolution of Drafting Ambiguities

  	
   

  	
  56

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II. THE CREDITS

  	
   

  	
  56

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.01.

  	
  Commitments

  	
   

  	
  56

  
	
  Section 2.02.

  	
  Loans

  	
   

  	
  57

  
	
  Section 2.03.

  	
  Borrowing Procedure

  	
   

  	
  58

  
	
  Section 2.04.

  	
  Evidence of Debt; Repayment of Loans

  	
   

  	
  63

  
	
  Section 2.05.

  	
  Fees

  	
   

  	
  64

  
	
  Section 2.06.

  	
  Interest on Loans

  	
   

  	
  65

  
	
  Section 2.07.

  	
  Termination and Reduction of Commitments

  	
   

  	
  67

  
	
  Section 2.08.

  	
  Interest Elections

  	
   

  	
  67

  
	
  Section 2.09.

  	
  [Intentionally Deleted].

  	
   

  	
  69

  
	
  Section 2.10.

  	
  Optional and Mandatory Prepayments of Loans

  	
   

  	
  69

  
	
  Section 2.11.

  	
  Alternate Rate of Interest

  	
   

  	
  73

  
	
  Section 2.12.

  	
  Yield Protection

  	
   

  	
  74

  
	
  Section 2.13.

  	
  Breakage Payments

  	
   

  	
  75

  
	
  Section 2.14.

  	
  Payments Generally; Pro Rata Treatment; Sharing of
  Setoffs

  	
   

  	
  76

  
	
  Section 2.15.

  	
  Taxes

  	
   

  	
  78

  
	
  Section 2.16.

  	
  Mitigation Obligations; Replacement of Lenders

  	
   

  	
  82

  
	
  Section 2.17.

  	
  Swingline Loans

  	
   

  	
  83

  
	
  Section 2.18.

  	
  Letters of Credit

  	
   

  	
  86

  
	
  Section 2.19.

  	
  Increase in Commitments

  	
   

  	
  92

  
	
  Section 2.20.

  	
  Determination of Borrowing Base

  	
   

  	
  94

  
	
  Section 2.21.

  	
  Determination of Canadian Borrowing Base

  	
   

  	
  97

  
	
  Section 2.22.

  	
  Collection Allocation Mechanism

  	
   

  	
  101

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III. REPRESENTATIONS AND WARRANTIES

  	
   

  	
  103

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 3.01.

  	
  Organization; Powers

  	
   

  	
  103

  
	
  Section 3.02.

  	
  Authorization; Enforceability

  	
   

  	
  104

  
	
  Section 3.03.

  	
  No Conflicts

  	
   

  	
  104

  
	
  Section 3.04.

  	
  Financial Statements; Projections

  	
   

  	
  104

  
	
  Section 3.05.

  	
  Properties

  	
   

  	
  105

  
	
  Section 3.06.

  	
  Intellectual Property

  	
   

  	
  106

  
	
  Section 3.07.

  	
  Equity Interests and Subsidiaries

  	
   

  	
  106

  
	
  Section 3.08.

  	
  Litigation; Compliance with Laws

  	
   

  	
  107

  



 



 i
 









 


	
  Section 3.09.

  	
  Agreements

  	
   

  	
  108

  
	
  Section 3.10.

  	
  Federal Reserve Regulations

  	
   

  	
  108

  
	
  Section 3.11.

  	
  Investment Company Act

  	
   

  	
  108

  
	
  Section 3.12.

  	
  Use of Proceeds

  	
   

  	
  108

  
	
  Section 3.13.

  	
  Taxes

  	
   

  	
  108

  
	
  Section 3.14.

  	
  No Material Misstatements

  	
   

  	
  109

  
	
  Section 3.15.

  	
  Labor Matters

  	
   

  	
  109

  
	
  Section 3.16.

  	
  Solvency

  	
   

  	
  109

  
	
  Section 3.17.

  	
  Employee Benefit Plans

  	
   

  	
  110

  
	
  Section 3.18.

  	
  Environmental Matters

  	
   

  	
  110

  
	
  Section 3.19.

  	
  Insurance

  	
   

  	
  112

  
	
  Section 3.20.

  	
  Security Documents

  	
   

  	
  112

  
	
  Section 3.21.

  	
  [Intentionally Omitted]

  	
   

  	
  113

  
	
  Section 3.22.

  	
  Anti-Terrorism Law

  	
   

  	
  113

  
	
  Section 3.23.

  	
  [Intentionally Deleted]

  	
   

  	
  114

  
	
  Section 3.24.

  	
  Executive Offices; Location of Material Inventory

  	
   

  	
  114

  
	
  Section 3.25.

  	
  Accuracy of Borrowing Base

  	
   

  	
  114

  
	
  Section 3.26.

  	
  [Intentionally Omitted.]

  	
   

  	
  114

  
	
  Section 3.27.

  	
  Common Enterprise

  	
   

  	
  114

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV. CONDITIONS TO CREDIT EXTENSIONS

  	
   

  	
  115

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 4.01.

  	
  Conditions to Effectiveness of this Agreement

  	
   

  	
  115

  
	
  Section 4.02.

  	
  Conditions to All Credit Extensions

  	
   

  	
  119

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V. AFFIRMATIVE COVENANTS

  	
   

  	
  120

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.01.

  	
  Financial Statements, Reports, etc.

  	
   

  	
  120

  
	
  Section 5.02.

  	
  Litigation and Other Notices

  	
   

  	
  123

  
	
  Section 5.03.

  	
  Existence; Businesses and Properties

  	
   

  	
  124

  
	
  Section 5.04.

  	
  Insurance

  	
   

  	
  124

  
	
  Section 5.05.

  	
  Obligations and Taxes

  	
   

  	
  125

  
	
  Section 5.06.

  	
  Employee Benefits

  	
   

  	
  126

  
	
  Section 5.07.

  	
  Maintaining Records; Access to Properties and
  Inspections; Annual Meetings

  	
   

  	
  127

  
	
  Section 5.08.

  	
  Use of Proceeds

  	
   

  	
  127

  
	
  Section 5.09.

  	
  Compliance with Environmental Laws; Environmental
  Reports

  	
   

  	
  127

  
	
  Section 5.10.

  	
  [Intentionally Deleted]

  	
   

  	
  128

  
	
  Section 5.11.

  	
  Additional Collateral; Additional Guarantors

  	
   

  	
  128

  
	
  Section 5.12.

  	
  Security Interests; Further Assurances

  	
   

  	
  129

  
	
  Section 5.13.

  	
  Information Regarding Collateral

  	
   

  	
  130

  
	
  Section 5.14.

  	
  Post-Closing Collateral Matters

  	
   

  	
  131

  
	
  Section 5.15.

  	
  Affirmative Covenants with Respect to Leases

  	
   

  	
  131

  
	
  Section 5.16.

  	
  Interest Rate Agreements

  	
   

  	
  131

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI. NEGATIVE COVENANTS

  	
   

  	
  131

  



 



 ii
 









 


	
  Section 6.01.

  	
  Indebtedness

  	
   

  	
  131

  
	
  Section 6.02.

  	
  Liens

  	
   

  	
  133

  
	
  Section 6.03.

  	
  Sale and Leaseback Transactions

  	
   

  	
  135

  
	
  Section 6.04.

  	
  Investment, Loan and Advances

  	
   

  	
  135

  
	
  Section 6.05.

  	
  Mergers and Consolidations

  	
   

  	
  137

  
	
  Section 6.06.

  	
  Asset Sales

  	
   

  	
  138

  
	
  Section 6.07.

  	
  Acquisitions

  	
   

  	
  138

  
	
  Section 6.08.

  	
  Dividends

  	
   

  	
  139

  
	
  Section 6.09.

  	
  Transactions with Affiliates

  	
   

  	
  139

  
	
  Section 6.10.

  	
  Financial Covenants

  	
   

  	
  141

  
	
  Section 6.11.

  	
  Prepayments of Other Indebtedness; Modifications of
  Organizational Documents and Other Documents, etc.

  	
   

  	
  142

  
	
  Section 6.12.

  	
  Limitation on Certain Restrictions on Subsidiaries

  	
   

  	
  142

  
	
  Section 6.13.

  	
  Limitation on Issuance of Capital Stock

  	
   

  	
  143

  
	
  Section 6.14.

  	
  Limitation on Creation of Subsidiaries

  	
   

  	
  144

  
	
  Section 6.15.

  	
  Business

  	
   

  	
  144

  
	
  Section 6.16.

  	
  Limitation on Accounting Changes

  	
   

  	
  144

  
	
  Section 6.17.

  	
  Fiscal Year

  	
   

  	
  144

  
	
  Section 6.18.

  	
  No Further Negative Pledge

  	
   

  	
  144

  
	
  Section 6.19.

  	
  Anti-Terrorism Law; Anti-Money Laundering

  	
   

  	
  145

  
	
  Section 6.20.

  	
  Embargoed Person

  	
   

  	
  145

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII. GUARANTEE

  	
   

  	
  145

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 7.01.

  	
  The Guarantee

  	
   

  	
  145

  
	
  Section 7.02.

  	
  Obligations Unconditional

  	
   

  	
  146

  
	
  Section 7.03.

  	
  Reinstatement

  	
   

  	
  147

  
	
  Section 7.04.

  	
  Subrogation; Subordination

  	
   

  	
  147

  
	
  Section 7.05.

  	
  Remedies

  	
   

  	
  148

  
	
  Section 7.06.

  	
  Instrument for the Payment of Money

  	
   

  	
  148

  
	
  Section 7.07.

  	
  Continuing Guarantee

  	
   

  	
  148

  
	
  Section 7.08.

  	
  General Limitation on Guarantee Obligations

  	
   

  	
  148

  
	
  Section 7.09.

  	
  Release of Guarantors

  	
   

  	
  148

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII. EVENTS OF DEFAULT

  	
   

  	
  149

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 8.01.

  	
  Events of Default

  	
   

  	
  149

  
	
  Section 8.02.

  	
  Rescission

  	
   

  	
  151

  
	
  Section 8.03.

  	
  Application of Proceeds

  	
   

  	
  152

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX. COLLATERAL ACCOUNT; APPLICATION OF
  COLLATERAL PROCEEDS

  	
   

  	
  153

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 9.01.

  	
  Collateral Accounts

  	
   

  	
  153

  
	
  Section 9.02.

  	
  Accounts; Cash Management

  	
   

  	
  154

  
	
  Section 9.03.

  	
  Inventory

  	
   

  	
  158

  
	
  Section 9.04.

  	
  Borrowing Base-Related Reports

  	
   

  	
  158

  



 



 iii
 









 


	
  Section 9.05.

  	
  Rescission of Activation Notice

  	
   

  	
  159

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X. THE ADMINISTRATIVE AGENTS AND THE
  COLLATERAL AGENTS

  	
   

  	
  160

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 10.01.

  	
  Appointment and Authority

  	
   

  	
  160

  
	
  Section 10.02.

  	
  Rights as a Lender

  	
   

  	
  160

  
	
  Section 10.03.

  	
  Exculpatory Provisions

  	
   

  	
  161

  
	
  Section 10.04.

  	
  Reliance by Agent

  	
   

  	
  162

  
	
  Section 10.05.

  	
  Delegation of Duties

  	
   

  	
  162

  
	
  Section 10.06.

  	
  Resignation of Agent

  	
   

  	
  162

  
	
  Section 10.07.

  	
  Non-Reliance on Agent and Other Lenders

  	
   

  	
  163

  
	
  Section 10.08.

  	
  No Other Duties, etc

  	
   

  	
  163

  
	
  Section 10.09.

  	
  Indemnification

  	
   

  	
  163

  
	
  Section 10.10.

  	
  Overadvances

  	
   

  	
  164

  
	
  Section 10.11.

  	
  Concerning the Collateral and the Related Loan
  Documents

  	
   

  	
  164

  
	
  Section 10.12.

  	
  Field Audit, Examination Reports and Other Reports

  	
   

  	
  165

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XI. MISCELLANEOUS

  	
   

  	
  165

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 11.01.

  	
  Notices

  	
   

  	
  165

  
	
  Section 11.02.

  	
  Waivers; Amendment

  	
   

  	
  170

  
	
  Section 11.03.

  	
  Expenses; Indemnity; Damage Waiver

  	
   

  	
  173

  
	
  Section 11.04.

  	
  Successors and Assigns

  	
   

  	
  175

  
	
  Section 11.05.

  	
  Survival of Agreement

  	
   

  	
  178

  
	
  Section 11.06.

  	
  Counterparts; Integration; Effectiveness; Electronic
  Execution

  	
   

  	
  178

  
	
  Section 11.07.

  	
  Severability

  	
   

  	
  178

  
	
  Section 11.08.

  	
  Right of Setoff

  	
   

  	
  179

  
	
  Section 11.09.

  	
  Governing Law; Jurisdiction; Consent to Service of
  Process

  	
   

  	
  179

  
	
  Section 11.10.

  	
  Waiver of Jury Trial

  	
   

  	
  180

  
	
  Section 11.11.

  	
  Headings

  	
   

  	
  180

  
	
  Section 11.12.

  	
  Treatment of Certain Information; Confidentiality

  	
   

  	
  180

  
	
  Section 11.13.

  	
  USA PATRIOT Act Notice

  	
   

  	
  181

  
	
  Section 11.14.

  	
  Interest Rate Limitation

  	
   

  	
  181

  
	
  Section 11.15.

  	
  Lender Addendum

  	
   

  	
  181

  
	
  Section 11.16.

  	
  Obligations Absolute

  	
   

  	
  181

  
	
  Section 11.17.

  	
  Dollar Equivalent Calculations

  	
   

  	
  182

  
	
  Section 11.18.

  	
  Judgment Currency

  	
   

  	
  182

  
	
  Section 11.19.

  	
  Special Provisions Relating to Currencies Other Than
  Dollars

  	
   

  	
  183

  
	
  Section 11.20.

  	
  Intercreditor Agreement

  	
   

  	
  183

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XII.

  	
   

  	
  184

  
	
   

  	
   

  	
   

  	
   

  
	
  AMENDMENT AND RESTATEMENT OF ORIGINAL CREDIT
  AGREEMENT

  	
   

  	
  184

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 12.01.

  	
  Acknowledgments

  	
   

  	
  184

  
	
  Section 12.02.

  	
  Adjustments to Borrowings and Commitments

  	
   

  	
  185

  



 



 iv
 









 


	
  ANNEXES

  	
   

  	
   

  
	
  Annex I

  	
  Applicable Margin

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULES

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Schedule 1.01(a)

  	
  Refinancing Indebtedness to Be Repaid

  	
   

  	
   

  
	
  Schedule 1.01(b)

  	
  Subsidiary Guarantors

  	
   

  	
   

  
	
  Schedule 1.01(c)

  	
  Existing Letters of Credit

  	
   

  	
   

  
	
  Schedule 3.03

  	
  Governmental Approvals; Compliance with Laws

  	
   

  	
   

  
	
  Schedule 3.09

  	
  Material Agreements

  	
   

  	
   

  
	
  Schedule 3.19

  	
  Insurance

  	
   

  	
   

  
	
  Schedule 3.21

  	
  Acquisition Documents (from the Original Credit
  Agreement)

  	
   

  	
   

  
	
  Schedule 3.24

  	
  Location of Material Inventory

  	
   

  	
   

  
	
  Schedule 4.01(g)

  	
  Local Counsel

  	
   

  	
   

  
	
  Schedule 5.14

  	
  Post-Closing Matters

  	
   

  	
   

  
	
  Schedule 6.01(b)

  	
  Existing Indebtedness (from the Original Credit
  Agreement)

  	
   

  	
   

  
	
  Schedule 6.02(c)

  	
  Existing Liens (from the Original Credit Agreement)

  	
   

  	
   

  
	
  Schedule 6.04(b)

  	
  Existing Investments (from the Original Credit
  Agreement)

  	
   

  	
   

  
	
  Schedule 9.02

  	
  Accounts and Lockboxes

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EXHIBITS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  Form of Administrative Questionnaire

  	
   

  	
   

  
	
  Exhibit B

  	
  Form of Assignment and Assumption

  	
   

  	
   

  
	
  Exhibit C

  	
  Form of Borrowing Request

  	
   

  	
   

  
	
  Exhibit D

  	
  Form of Compliance Certificate

  	
   

  	
   

  
	
  Exhibit E

  	
  Form of Interest Election Request

  	
   

  	
   

  
	
  Exhibit F

  	
  Form of Joinder Agreement

  	
   

  	
   

  
	
  Exhibit G

  	
  Form of Landlord Access Agreement

  	
   

  	
   

  
	
  Exhibit H

  	
  Form of LC Request

  	
   

  	
   

  
	
  Exhibit I

  	
  Form of Lender Addendum

  	
   

  	
   

  
	
  Exhibit K-1

  	
  Form of Revolving Note

  	
   

  	
   

  
	
  Exhibit K-2

  	
  Form of Canadian Revolving Note

  	
   

  	
   

  
	
  Exhibit K-3

  	
  Form of US Swingline Note

  	
   

  	
   

  
	
  Exhibit K-4

  	
  Form of Canadian Swingline Note

  	
   

  	
   

  
	
  Exhibit K-5

  	
  Form of Discount Note

  	
   

  	
   

  
	
  Exhibit L-1

  	
  Form of Perfection Certificate

  	
   

  	
   

  
	
  Exhibit L-2

  	
  Form of Perfection Certificate Supplement

  	
   

  	
   

  
	
  Exhibit N

  	
  Form of Opinion of Company Counsel

  	
   

  	
   

  
	
  Exhibit P

  	
  Form of Intercompany Note

  	
   

  	
   

  
	
  Exhibit Q

  	
  Form of Non-Bank Certificate

  	
   

  	
   

  
	
  Exhibit S

  	
  Form of Borrowing Base Certificate

  	
   

  	
   

  



 



 v















AMENDED
AND RESTATED CREDIT AGREEMENT


This AMENDED AND RESTATED
CREDIT AGREEMENT (this “Agreement”)
dated as of May 24, 2007 is among LINENS ‘N THINGS, INC., a Delaware
corporation (“LNT”) and LINENS ‘N THINGS CENTER,
INC., a California corporation (“LNT Center” and
together with LNT the “US Borrowers”
and each individually a “US Borrower”),
LINENS ‘N THINGS CANADA CORP., a Nova Scotia unlimited company (“Canadian Borrower” and together with US Borrowers, the “Borrowers”); LINENS HOLDING CO., a Delaware corporation  (“Holdings”);
the Subsidiary Guarantors (such term and each other capitalized term used but
not defined herein having the meaning given to it in Article I); the
Lenders; UBS SECURITIES LLC (“UBSS”), as lead
arranger (in such capacity, “Arranger”)
and as documentation agent (in such capacity, “Documentation Agent”);
UBS LOAN FINANCE LLC (“UBS”), as US
swingline lender (in such capacity, “US  Swingline Lender”); BEAR, STEARNS & CO.
INC., (“Bear Stearns”), as co-syndication agent
(in such capacity, “Syndication Agent”);
UBS AG, STAMFORD BRANCH, as an issuing bank, as US administrative agent (in
such capacity, “US  Administrative Agent”) for the Lenders and as US co-collateral
agent (in such capacity, the “US Co-Collateral Agent”)
for the Secured Parties and the Issuing Bank; UBS AG CANADA BRANCH, as Canadian
co-collateral agent (in such capacity, the “Canadian
Co-Collateral Agent”) for the Secured Parties and the Issuing Bank;
WACHOVIA BANK, NATIONAL ASSOCIATION, as US co-collateral agent (together with US
Co-Collateral Agent, the “US  Collateral Agents”) for the Secured Parties and the Issuing
Bank and as an issuing bank; WACHOVIA CAPITAL FINANCE CORPORATION (CANADA), as
Canadian administrative agent (in such capacity, the “Canadian
Administrative Agent” together with the US Administrative Agent, the
“Administrative Agents”) for the
Lenders, as Canadian co-collateral agent (together with Canadian Co-Collateral
Agent, the “Canadian  Collateral
Agents”; the US Collateral Agents and the Canadian Collateral Agents
are collectively referred to herein as the “Collateral
Agents”) for the Secured Parties and the Issuing Bank, as an issuing
bank, and as Canadian swingline lender (in such capacity, “Canadian
Swingline Lender” and together with US Swingline Lender, the “Swingline Lenders”).


WITNESSETH:


WHEREAS, the Loan Parties, the Agents and the lenders
named therein (such lenders being the “Original
Lenders”) are party to that certain $600 million Credit Agreement
dated as of February 14, 2006 (as amended, supplemented and modified, the “Original Credit Agreement”) pursuant to
which the Original Lenders agreed to extend credit in the form of revolving
loans, swingline loans and letters of credit on the terms, and subject to the
conditions, set forth in the Original Credit Agreement.


WHEREAS, the Administrative Borrower, for itself and
on behalf of the other Loan Parties, has requested that the Agents and the
Lenders increase the maximum amount of credit available from time to time to
$700 million at any one time outstanding and otherwise amend and restate the
Original Credit Agreement in its entirety in the form of this Agreement.


WHEREAS, the Agents and the Lenders have agreed to
amend and restate the Original Credit Agreement in its entirety as set forth in
this Agreement.













WHEREAS, the Loan Parties acknowledge and agree that
the security interests granted to the Collateral Agents, for themselves and on
behalf of the Secured Parties pursuant to the Original Credit Agreement and the
Security Documents (as defined in the Original Credit Agreement) executed in
connection therewith, shall remain in full force and effect in accordance with
the Original Credit Agreement and shall continue to secure the Obligations (as
hereinafter defined).


WHEREAS, the Loan Parties acknowledge and agree that
(i) the Obligations (as hereinafter defined) represent, among other
things, the increase, amendment, restatement, renewal, extension and
modification of the Obligations (as defined in the Original Credit Agreement)
arising in connection with the Original Credit Agreement and the other Security
Documents executed in connection therewith; (ii) the parties hereto intend
that the Original Credit Agreement and the Security Documents, executed in
connection therewith and the collateral pledged thereunder, shall secure,
without interruption or impairment of any kind, all existing Obligations under
the Original Credit Agreement and the Security Documents, executed in
connection therewith, as so increased, amended, restated, restructured,
renewed, extended and/or modified hereunder, together with the Obligations (as
hereinafter defined); (iii) all Liens created by the Original Credit
Agreement and the Security Documents executed in connection therewith are
hereby ratified, confirmed and continued in full force and effect; and
(iv) the Loan Documents (as hereinafter defined) are intended to restate,
renew, extend, amend and/or modify the Original Credit Agreement and the
Security Documents, executed in connection therewith.


WHEREAS, the parties hereto intend that the provisions
of the Original Credit Agreement and the other Security Documents executed in
connection therewith, to the extent restructured, restated, renewed, extended,
consolidated, amended and modified hereby, are hereby superseded and replaced
by the provisions hereof and of the Loan Documents.


NOW, THEREFORE, the parties hereto agree that the
Original Credit Agreement is hereby amended and restated in full as follows:


ARTICLE
I.



DEFINITIONS


SECTION 1.01  Defined
Terms.  As used in this Agreement,
the following terms shall have the meanings specified below:


“ABR”,
when used in reference to any Loan or Borrowing, is used when such Loan, or the
Loans comprising such Borrowing, are bearing interest at a rate determined by
reference to the Alternate Base Rate.


“ABR Borrowing”
shall mean a Borrowing comprised of ABR Loans.


“ABR Loan”
shall mean any ABR Revolving Loan or US Swingline Loan.


“ABR Revolving Loan”
shall mean any Revolving Loan bearing interest at a rate determined by
reference to the Alternate Base Rate in accordance with the provisions of Article
II.



 2
 









“Acceptance Fee”
shall have the meaning assigned to such term in Section 2.06(d).


“Account Debtor”
shall mean any Person who may become obligated to another Person under, with
respect to, or on account of, an Account.


“Accounts”
shall mean all “accounts” as such term is defined in the UCC as in effect on
the date hereof in the State of New York or as defined in the PPSA, as
applicable, in which such Person now or hereafter has rights and shall include,
without limitation, Credit Card Receivables.


“Acquisition
Agreement” means that certain Agreement and Plan of Merger dated as
of November 8, 2005 (as amended, supplemented or otherwise modified from
time to time) by and among Holdings, Linens Merger Sub Co. and LNT which
provided for the acquisition (the “Acquisition”)
of all of the business of LNT (the “Acquired
Business”).


“Acquisition
Consideration” shall mean the purchase consideration for any
Permitted Acquisition and all other payments by Holdings or any of its
Subsidiaries in exchange for, or as part of, or in connection with, any
Permitted Acquisition, whether paid in cash or by exchange of Equity Interests
or of properties or otherwise and whether payable at or prior to the consummation
of such Permitted Acquisition or deferred for payment at any future time,
whether or not any such future payment is subject to the occurrence of any
contingency, and includes any and all payments representing the purchase price
and any assumptions of Indebtedness, “earn-outs” and other agreements to make
any payment the amount of which is, or the terms of payment of which are, in
any respect subject to or contingent upon the revenues, income, cash flow or
profits (or the like) of any person or business; provided
that any such future payment that is subject to a contingency shall be
considered Acquisition Consideration only to the extent of the reserve, if any,
required under GAAP at the time of such sale to be established in respect
thereof by Holdings or any of its Subsidiaries.


“Acquisition
Documents” shall mean the collective reference to the Acquisition
Agreement, and the other documents listed on Schedule 3.21 to the Original
Credit Agreement.


“Activation Notice”
has the meaning assigned to such term in Section 9.02.


“Adjusted LIBOR Rate”
shall mean, with respect to any Eurodollar Borrowing for any Interest Period,
(a) an interest rate per annum (rounded upward, if necessary, to the nearest
1/100th of 1%) determined by the applicable Administrative Agent to be equal to
the LIBOR Rate for such Eurodollar Borrowing in effect for such Interest Period
divided by (b) 1 minus the Statutory Reserves (if any) for such
Eurodollar Borrowing for such Interest Period.


“Administrative
Agent Fees”  shall have
the meaning assigned to such term in Section 2.05(b).


“Administrative
Agents” shall have the meaning assigned to such term in the preamble
hereto.



 3
 









“Administrative Borrower”
shall mean LNT Center, or any successor entity serving in that role pursuant to
Section 2.03(c).


“Administrative
Questionnaire” shall mean an Administrative Questionnaire in
substantially the form of Exhibit A.


“Affiliate”
shall mean, when used with respect to a specified person, another person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the person specified; provided,
however, that, for purposes of Section 6.09 , the term “Affiliate”
shall also include (i) any person that directly or indirectly owns more than
10% of any class of Equity Interests of the person specified or (ii) any person
that is an executive officer or director of the person specified.


“Agents”
shall mean the Administrative Agents and the Collateral Agents; and “Agent”
shall mean any of them.


“Agreement”
shall have the meaning assigned to such term in the preamble hereto.


“Alternate Base Rate”
shall mean, for any day, a rate per annum (rounded upward, if necessary, to the
nearest 1/100th of 1%) equal to the greater of (a) the Base Rate in effect on
such day and (b) the Federal Funds Effective Rate in effect on such day plus
0.50%.  If the US Administrative Agent
shall have determined (which determination shall be conclusive absent manifest
error) that it is unable to ascertain the Federal Funds Effective Rate for any
reason, including the inability or failure of the US Administrative Agent to
obtain sufficient quotations in accordance with the terms of the definition
thereof, the Alternate Base Rate shall be determined without regard to clause
(b) of the preceding sentence until the circumstances giving rise to such
inability no longer exist.  Any change in
the Alternate Base Rate due to a change in the Base Rate or the Federal Funds
Effective Rate shall be effective on the effective date of such change in the
Base Rate or the Federal Funds Effective Rate, respectively.


“Anti-Terrorism Laws”
shall have the meaning assigned to such term in Section 3.22.


“Applicable Fee”
shall mean, for any day, with respect to any Commitment, the applicable
percentage set forth in Annex I under the caption “Applicable Fee”.


“Applicable Margin”
shall mean, for any day, with respect to any Revolving Loan or Swingline Loan,
as the case may be, the applicable percentage set forth in Annex I
under the appropriate caption.


“Applicable Percentage”
shall mean, with respect to any Lender, the percentage of the total Loans
and Commitments represented by such Lender’s Loans and Commitments.


“Approved Currency”
shall mean each of dollars and Canadian dollars.



 4
 









“Approved Fund”
shall mean 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.


“Arranger”
shall have the meaning assigned to such term in the preamble hereto.


“Asset Sale”
shall mean (a) any conveyance, sale, lease, sublease, assignment, transfer
or other disposition (including by way of merger, amalgamation or consolidation
and including any Sale and Leaseback Transaction) of any property excluding (i)
sales of Inventory, (ii) dispositions of Cash Equivalents and (iii) leases or
subleases of less than all or substantially all of the Stores, in each case, in
the ordinary course of business, by Holdings or any of its Subsidiaries and
(b) any issuance or sale of any Equity Interests of any Subsidiary of
Holdings, in each case, to any person other than (i) the Borrowers,
(ii) any Subsidiary Guarantor or (iii) other than for purposes of Section
6.06, any other Subsidiary.


“Assignment and
Assumption” shall mean an assignment and assumption entered into by
a Lender and an Eligible Assignee (with the consent of any party whose consent
is required by Section 11.04(b)), and accepted by the applicable
Administrative Agent, in substantially the form of Exhibit B, or
any other form approved by the applicable Administrative Agent.


“Average Excess
Availability” shall mean, as of any date of determination, the
Excess Availability on the last Business Day of the fiscal quarter most
recently ended; provided, that, if an Activation Notice has been
delivered, the Average Excess Availability shall mean the weighted average
amount of Excess Availability for such quarter which shall equal the sum of
each “Periodic Availability Amount” (defined
below) calculated for such quarter.  As
used herein, the term “Periodic Availability
Amount” shall mean with respect to any period of days in a quarter
for which a Borrowing Base Certificate is in effect, (a) the Excess
Availability amount determined by the Collateral Agents and Administrative
Agents based on (x) the information set forth in the Borrowing Base
Certificate as adjusted to reflect any change noted by the Collateral Agents
pursuant to the terms hereof, and (y) the outstanding Dollar Equivalents
of the Loans and LC Exposures as shown on the books of the applicable
Administrative Agent, for such period of days multiplied by (b) the
fraction (expressed as a percentage), the numerator of which is the number of
days in such quarter for which such Borrowing Base Certificate was in effect,
and the denominator of which is the number of days in such quarter.  Average Excess Availability shall be
calculated for each fiscal quarter by the Collateral Agents and such
calculations shall be presumed to be correct, absent manifest error.


“BA Equivalent Loan”
shall mean a Canadian Revolving Loan made by a Non-BA Lender.


“Bailee Letter”
shall have the meaning assigned thereto in the Security Agreement.


“Bankers’ Acceptance”
shall mean a bill of exchange, including a depository bill defined and issued
in accordance with the Depository Bills and Notes Act (Canada), denominated in
Canadian dollars, drawn by the Canadian Borrower and accepted by the Lender 



 5
 









and shall include, where the context requires, a
Discount Note and a BA Equivalent Loan not evidenced by a Discount Note.


“Base Rate”
shall mean, for any day, a rate per annum that is equal to the corporate base
rate of interest established by the US Administrative Agent from time to time;
each change in the Base Rate shall be effective on the date such change is effective.  The corporate base rate is not necessarily
the lowest rate charged by the US Administrative Agent to its customers.


“BIA” shall mean
the Bankruptcy and Insolvency Act
(Canada) as such legislation now exists or may from time to time hereafter be amended,
modified, recodified, supplemented or replaced, together with all rules,
regulations and interpretations thereunder or related thereto.


“Blocked Account”
shall mean shall have the meaning assigned to such term in Section 9.02(b).


“Board”
shall mean the Board of Governors of the Federal Reserve System of the United
States.


“Board of Directors”
shall mean, with respect to any person, (i) in the case of any corporation
(including, for the avoidance of doubt, any company incorporated under the laws
of Canada (or any province or territory thereof)), the board of directors of
such person, (ii) in the case of any limited liability company, the board
of managers of such person, (iii) in the case of any partnership, the
Board of Directors of the general partner of such person and (iv) in any
other case, the functional equivalent of the foregoing.


“Borrowers”
shall have the meaning assigned to such term in the preamble hereto.


“Borrowing”
shall mean (a) Loans of the same Class and Type, made, converted or continued
on the same date and, in the case of Eurodollar Loans or Banker’s Acceptances,
as to which a single Interest Period is in effect, or (b) a Swingline Loan.


“Borrowing Base”
shall mean at any time, subject to adjustment as provided in Section 2.20,
an amount equal to the lesser of (a) the sum of, without duplication:


(i)            the
book value of Eligible Accounts of US Borrowers multiplied by the advance rate
of 85%, plus


(ii)           (A)
at any time other than during a Seasonal Advance Period, the lesser of (x) the
advance rate of 70% of the Cost of Eligible Inventory of US Borrowers, and (y)
the advance rate of 85% of the Net Recovery Cost Percentage multiplied by the
Cost of Eligible Inventory of US Borrowers and (B) during a Seasonal Advance
Period, the lesser of (x) the advance rate of 80% of the Cost of Eligible
Inventory of US Borrowers, and (y) the advance rate of 90% of the Net Recovery
Cost Percentage multiplied by the Cost of Eligible Inventory of US Borrowers, plus



 6
 









(iii)          (A)
at any time other than during a Seasonal Advance Period, the lesser of (x) the
Cost of all Eligible In-Transit Inventory of US Borrowers multiplied by the
advance rate of 70%, and (y) the advance rate of 85% of the Net Recovery Cost
Percentage multiplied by the Cost of Eligible In-Transit Inventory of US
Borrowers and (B) during a Seasonal Advance Period, the lesser of (x) the Cost
of all Eligible In-Transit Inventory of US Borrowers multiplied by the advance
rate of 80%, and (y) the advance rate of 90% of the Net Recovery Cost Percentage
multiplied by the Cost of Eligible In-Transit Inventory of US Borrowers, plus


(iv)          the
aggregate of all Incorporated Borrowing Bases, plus


(v)           (A)
at any time other than during a Seasonal Advance Period, the lesser of (x) the
aggregate undrawn face amount of Eligible Letters of Credit multiplied by the
advance rate of 70% and (y) 85% of the Net Recovery Cost Percentage of
Inventory being purchased with Eligible Letters of Credit and (B) at any time
during a Seasonal Advance Period, the lesser of (x) the aggregate undrawn
face amount of Eligible Letters of Credit multiplied by the advance rate of 80%
and (y) 90% of the Net Recovery Cost Percentage of Inventory being purchased
with Eligible Letters of Credit, minus


(vi)          a
reserve in the amount of the Current Derivative Exposure; minus


(vii)         effective
immediately upon notification thereof to US Borrowers by the applicable
Collateral Agents, any Reserves established from time to time by such
Collateral Agents in the exercise of their Permitted Discretion; and


 (b) the maximum
amount of Revolving Credit Obligations (as defined in the Senior Note
Agreement) that are permitted in Section 4.09 of the Senior Note
Agreement as Permitted Debt thereunder minus the Canadian Exposure of
all the Lenders minus the Line Reserve allocated to US Revolving
Commitments.


The Borrowing Base at any time shall be determined by
reference to the most recent Borrowing Base Certificate theretofore delivered
to the Collateral Agents and the Administrative Agents with such adjustments as
Administrative Agents and Collateral Agents deem appropriate in their
collective Permitted Discretion to assure that the Borrowing Base is calculated
in accordance with the terms of this Agreement.


“Borrowing Base
Certificate” shall mean an Officers’ Certificate from Borrowers,
substantially in the form of (or in such other form as may be mutually agreed
upon by Borrowers, Collateral Agents and Administrative Agents), and containing
the information prescribed by Exhibit S, delivered to the
Administrative Agents and the Collateral Agents setting forth Borrowers’
calculation of the Borrowing Base and the Canadian Borrowing Base.


“Borrowing Base
Guarantor Intercompany Loan Amount” shall mean, at any time, the
amount which is the sum of (a) the net amount of any intercompany advances
(including Letters of Credit issued for the account or benefit of a US
Borrowing Base Guarantor) which are made and outstanding to or for the account
of a US Borrowing Base Guarantor from the Administrative Borrower and (b)
interest accrued and unpaid on such amount (from the date of this Agreement for
amounts outstanding on the date hereof and which remain outstanding, and 



 7
 









from the date of such intercompany advance for
subsequent advances) at the rate per annum equal to the Alternate Base Rate
plus the Applicable Margin in effect from time to time.


“Borrowing Base Guarantors”
shall mean the US Borrowing Base Guarantors and the Canadian Borrowing Base
Guarantors.


“Borrowing Request”
shall mean a request by Borrowers in accordance with the terms of Section
2.03 and substantially in the form of Exhibit C, or such other form
as shall be approved by the Administrative Agents.


“Business Day”
shall mean any day other than a Saturday, Sunday or other day on which banks in
New York City are authorized or required by law to close; provided, however,
that when used in connection with (a) a Eurodollar Loan, the term “Business Day”
shall also exclude any day on which banks are not open for dealings in dollar
deposits in the London interbank market (b) a Canadian Revolving Loan, the term “Business Day” shall also exclude
any day on which banks in Toronto, Canada are authorized or required by law to
close.


“CAM Exchange”
shall mean the exchange of the Lenders’ interests provided for in Section
2.22.


“CAM Exchange Date”
shall mean the date on which (i) any event referred to in Section 8.01(g)
or (h) shall occur, or (ii) an acceleration of the maturity of the Loans
pursuant to Section 8.01 shall occur.


“CAM Percentage”
shall mean, as to each Lender, a fraction, expressed as a decimal, of which (i)
the numerator shall be (without duplication) the aggregate Dollar Equivalent of
the Specified Obligations owed to such Lender and such Lender’s participation
in the aggregate LC Obligations immediately prior to the CAM Exchange Date and
(ii) the denominator shall be (without duplication) the aggregate Dollar
Equivalent (as so determined) of the Specified Obligations owed to all the
Lenders and the aggregate LC Obligations immediately prior to such CAM Exchange
Date.


“Canadian Administrative
Agent” shall have the meaning assigned to such term in the preamble
hereto.


“Canadian Borrower”
shall have the meaning assigned to such term in the preamble hereto.


“Canadian Borrowing Base”
shall mean at any time, subject to adjustment as provided in Section 2.21,
an amount equal to the lesser of (a) the sum of, without duplication:


(i)            the
book value of Eligible Canadian Accounts of Canadian Borrower multiplied by the
advance rate of 85%, plus


(ii)           (A)
at any time other than during a Seasonal Advance Period, the lesser of (x) the
advance rate of 70% of the Cost of Eligible Canadian Inventory of Canadian
Borrower, and (y) the advance rate of 85% of the Net Recovery Cost Percentage
multiplied by the Cost of Eligible Canadian Inventory of Canadian Borrower and
(B) during a Seasonal Advance Period, 



 8
 









the lesser of (x) the advance rate of 80% of the Cost
of Eligible Canadian Inventory of Canadian Borrower, and (y) the advance rate
of 90% of the Net Recovery Cost Percentage multiplied by the Cost of Eligible
Canadian Inventory of Canadian Borrower, plus


(iii)          (A)
at any time other than during a Seasonal Advance Period, the lesser of (x) the
cost of all the Eligible Canadian In-Transit Inventory of Canadian Borrower
multiplied by an advance rate of 70%, and (y) the advance rate of 85% of the
Net Recovery Cost Percentage multiplied by the Cost of Eligible Canadian
In-Transit Inventory of Canadian Borrower and (B) during a Seasonal Advance
Period, the lesser of (x) the Cost of all Eligible Canadian In-Transit
Inventory of Canadian Borrower multiplied by the advance rate of 80% and (y)
the advance rate of 90% of the Net Recovery Cost Percentage multiplied by the
Cost of Eligible Canadian In-Transit Inventory of Canadian Borrower, plus


(iv)          the
amount, if any, by which the Borrowing Base exceeds the US Revolving Exposure
of all of the Lenders (but only to the extent that such excess is not made
available to US Borrowers), minus


(v)           to
the extent not already deducted in the calculation of the Borrowing Base, a
reserve in the amount of the Current Derivative Exposure; minus


(vi)          a
reserve in the amount of the Priority Payables; minus


(vii)         effective
immediately upon notification thereof to Canadian Borrower by the applicable
Collateral Agents, any Reserves established from time to time by such
Collateral Agents in the exercise of their Permitted Discretion; and


(b)           the
maximum amount of Revolving Credit Obligations (as defined in the Senior Note
Agreement) that are permitted in Section 4.09  of the Senior Note Agreement as Permitted Debt thereunder minus
the US Revolving Exposure of all of the Lenders minus the Line Reserve
allocated to the Canadian Revolving Commitments.


The Canadian Borrowing Base at any time shall be
determined by reference to the most recent Borrowing Base Certificate
theretofore delivered to the Collateral Agents and the Administrative Agents
with such adjustments as Administrative Agents and Collateral Agents deem
appropriate in their collective Permitted Discretion to assure that the
Canadian Borrowing Base is calculated in accordance with the terms of this
Agreement.


“Canadian  Borrowing Base Guarantor” shall mean any
Wholly Owned Subsidiary of the Canadian Borrower which may hereafter be
approved by the Administrative Agents and the Collateral Agents and which (a)
is organized under the laws of Canada (or any province or territory thereof),
(b) is currently able to prepare all collateral reports in a comparable manner
to the Borrowers’ reporting procedures and (c) has executed and delivered to
the applicable Collateral Agents such joinder agreements to guarantees,
contribution and set-off agreements and other Security Documents as such
Collateral Agents have reasonably requested so long as such Collateral Agents
have received and approved, in their reasonable discretion, (i) a collateral
audit and Inventory Appraisal conducted by an independent appraisal firm
reasonably acceptable to such Collateral Agents and (ii) all PPSA and similar
search results necessary to 



 9
 









confirm such Collateral Agents’ first priority Lien on
all of such Canadian Borrowing Base Guarantor’s personal property, subject to
Permitted Liens.


“Canadian Collateral Agent”
shall have the meaning assigned to such term in the preamble hereto.


“Canadian dollars”
or “Can$” shall mean the lawful money of
Canada.


“Canadian Exposure”
shall mean, with respect to any Lender at any time, the Dollar Equivalent of
the aggregate principal amount at such time of all outstanding Canadian
Revolving Loans of such Lender, plus the aggregate
amount at such time of such Lender’s Swingline Exposure to Canadian Borrower.


“Canadian Guarantors”  shall mean LNT I, LNT II, LNT Partnership and each other
person, if any, that executes or becomes party to a Canadian Guaranty or other
similar agreement guaranteeing the Canadian Obligations in favor of the
Canadian Collateral Agents.


“Canadian Guaranty”
shall mean each certain Guaranty Agreement dated as of the Original Closing
Date guaranteeing the Canadian Obligations addressed to the Canadian Collateral
Agents for the benefit of the Canadian Secured Parties by each Canadian Loan
Party governed by Canadian law, as the same may from time to time be modified,
amended, extended or reaffirmed in accordance with the terms thereof.


“Canadian Inventory”
shall mean all of the Canadian Borrower’s and Canadian Borrowing Base
Guarantors’ now owned and hereafter existing or acquired raw materials, work in
process, finished goods and all other inventory of whatsoever kind or nature,
wherever located.


“Canadian Loan Parties”  shall mean Canadian Borrower and the Canadian Guarantors.


“Canadian Obligations”
shall mean (a) obligations of Canadian Borrower and the other Canadian
Loan Parties from time to time arising under or in respect of the due and
punctual payment of (i) the principal of and premium, if any, and interest
(including interest accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding) on the Canadian Revolving Loans and Canadian
Swingline Loans, when and as due, whether at maturity, by acceleration, upon
one or more dates set for prepayment or otherwise, (ii) each payment required
to be made by Canadian Borrower under this Agreement in respect of any Letter
of Credit or LC Acceptance, when and as due, including payments in respect of
Reimbursement Obligations, interest thereon and obligations to provide cash
collateral, and (iii) all other monetary obligations, including fees, costs,
expenses and indemnities, whether primary, secondary, direct, contingent, fixed
or otherwise (including monetary obligations incurred during the pendency of
any bankruptcy, insolvency, receivership or other similar proceeding,
regardless of whether allowed or allowable in such proceeding), of Canadian
Borrower and the other Canadian Loan Parties under this Agreement and the other
Loan Documents with respect to obligations of Canadian Borrower and the
Canadian Guarantors, (b) the due and punctual performance of all 



 10
 









covenants, agreements, obligations and liabilities of
Canadian Borrower and the Canadian Guarantors under or pursuant to this
Agreement and the other Loan Documents with respect to the obligations of
Canadian Borrower, (c) the due and punctual payment and performance of all
obligations of Canadian Borrower and the other Canadian Loan Parties under each
Lender Hedging Agreement to which Canadian Borrower and/or the other Canadian
Loan Parties maybe a party, and (d) the due and punctual payment and
performance of all obligations of any Canadian Loan Party in respect of
overdrafts and related liabilities owed to any Lender, any Affiliate of a
Lender, the Administrative Agents or the Collateral Agents arising from
treasury, depository and cash management services or in connection with any
automated clearinghouse transfer of funds. 
Notwithstanding anything herein to the contrary, the term “Canadian Obligations” shall only refer to obligations of
Canadian Borrower and Canadian Guarantors hereunder and under the other Loan
Documents and shall not refer to obligations of US Borrowers and their US
Subsidiaries.


“Canadian Pledge Agreements”
shall mean that certain Pledge Agreement dated as of the Original Closing Date
by LNT Center pledging sixty-five percent (65%) of its Equity Interests in LNT
I and LNT II to secure the US Obligations and pledging 100% thereof to secure
the Canadian Obligations  and those
certain Pledge Agreements dated as of the Original Closing Date by LNT I, LNT
II, LNT Partnership and Canadian Borrower pledging all of their Equity
Interests in the Canadian Borrower and the Canadian Guarantors, as applicable,
to secure the Canadian Obligations, in each case, addressed to the applicable
Collateral Agents for the benefit of the applicable Secured Parties, as the
same may from time to time be modified, amended, extended or reaffirmed in
accordance with the terms thereof.


“Canadian Prime Rate”
shall mean on any day the greater of:


(a)           a
rate per annum that is equal to the corporate base rate of interest established
from time to time by Bank of Montreal (or such other Schedule I Bank selected
by the Canadian Administrative Agent from time to time) as its reference rate
then in effect on such day for commercial loans made by it in Canada (it is
understood and agreed that such corporate base rate is not necessarily the
lowest rate charged by the Canadian Administrative Agent to its customers); and


(b)           the
CDOR Rate in effect from time to time plus 100 basis points per annum.


Any change in the Canadian Prime Rate shall be
effective as of the opening of business on the date the change become effective
generally.


“Canadian Prime Rate
Borrowing” shall mean a Borrowing comprised of Canadian Prime Rate
Loans.


“Canadian Prime Rate Loans”
shall mean any Canadian Revolving Loan or Canadian Swingline Loan bearing interest
at a rate determined by reference to the Canadian Prime Rate in accordance with
the provisions of Article II.



 11
 









“Canadian Pro Rata
Percentage” of any Canadian Revolving Lender at any time shall mean
the percentage of the total Canadian Revolving Commitments of all Canadian
Revolving Lenders represented by such Lender’s Canadian Revolving Commitment.


“Canadian Reaffirmation
Agreement” means that certain Omnibus Canadian Reaffirmation
Acknowledgement and Amendment to Security Documents dated as of the Closing
Date by and among the Canadian Loan Parties and Agents, as the same may be
amended, amended and restated, supplemented, revised or modified from time to
time.


“Canadian Revolving
Borrowing” shall mean a Borrowing comprised of Canadian Revolving
Loans.


“Canadian Revolving
Commitment” shall mean, with respect to each Revolving Lender, the
commitment, if any, of such Revolving Lender to make Canadian Revolving Loans
hereunder up to the amount set forth on Schedule I to the Lender Addendum
executed and delivered by such Lender or in the Assignment and Assumption
pursuant to which such lender assumed its Canadian Revolving Commitment.  The Canadian Revolving Commitment of each Revolving
Lender is a sub-commitment of its Revolving Commitment and, as such, may be
(a) reduced from time to time pursuant to Section 2.07 and
(b) reduced or increased from time to time pursuant to assignments by or
to such Revolving Lender pursuant to Section 11.04.  The aggregate amount of the Lenders’ Canadian
Revolving Commitments on the Closing Date is $40 million.


“Canadian Revolving Lender”
shall mean a Lender with a Canadian Revolving Commitment.


“Canadian Revolving Loan”
shall mean a Revolving Loan borrowed by the Canadian Borrower denominated in
Canadian dollars or a Bankers’ Acceptance (and any advances with respect
thereto) denominated in Canadian dollars.


“Canadian Secured Parties”  shall mean the Canadian Administrative Agent,
the Canadian Collateral Agents, each Lender that holds Canadian Revolving Loans
or has Canadian Revolving Commitments (in its capacity as such) and the
Canadian Swingline Lender.


“Canadian Security
Agreement” shall mean each certain Security Agreement dated as of
the Original Closing Date in favor of the Canadian Collateral Agents for the
benefit of the Canadian Secured Parties by Canadian Borrower and by each
Canadian Guarantor, which is governed by Canadian law, as the same may from
time to time be modified, amended, extended or reaffirmed in accordance with the
terms thereof.


“Canadian  Swingline Commitment” shall mean the
commitment of the Canadian Swingline Lender to make loans pursuant to Section
2.17, as the same may be reduced from time to time pursuant to Section
2.07 or Section 2.17.  The
amount of the Canadian Swingline Commitment shall initially be $5 million, but
in no event shall exceed the Revolving Commitment.


“Canadian  Swingline Lender” shall have the meaning
assigned to such term in the preamble hereto.



 12
 









“Canadian Swingline Loans”
shall mean any loan made by the Canadian Swingline Lender pursuant to Section
2.17(d).


“Capital
Expenditures” shall mean, for any period, without duplication, the
increase during that period in the gross property, plant or equipment account
in the consolidated balance sheet of LNT and its Subsidiaries, determined in
accordance with GAAP, whether such increase is due to purchase of properties
for cash or financed by the incurrence of Indebtedness, but excluding
(i) expenditures made in connection with the replacement, substitution or
restoration of property pursuant to Section 2.10(d) and (ii) any
portion of such increase attributable solely to acquisitions of property, plant
and equipment in Permitted Acquisitions.


“Capital Lease
Obligations” of any person shall mean the obligations of such person
to pay rent or other amounts under any lease of (or other arrangement conveying
the right to use) real or personal property, or a combination thereof, which
obligations are required to be classified and accounted for as capital leases
on a balance sheet of such person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance
with GAAP.


“Cash Collateral
Account” shall mean a collateral account in the form of a deposit
account established and maintained by the Collateral Agents for the benefit of
the Secured Parties from the proceeds of Collateral collected in the Collection
Account that have not either been released to the Borrowers or applicable
Guarantor or applied immediately to outstanding Obligations.


“Cash Equivalents”
shall mean, as to any person, (a) securities issued, or directly,
unconditionally and fully guaranteed or insured, by the United States, Canada
or any agency or instrumentality thereof (provided
that the full faith and credit of the United States or Canada is pledged in
support thereof) having maturities of not more than one year from the date of
acquisition by such person; (b) time deposits and certificates of deposit
of any Lender or any commercial bank having, or which is the principal banking
subsidiary of a bank holding company organized under the laws of the United
States, any state thereof or the District of Columbia or any province or
territory of Canada having, capital and surplus aggregating in excess of $500
million and a rating of “A” (or such other similar equivalent rating) or higher
by at least one nationally recognized statistical rating organization (as
defined in Rule 436 under the Securities Act) with maturities of not more than
one year from the date of acquisition by such person; (c) repurchase
obligations with a term of not more than 30 days for underlying securities
of the types described in clause (a) above entered into with any bank
meeting the qualifications specified in clause (b) above, which repurchase
obligations are secured by a valid perfected security interest in the
underlying securities; (d) commercial paper issued by any person
incorporated in the United States or Canada rated at least A-1 or the
equivalent thereof by Standard & Poor’s Rating Service or at least P-1 or
the equivalent thereof by Moody’s Investors Service Inc., and in each case
maturing not more than one year after the date of acquisition by such person;
(e) investments in money market funds substantially all of whose assets
are comprised of securities of the types described in clauses (a) through
(d) above; (f) demand deposit accounts maintained in the ordinary course
of business; and (g) other bank accounts which contain funds that have not been
swept to the Concentration Accounts because of the need 



 13
 









to meet compensating balance or other fee requirements
of a bank that provides a Blocked Account.


“Casualty Event”
shall mean any loss of title or any loss of or damage to or destruction of, or
any condemnation or other taking (including by any Governmental Authority) of,
any property of Holdings or any of its Subsidiaries.  “Casualty Event” shall include but not be
limited to any taking of all or any part of any Real Property of any person or
any part thereof, in or by condemnation or other eminent domain proceedings
pursuant to any Requirement of Law, or by reason of the temporary requisition
of the use or occupancy of all or substantially all of any Real Property of any
person or any part thereof by any Governmental Authority, civil or military, or
any settlement in lieu thereof, but shall not include a loss of title to the
extent covered by a title insurance policy.


“CDOR Rate”
shall mean, on any day, the annual rate of interest which is the arithmetic
average of the “BA 1 month” rates applicable to Bankers’ Acceptances issued by
Schedule I banks identified as such on the Reuters Screen CDOR Page at
approximately 10:00 a.m. (Toronto time) on such day (as adjusted by the
Canadian Administrative Agent after 10:00 a.m. (Toronto time) to reflect any
error in any posted rate or in the posted average annual rate).  If the rate does not appear on the Reuters
Screen CDOR Page as contemplated above, then the CDOR Rate on any day shall be
calculated as the arithmetic average of the discount rates applicable to one
month Bankers’ Acceptances of, and as quoted by, any two of the Schedule I
banks, chosen by the Canadian Administrative Agent, as of 10:00 a.m. (Toronto
time) on such day, or if such day is not a Business Day, then on the
immediately preceding Business Day.  If
less than two Schedule I banks quote the aforementioned rate, the CDOR Rate
shall be the rate chosen by the Canadian Administrative Agent.


“CERCLA”
shall mean the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, 42 U.S.C. § 9601 et seq. and all implementing regulations.


A “Change in Control”
shall be deemed to have occurred if:


(a)           Holdings at any time ceases to own
directly or indirectly 100% of the Equity Interests of Borrowers;


(b)           at any time a change of control
occurs under any Material Indebtedness;


(c)           prior to an IPO, the Permitted
Holders cease to own, or to have the power to vote or direct the voting of,
Voting Stock of Holdings representing a majority of the voting power of the
total outstanding Voting Stock of Holdings;


(d)           following an IPO, (i) the
Permitted Holders shall fail to own, or to have the power to vote or direct the
voting of, Voting Stock of Holdings representing more than 25% of the voting
power of the total outstanding Voting Stock of Holdings, (ii) the
Permitted Holders cease to own Equity Interests representing more than 25% of
the total economic interests of the Equity Interests of Holdings or
(iii) any “person” or 



 14
 









“group” (as such terms
are used in Sections 13(d) and 14(d) of the Exchange Act),
other than one or more Permitted Holders, is or becomes the beneficial owner
(as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that for
purposes of this clause such person or group shall be deemed to have “beneficial
ownership” of all securities that such person or group has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of an equal or greater percentage of
Voting Stock of Holdings than the percentage of Voting Stock that the Sponsor
and its Controlled Investment Affiliates own or have the power to vote or
direct the voting of after such IPO; or


(e)           following an IPO, during any period
of two consecutive years, individuals who at the beginning of such period
constituted the Board of Directors of Holdings (together with any new directors
whose election to such Board of Directors or whose nomination for election was
approved by a vote of a majority of the members of the Board of Directors of
Holdings, or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors of Holdings.


For purposes of this definition, a person shall not be
deemed to have beneficial ownership of Equity Interests subject to a stock
purchase agreement, merger agreement, amalgamation agreement or similar
agreement until the consummation of the transactions contemplated by such
agreement.


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


“Charges”
shall have the meaning assigned to such term in Section 11.14.


“Chattel Paper”
shall mean all “chattel paper,” as such term is defined in the UCC as in effect
on the date hereof in the State of New York, or as defined in the PPSA, as
applicable, in which any Person now or hereafter has rights.


“Class,”
when used in reference to any Loan or Borrowing, refers to whether such Loan,
or the Loans comprising such Borrowing, are Revolving Loans or Swingline Loans
and, when used in reference to any Commitment, refers to whether such
Commitment is a Revolving Commitment, US Swingline Commitment or Canadian
Swingline Commitment, in each case, under this Agreement as originally in
effect or pursuant to Section 2.19, of which such Loan, Borrowing or
Commitment shall be a part.


“Closing Date”
shall mean the date of this Agreement.


“Code”
shall mean the Internal Revenue Code of 1986, as amended from time to time.



 15
 









“Collateral”
shall mean, collectively, all of the Security Agreement Collateral, the
Mortgaged Property and all other property of whatever kind and nature subject
or purported to be subject from time to time to a Lien under any Security
Document.


“Collateral Agent”
shall have the meaning assigned to such term in the preamble hereto; provided,
however, when reference is made to the applicable Collateral Agents, the
reference shall be deemed to be (i) to UBS AG, Stamford Branch or UBS AG Canada
Branch as Co-Collateral Agent, if and to the extent that such reference
requires a payment to be made (other than with respect to any indemnification
or such other payment that is to be made to Wachovia Bank, National Association
as Co-Collateral Agent, as provided by this Agreement), (ii) Wachovia Bank,
National Association or Wachovia Capital Finance Corporation (Canada) as
Co-Collateral Agent, if and to the extent that such reference requires action
or determination with respect to the reporting or monitoring of the Collateral,
the Borrowing Base or the Canadian Borrowing Base, as applicable, including any
and all actions relating to Eligible In-Transit Inventory, Eligible Canadian
In-Transit Inventory or Eligible Letters of Credit, and (iii) both US
Collateral Agents or both Canadian Collateral Agents or (in the case of issues
affecting all Lenders (other than after the operation of a CAM Exchange)) all Collateral
Agents if and to the extent that such reference requires action or
determination with respect to other issues, such as the establishment or
modification of eligibility criteria, advance rates or Reserves.


“Collection Accounts”
has the meaning assigned to such term in Section 9.02(d).


“Commercial Letter
of Credit” shall mean any letter of credit or similar instrument
issued for the purpose of providing credit support in connection with the
purchase of materials, goods or services by US Borrowers or any of their
Subsidiaries in the ordinary course of their businesses.


“Commitment”
shall mean, with respect to any Lender, such Lender’s Revolving Commitment,
Canadian Revolving Commitment, US Swingline Commitment or Canadian Swingline
Commitment, and any Commitment to make Revolving Loans of a new Class extended
by such Lender as provided in Section 2.19.


“Commitment Fee”
shall have the meaning assigned to such term in Section 2.05(a).


“Companies”
shall mean Holdings and its Subsidiaries; and “Company” shall mean any one of them.


“Compliance
Certificate” shall mean a certificate of a Financial Officer
substantially in the form of Exhibit D or such other form as may be
acceptable to the Administrative Agents.


“Concentration Accounts”
shall have the meaning assigned to such term in Section 9.02(d).


“Confidential
Information Memorandum” shall mean that certain confidential
information memorandum relating to the Senior Notes dated as of February
8, 2006.



 16















“Consolidated Cash Flow”
means, for any period, the Consolidated Net Income for such period plus, without
duplication:


(i)            an amount equal to any extraordinary
loss plus any net loss realized by LNT or any of its Subsidiaries in connection
with an Asset Sale, to the extent such losses were deducted in computing such
Consolidated Net Income; plus


(ii)           provision for taxes based on income
or profits of LNT and its Subsidiaries for such period, including any
applicable franchise or property taxes, to the extent that such provision for
taxes was deducted in computing such Consolidated Net Income; plus


(iii)          Consolidated Interest Expense for such
period, to the extent that such Consolidated Interest Expense were deducted in
computing such Consolidated Net Income; plus


(iv)          the amount of any restructuring
charges or reserves (which for the avoidance of doubt, shall include retention,
escheat, severance, relocation, excess pension charges, contract termination
costs, including future lease commitments) 
deducted in such period in computing Consolidated Net Income; plus


(v)           the amount of management, monitoring,
consulting and advisory fees and related expenses paid to the Sponsors (or any
accruals relating to such fees and related expenses) during such period;  provided that such
amount shall not exceed $2.0 million in any four quarter period (calculated
without giving effect to this clause (5)); plus


(vi)          cash received pursuant to tenant
allowances from landlords, plus


(vii)         for any quarter in the four quarter
periods ended October 1, 2005 and December 31, 2005, respectively, all
adjustments to net income (or loss) used in connection with the calculation of
pro forma “Adjusted EBITDA” for the 52 weeks ended October 1, 2005 and December
31, 2005, respectively (as set forth in the offering memorandum relating to the
Senior Notes under Note (4) to the section entitled “Offering Memorandum
Summary—Summary Historical and Pro Forma Consolidated Financial and Operating
Data”) to the extent such adjustments are not fully reflected in the applicable
quarter and continue to be applicable; plus


(viii)        depreciation, amortization (including
amortization of intangibles and any amortization of straight line rent expense
but excluding amortization of prepaid cash expenses that were paid in a prior
period) and other non-cash expenses (including charges related to the write-off
of goodwill or intangibles as a result of impairment, in each case as required
by SFAS No. 142 or SFAS No. 144 but excluding any such non-cash expense to the
extent that it represents an accrual of or reserve for cash expenses in any
future period or amortization of a prepaid cash expense that was paid in a
prior period) of LNT and its Subsidiaries for such period to the extent that
such depreciation, 



 17
 









amortization and other
non-cash expenses were deducted in computing such Consolidated Net Income; minus


(ix)           non-cash items increasing such
Consolidated Net Income (including the amortization of tenant allowances
received) for such period, other than the accrual of revenue in the ordinary
course of business,


in each case, on a
consolidated basis and determined in accordance with GAAP.


“Consolidated Fixed Charge
Coverage Ratio” shall mean, for any Test Period, the ratio of (a)
Consolidated Cash Flow for such Test Period to (b) Consolidated Fixed Charges
for such Test Period.


“Consolidated Fixed
Charges” shall mean, for any period, the sum, without duplication,
of


(a)           Consolidated Interest Expense for
such period;


(b)           the aggregate amount of Capital
Expenditures for such period (other than to the extent financed by Excluded
Issuances);


(c)           all cash payments in respect of
income taxes made during such period (net of any cash refund in respect of
income taxes actually received during such period);


(d)           the principal amount of all scheduled
amortization payments on all Indebtedness (including the principal component of
all Capital Lease Obligations, but excluding such amortization payments on
Indebtedness incurred to finance Capital Expenditures included in clause (b)
above in such period or any prior period) of LNT and its Subsidiaries for such
period (as determined on the first day of the respective period);


(e)           the product of all cash dividend
payments on any series of Disqualified Capital Stock of Holdings or any of its
Subsidiaries (other than dividend payments to LNT or any of its Subsidiaries);
and


(f)            the product of all cash dividend
payments on any Preferred Stock (other than Disqualified Capital Stock) of
Holdings or any of its Subsidiaries (other than dividend payments to LNT or any
of its Subsidiaries).


“Consolidated
Indebtedness” shall mean, as at any date of determination, the
aggregate amount of all Indebtedness and all LC Exposure for Standby Letters of
Credit of LNT and its Subsidiaries, determined on a consolidated basis in
accordance with GAAP.


“Consolidated
Interest Expense” shall mean, for any period, the total consolidated
cash interest expense of LNT and its Subsidiaries for such period determined on
a consolidated basis in accordance with GAAP plus,
without duplication each of the following to the extent paid or payable in
cash:



 18
 









(a)           imputed interest on Capital Lease
Obligations of LNT and its Subsidiaries for such period;


(b)           commissions, discounts and other fees
and charges owed by LNT or any of its Subsidiaries with respect to Standby
Letters of Credit, bankers’ acceptance financing and receivables financings for
such period;


(c)           cash contributions to any employee
stock ownership plan or similar trust made by LNT or any of its Subsidiaries to
the extent such contributions are used by such plan or trust to pay interest or
fees to any person (other than LNT or a Wholly Owned Subsidiary) in connection
with Indebtedness incurred by such plan or trust for such period;


(d)           all interest paid or payable with
respect to discontinued operations of LNT or any of its Subsidiaries for such
period;


(e)           the interest portion of any deferred
payment obligations of LNT or any of its Subsidiaries for such period;


(f)            all interest on any Indebtedness of
LNT or any of its Subsidiaries of the type described in clause (e) or (i)
of the definition of “Indebtedness” for such period;


provided that
(a) to the extent directly related to the Transactions, debt issuance
costs, debt discount or premium and other financing fees and expenses shall be
excluded from the calculation of Consolidated Interest Expense and
(b) Consolidated Interest Expense shall be calculated after giving effect
to Hedging Agreements (including associated costs), but excluding unrealized
gains and losses with respect to Hedging Agreements.


Consolidated Interest Expense shall be calculated on a
Pro Forma Basis to give effect to any Indebtedness incurred, assumed or
permanently repaid or extinguished during the relevant Test Period in
connection with the Acquisition, any Permitted Acquisitions and Asset Sales
(other than any dispositions in the ordinary course of business) as if such
incurrence, assumption, repayment or extinguishing had been effected on the
first day of such period.


“Consolidated Net Income”
means, for any period, the aggregate of the Net Income of LNT and its
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that:


(i)            the Net Income (but not loss) of any
person that is not a Subsidiary Guarantor or that is accounted for by the
equity method of accounting will be included only to the extent of the amount
of dividends or similar distributions paid in cash (or converted into cash) to
the US Borrowers or a Subsidiary Guarantor;


(ii)           the Net Income of any Subsidiary will
be excluded to the extent that the declaration or payment of dividends or
similar distributions by that Subsidiary of that Net Income is not at the date
of determination permitted without any prior governmental approval (that has
not been obtained) or, directly or indirectly, by operation 



 19
 









of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Subsidiary or its stockholders; provided that if any such dividend or distribution is
actually received it will be included for the purposes of this definition;


(iii)          any increase in amortization and
depreciation or any one-time non-cash charges resulting from purchase
accounting in connection with any acquisition that is consummated on or after
the date of this Agreement will be excluded;


(iv)          the cumulative effect of a change in
accounting principles will be excluded;


(v)           any net after-tax gains or losses
(less all fees and expenses or charges relating thereto) attributable to
business dispositions or asset dispositions other than in the ordinary course
of business (as determined in good faith by senior management or the board of
directors of Holdings) will be excluded;


(vi)          any net after-tax gains or losses
(less all fees and expenses or charges relating thereto) attributable to the
early extinguishment of indebtedness will be excluded;


(vii)         non-cash gains, losses, income and
expenses resulting from fair value accounting required by Statement of
Financial Accounting Standards No. 133 and related interpretations will be
excluded;


(viii)        the effects of purchase accounting as a
result of the Transactions will be excluded;


(ix)           any fees, expenses and charges
relating to the Transactions (whenever paid) will be excluded; and


(x)            accruals and reserves that are
established within 12 months of the Closing Date and that are required to be
established in accordance with GAAP will be excluded.


“Consolidated Net Tangible
Assets” means, as of any date of determination, the sum of the assets
of LNT and its Subsidiaries after eliminating intercompany items, determined on
a consolidated basis in accordance with GAAP, less (without duplication) (i)
the net book value of all of LNT’s and its Subsidiaries’ licenses, patents,
patent applications, copyrights, trademarks, trade names, goodwill, non-compete
agreements or organizational expenses and other like intangibles shown on the
balance sheet of LNT and its Subsidiaries as of the most recent date for which
such a balance sheet is available, (ii) unamortized Indebtedness discount and
expenses, (iii) all reserves for depreciation, obsolescence, depletion and
amortization of its properties and all other proper reserves related to assets
which in accordance with GAAP have been provided by LNT and its Subsidiaries
and (iv) all current liabilities.



 20
 









“Contested Collateral Lien Conditions” shall mean, with
respect to any Permitted Lien of the type described in clauses (a), (b),
(e) and (f) of Section 6.02, the following conditions:


(a)           US Borrowers shall cause any
proceeding instituted contesting such Lien to stay the sale or forfeiture of
any portion of the Collateral on account of such Lien;


(b)           at the option and at the request of
the US Administrative Agent, to the extent such Lien is in an amount in excess
of $100,000, the applicable Collateral Agent shall maintain a Reserve against
the Borrowing Base or Canadian Borrowing Base, as applicable, in an amount
sufficient to pay and discharge such Lien and the US Administrative Agent’s
reasonable estimate of all interest and penalties related thereto; and


(c)           such Lien shall in all respects be
subject and subordinate in priority to the Lien and security interest created
and evidenced by the Security Documents, except if and to the extent that the
Requirement of Law creating, permitting or authorizing such Lien provides that
such Lien is or must be superior to the Lien and security interest created and
evidenced by the Security Documents.


“Contingent
Obligation” shall mean, as to any person, any obligation, agreement,
understanding or arrangement of such person guaranteeing or intended to
guarantee any Indebtedness, leases, dividends or other obligations (“primary obligations”) of any other person
(the “primary obligor”) in any
manner, whether directly or indirectly, including any obligation of such
person, whether or not contingent, (a) to purchase any such primary
obligation or any property constituting direct or indirect security therefor;
(b) to advance or supply funds (i) for the purchase or payment of any
such primary obligation or (ii) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor; (c) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such
primary obligation; (d) with respect to bankers’ acceptances, letters of
credit and similar credit arrangements, until a reimbursement obligation arises
(which reimbursement obligation shall constitute Indebtedness); or
(e) otherwise to assure or hold harmless the holder of such primary
obligation against loss in respect thereof; provided,
however, that the term “Contingent Obligation” shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business or any product warranties.  The
amount of any Contingent Obligation shall be deemed to be an amount equal to
the stated or determinable amount of the primary obligation in respect of which
such Contingent Obligation is made (or, if less, the maximum amount of such
primary obligation for which such person may be liable, whether singly or
jointly, pursuant to the terms of the instrument evidencing such Contingent Obligation)
or, if not stated or determinable, the maximum reasonably anticipated liability
in respect thereof (assuming such person is required to perform thereunder) as
determined by such person in good faith.


“Contribution, Intercompany
Contracting and Offset Agreement” shall mean that certain
Contribution, Intercompany Contracting and Offset Agreement dated as of the 



 21
 









Original Closing Date by and among the Loan Parties
(other than Foreign Subsidiaries), Collateral Agents and Administrative Agents,
as the same may be amended, amended and restated, reaffirmed, supplemented,
revised or modified from time to time.


“Control”
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a person, whether through
the ownership of voting securities, by contract or otherwise, and the terms “Controlling” and “Controlled” shall have meanings correlative
thereto.


“Control Agreement”
shall have the meaning assigned to such term in the Security Agreement.


“Controlled
Investment Affiliate” means, as to any person, any other person
which directly or indirectly is in Control of, is Controlled by, or is under
common Control with, such person and is organized by such person (or any person
Controlling such person) primarily for making equity or debt investments in
Holdings or other portfolio companies.


“Cost”
shall mean, as determined by the applicable Collateral Agents, in good faith,
with respect to Inventory or Canadian Inventory, as applicable, the lower of
(a) landed cost computed on first-in a first-out basis in accordance with GAAP
or (b) market value; provided, that for purposes of the calculation of
the Borrowing Base or the Canadian Borrowing Base, (i) the Cost of the
Inventory or the Cost of the Canadian Inventory shall not include: (A) the
portion of the cost of Inventory or Canadian Inventory equal to the profit
earned by any Affiliate on the sale thereof to Borrowers or the Borrowing Base
Guarantors or (B) write-ups or write-downs in cost with respect to
currency exchange rates, and (ii) notwithstanding anything to the contrary
contained herein, the cost of the Inventory and Canadian Inventory shall be
computed in the same manner and consistent with the most recent Inventory
Appraisal which has been received and approved by Collateral Agents in their
reasonable discretion.


“Credit Card Agreements”
shall mean all agreements now or hereafter entered into by Borrowers or
Borrowing Base Guarantors with any credit card issuer or any credit card
processor, as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced, including, without
limitation, any agreements entered into in connection with any Private Label
Credit Cards.


“Credit Card Receivables”
shall mean, collectively, all present and future rights of Borrowers or
Borrowing Base Guarantors to payment from (a) any major credit card issuer or
major credit card processor arising from sales of goods or rendition of
services to customers who have purchased such goods or services using a credit
or debit card, (b) any major credit card issuer or major credit card processor
in connection with the sale or transfer of Accounts arising pursuant to the
sale of goods or rendition of services to customers who have purchased such
goods or services using a credit card or a debit card, including, but not
limited to, all amounts at any time due or to become due from any major credit
card issuer or major credit card processor under the Credit Card Agreements or
otherwise and (c) the issuers of Private Label Credit Cards.



 22
 









“Credit Extension”
shall mean, as the context may require, (i) the making of a Loan by a Lender or
(ii) the issuance of any Letter of Credit, or the amendment, extension or
renewal of any existing Letter of Credit, by the Issuing Bank.


“Current Derivative
Exposure”  shall mean, as of any date of
determination, 100% of the aggregate mark-to-market exposure then owing by any
Borrower under Lender Hedging Agreements, determined by all Lenders that are
counterparties to each Lender Hedging Agreement, in good faith and in a
commercially reasonable manner, based on net termination values and calculated
as if such Lender Hedging Agreements were terminated as of such determination
date and a payment were due thereunder to the Lender or its Affiliates and
furnished to the applicable Agent on a bi-monthly basis (or more frequently, in
the commercially reasonable discretion of the applicable Agent).


 “Debt Issuance” shall mean the incurrence by
Holdings or any of its Subsidiaries of any Indebtedness after the Closing Date
(other than as permitted by Section 6.01).


“Default”
shall mean any event, occurrence or condition which is, or upon notice, lapse
of time or both would constitute, an Event of Default.


“Default Rate”
shall have the meaning assigned to such term in Section 2.06(e).


“Discount Note”
shall mean a non-interest bearing promissory note denominated in Canadian
Dollars, substantially in the form of Exhibit K-5, issued by the
Canadian Borrower to evidence a BA Equivalent Loan.


“Discount
Proceeds” shall mean on any day, for any Bankers’ Acceptance issued
hereunder, an amount calculated on such day by multiplying:


(a)           the
face amount of such Bankers’ Acceptance by


(b)           the quotient obtained by dividing:


(i)      one by


(ii)     the sum of one plus the product of:


A)           the Discount Rate
applicable to such Bankers’ Acceptance and


B)            a fraction, the
numerator of which is the number of days in the applicable Interest Period and
the denominator of which is 365,


with the quotient being
rounded up or down to the fifth decimal place and 0.00005 being rounded up.


“Discount Rate”
means, on any day, with respect to an issue of Bankers’ Acceptances, or in
respect of a BA Equivalent Loan, with the same maturity date, (a) for a Lender
which is a Schedule I Lender, (i) the average bankers’ acceptance discount rate
of the 



 23
 









appropriate term as quoted on Reuters Screen CDOR Page
determined at or about 10:00 a.m. (Toronto time) on that day or, (ii) if the
discount rate for a particular term is not quoted on Reuters Screen CDOR Page,
the arithmetic average of the actual discount rates for bankers’ acceptances
for such term accepted by any two of the Schedule I banks, chosen by the
Canadian Administrative Agent, as of 10:00 a.m. (Toronto time) on such day, or
if such day is not a Business Day, then on the immediately preceding Business
Day, and (b) for a Lender which is not a Schedule I Lender, the rate determined
by the Canadian Administrative Agent in accordance with (a) above, plus 10
basis points per annum.


“Disqualified
Capital Stock” shall mean any Equity Interest which, by its terms
(or by the terms of any security into which it is convertible or for which it
is exchangeable), or upon the happening of any event, (a) matures
(excluding any maturity as the result of an optional redemption by the issuer
thereof) or is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or is redeemable at the option of the holder thereof, in whole or in
part, on or prior to the first anniversary of the Final Maturity Date,
(b) is convertible into or exchangeable (unless at the sole option of the
issuer thereof) for (i) debt securities or (ii) any Equity Interests
referred to in (a) above, in each case at any time on or prior to the first anniversary
of the Final Maturity Date, or (c) contains any repurchase obligation
which may come into effect prior to payment in full of all Obligations; provided, however, that any Equity
Interests that would not constitute Disqualified Capital Stock but for
provisions thereof giving holders thereof (or the holders of any security into
or for which such Equity Interests is convertible, exchangeable or exercisable)
the right to require the issuer thereof to redeem such Equity Interests upon
the occurrence of a change in control or an asset sale occurring prior to the
first anniversary of the Final Maturity Date shall not constitute Disqualified
Capital Stock if such Equity Interests provide that the issuer thereof will not
redeem any such Equity Interests pursuant to such provisions prior to the
repayment in full of the Obligations.


“Dividend”
with respect to any person shall mean that such person has declared or paid a
dividend or returned any equity capital to the holders of its Equity Interests
or authorized or made any other distribution, payment or delivery of property
(other than Qualified Capital Stock of such person) or cash to the holders of
its Equity Interests as such, or redeemed, retired, purchased or otherwise
acquired, directly or indirectly, for consideration any of its Equity Interests
outstanding (or any options or warrants issued by such person with respect to
its Equity Interests), or set aside any funds for any of the foregoing
purposes, or shall have permitted any of its Subsidiaries to purchase or
otherwise acquire for consideration any of the Equity Interests of such person
outstanding (or any options or warrants issued by such person with respect to
its Equity Interests).  Without limiting
the foregoing, “Dividends” with respect to any person shall also include all
payments made or required to be made by such person with respect to any stock
appreciation rights, plans, equity incentive or achievement plans or any
similar plans or setting aside of any funds for the foregoing purposes.


“Documentation Agent”
shall have the meaning assigned to such term in the preamble hereto.


“Dollar Equivalent”
shall mean, as to any amount denominated in Canadian dollars on any date of
determination, the amount of dollars that would be required to purchase the amount
of Canadian dollars based upon the Spot Selling Rate.



 24
 









“dollars” or “$” shall mean lawful money of the United
States.


“Eligible Accounts”
shall have the meaning assigned to such term in Section 2.20(a).


“Eligible Assignee”
shall mean (a) if the assignment does not include assignment of a
Revolving Commitment, (i) any Lender, (ii) an Affiliate of any Lender,
(iii) an Approved Fund and (iv) any other person approved by the
applicable Administrative Agent (such approval not to be unreasonably withheld
or delayed) and (b) if the assignment includes assignment of a Revolving
Commitment, (i) any Revolving Lender, (ii) an Affiliate of any
Revolving Lender, (iii) an Approved Fund of a Revolving Lender and
(iv) any other person approved by the applicable Administrative Agent, the
Issuing Bank, the Swingline Lenders and Borrowers (each such approval not to be
unreasonably withheld or delayed); provided
that (x) no approval of Borrowers shall be required during the continuance of a
Default, (y) ”Eligible Assignee” shall not include US Borrowers or any of
their Affiliates or Subsidiaries or any natural person and (z) each Revolving
Lender becoming a party hereto pursuant to an Assignment and Assumption must
also arrange to designate an Affiliate as a Canadian Revolving Lender and such
Canadian Revolving Lender must also become a party hereto pursuant to such
Assignment and Assumption.


“Eligible Canadian Accounts”
shall have the meaning assigned to such term in Section 2.21(a).


“Eligible Canadian
Inventory” shall mean, subject to adjustment as set forth in Section
2.21(b), items of Canadian Inventory of the Canadian Borrower and any
Canadian Borrowing Base Guarantors.


“Eligible Canadian
In-Transit Inventory” means, as of any date of determination,
without duplication of other Eligible Canadian Inventory, Inventory (a) which
has been shipped by or on behalf of a supplier from any location for receipt by
Canadian Borrower or any Canadian Borrowing Base Guarantor within sixty (60)
days of the date of determination, but which has not yet been received by
Canadian Borrower or such Canadian Borrowing Base Guarantor, (b) for which the
purchase order is in the name of Canadian Borrower or any Canadian Borrowing
Base Guarantor, and title has passed to Canadian Borrower or any Canadian
Borrowing Base Guarantor, (c) for which the document of title, to the extent
applicable, reflects Canadian Borrower or any Canadian Borrowing Base Guarantor
as consignee (along with delivery to Canadian Borrower or such Canadian
Borrowing Base Guarantor of the documents of title, to the extent applicable,
with respect thereto), (d) as to which the applicable Collateral Agent has
control over the documents of title, to the extent applicable, which evidence
ownership of the subject Inventory (such as by the delivery of a Freight
Forwarding Agreement), (e) is covered by insurance reasonably acceptable to the
Collateral Agents, and (f) which otherwise is not excluded from the definition
of Eligible Inventory.


“Eligible Canadian Lender”  means
a financial institution that is (i) not a 

non-resident of Canada for the purpose of the ITA, or (ii) an “authorized
foreign bank” as defined in section 2, of the Bank
Act (Canada) and in subsection 248(1) of the ITA, that is not
subject to the restrictions and requirements referred to in subsection 524(2)
of the Bank Act  



 25
 









(Canada) and which will
receive all amounts paid or credited to it under its Canadian Revolving Loans
and under the Loan Documents in respect of its “Canadian banking business” (as
defined in subsection 248(1) of the ITA) for the purposes of paragraph
212(13.3)(a) of the ITA.


“Eligible In-Transit
Inventory” means, as of any date of determination, without
duplication of other Eligible Inventory, Inventory (a) which has been shipped
by or on behalf of a supplier from any location for receipt by either a US
Borrower or any US Borrowing Base Guarantor within sixty (60) days of the date
of determination, but which has not yet been received by such US Borrower or US
Borrowing Base Guarantor, (b) for which the purchase order is in the name of
either a US Borrower or any US Borrowing Base Guarantor, and title has passed
to either a US Borrower or any US Borrowing Base Guarantor, (c) for which the
document of title, to the extent applicable, reflects either a US Borrower or
any US Borrowing Base Guarantor as consignee (along with delivery to such a US
Borrower or US Borrowing Base Guarantor of the documents of title, to the
extent applicable, with respect thereto), (d) as to which either the applicable
Collateral Agent has control over the documents of title, to the extent
applicable, which evidence ownership of the subject Inventory (such as by the
delivery of a Freight Forwarding Agreement) or the goods covered by such
document of title are expected to be delivered to a distribution center
operated by US Borrowers or any of their Subsidiaries within 20 days of the
date such goods become the subject of such document of title, (e) is covered by
insurance reasonably acceptable to the Collateral Agents, and (f) which
otherwise is not excluded from the definition of Eligible Inventory.


“Eligible Inventory”
shall mean, subject to adjustment as set forth in Section 2.20(b), items
of Inventory of the US Borrowers and any US Borrowing Base Guarantors.


“Eligible Letter of Credit”
means, as of any date of determination a Commercial Letter of Credit issued by
the Issuing Bank which meet the following criteria:


 (a) the Inventory being purchased thereunder has
not yet been delivered to a US Borrower or any of the US Borrowing Base
Guarantors;


 (b) The purchase order for such Inventory is in
the name of US Borrowers or any of its US Borrowing Base Guarantors (or
Canadian Borrower or any Canadian Borrowing Base Guarantor, for Letters of
Credit issued pursuant to Section 2.18(m)) and the purchase of which is
supported by a Commercial Letter of Credit issued under this Agreement having
an initial expiry, subject to the proviso hereto, within 120 days after the
date of initial issuance of such Commercial Letter of Credit, provided that
fifty percent (50%) of the maximum Stated Amount all such Commercial Letters of
Credit shall not, at any time, have an initial expiry greater than ninety (90)
days after the original date of issuance of such Commercial Letters of Credit;


(c) Drawing under such Commercial Letters of Credit
requires delivery of a bill of lading or other document of title, which names
the US Collateral Agent, a US Borrower or any of the US Borrowing Base
Guarantors or any of their agents as consignee, which evidences ownership of
the subject inventory and which complies with the requirements of the
applicable Freight Forwarding Agreement;



 26
 









(d) the Inventory is not otherwise included in another
category of Eligible Inventory or Eligible In-Transit Inventory;


(e) the Inventory being purchased thereunder is
covered by insurance reasonably acceptable to the Collateral Agents; and


(f) the Inventory being purchased thereunder is not
expected to be excluded from the definition of Eligible Inventory once it has
been purchased and delivered.


“Embargoed Person”
shall have the meaning assigned to such term in Section 6.20.


“Environment”
shall mean ambient air, indoor air, surface water and groundwater (including
potable water, navigable water and wetlands), the land surface or subsurface strata,
natural resources, the workplace or as otherwise defined in any Environmental
Law.


“Environmental Claim”
shall mean any claim, notice, demand, order, action, suit, proceeding or other
communication alleging liability for or obligation with respect to any
investigation, remediation, removal, cleanup, response, corrective action,
damages to natural resources, personal injury, property damage, fines,
penalties or other costs resulting from, related to or arising out of
(i) the presence, Release or threatened Release in or into the Environment
of Hazardous Material at any location or (ii) any violation or alleged
violation of any Environmental Law, and shall include any claim seeking
damages, contribution, indemnification, cost recovery, compensation or injunctive
relief resulting from, related to or arising out of the presence, Release or
threatened Release of Hazardous Material or alleged injury or threat of injury
to health, safety or the Environment.


“Environmental Law”
shall mean any and all present and future, foreign or domestic, federal,
provincial, territorial or state (or any Subdivision of any of them) treaties,
laws, statutes, ordinances, regulations, rules, decrees, orders, judgments,
consent orders, consent decrees, code or other binding requirements, and the
common law, relating to protection of public health or the Environment, the
Release or threatened Release of Hazardous Material, natural resources or
natural resource damages, or occupational safety or health, and any and all
Environmental Permits.


“Environmental
Permit” shall mean any permit, license, approval, registration,
notification, exemption, consent or other authorization required by or from a
Governmental Authority under Environmental Law.


“Equipment”
shall have the meaning assigned to such term in the applicable Security
Agreement.


“Equity Financing”
shall mean the cash equity investment in Holdings by the Equity Investors as
the same was further invested in cash equity in the US Borrowers on or prior to
the Original Closing Date, in an amount not less than $600 million on
terms and conditions satisfactory to the Administrative Agents; of which at
least 50% was, directly or indirectly, invested by Sponsor and its Controlled
Investment Affiliates.



 27
 









“Equity Interest”
shall mean, with respect to any person, any and all shares, interests,
participations or other equivalents, including membership interests (however
designated, whether voting or nonvoting), of equity of such person, including,
if such person is a partnership, partnership interests (whether general or
limited) and any other interest or participation that confers on a person the
right to receive a share of the profits and losses of, or distributions of
property of, such partnership, whether outstanding on the date hereof or issued
after the Closing Date, but excluding debt securities convertible or
exchangeable into such equity.


“Equity Investors”
shall mean Sponsor, its Controlled Investment Affiliates and one or more
investors reasonably satisfactory to the Administrative Agents and the
Arranger.


“Equity Issuance”
shall mean, without duplication, (i) any issuance or sale by Holdings
after the Original Closing Date of any Equity Interests in Holdings (including
any Equity Interests issued upon exercise of any warrant or option) or any
warrants or options to purchase Equity Interests or (ii) any contribution
to the capital of Holdings; provided,
however, that an Equity Issuance shall not include (x) any
Preferred Stock Issuance or Debt Issuance, (y) any such sale or issuance by
Holdings of not more than an aggregate amount of 5.0% of its Equity Interests
(including its Equity Interests issued upon exercise of any warrant or option
or warrants or options to purchase its Equity Interests but excluding
Disqualified Capital Stock), in each case, to directors, officers or employees
of any Company and (z) any Excluded Issuance.


“ERISA”
shall mean the Employee Retirement Income Security Act of 1974, as the same may
be amended from time to time.


“ERISA Affiliate”
shall mean, with respect to any person, any trade or business (whether or not
incorporated) that, together with such person, is treated as a single employer
under Section 414 (b), (c) or (m) of the Code.


“ERISA Event”
shall mean (a) any “reportable event,” as defined in Section 4043 of
ERISA or the regulations issued thereunder, with respect to a Plan (other than
an event for which the 30-day notice period is waived by regulation);
(b) the existence with respect to any Plan of an “accumulated funding
deficiency” (as defined in Section 412 of the Code or Section 302 of
ERISA), whether or not waived; (c) the failure to make by its due date a
required installment under Section 412(m) of the Code with respect to any
Plan or the failure to make any required contribution to a Multiemployer Plan;
(d) the filing pursuant to Section 412(d) of the Code or
Section 303(d) of ERISA of an application for a waiver of the minimum
funding standard with respect to any Plan; (e) the incurrence by any
Company of any liability under Title IV of ERISA with respect to the
termination of any Plan; (f) the incurrence by the Company of material
liability, under Title IV of ERISA with respect to a defined benefit pension
plan maintained by an ERISA Affiliate or a multi-employer plan (as defined in
ERISA Section 3 (37)) contributed to by an ERISA Affiliate (g) the receipt by
any Company from the PBGC or a plan administrator of any notice relating to the
intention to terminate any Plan or Plans or to appoint a trustee to administer
any Plan, or the occurrence of any event or condition which could reasonably be
expected to constitute grounds under ERISA for the termination of, or the
appointment of a trustee to administer, any Plan; (h) the incurrence by
any Company of any liability with respect to the withdrawal from any Plan or
Multiemployer Plan; (i) the receipt by 



 28
 









any Company of any notice, concerning the imposition
of Withdrawal Liability or a determination that a Multiemployer Plan is, or is
expected to be, insolvent or in reorganization, within the meaning of Title IV
of ERISA; (j) the “substantial cessation of operations” within the meaning
of Section 4062(e) of ERISA with respect to a Plan; (k) the making of any
amendment to any Plan which could result in the imposition of a Lien or the
posting of a bond or other security; and (l) the occurrence of a nonexempt
prohibited transaction (within the meaning of Section 4975 of the Code or
Section 406 of ERISA) which could reasonably be expected to result in
liability to any Company.


“Eurodollar
Borrowing” shall mean a Borrowing comprised of Eurodollar Loans.


“Eurodollar Loan”
shall mean any Eurodollar Revolving Loan.


“Eurodollar
Revolving Borrowing” shall mean a Borrowing comprised of Eurodollar
Revolving Loans.


“Eurodollar
Revolving Loan” shall mean any Revolving Loan bearing interest at a
rate determined by reference to the Adjusted LIBOR Rate in accordance with the
provisions of Article II.


“Event of Default”
shall have the meaning assigned to such term in Section 8.01.


“Excess Amount”
shall have the meaning assigned to such term in Section 2.10(f)(iii).


“Excess Availability” shall mean, at any time, (a) the
lesser of (i) the Revolving Commitments of all of the Lenders and (ii) (x) the
Borrowing Base plus (y) the lesser of the Canadian Borrowing Base and the Canadian
Revolving Commitments on the date of determination less (b) all outstanding Loans and LC Exposure less (c) in the applicable Collateral
Agents’ reasonable discretion, the aggregate amount of all the outstanding and
unpaid trade payables and other obligations of Borrowers and/or the Borrowing
Base Guarantors which are not paid within 75 days past the due date according
to their original terms of sale, in each case as of such date of determination less (d) in the applicable Collateral
Agents’ reasonable discretion, and without duplication, the amount of checks
issued by Borrowers and/or the Borrowing Base Guarantors to pay trade payables
and other obligations but which are not paid within 75 days past the due date
according to their original terms of sale, in each case as of such date of
determination, but which either have not yet been sent or are subject to other
arrangements which are expected to delay the prompt presentation of such checks
for payment.


“Exchange Act”
shall mean the Securities Exchange Act of 1934, as amended.


“Excluded Issuance”
shall mean an issuance and sale of Qualified Capital Stock of Holdings, to the
extent such Qualified Capital Stock is used, or the Net Cash Proceeds thereof
shall be, within ninety (90) days of the consummation of such issuance and
sale, used, without duplication, to finance Capital Expenditures or one or more
Permitted Acquisitions.



 29
 









“Excluded Taxes”
shall mean, with respect to the Administrative Agents, any Lender, the Issuing
Bank or any other recipient of any payment to be made by or on account of any
obligation of Borrowers hereunder, (a) taxes imposed on or measured by its
overall net income (however denominated), franchise taxes imposed on it (in
lieu of net income taxes) and branch profits taxes imposed on it, by a
jurisdiction (or any political subdivision thereof) as a result of the
recipient being organized or having its principal office or, in the case of any
Lender, its applicable lending office in such jurisdiction; (b) in the case of
a Foreign Lender, any U.S. federal withholding tax that (i) is imposed on
amounts payable to such Foreign Lender at the time such Foreign Lender became a
party to the Original Credit Agreement or becomes a party hereto (or designates
a new lending office), except to the extent that such Foreign Lender (or its
assignor, if any) was entitled, at the time of designation of a new lending
office (or assignment), to receive additional amounts from Borrowers with
respect to such withholding tax pursuant to Section 2.15(a) or (y) if
such Foreign Lender is an assignee pursuant to a request by Borrowers under Section
2.16; provided that this subclause (b)(i)
shall not apply to any Tax imposed on a Lender following an Event of Default or
in connection with an interest or participation in any Loan or other obligation
that such Lender was required to acquire pursuant to Section 2.14(d), or
(ii) is attributable to such Lender’s failure to comply with Section 2.15(e);
and (c) those Canadian federal withholding taxes under Part XIII of
the ITA, if any, in excess of the amount of such taxes that would
have been imposed had the recipient of the particular payment
been, at the time of the payment, a resident of the United States for the
purposes of the Canada-United States Income Tax Convention (1980), as amended
from time to time, and entitled to the reduced withholding tax rate provided
under paragraph 2 of Article XI thereof (such rate, for greater certainty,
being 10% (ten percent) as at the date of this Agreement).


“Existing ABR
Borrowings” shall mean all ABR Borrowings advanced under the
Original Credit Agreement and outstanding on the Closing Date.


“Existing Eurodollar
Revolving Borrowings” shall mean all Eurodollar Revolving Borrowings
advanced under the Original Credit Agreement and outstanding on the Closing
Date.


“Existing Obligations”
shall mean the “Obligations” as defined in the Original Credit Agreement.


“Executive Order”
shall have the meaning assigned to such term in Section 3.22.


“Existing Issuing Bank
Letters of Credit” shall mean the outstanding letters of credit
issued before the Original Closing Date by an Issuing Bank for the account of a
Borrower or a Subsidiary of a Borrower set forth on Schedule 1.01(c) hereto.


“Existing Lien”
shall have the meaning assigned to such term in Section 6.02(c).


“Federal Funds
Effective Rate” shall mean, for any day, the weighted average of the
rates on overnight federal funds transactions with members of the Federal
Reserve System of the United States arranged by federal funds brokers, as published
on the next succeeding Business Day by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day that is a Business Day, the
average of the quotations for the day for such transactions 



 30
 









received by the Administrative Agent from three
federal funds brokers of recognized standing selected by it.


“Fee Letter”
shall mean that certain Bank Fee Letter dated as of May 1, 2007 by and among
UBS, UBSS and Borrowers, as the same may be amended, amended and restated,
supplemented, revised or modified from time to time.


“Fees”
shall mean the Commitment Fees, the Administrative Agent Fees, the Collateral
Monitoring Fees, the LC Participation Fees and the Fronting Fees.


“Final Maturity Date”
shall mean the Revolving Maturity Date.


“Financial Officer”
of any person shall mean the chief financial officer, principal accounting
officer, treasurer or controller of such person.


“FIRREA”
shall mean the Federal Institutions Reform, Recovery and Enforcement Act of
1989, as amended.


“First Priority”
means, with respect to any Lien purported to be created in any Collateral
pursuant to any Security Document, that such Lien is the most senior Lien to
which such Collateral is subject (subject to Permitted Liens).


“Foreign Lender”
shall mean any Lender that is not, for United States federal income tax
purposes, (i) an individual who is a citizen or resident of the United
States, (ii) a corporation, partnership or other entity treated as a
corporation or partnership created or organized in or under the laws of the
United States, or any political subdivision thereof, (iii) an estate whose
income is subject to U.S. federal income taxation regardless of its source or
(iv) a trust if a court within the United States is able to exercise
primary supervision over the administration of such trust and one or more
United States persons have the authority to control all substantial decisions
of such trust.


“Foreign Plan”
shall mean any defined benefit pension plan, program, policy, arrangement or
agreement maintained or contributed to by any Company with respect to employees
employed outside the United States.


“Foreign Subsidiary”
shall mean a Subsidiary that is organized under the laws of a jurisdiction
other than the United States or any state thereof or the District of Columbia.


“Freight Forwarding
Agreement” means a multi-party agreement in a form and substance
satisfactory to Collateral Agents among a Borrower, a customs broker, freight
forwarder, or other carrier, and the applicable Collateral Agents in which the
customs broker, freight forwarder, or other carrier acknowledges that it has
control over (in the case of persons other than carriers which are issuing
non-negotiable bills of lading) and holds the documents evidencing ownership of
the subject Inventory or other property for the benefit of such Collateral
Agents and agrees, upon notice from such Collateral Agent to hold and dispose
of the subject Inventory and other property solely as directed by the such
Collateral Agent.


“Fronting Fee”
shall have the meaning assigned to such term in Section 2.05(d).



 31
 









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


“GAAP”
shall mean generally accepted accounting principles in the United States
applied on a consistent basis.


“Governmental
Authority” shall mean the government of the United States of America
or any other nation, or of any political subdivision thereof, whether state,
provincial, territorial or local, and any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative powers or functions
of or pertaining to government (including any supra-national bodies such as the
European Union or the European Central Bank).


“Governmental Real
Property Disclosure Requirements” shall mean any Requirement of Law
of any Governmental Authority requiring notification of the buyer, lessee,
mortgagee, assignee or other transferee of any Real Property, facility,
establishment or business, or notification, registration or filing to or with
any Governmental Authority, in connection with the sale, lease, mortgage,
assignment or other transfer (including any transfer of control) of any Real
Property, facility, establishment or business, of the actual or threatened
presence or Release in or into the Environment, or the use, disposal or
handling of Hazardous Material on, at, under or near the Real Property,
facility, establishment or business to be sold, leased, mortgaged, assigned or
transferred.


“Guaranteed
Obligations” shall have the meaning assigned to such term in Section
7.01.


“Guarantees”
shall mean the guarantees issued pursuant to Article VII by Holdings and
the Subsidiary Guarantors.


“Guarantors”
shall mean Holdings, each Borrowing Base Guarantor and the Subsidiary
Guarantors.


“Hazardous Materials”
shall mean the following:  hazardous
substances; hazardous wastes; polychlorinated biphenyls (“PCBs”) or any substance or compound
containing PCBs; asbestos or any asbestos-containing materials in any form or
condition; radon or any other radioactive materials including any source,
special nuclear or by-product material; petroleum, crude oil or any fraction
thereof; and any other pollutant or contaminant or chemicals, wastes,
materials, compounds, constituents or substances, subject to regulation or
which can give rise to liability under any Environmental Laws.


“Hedging Agreement”
shall mean any swap, cap, collar, forward purchase or similar agreements or
arrangements dealing with interest rates, currency exchange rates or commodity
prices, either generally or under specific contingencies entered into for the
purpose of hedging any Borrower’s exposure to interest or exchange rates, loan
credit exchange, security or currency valuations or commodity prices not for
speculative purposes.



 32















“Hedging Obligations”
shall mean obligations under or with respect to Hedging Agreements.


“Holdings”
shall have the meaning assigned to such term in the preamble hereto.


“Incorporated
Borrowing Base” shall mean at any
time, for each US Borrowing Base Guarantor, subject to adjustment as provided
in Section 2.20, an amount equal to the lesser of:


(a)           the
sum of, without duplication:


(i)            the book value of Eligible Accounts
of such US Borrowing Base Guarantor multiplied by the advance rate of 85%, plus


(ii)           (A) at any time other than during a
Seasonal Advance Period, the lesser of (x) the advance rate of 70% of the Cost
of Eligible Inventory of US Borrowing Base Guarantors, and (y) the advance rate
of 85% of the Net Recovery Cost Percentage multiplied by the Cost of Eligible
Inventory of US Borrowing Base Guarantors and (B) during a Seasonal Advance
Period, the lesser of (x) the advance rate of 80% of the Cost of Eligible
Inventory of US Borrowing Base Guarantors, and (y) the advance rate of 90% of
the Net Recovery Cost Percentage multiplied by the Cost of Eligible Inventory
of US Borrowing Base Guarantors, or


(b)           with respect to the US Borrowing Base
Guarantors, the applicable Borrowing Base Guarantor Intercompany Loan Amount.


“Increase Effective
Date” shall have the meaning assigned to such term in Section
2.19(a).


“Increase Joinder”
shall have the meaning assigned to such term in Section 2.19(c).


“Indebtedness”
of any person shall mean, without duplication, (a) all obligations of such
person for borrowed money or advances; (b) all obligations of such person
evidenced by bonds, debentures, notes or similar instruments; (c) all
obligations of such person under conditional sale or other title retention
agreements relating to property purchased by such person; (d) all
obligations of such person issued or assumed as the deferred purchase price of
property or services (excluding trade accounts payable and accrued obligations
incurred in the ordinary course of business on normal trade terms and not
overdue by more than 90 days); (e) all Indebtedness of others secured
by any Lien on property owned or acquired by such person, whether or not the
obligations secured thereby have been assumed, but limited to the fair market
value of such property; (f) all Capital Lease Obligations, Purchase Money
Obligations and synthetic lease obligations of such person; (g) all
Hedging Obligations to the extent required to be reflected on a balance sheet
of such person; (h) all obligations of such person for the reimbursement
of any obligor in respect of Standby Letters of Credit, letters of guaranty,
bankers’ acceptances and similar credit transactions; and (i) all
Contingent Obligations of such person in respect of Indebtedness or obligations
of others of the kinds referred to in clauses (a) through (h) above.  The Indebtedness of any person shall include
the Indebtedness of any other 



 33
 









entity (including any partnership in which such person
is a general partner) to the extent such person is liable therefor as a result
of such person’s ownership interest in or other relationship with such entity,
except (other than in the case of general partner liability) to the extent that
terms of such Indebtedness expressly provide that such person is not liable
therefor.


“Indemnified Taxes”
shall mean all Taxes other than Excluded Taxes.


“Indemnitee”
shall have the meaning assigned to such term in Section 11.03(b).


“Information”
shall have the meaning assigned to such term in Section 11.12.


“Insolvency Laws”
shall mean any of the BIA, the Companies’ Creditors
Arrangement Act (Canada), and the Winding-Up
and Restructuring Act (Canada), each as now exists or may from time
to time hereafter be amended, modified, recodified, supplemented or replaced,
together with all rules, regulations and interpretations thereunder or related
thereto, and any other applicable insolvency or other similar law of any
jurisdiction, including any law of any jurisdiction permitting a debtor to
obtain a stay or a compromise of the claims of its creditors against it.


“Instruments”
shall mean all “instruments,” as such term is defined in the UCC as in effect
on the date hereof in the State of New York or as defined in the PPSA, as
applicable, in which any Person now or hereafter has rights.


“Insurance Policies”
shall mean the insurance policies and coverages required to be maintained by
each Loan Party which is an owner of Mortgaged Property with respect to the
applicable Mortgaged Property pursuant to Section 5.04 and all renewals
and extensions thereof.


“Insurance
Requirements” shall mean, collectively, all provisions of the
Insurance Policies, all requirements of the issuer of any of the Insurance
Policies and all orders, rules, regulations and any other requirements of the
National Board of Fire Underwriters (or any other body exercising similar
functions) binding upon each Loan Party which is an owner of Mortgaged Property
and applicable to the Mortgaged Property or any use or condition thereof.


“Intellectual
Property” shall have the meaning assigned to such term in Section
3.06(a).


“Intercompany Note”
shall mean a promissory note substantially in the form of Exhibit P.


“Intercreditor Agreement”
shall mean that certain Intercreditor Agreement dated as of the Original
Closing Date by and among Holdings, US Borrowers, Canadian Borrower, the
Subsidiary Guarantors party thereto, US Administrative Agent, US Collateral
Agents, Canadian Collateral Agents and Senior Note Collateral Agent, as the
same may be amended, restated, supplemented or otherwise modified from time to
time.


“Interest Election
Request” shall mean a request by a Borrower to convert or continue a
Revolving Borrowing in accordance with Section 2.08(b), substantially in
the form of Exhibit E.



 34
 









“Interest Payment
Date” shall mean (a) with respect to any ABR Loan or Canadian
Prime Rate Loan, the last Business Day of each March, June, September and
December to occur during any period in which such Loan is outstanding,
(b) with respect to any Eurodollar Loan, the last day of the Interest
Period applicable to the Borrowing of which such Loan is a part and, in the
case of a Eurodollar Loan with an Interest Period of more than three months’
duration, each day prior to the last day of such Interest Period that occurs at
intervals of three months’ duration after the first day of such Interest
Period, (c) with respect to any Swingline Loan, the last Business Day of
each month to occur during any period in which such Swingline Loan is
outstanding and (d) with respect to any Revolving Loan or Swingline Loan, the
Revolving Maturity Date or such earlier date on which the Revolving Commitments
are terminated.


“Interest Period”
shall mean, with respect to any Eurodollar Borrowing or Bankers’ Acceptance,
the period commencing on the date of such Borrowing and ending on the
numerically corresponding day in the calendar month that is one, two, three or
six months (or, if each affected Lender so agrees, nine or twelve months)
thereafter as the applicable Borrower may elect; provided that with respect to any Eurodollar Borrowing
(a) if any Interest Period would end on a day other than a Business Day,
such Interest Period shall be extended to the next succeeding Business Day
unless such next succeeding Business Day would fall in the next calendar month,
in which case such Interest Period shall end on the next preceding Business
Day, and (b) any Interest Period that commences on the last Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the last calendar month of such Interest Period) shall end
on the last Business Day of the last calendar month of such Interest
Period.  For purposes hereof, the date of
a Borrowing initially shall be the date on which such Borrowing is made and
thereafter shall be the effective date of the most recent conversion, rollover
or continuation of such Borrowing.


“Inventory”
shall mean all “inventory,” as such term is defined in the UCC as in effect on
the date hereof in the State of New York, or as defined in the PPSA, as
applicable, wherever located, in which any Person now or hereafter has rights.


“Inventory Appraisal”
shall mean (a) on the Original Closing Date, the audit prepared by the Great
American Appraisal & Valuation Services, L.L.C. dated December, 2005 and
(b) thereafter, the most recent inventory appraisal conducted by an independent
appraisal firm and delivered pursuant to Section 9 hereof.  For the avoidance of doubt, the
Administrative Borrower may, at any time when an Event of Default has not
occurred and is  not continuing, request
that a new Inventory Appraisal be conducted at its expense and the Borrowers
and Agents shall thereafter promptly arrange for such appraisal to be completed
at Borrower’s expense.


“Investments”
shall have the meaning assigned to such term in Section 6.04.


“Issuing Bank”
shall mean, as the context may require, (a) UBS AG, Stamford Branch, in
its capacity as issuer of Letters of Credit issued by it; (b) Wachovia Bank,
National Association in its capacity as issuer of Letters of Credit issued by
it; (c) The Bank of New York in its capacity as issuer of Letters of Credit
issued by it; (d) National City Bank in its capacity as issuer of Letters
of Credit issued by it; (e) any other Lender that may become an Issuing Bank 



 35
 









pursuant to Sections 2.18(j) and (k) in
its capacity as issuer of Letters of Credit issued by such Lender; or
(f) collectively, all of the foregoing.


“ITA” means the
Income Tax Act, RSC 1985, c.1 (5th supp), as amended from time to time.


“Joinder Agreement”
shall mean a joinder agreement substantially in the form of Exhibit F.


“Landlord Access
Agreement” shall mean a Landlord Access Agreement, substantially in
the form of Exhibit G, or such other form as may reasonably be
acceptable to the applicable Administrative Agent.


“LC Acceptance(s)”
shall mean acceptances that are created by an Issuing Bank pursuant to
Commercial Letters of Credit.


“LC Collateral Account” shall mean a collateral account
in the form of a deposit account established and maintained by the applicable
Collateral Agents for the benefit of the Secured Parties, in accordance with
the provisions of Section 9.01.


“LC Commitment”
shall mean the commitment of the Issuing Bank to issue Letters of Credit
pursuant to Section 2.18. 
The total amount of the LC Commitment shall initially be $400  million, but in no event exceed the Revolving Commitment.


“LC Disbursement”
shall mean a payment or disbursement made by the Issuing Bank pursuant to a
Letter of Credit or a LC Acceptance.


“LC Exposure”
shall mean at any time the sum of (a) the Dollar Equivalent of the
aggregate undrawn amount of all outstanding Letters of Credit at such time plus (b) the Dollar Equivalent of the
aggregate principal amount of all Reimbursement Obligations outstanding at such
time, plus, (c) the Dollar Equivalent of the
aggregate amount owing on all outstanding LC Acceptances.  The LC Exposure of any Revolving Lender at
any time shall mean its Pro Rata Percentage of the aggregate LC Exposure at
such time.


“LC Obligations”
shall mean each payment required to be made by US Borrowers and the other Loan
Parties under this Agreement in respect of any Letter of Credit or LC
Acceptance, when and as due, including payments in respect of Reimbursement
Obligations, interest thereon and obligations to provide cash collateral.


“LC Participation
Fee” shall have the meaning assigned to such term in Section
2.05(d).


“LC Request”
shall mean a request by a Borrower in accordance with the terms of Section
2.18(b) and substantially in the form of Exhibit H, or such
other form as shall be approved by the Administrative Agents.


“Leases”
shall mean any and all leases, subleases, tenancies, options, concession
agreements, rental agreements, occupancy agreements, franchise agreements,
access agreements 



 36
 









and any other agreements (including all amendments,
extensions, replacements, renewals, modifications and/or guarantees thereof),
whether or not of record and whether now in existence or hereafter entered
into, affecting the use or occupancy of all or any material portion of any Real
Property.


“Lender Addendum”
shall mean with respect to any Lender on the Closing Date, a lender addendum in
the form of Exhibit I, to be executed and delivered by such Lender
on the Closing Date as provided in Section 11.15, as the same may be
amended, restated, supplemented or otherwise modified from time to time.


“Lender Hedging Agreement”
shall mean any Hedging Agreement between a Borrower and any Person (or
affiliate of such Person) that was a Lender or an Affiliate of such lender at
the time it entered into such Hedging Agreement whether or not such Person has
ceased to be a Lender under this Agreement.


“Lenders”
shall mean (a) the financial institutions that have become a party hereto
pursuant to a Lender Addendum and (b) any financial institution that has
become a party hereto pursuant to an Assignment and Assumption, other than, in
each case, any such financial institution that has ceased to be a party hereto
pursuant to an Assignment and Assumption. 
Unless the context clearly indicates otherwise, the term “Lenders” shall
include the Swingline Lenders and the Canadian Revolving Lenders.


“Letter of Credit”
shall mean any (i) Standby Letter of Credit, (ii) Commercial Letter
of Credit, in each case, issued or to be issued by an Issuing Bank for the
account of the US Borrowers or the Canadian Borrower pursuant to Section
2.18 and (iii) the Existing Issuing Bank Letters of Credit.


“Letter of Credit
Expiration Date” shall mean the date which is five (5) days prior to
the Revolving Maturity Date.


“LIBOR Rate”
shall mean, with respect to any Eurodollar Borrowing for any Interest Period,
the rate per annum determined by the applicable Administrative Agent to be the
arithmetic mean (rounded upward, if necessary, to the nearest 1/100th of 1%) of
the offered rates for deposits in dollars with a term comparable to such
Interest Period that appears on the Reuters Interest Settlement Rates Page (as
defined below) at approximately 11:00 a.m., London, England time, on the second
full Business Day preceding the first day of such Interest Period; provided, however, that (i) if no
comparable term for an Interest Period is available, the LIBOR Rate shall be
determined using the weighted average of the offered rates for the two terms
most nearly corresponding to such Interest Period and (ii) if there shall
at any time no longer exist a Reuters Interest Settlement Rates Page, “LIBOR
Rate” shall mean, with respect to each day during each Interest Period
pertaining to Eurodollar Borrowings comprising part of the same Borrowing, the
rate per annum equal to the rate at which the applicable Administrative Agent
is offered deposits in dollars at approximately 11:00 a.m., London, England
time, two Business Days prior to the first day of such Interest Period in the
London interbank market for delivery on the first day of such Interest Period
for the number of days comprised therein and in an amount comparable to its
portion of the amount of such Eurodollar Borrowing to be outstanding during
such Interest Period.  “Reuters Interest Settlement Rates Page”
shall mean the display designated as Reuters 



 37
 









Screen LIBOR01 Page (or any successor page provided by
Reuters or any successor service for the purpose of displaying the rates at
which dollar deposits are offered by leading banks in the London interbank
deposit market).


“Lien”
shall mean, with respect to any property, (a) any mortgage, deed of trust,
lien, pledge, encumbrance, claim, charge, assignment, hypothecation, security
interest or encumbrance of any kind or any arrangement to provide priority or
preference or any filing of any financing statement or financing change
statement under the UCC or the PPSA or any other similar notice of lien under
any similar notice or recording statute of any Governmental Authority,
including any easement, right-of-way or other encumbrance on title to Real
Property, in each of the foregoing cases whether voluntary or imposed by law,
and any agreement to give any of the foregoing; (b) the interest of a
vendor or a lessor under any conditional sale agreement, capital lease or title
retention agreement (or any financing lease having substantially the same
economic effect as any of the foregoing) relating to such property; and
(c) in the case of securities, any purchase option, call or similar right
of a third party with respect to such securities.


“Line Reserve”
shall have the meaning assigned to such term in Section 2.10(f)(ii).


“LNT” shall have
the meaning assigned to such term in the preamble.


“LNT Center”
shall have the meaning assigned to such term in the preamble.


“LNT Partnership”
means Linens ‘n Things Canada Limited Partnership, an Alberta limited
partnership.


“LNT I” means
Linens ‘n Things Investment Canada I Company, a Nova Scotia unlimited company.


“LNT II” means
Linens ‘n Things Investment Canada II Company, a Nova Scotia unlimited company.


“Loan Documents”
shall mean this Agreement, the Reaffirmation Agreement, the Canadian
Reaffirmation Agreement, the Fee Letter, any Borrowing Base Certificate, the
Letters of Credit, the Notes (if any), the Intercreditor Agreement, and the
Security Documents.


“Loan Parties”
shall mean Holdings, Borrowers and the Subsidiary Guarantors.


“Loans”
shall mean, as the context may require, a US Revolving Loan, a Canadian
Revolving Loan or a Swingline Loan (and shall include any Loans contemplated by
Section 2.19).


“Management Services
Agreement” means that certain Management Services Agreement dated as
of February 14, 2006 among LNT, Holdings, Apollo Management V, L.P., NRDC
Linens B LLC and Silver Point Capital Fund Investments LLC.


“Margin Stock”
shall have the meaning assigned to such term in Regulation U.



 38
 









“Material Adverse
Effect” shall mean (a) a material adverse effect on the
business, property, results of operations, prospects or condition, financial or
otherwise, or material agreements of US Borrowers and their Subsidiaries, taken
as a whole; (b) material impairment of the ability of the Loan Parties to
fully and timely perform their obligations under the Loan Documents;
(c) material impairment of the rights of or benefits or remedies available
to the Lenders or the Collateral Agents under any Loan Document; or (d) a
material adverse effect on the Collateral or the Liens in favor of the
Collateral Agents (for their benefit and for the benefit of the other Secured
Parties) on the Collateral or the priority of such Liens.


“Material
Indebtedness” shall mean (a) the Senior Note Documents and
(b) any other Indebtedness (other than the Loans and Letters of Credit) or
Hedging Obligations of Holdings or any of its Subsidiaries in an aggregate
outstanding principal amount exceeding $30 million.  For purposes of determining Material
Indebtedness, the “principal amount” in respect of any Hedging Obligations of
any Loan Party at any time shall be the maximum aggregate amount (giving effect
to any netting agreements) that such Loan Party would be required to pay if the
related Hedging Agreement were terminated at such time.


“Maximum Rate”
shall have the meaning assigned to such term in Section 11.14.


“Merger”
shall have the meaning assigned to such term in the second recital hereto.


“Mortgage”
shall mean an agreement, including, but not limited to, a mortgage, deed of
trust or any other document, creating and evidencing a Lien on a Mortgaged
Property, which shall be substantially in a form reasonably satisfactory to the
applicable Collateral Agents, in each case, with such schedules and including
such provisions as shall be reasonably necessary to conform such document to
applicable local or foreign law or as shall be customary under applicable local
or foreign law.


“Mortgaged Property”
shall mean (a) each Real Property identified as a Mortgaged Property on Schedule 8(a)
to the Perfection Certificate dated the Closing Date and (b) each Real
Property, if any, which shall be subject to a Mortgage delivered after the
Closing Date pursuant to Section 5.11(c).


“Multiemployer Plan”
shall mean a multiemployer plan within the meaning of Section 4001(a)(3)
or Section 3(37) of ERISA (a) to which any Company is then making or
accruing an obligation to make contributions; (b) to which any Company has
within the preceding five plan years made contributions; or (c) with
respect to which any Company could incur liability.


“Net Cash Proceeds” shall mean:


(a)           with respect to any Asset Sale (other
than any issuance or sale of Equity Interests), the cash proceeds received by
Holdings or any of its Subsidiaries (including cash proceeds subsequently
received (as and when received by Holdings or any of its Subsidiaries) in
respect of non-cash consideration initially received) net of (i) selling
expenses (including reasonable brokers’ fees or commissions, legal, accounting 



 39
 









and other professional
and transactional fees, transfer and similar taxes and Borrowers’ good faith
estimate of income taxes paid or payable in connection with such sale);
(ii) amounts reasonably estimated by Holdings or any of its Subsidiaries
as a reserve, in accordance with GAAP, against (x) any liabilities under
any indemnification obligations associated with such Asset Sale or (y) any
other liabilities retained by Holdings or any of its Subsidiaries associated
with the properties sold in such Asset Sale (provided
that, to the extent and at the time any such amounts are released from such
reserve, such amounts shall constitute Net Cash Proceeds); (iii) Borrowers’
good faith estimate of payments required to be made with respect to unassumed
liabilities relating to the properties sold within 90 days of such Asset
Sale (provided that, to the extent such cash
proceeds are not used to make payments in respect of such unassumed liabilities
within 90 days of such Asset Sale, such cash proceeds shall constitute Net
Cash Proceeds); and (iv) the principal amount, premium or penalty, if any,
interest and other amounts on any Indebtedness for borrowed money (other than
Obligations) which is secured by a Lien on the properties sold in such Asset
Sale (so long as such Lien was permitted to encumber such properties under the
Loan Documents at the time of such sale) and which is repaid with such proceeds
(other than any such Indebtedness assumed by the purchaser of such properties);


(b)           with respect to any Debt Issuance,
any Equity Issuance or any other issuance or sale of Equity Interests by
Holdings or any of its Subsidiaries, the cash proceeds thereof, net of
customary fees, commissions, costs and other expenses incurred in connection
therewith; and


(c)           with respect to any Casualty Event,
the cash insurance proceeds, condemnation awards and other compensation
received in respect thereof, net of all reasonable costs and expenses incurred
in connection with the collection of such proceeds, awards or other
compensation in respect of such Casualty Event.


“Net Income” means, with respect
to any specified person, the net income (loss) of such person, determined in
accordance with GAAP and before any reduction in respect of preferred stock
dividends, excluding for the purposes of the calculation of the Consolidated
Fixed Charge Coverage Ratio only, however:


(i)            any gain (but not loss), together
with any related provision for taxes on such gain (but not loss), realized in
connection with: (a) any Asset Sale; or (b) the disposition of any securities
by such person or any of its Subsidiaries or the extinguishment of any
Indebtedness of such person or any of its Subsidiaries; and


(ii)           any extraordinary gain (but not
loss), together with any related provision for taxes on such extraordinary gain
(but not loss).


“Net Recovery Cost
Percentage” shall mean the fraction, expressed as a percentage, (a)
the numerator of which is the amount equal to the recovery on the aggregate
amount of the Inventory or Canadian Inventory, as applicable, at such time on a
“net orderly liquidation value” basis as set forth in the most recent Inventory
Appraisal received by Collateral Agents in accordance with Section 4.01
or Section 9, net of operating expenses, liquidation expenses and
commissions reasonably anticipated in the disposition of such assets, and (b)
the 



 40
 









denominator of which is the original Cost of the
aggregate amount of the Inventory or the Canadian Inventory, as applicable,
subject to appraisal.


“Non-BA Lender”
shall mean a Canadian Revolving Lender that cannot or does not, as a matter of
policy, accept Bankers’ Acceptances.


“Non-Guarantor
Subsidiary” shall mean each Subsidiary that is not a Subsidiary
Guarantor.


“Notes”
shall mean any notes evidencing the Revolving Loans or Swingline Loans, in each
case, issued pursuant to the Original Credit Agreement or this Agreement, if
any, substantially in the form of Exhibit K-1, K-2, K-3
or K-4, including any notes issued to the Lenders on the Closing Date as
an amendment and restatement of and in substitution for any notes issued on the
Original Closing Date and any notes issued in exchange therefor.


“Obligations”
shall mean (a) obligations of Borrowers and the other Loan Parties from
time to time arising under or in respect of the due and punctual payment of
(i) the principal of and premium, if any, and interest (including interest
accruing during the pendency of any bankruptcy, insolvency, receivership or
other similar proceeding, regardless of whether allowed or allowable in such
proceeding) on the Loans, when and as due, whether at maturity, by
acceleration, upon one or more dates set for prepayment or otherwise,
(ii) each payment required to be made by Borrowers and the other Loan Parties
under this Agreement in respect of any Letter of Credit or LC Acceptance, when
and as due, including payments in respect of Reimbursement Obligations,
interest thereon and obligations to provide cash collateral and (iii) all
other monetary obligations, including fees, costs, expenses and indemnities,
whether primary, secondary, direct, contingent, fixed or otherwise (including
monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding), of Borrowers and the other Loan
Parties under this Agreement and the other Loan Documents, (b) the due and
punctual performance of all covenants, agreements, obligations and liabilities
of Borrowers and the other Loan Parties under or pursuant to this Agreement and
the other Loan Documents, (c) the due and punctual payment and performance of
all obligations of the Borrowers and any and all of the other Loan Parties
under each Lender Hedging Agreement and (d) the due and punctual payment and
performance of all obligations in respect of overdrafts and related liabilities
owed to any Lender, any Affiliate of a Lender, the Administrative Agents or the
Collateral Agents arising from treasury, depositary and cash management
services or in connection with any automated clearinghouse transfer of funds.


“OFAC”
shall have the meaning assigned to such term in Section 3.22.


“Officers’
Certificate” shall mean a certificate executed by the chairman of
the Board of Directors (if an officer), the chief executive officer, the
president or one of the Financial Officers, each in his or her official (and
not individual) capacity.


“Organizational
Documents” shall mean, with respect to any person, (i) in the
case of any corporation, the certificate of incorporation and by-laws (or
similar documents) of such person, (ii) in the case of any limited
liability company, the certificate of formation and 



 41
 









operating agreement (or similar documents) of such
person, (iii) in the case of any limited partnership, the certificate of
formation and limited partnership agreement (or similar documents) of such
person, (iv) in the case of any general partnership, the partnership
agreement (or similar document) of such person, (v) with respect to any Foreign
Subsidiary, the equivalent of the foregoing in its jurisdiction of
incorporation or organization, and (vi) in any other case, the functional
equivalent of the foregoing.


“Original Closing Date”
shall mean February 14, 2006.


“Original Credit Agreement”
shall have the meaning assigned to such term in the preamble hereto.


“Original Lenders”  shall have the meaning assigned to such term
in the preamble hereto.


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


“Participant”
shall have the meaning assigned to such term in Section 11.04(d).


“PBGC”
shall mean the Pension Benefit Guaranty Corporation referred to and defined in
ERISA.


“Perfection
Certificate” shall mean a certificate in the form of Exhibit L-1
or any other form approved by the Collateral Agents, as the same shall be
supplemented from time to time by a Perfection Certificate Supplement or
otherwise.


“Perfection
Certificate Supplement” shall mean a certificate supplement in the
form of Exhibit L-2 or any other form approved by the Collateral
Agents.


“Permitted
Acquisition” shall mean any transaction or series of related
transactions for the direct or indirect (a) acquisition of all or
substantially all of the property of any person, or of any line of business or
division of any person; (b) acquisition of in excess of 50% of the Equity
Interests of any person, and otherwise causing such person to become a
Subsidiary of such person; or (c) merger, amalgamation or consolidation or
any other combination with any person, if each of the following conditions is
met:


(i)            no Default then exists or would
result therefrom;


(ii)           after giving effect to such
transaction on a Pro Forma Basis, (A) Average Excess Availability
determined as of the date five (5) Business Days prior to the Closing Date of
such acquisition would have exceeded $150 million (after giving effect to such
acquisition and the Revolving Loans to be funded in connection therewith as if
made on the first day of such period), and (B) the projections in connection with
the proposed acquisition for the 2 years after the consummation of such
acquisition shall be reasonably acceptable to the Collateral Agents and
Administrative Agents;



 42
 









(iii)          no Company shall, in connection with
any such transaction, assume or remain liable with respect to any Indebtedness
or other liability (including any material tax or ERISA liability) of the
related seller or the business, person or properties acquired, except
(A) to the extent permitted under Section 6.01 and
(B) obligations not constituting Indebtedness incurred in the ordinary
course of business and necessary or desirable to the continued operation of the
underlying properties, and any other such liabilities or obligations not
permitted to be assumed or otherwise supported by any Company hereunder shall
be paid in full or released as to the business, persons or properties being so
acquired on or before the consummation of such acquisition;


(iv)          the person or business to be acquired
shall be, or shall be engaged in, a business of the type that US Borrowers and
their Subsidiaries are permitted to be engaged in under Section 6.15 and
the property acquired in connection with any such transaction shall be made
subject to the Lien of the Security Documents and shall be free and clear of any
Liens, other than Permitted Liens;


(v)           the Board of Directors of the person
to be acquired shall not have indicated publicly its opposition to the
consummation of such acquisition (which opposition has not been publicly
withdrawn);


(vi)          all transactions in connection
therewith shall be consummated in accordance with all applicable Requirements
of Law;


(vii)         with respect to any transaction
involving Acquisition Consideration of more than $100 million, unless the
Administrative Agent shall otherwise agree, Borrowers shall have provided the
Administrative Agents and the Lenders with (A) historical financial
statements for the last three fiscal years (or, if less, the number of years
since formation) of the person or business to be acquired (audited if available
without undue cost or delay) and unaudited financial statements thereof for the
most recent interim period which are available, (B) reasonably detailed
projections for the succeeding five years pertaining to the person or business
to be acquired and updated projections for Borrower after giving effect to such
transaction, (C) a reasonably detailed description of all material
information relating thereto and copies of all material documentation
pertaining to such transaction, and (D) all such other information and
data relating to such transaction or the person or business to be acquired as
may be reasonably requested by the Administrative Agents or the Required
Lenders;


(ix)           the Property acquired in connection
with any such acquisition shall be made subject to the Lien of the Security
Documents on terms reasonably satisfactory to the Agents, and shall be free and
clear of any Liens, other than Permitted Liens, and the Agents shall have
received all opinions, certificates, lien search results and other documents
reasonably requested by the Agents;


(x)            at least 10 Business Days prior to
the proposed date of consummation of the transaction, Borrowers shall have
delivered to the Agents and the Lenders an Officers’ Certificate certifying
that (A) such transaction complies with this definition (which shall have
attached thereto reasonably detailed backup data and 



 43
 









calculations showing such
compliance), and (B) such transaction could not reasonably be expected to
result in a Material Adverse Effect; and


(xi)           the Acquisition Consideration
(exclusive of any amounts financed by Excluded Issuances) for such acquisition
shall not exceed $300 million, and the aggregate amount of the Acquisition
Consideration (exclusive of any amounts financed by Excluded Issuances) for all
Permitted Acquisitions since the Original Closing Date shall not exceed $500
million; provided that any Equity Interests
constituting all or a portion of such Acquisition Consideration shall not have
a cash dividend requirement on or prior to the Final Maturity Date.


“Permitted
Discretion” shall mean a determination made in good faith and in the
exercise of reasonable (from the perspective of a secured asset based lender)
business judgment.


“Permitted Holders”
shall mean (a) Sponsor, (b) its Controlled Investment Affiliates,
(c) Silver Point Capital, L.P. and National Realty & Development Corp.
and (d) each such person’s Related Parties.


“Permitted Liens”
shall have the meaning assigned to such term in Section 6.02.


“Permitted Tax Distributions” shall mean payments,
dividends or distributions by US Borrowers and any US Subsidiaries to Holdings
in order to pay consolidated or combined federal, state or local taxes,
including estimated taxes, not payable directly by US Borrowers or any of their
Subsidiaries which payments by US Borrowers and their US Subsidiaries are not
in excess of the tax liabilities that would have been payable by US Borrowers
and their Subsidiaries on a stand-alone basis.


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


“Plan” shall mean any employee pension benefit plan
(other than a Multiemployer Plan) subject to the provisions of Title IV of
ERISA or Section 412 of the Code or Section 302 of ERISA which is
maintained or contributed to by any Company or with respect to which any
Company could incur liability (including under Section 4069 of ERISA)
other than plans of ERISA Affiliates.


“Post-Increase
Revolving Lenders” shall have the meaning assigned to such term in Section
2.19(d).


“PPSA” shall
mean the Personal Property Security Act (Ontario)
and the Regulations thereunder, as from time to time in effect, provided,
however, if attachment, perfection or priority of any Agent’s security interest
in any Collateral is governed by the personal property security laws of any
jurisdiction other than Ontario, PPSA shall mean those personal property
security laws in such other jurisdiction of Canada for the purposes of the
provisions hereof relating to such attachment, perfection or priority and for
the definitions related to such provisions.



 44
 









“Pre-Increase
Revolving Lenders” shall have the meaning assigned to such term in Section
2.19(d).


“Preferred Stock”
shall mean, with respect to any person, any and all preferred or preference
Equity Interests (however designated) of such person whether now outstanding or
issued after the Closing Date.


“Preferred Stock
Issuance” shall mean the issuance or sale by Holdings or any of its Subsidiaries
of any Preferred Stock after the Closing Date (other than any Excluded
Issuance).


“Premises”
shall have the meaning assigned thereto in the applicable Mortgage.


“Prior Loan Documents”
shall have the meaning assigned to such term in Section 12.01(d) herein.


“Priority Payables”
shall mean, at any time, the full amount of the liabilities at such time which
have a trust imposed to provide for payment or security interest, lien or
charge ranking or capable of ranking senior to or pari passu with security
interests, hypothecs, liens or charges securing the Obligations on any of the
Collateral under federal, provincial, state, county, municipal, or local law
including, but not limited, to claims for unremitted and accelerated rents,
taxes, wages, workers’ compensation obligations, vacation pay, government
royalties or pension fund obligations, together with the aggregate value,
determined in accordance with GAAP, of all Eligible Canadian Inventory which
applicable Collateral Agents consider may be or may become subject to a right
of a supplier to recover possession thereof under any federal or provincial or
territorial law, where such supplier’s right may have priority over the
security interests, liens or charges securing the Obligations including, without
limitation, Eligible Canadian Inventory subject to a right of a supplier to
repossess goods pursuant to Section 81.1 of the BIA.


“Private Label Credit Card”
shall mean a credit card that bears either Borrower’s trademark and/or logo and
is issued by a third party which takes the credit risk as to customers and
makes payments to the Borrowers or Guarantors in a manner similar to other
major credit card issuers.


“Pro Forma Basis”
shall mean on a basis in accordance with GAAP and Regulation S-X and otherwise
reasonably satisfactory to the Administrative Agent.


“Pro Rata Percentage”
of any Revolving Lender at any time shall mean the percentage of the total
Revolving Commitments of all Revolving Lenders represented by such Lender’s
Revolving Commitment, and with respect to any Canadian Revolving Lender at any
time, the percentage of the total Canadian Revolving Commitments of all
Canadian Revolving Lenders represented by such Canadian Revolving Lender’s
Canadian Revolving Commitment.


“property”
shall mean any right, title or interest in or to property or assets of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible
and including Equity Interests or other ownership interests of any person and
whether now in existence or owned or hereafter entered into or acquired,
including all Real Property.



 45
 









“Property Material
Adverse Effect” shall have the meaning assigned thereto in the
Mortgage.


“Purchase Money
Obligation” shall mean, for any person, the obligations of such
person in respect of Indebtedness (including Capital Lease Obligations)
incurred for the purpose of financing all or any part of the purchase price of
any property (including Equity Interests of any person) or the cost of
installation, construction or improvement of any property and any refinancing
thereof; provided, however, that
(i) such Indebtedness is incurred within one year after such acquisition of
such property by such person and (ii) the amount of such Indebtedness does not
exceed 100% of the cost of such acquisition, installation, construction or
improvement, as the case may be.


“Qualified Capital
Stock” of any person shall mean any Equity Interests of such person
that are not Disqualified Capital Stock.


“Reaffirmation Agreement” means
that certain Omnibus Reaffirmation, Acknowledgement and Amendment to Security
Documents dated as of the Closing Date by and among the Loan Parties and
Agents, as the same may be amended, amended and restated, supplemented, revised
or modified from time to time.


“Real Property”
shall mean, collectively, all right, title and interest (including any
leasehold, mineral or other estate) in and to any and all parcels of or
interests in real property owned, leased or operated by any person, whether by
lease, license or other means, together with, in each case, all easements,
hereditaments and appurtenances relating thereto, all improvements and
appurtenant fixtures.


“Refinancing”
shall mean the repayment in full and the termination of any commitment to make
extensions of credit under all of the outstanding indebtedness of Holdings or
any of its Subsidiaries listed on Schedule 1.01(a).


“Register”
shall have the meaning assigned to such term in Section 11.04(c).


“Regulation D”
shall mean Regulation D of the Board as from time to time in effect and all
official rulings and interpretations thereunder or thereof.


“Regulation S-X”
shall mean Regulation S-X promulgated under the Securities Act.


“Regulation T”
shall mean Regulation T of the Board as from time to time in effect and all
official rulings and interpretations thereunder or thereof.


“Regulation U”
shall mean Regulation U of the Board as from time to time in effect and all
official rulings and interpretations thereunder or thereof.


“Regulation X”
shall mean Regulation X of the Board as from time to time in effect and all
official rulings and interpretations thereunder or thereof.



 46
 









“Reimbursement
Obligations” shall mean Borrowers’ obligations under Section
2.18(e) to reimburse LC Disbursements.


“Related Parties”
shall mean, with respect to any person, such person’s Affiliates and the
partners, directors, officers, employees, agents and advisors of such person
and of such person’s Affiliates.


“Release”
shall mean any spilling, leaking, seepage, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, disposing,
depositing, dispersing, emanating or migrating of any Hazardous Material in,
into, onto or through the Environment.


“Required Lenders”
shall mean Lenders having more than 50% of the sum of all Loans outstanding, LC
Exposure and unused Revolving Commitments.


“Requirements of Law”
shall mean, collectively, any and all requirements of any Governmental
Authority including any and all laws, judgments, orders, decrees, ordinances,
rules, regulations, statutes or case law.


“Reserves”
shall mean reserves established against the Borrowing Base or Canadian
Borrowing Base that the Collateral Agents may, in their Permitted Discretion,
establish from time to time.


“Response”
shall mean (a) ”response” as such term is defined in CERCLA, 42 U.S.C.
§ 9601(24), and (b) all other actions required by any Governmental
Authority or voluntarily undertaken to (i) clean up, remove, treat, abate
or in any other way address any Hazardous Material in the Environment; (ii) prevent
the Release or threat of Release, or minimize the further Release, of any
Hazardous Material; or (iii) perform studies and investigations in
connection with, or as a precondition to, or to determine the necessity of the
activities described in, clause (i) or (ii) above.


“Responsible Officer”
of any person shall mean any executive officer or Financial Officer of such
person and any other officer or similar official thereof with responsibility
for the administration of the obligations of such person in respect of this
Agreement.


“Reuters Screen CDOR
Page” shall mean the display designated as page CDOR on the Reuters
Monitor Money Rates Service or such other page as may, from time to time,
replace that page on that service for the purpose of displaying bid quotations for
bankers’ acceptances accepted by leading Canadian banks.


“Revolving
Availability Period” shall mean the period from and including the
Closing Date to but excluding the earlier of (i) the Business Day
preceding the Revolving Maturity Date and (ii) the date of termination of
the Revolving Commitments.


“Revolving Borrowing”
shall mean a Borrowing comprised of Revolving Loans.


“Revolving
Commitment” shall mean, with respect to each Lender, the commitment,
if any, of such Lender to make Revolving Loans hereunder up to the amount set 



 47
 









forth on Schedule I to the Lender Addendum
executed and delivered by such Lender or by an Increase Joinder delivered
pursuant to Section 2.19, or in the Assignment and Assumption pursuant
to which such Lender assumed its Revolving Commitment, as applicable, as the
same may be (a) reduced from time to time pursuant to Section 2.07
and (b) reduced or increased from time to time pursuant to assignments by
or to such Lender pursuant to Section 11.04.  The portion of the Revolving Commitments, if
any, which may be utilized for Canadian Revolving Loans shall constitute the
Canadian Revolving Commitment, which shall be treated as a sub-facility of the
Revolving Commitment and the total Revolving Loans and LC Exposure shall not
exceed the total Revolving Commitments. 
The aggregate amount of the Lenders’ Revolving Commitments on the
Closing Date is $700 million.


“Revolving Exposure”
shall mean, with respect to any Lender at any time, the Dollar Equivalent of
the aggregate principal amount at such time of all outstanding Revolving Loans
of such Lender, plus the Dollar
Equivalent of the aggregate amount at such time of such Lender’s LC Exposure, plus the Dollar Equivalent of the
aggregate amount at such time of such Lender’s Swingline Exposure.


“Revolving Lender”
shall mean a Lender with a Revolving Commitment and, with respect to any
Canadian Revolving Commitment, shall include the respective Canadian Revolving
Lender; it being understood that each Revolving Lender that is not a Canadian
Revolving Lender shall have an affiliated Canadian Revolving Lender that will
provide the Canadian Revolving Loans and become a signatory hereto.


“Revolving Loan”
shall mean a Loan made by any of the Lenders to any Borrower pursuant to Section
2.01(a) or (b).  Each
Revolving Loan shall either be an ABR Revolving Loan, Eurodollar Revolving
Loan, Canadian Prime Rate Loan or Bankers’ Acceptance.


“Revolving Maturity
Date” shall mean February 14, 2011.


“Sale and Leaseback
Transaction” means any arrangement, directly or indirectly, with any
person whereby any person shall sell or transfer any property, real or
personal, used or useful in its business, whether now owned or hereafter
acquired, and thereafter rent or lease such property or other property which it
intends to use for substantially the same purpose or purposes as the property
being sold or transferred.


“Sarbanes-Oxley Act”
shall mean the United States Sarbanes-Oxley Act of 2002, as amended, and all
rules and regulations promulgated thereunder.


“Schedule I Lender”
means any Lender named on Schedule I to the Bank Act
(Canada).


“Seasonal Advance Period”
shall mean the period from and including the first day of the fiscal month of
August of each year to and including December 31 of the same year.


“Secured Obligations”
shall mean (a) the Obligations, (b) the due and punctual payment and
performance of all obligations of Borrowers and the other Loan Parties under
each Hedging Agreement entered into with any counterparty that is a Secured
Party and (c) the due



 48















and punctual payment and performance of all
obligations in respect of overdrafts and related liabilities owed to any
Lender, any Affiliate of a Lender, the Administrative Agents or the Collateral
Agents arising from treasury, depositary and cash management services or in
connection with any automated clearinghouse transfer of funds.


“Secured Parties”
shall mean, collectively, the Administrative Agents, the Collateral Agents, the
Lenders, the Issuing Banks and each party to a Lender Hedging Agreement if at the
date of entering into such Lender Hedging Agreement such person executes and
delivers to the Administrative Agents a letter agreement in form and substance
acceptable to the Administrative Agents pursuant to which such person
(i) appoints the applicable Collateral Agents as its agent under the
applicable Loan Documents and (ii) agrees to be bound by the provisions of
Section 10.03, Section 10.09 and the Security Agreements.


“Securities Act”
shall mean the Securities Act of 1933.


“Securities
Collateral” shall have the meaning assigned to such term in the
Security Agreements.


“Security Agreement
Collateral” shall mean all property pledged or granted as collateral
pursuant to the Security Agreements or pursuant to Section 5.11.


“Security Agreements”
shall mean, collectively, (a) the US Security Agreement and (b) the Canadian
Security Agreements, in each case, as the same may from time to time be
modified, amended, extended or reaffirmed in accordance with the terms thereof.


“Security Documents”
shall mean the Security Agreements, the Mortgages, the Canadian Pledge
Agreements, the US Pledge Agreements, each Canadian Guaranty and each other
security document or pledge agreement delivered in accordance with applicable
local or foreign law to grant a valid, perfected security interest in any
property as collateral for the Secured Obligations, and all UCC or PPSA or
other financing statements or financing change statements or instruments of
perfection required by this Agreement, the Security Agreements, any Mortgage or
any other such security document or pledge agreement to be filed with respect
to the security interests in property and fixtures created pursuant to the
Security Agreements or any Mortgage and any other document or instrument
utilized to pledge or grant or purport to pledge or grant a security interest
or lien on any property as collateral for the Secured Obligations.


“Seller”
shall have the meaning assigned to such term in the first recital hereto.


“Senior Note
Agreement” shall mean that certain Indenture dated as of February
14, 2006 by US Borrowers in favor of Senior Note Collateral Agent pursuant to
which the Senior Notes are issued as in effect on the Original Closing Date and
thereafter amended from time to time subject to the requirements of this Agreement.


“Senior  Note  Collateral”
shall have the meaning assigned to such term in the Intercreditor Agreement.



 49
 









“Senior  Note  Collateral Agent”
means the Bank of New York, in its capacity as the collateral agent under the
Senior Note Documents, together with any successors and assigns.


 “Senior Note Documents” shall mean the
Senior Notes, the Senior Note Agreement, the Senior Note Guarantees and all
other documents executed and delivered with respect to the Senior Notes or the
Senior  Note Agreement.


“Senior Note Guarantees”
shall mean the guarantees of Holdings and the Subsidiary Guarantors pursuant to
the Senior Note Agreement.


“Senior  Note Secured Parties” shall have the meaning assigned to
such term in the Intercreditor Agreement.


 “Senior Notes” shall mean US Borrowers’
Senior Secured Floating Rate Notes due 2014 issued on February 14, 2006 and any
registered notes issued by US Borrowers in exchange for, and as contemplated
by, such notes with substantially identical terms as such notes.


“Specified Obligations”
shall mean any obligation of any Loan Parties under the Loan Documents
consisting of (i) the payment of principal of and interest on Loans and (ii)
Reimbursement Obligations in respect of Letters of Credit.


“Sponsor”
shall mean Apollo Management, L.P. and its Affiliates.


“Spot Selling Rate”
shall mean the spot selling rate at which the US Administrative Agent offers to
sell Canadian Dollars for dollars in the Toronto foreign exchange market at
approximately 11:00 a.m. Toronto time on such date for delivery two (2)
Business Days later.


“Standby Letter of
Credit” shall mean any Letters of Credit other than Letters of
Credit which are Commercial Letters of Credit.


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


“Statutory Reserves”
shall mean (a) for any Interest Period for any Eurodollar Borrowing in
dollars, the average maximum rate at which reserves (including any marginal,
supplemental or emergency reserves) are required to be maintained during such Interest
Period under Regulation D by member banks of the United States Federal Reserve
System in New York City with deposits exceeding one billion dollars against “Eurocurrency
liabilities” (as such term is used in Regulation D).


“Stores” shall
mean any of the retail stores operated by LNT Center and its Subsidiaries.


“Subsidiary”
shall mean, with respect to any person (the “parent”)
at any date, (i) any person the accounts of which would be consolidated
with those of the parent in the parent’s consolidated financial statements if
such financial statements were prepared in 



 50
 









accordance with GAAP as of such date, (ii) any
other corporation, limited liability company, association or other business
entity of which securities or other ownership interests representing more than
50% of the voting power of all Equity Interests entitled (without regard to the
occurrence of any contingency) to vote in the election of the Board of
Directors thereof are, as of such date, owned, controlled or held by the parent
and/or one or more subsidiaries of the parent, (iii) any partnership
(a) the sole general partner or the managing general partner of which is
the parent and/or one or more subsidiaries of the parent or (b) the only
general partners of which are the parent and/or one or more subsidiaries of the
parent and (iv) any other person that is otherwise Controlled by the
parent and/or one or more subsidiaries of the parent.  Unless the context requires otherwise, “Subsidiary”
refers to a Subsidiary of Borrower.


“Subsidiary Guarantor”
shall mean each Subsidiary listed on Schedule 1.01(b), and each other
Subsidiary that is or becomes a party to this Agreement pursuant to Section
5.11.


“Supermajority Lenders”
shall mean at any time, Lenders having at least 66 2/3% of the Revolving
Commitment or, if the Revolving Commitments have been terminated, at least 66
2/3% of the sum of Revolving Exposure.


“Survey”
shall mean a survey of any Mortgaged Property (and all improvements thereon)
which is (i) prepared by a surveyor or engineer licensed to perform
surveys in the jurisdiction where such Mortgaged Property is located,
(ii) dated (or redated) not earlier than six months prior to the date of
delivery thereof unless there shall have occurred within six months prior to
such date of delivery any exterior construction of structures on the site of
such Mortgaged Property or any easement or right of way on the Mortgaged
Property has been granted or become effective through operation of law or
otherwise with respect to such Mortgaged Property which, in either case, can
reasonably be depicted on a survey, in which events, as applicable, such survey
shall be dated (or redated) after the completion of such construction or if
such construction shall not have been completed as of such date of delivery,
not earlier than 20 days prior to such date of delivery, or after the
grant or effectiveness of any such easement or right of way on the applicable
Mortgaged Property, (iii) certified by the surveyor (in a manner
reasonably acceptable to the Administrative Agents) to such Administrative
Agents, the applicable Collateral Agents and the Title Company, and
(iv) complying in all respects with the minimum detail requirements of the
American Land Title Association as such requirements are in effect on the date
of preparation of such survey.


“Swingline Exposure”
shall mean at any time the aggregate principal amount at such time of all
outstanding Swingline Loans.  The
Swingline Exposure of any Revolving Lender at any time shall equal its Pro Rata
Percentage of the aggregate Swingline Exposure at such time.


“Swingline Lenders”
shall have the meaning assigned to such term in the preamble hereto.


“Swingline Loans”
shall mean the US Swingline Loans and the Canadian Swingline Loans.



 51
 









“Syndication Agent”
shall have the meaning assigned to such term in the preamble hereto.


“Tax Return”
shall mean all returns, statements, filings, attachments and other documents or
certifications required to be filed in respect of Taxes.


“Taxes”
shall mean all present or future taxes, levies, imposts, duties, deductions,
withholdings, social security and unemployment taxes, assessments, fees or
other charges imposed by any Governmental Authority, including any interest,
additions to tax or penalties applicable thereto.


“Test Period”
shall mean, at any time, the four consecutive fiscal quarters of US Borrowers
then last ended (in each case taken as one accounting period) for which
financial statements have been or are required to be delivered pursuant to Section
5.01(a) or (b); provided that, for purposes of calculating the Total
Leverage Ratio and the Consolidated Fixed Charge Coverage Ratio at any time
from and after the delivery of a Financial Covenant Amendment Notice the
defined term “Test Period” shall mean, at any such time, the period consisting
of the prior twelve fiscal months then last ended (in each case taken as one
accounting period).


“Title Company”
shall mean any title insurance company as shall be retained by Borrowers and
reasonably acceptable to the Administrative Agent.


“Title Policy”
shall have the meaning assigned to such term in Section 4.01(o)(iii).


“Total Leverage
Ratio” shall mean, at any date of determination, the ratio of
Consolidated Indebtedness on such date to Consolidated Cash Flow for the Test
Period then most recently ended.


“Transaction  Documents” shall mean the Acquisition
Documents, the Senior Note Documents, the Prior Loan Documents and the Loan
Documents.


“Transactions”
shall mean, collectively, (a) the transactions which occurred on or prior to
the Original Closing Date pursuant to the Acquisition Documents, the Senior
Note Documents or the Prior Loan Documents, including (i) the consummation
of the Acquisition; (ii) the execution, delivery and performance of the
Prior Loan Documents; (iii) the Refinancing; (iv) the Equity
Financing; (v) the issuance of the Senior Notes; and (vi) the payment
of all fees and expenses to be paid on or prior to the Original Closing Date
and owing in connection with the foregoing subclauses (i) through (v) and (b)
the transactions which occurred on or prior to the Closing Date pursuant to the
Loan Documents, including the execution, delivery and performance of the Loan
Documents and the payment of all fees and expenses to be paid on or prior to
the Closing Date and owing in connection therewith.


“Transferred
Guarantor” shall have the meaning assigned to such term in Section
7.09.



 52
 









“Trigger Event”
shall mean at any time (a) a Default shall have occurred and be continuing
and/or (b) Average Excess Availability for the preceding fiscal quarter shall
be less than $70 million.


“Type,”
when used in reference to any Loan or Borrowing, refers to whether the rate of
interest on such Loan, or on the Loans comprising such Borrowing, is determined
by reference to the Adjusted LIBOR Rate, the Alternate Base Rate, Canadian
Prime Rate or Bankers’ Acceptances.


“UCC”
shall mean the Uniform Commercial Code as in effect from time to time (except
as otherwise specified) in any applicable state or jurisdiction.


“United States”
shall mean the United States of America.


“US Administrative Agent”
shall have the meaning assigned to such term in the preamble hereto and
includes each other person appointed as the successor pursuant to Article X.


“US Borrower”
shall have the meaning assigned to such term in the preamble hereto.


“US  Borrowing Base Guarantor” shall mean LNT
Inc., a New Jersey corporation, LNT West, a Delaware corporation, and LNT
Merchandising Company, LLC, a Delaware limited liability company and any Wholly
Owned Subsidiary of US Borrowers which may hereafter be approved by the
Administrative Agents and the Collateral Agents which (a) is organized in a
State within the United States, (b) is currently able to prepare all collateral
reports in a comparable manner to the Borrowers’ reporting procedures and (c)
has executed and delivered to the applicable Collateral Agents such joinder
agreements to guarantees, contribution and set-off agreements and other
Security Documents as such Collateral Agents have reasonably requested so long
as such Collateral Agents have received and approved, in their reasonable
discretion, (i) a collateral audit and Inventory Appraisal conducted by an
independent appraisal firm reasonably acceptable to such Collateral Agents and
(ii) all UCC and similar search results necessary to confirm such Collateral
Agents’ first priority Lien on all of such Borrowing Base Guarantor’s personal
property, subject to Permitted Liens.


“US Obligations”
shall mean (a) obligations of US Borrowers and the other Loan Parties from time
to time arising under or in respect of the due and punctual payment of (i) the
principal of and premium, if any, and interest (including interest accruing
during the pendency of any bankruptcy, insolvency, receivership or other
similar proceeding, regardless of whether allowed or allowable in such
proceeding) on the US Revolving Loans and the US Swingline Loans, when and as
due, whether at maturity, by acceleration, upon one or more dates set for
prepayment or otherwise, (ii) each payment required to be made by US Borrowers
and the other Loan Parties under this Agreement in respect of any Letter of
Credit or LC Acceptance, when and as due, including payments in respect of
Reimbursement Obligations, interest thereon and obligations to provide cash
collateral and (iii) all other monetary obligations, including fees, costs,
expenses and indemnities, whether primary, secondary, direct, contingent, fixed
or otherwise (including monetary obligations incurred during the pendency of
any bankruptcy, insolvency, receivership or other similar proceeding,
regardless of whether allowed or allowable 



 53
 









in such proceeding), of US Borrowers and the other
Loan Parties under this Agreement and the other Loan Documents, (b) the due and
punctual performance of all covenants, agreements, obligations and liabilities
of US Borrowers and the other Loan Parties under or pursuant to this Agreement
and the other Loan Documents, (c) the due and punctual payment and performance
of all obligations of the US Borrowers and any and all of the other Loan Parties
under each Lender Hedging Agreement and (d) the due and punctual payment and
performance of all obligations in respect of overdrafts and related liabilities
owed to any Lender, any Affiliate of a Lender, the Administrative Agents or the
Collateral Agents arising from treasury, depositary and cash management
services or in connection with any automated clearinghouse transfer of funds.


“US Pledge Agreements”
shall mean that certain Pledge Agreement dated as of the Original Closing Date
by Holdings pledging all of its Equity Interests in LNT and that certain Pledge
Agreement dated as of the Original Closing Date by LNT and certain US
Subsidiaries pledging all of their Equity Interests in LNT Center and the
Subsidiary Guarantors, as applicable (except the Canadian Loan Parties), in
each case, addressed to the Collateral Agents for the benefit of the Secured
Parties, as the same may from time to time be modified, amended, extended or
reaffirmed in accordance with the terms thereof.


“US Revolving Commitment”
shall mean, with respect to each Revolving Lender, the commitment, if any, of
such Revolving Lender to make US Revolving Loans hereunder up to its Pro Rata
Percentage of the Revolving Commitment.


“US Revolving Exposure” shall
mean, with respect to any Lender at any time, the Dollar Equivalent of the
aggregate principal amount at such time of all outstanding Revolving Loans made
to US Borrowers of such Lender, plus the
aggregate amount at such time of such Lender’s LC Exposure, plus the aggregate amount at such time of such Lender’s
Swingline Exposure to US Borrower.


“US Revolving Lender”
shall mean a Lender with a US Revolving Commitment.


“US Revolving Loans”
shall mean each Revolving Loan borrowed by a US Borrower.


“US Security Agreement”
shall mean that Security Agreement dated as of the Original Closing Date by and
among certain of the Loan Parties and US Collateral Agents for the benefit of
the Secured Parties, as the same may from time to time be modified, amended,
extended or reaffirmed in accordance with the terms thereof.


“US Subsidiary”
shall mean a Subsidiary organized in a State of the United States.


“US  Swingline Commitment” shall mean the
commitment of the Swingline Lender to make loans pursuant to Section 2.17,
as the same may be reduced from time to time pursuant to Section 2.07 or
Section 2.17.  The amount of the
US Swingline Commitment shall initially be $35 million, but in no event shall
exceed the Revolving Commitment.


“US  Swingline Lender” shall have the meaning
assigned to such term in the preamble hereto.



 54
 









“US Swingline Loans”
shall mean any loan made by the US Swingline Lender pursuant to Section
2.17(a).


“Voting Stock”
shall mean, with respect to any person, any class or classes of Equity
Interests pursuant to which the holders thereof have the general voting power
under ordinary circumstances to elect at least a majority of the Board of
Directors of such person.


“Wholly Owned
Subsidiary” shall mean, as to any person, (a) any corporation
100% of whose capital stock (other than directors’ qualifying shares) is at the
time owned by such person and/or one or more Wholly Owned Subsidiaries of such
person and (b) any partnership, association, joint venture, limited
liability company or other entity in which such person and/or one or more
Wholly Owned Subsidiaries of such person have a 100% equity interest at such
time.


“Withdrawal
Liability” shall mean liability to a Multiemployer Plan as a result
of a complete or partial withdrawal from such Multiemployer Plan, as such terms
are defined in Part I of Subtitle E of Title IV of ERISA.


SECTION 1.02.  Classification
of Loans and Borrowings.  For
purposes of this Agreement, Loans may be classified and referred to by Class (e.g., a “Revolving Loan”) or by Type
(e.g., a “Eurodollar Loan”)
or by Class and Type (e.g., a “Eurodollar
Revolving Loan”).  Borrowings also may be
classified and referred to by Class (e.g., a
“Revolving Borrowing,” “Borrowing of Tranche A Loans”) or by Type (e.g., a “Eurodollar Borrowing”) or by
Class and Type (e.g., a “Eurodollar
Revolving Borrowing”).


SECTION 1.03.  Terms
Generally.  The definitions of terms
herein shall apply equally to the singular and plural forms of the terms
defined.  Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms.  The words “include,” “includes”
and “including” shall be deemed to be followed by the phrase “without
limitation.”  The word “will” shall be
construed to have the same meaning and effect as the word “shall.”  Unless the context requires otherwise
(a) any definition of or reference to any Loan Document, agreement,
instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any
reference herein to any person shall be construed to include such person’s
successors and assigns, (c) the words “herein,” “hereof” and “hereunder,”
and words of similar import, shall be construed to refer to this Agreement in
its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement, (e) any reference to any law or regulation herein shall
refer to such law or regulation as amended, modified or supplemented from time
to time, (f) the words “asset” and “property” shall be construed to have
the same meaning and effect and to refer to any and all tangible and intangible
assets and properties, including cash, securities, accounts and contract rights
and (g) “on,” when used with respect to the Mortgaged Property or any property
adjacent to the Mortgaged Property, means “on, in, under, above or about.”



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SECTION 1.04.  Accounting
Terms; GAAP.  Except as otherwise
expressly provided herein, all financial statements to be delivered pursuant to
this Agreement shall be prepared in accordance with GAAP as in effect from time
to time and all terms of an accounting or financial nature shall be construed
and interpreted in accordance with GAAP, as in effect on the date hereof unless
otherwise agreed to by Borrower and the Required Lenders.  With respect to any change in the fiscal
year-end of the Loan Parties (as permitted by Section 6.17 herein), if the new
fiscal year-end does not coincide with the Saturday closest to the end of
March, June, September or December then (i) the table set forth in Section
6.10(a) hereof shall be adjusted so that each Test Period ending date coincides
with the ending date of a new fiscal quarter and the required Total Leverage
Ratio for each such new Test Period ending date shall be the amount determined
by straight-line interpolation between the Total Leverage Ratios currently
specified for the Test Period ending dates most closely preceding and following
each new Test Period ending date (for example, if the fiscal year end is
changed to the Saturday closest to July 31, then one of the new Test Period
ending dates would be the last day of the fiscal quarter ending closest to
October 31, 2008 and the required Total Leverage Ratio at such Test Period
ending date would be 4.16667), and (ii) the table in Section 6.10(b) hereof
shall be adjusted so that the scheduled step-up in the Consolidated Fixed
Charge Coverage Ratio is moved to the new fiscal quarter ending date most
closely following March 31, 2008. The Administrative Agents shall determine any
adjustments which may be required by the preceding sentence and, absent
manifest error in the calculation thereof, ten days after delivering written
notice of such adjusted financial covenants to the Administrative Borrower,
such adjusted financial covenants shall be effective against and binding upon
the Agents, the Lenders and the Loan Parties for all purposes under this
Agreement as of the date of such change in fiscal year-end (a “Financial
Covenant Amendment Notice”).


SECTION 1.05.  Resolution
of Drafting Ambiguities.  Each Loan
Party acknowledges and agrees that it was represented by counsel in connection
with the execution and delivery of the Loan Documents to which it is a party,
that it and its counsel reviewed and participated in the preparation and
negotiation hereof and thereof and that any rule of construction to the effect
that ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation hereof or thereof.


ARTICLE
II.



THE CREDITS


SECTION 2.01.  Commitments.  Subject to the terms and conditions and
relying upon the representations and warranties herein set forth, each Lender
agrees, severally and not jointly as follows:


(a)           each
US Revolving Lender agrees, severally and not jointly, to make US Revolving
Loans to US Borrowers, at any time and from time to time on or after the
Closing Date until the earlier of the Business Day prior to the Revolving
Maturity Date and the termination of the Revolving Commitment of such Lender in
accordance with the terms hereof, in an aggregate principal amount at any time
outstanding that will not (subject to the provisions of Section 10.10
and Section 10.11) result in such Lender’s US Revolving Exposure
exceeding the lesser of (i) such Lender’s Revolving Commitment less such Lender’s
Pro Rata Percentage of 



 56
 









any Line Reserve and (ii) such Lender’s Pro Rata Percentage multiplied
by the Borrowing Base then in effect; and


(b)         each Canadian Revolving Lender agrees,
severally and not jointly, to make Canadian Revolving Loans to Canadian
Borrower, at any time and from time to time on or after the Closing Date until
the earlier of the Business Day prior to the Revolving Maturity Date and the
termination of the Canadian Revolving Commitment of such Lender in accordance
with the terms hereof, in an aggregate principal amount at any time outstanding
that will not (subject to Section 10.10 and Section 10.11) result
in such Lender’s Canadian Exposure exceeding the lesser of (i) such Lender’s
Canadian Revolving Commitment less such Lender’s Pro Rata Percentage of any
Line Reserve allocated to Canadian Revolving Commitments and (ii) such
Lender’s Pro Rata Percentage multiplied by the Canadian Borrowing Base then in
effect.


Within the limits set forth in clause (a) and clause
(b) above and subject to the terms, conditions and limitations set forth
herein, Borrower may borrow, pay or prepay and reborrow Revolving Loans.


SECTION 2.02.  Loans.


(a)           Each Loan (other than Swingline
Loans) shall be made as part of a Borrowing consisting of Loans made by the
Lenders ratably in accordance with their applicable Commitments; provided, that the failure of any Lender to make its Loan shall not in
itself relieve any other Lender of its obligation to lend hereunder (it being
understood, however, that no Lender shall be responsible for the failure of any
other Lender to make any Loan required to be made by such other Lender).  Except for Loans deemed made pursuant to Section
2.18(e)(ii), (A) ABR Loans comprising any Borrowing shall be in an
aggregate principal amount that is (i) an integral multiple of $1.0 million and
not less than $3.0 million or (ii) equal to the remaining available balance of
the applicable Commitments and (B) the Eurodollar Loans comprising any
Borrowing shall be in an aggregate principal amount that is (i) an integral
multiple of $1.0 million and not less than $3.0 million or (ii) equal to the
remaining available balance of the applicable Commitments (C) Canadian
Prime Rate Loans in Canadian dollars comprising any Borrowing shall be in an
aggregate principal amount that is (i) an integral multiple of Can$100,000
and not less than Can$1.0 million or (ii) equal to the remaining available
balance of the applicable Commitments and (D) Bankers’ Acceptances in Canadian
dollars comprising any Borrowing shall be in an aggregate principal amount that
is (i) an integral multiple of Can$100,000 and not less than Can$3.0 million or
(ii) equal to the remaining available balance of the applicable commitments.


(b)           Subject to Section 2.11 and Section
2.12, each Borrowing shall be comprised entirely of ABR Loans, Eurodollar
Loans, Canadian Prime Rate Loans or Bankers’ Acceptances as the applicable
Borrower may request pursuant to Section 2.03.  Each Lender may at its option make any
Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such
Lender to make such Loan; provided
that any exercise of such option shall not affect the obligation of such
Borrower to repay such Loan in accordance with the terms of this
Agreement.  Borrowings of more than one
Type may be outstanding at the same time; provided that such Borrower shall not be entitled to request
any Borrowing that, if made, would result in more than eight Eurodollar
Borrowings outstanding hereunder at any one time.  For purposes of the foregoing, Borrowings 



 57
 









having
different Interest Periods, regardless of whether they commence on the same
date, shall be considered separate Borrowings.


(c)           Except with respect to Loans deemed
made pursuant to Section 2.18(e)(ii), each Lender shall make each Loan
to be made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds to such account in New York City or Toronto, as the
case may be, as the applicable Administrative Agent may designate not later
than 11:00 a.m., New York City time, and the applicable Administrative Agent
shall promptly credit the amounts so received to an account as directed by the
Administrative Borrower in the applicable Borrowing Request maintained with the
applicable Administrative Agent or, if a Borrowing shall not occur on such date
because any condition precedent herein specified shall not have been met,
return the amounts so received to the respective Lenders.


(d)           Unless the applicable Administrative
Agent shall have received notice from a Lender prior to the date of any
Borrowing that such Lender will not make available to the applicable
Administrative Agent such Lender’s portion of such Borrowing, such
Administrative Agent may assume that such Lender has made such portion
available to such Administrative Agent on the date of such Borrowing in
accordance with paragraph (c) above, and such Administrative Agent may, in
reliance upon such assumption, make available to the applicable Borrower on
such date a corresponding amount.  If the
applicable Administrative Agent shall have so made funds available, then, to
the extent that such Lender shall not have made such portion available to such
Administrative Agent, each of such Lender and the Borrowers severally agrees to
repay to such Administrative Agent forthwith on demand such corresponding
amount together with interest thereon, for each day from the date such amount
is made available to the applicable Borrower until the date such amount is
repaid to such Administrative Agent at (i) in the case of such Borrower,
the interest rate applicable at the time to the Loans comprising such Borrowing
and (ii) in the case of such Lender, the greater of the Federal Funds
Effective Rate and a rate determined by such Administrative Agent in accordance
with banking industry rules on interbank compensation.  If such Lender shall repay to such
Administrative Agent such corresponding amount, such amount shall constitute
such Lender’s Loan as part of such Borrowing for purposes of this Agreement,
and Borrowers’ obligation to repay such Administrative Agent such corresponding
amount pursuant to this Section 2.02(d) shall cease.


(e)           Notwithstanding any other provision
of this Agreement, Borrowers shall not be entitled to request, or to elect to
convert or continue, any Borrowing if the Interest Period requested with
respect thereto would end after the Revolving Maturity Date.


SECTION 2.03.  Borrowing
Procedure.


(a)           Borrowings.  To request a Revolving Borrowing, the
Administrative Borrower shall deliver, by hand delivery or telecopier, a duly
completed and executed Borrowing Request to the applicable Administrative Agent
(i) in the case of a Eurodollar Borrowing in dollars or a Bankers’
Acceptance, not later than 11:00 a.m., New York City time, three Business Days
before the date of the proposed Borrowing, (ii) in the case of an ABR
Borrowing, not later than 9:00 a.m., New York City time, on the date of the
proposed Borrowing or (iii) in the case of a Borrowing of Canadian Prime Rate
Loans, not later than 11:00 a.m., New York time, one 



 58
 









Business Day before the date of the proposed Borrowing.  Each Borrowing Request shall be irrevocable
and shall specify the following information in compliance with Section 2.02:


(i)            the aggregate amount and Approved
Currency of such Borrowing;


(ii)           the date of such Borrowing, which
shall be a Business Day;


(iii)          for US Revolving Loans, whether such
Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing or, for Canadian
Revolving Loans, whether such Borrowing is to be by way of Bankers’ Acceptance
or Canadian Prime Rate Loan;


(iv)          in the case of a Eurodollar Borrowing
or a Bankers’ Acceptance, the initial Interest Period to be applicable thereto,
which shall be a period contemplated by the definition of the term “Interest
Period”;


(v)           the name of the applicable Borrower
and the location and number of the applicable Borrower’s account to which funds
are to be disbursed, which shall comply with the requirements of Section
2.02(c); and


(vi)          that the conditions set forth in Section
4.02(b) – (e) have been satisfied as of the date of the notice.


If no election as to the Type of Borrowing is
specified, then the requested Borrowing shall be an ABR Borrowing in dollars
or, in the case of a Canadian Revolving Loan in Canadian dollars, a Canadian
Prime Rate Loan.  If no Interest Period
is specified with respect to any requested Eurodollar Borrowing or Bankers’
Acceptance then the applicable Borrower shall be deemed to have selected an
Interest Period of one month’s duration. 
Promptly following receipt of a Borrowing Request in accordance with
this Section, such Administrative Agent shall advise each applicable Lender of
the details thereof and of the amount of such Lender’s Loan to be made as part
of the requested Borrowing.


(b)           Bankers’
Acceptances.


(i)            Canadian Administrative Agent.  On each date that a Bankers’ Acceptance is to
be accepted hereunder, the Canadian Administrative Agent  shall advise the Canadian Borrower as to the
Canadian Administrative Agent’s determination of the applicable Discount Rate
for the Bankers’ Acceptance which any of the Canadian Revolving Lenders have
agreed to accept and purchase.


(ii)           Purchase.  Each Canadian Revolving Lender shall purchase
a Bankers’ Acceptance accepted by it, and the Canadian Borrower shall sell such
Bankers’ Acceptance to such Canadian Revolving Lender at the applicable
Discount Rate.  The relevant Canadian
Revolving Lender shall provide to the Canadian Administrative Agent on the date
of the related Borrowing the Discount Proceeds less the Acceptance Fee payable
by the Canadian Borrower with respect to such Bankers’ Acceptance.



 59
 









(iii)          Sale.  Each Canadian Revolving Lender may from time
to time hold, sell, rediscount or otherwise dispose of any or all Bankers’
Acceptances accepted and purchased by it.


(iv)          Power of Attorney for the Execution
of Bankers’ Acceptances.  To
facilitate the issuance of Bankers’ Acceptances, the Canadian Borrower hereby
appoints each Canadian Revolving Lender as its attorney to sign and endorse on
its behalf, in handwriting or facsimile or mechanical signature as and when
deemed necessary by such Canadian Revolving Lender, blank forms of Bankers’
Acceptances.  In this respect, it is
each  Canadian Revolving Lender’s responsibility
to maintain an adequate supply of blank forms of Bankers’ Acceptances for
acceptance under this Agreement.  The
Canadian Borrower recognizes and agrees that all Bankers’ Acceptances signed
and/or endorsed on its behalf by a Canadian Revolving Lender shall bind the Canadian
Borrower as fully and effectually as if signed in the handwriting of and duly
issued by the proper signing officers of the Canadian Borrower.  Each Canadian Revolving Lender is hereby
authorized to issue such Bankers’ Acceptances endorsed in blank in such face
amounts as may be determined by such Canadian Revolving Lender; provided that the aggregate amount thereof is equal to the
aggregate amount of Bankers’ Acceptances required to be accepted and purchased
by such Canadian Revolving Lender.  No
Canadian Revolving Lender shall be liable for any damage, loss or other claim
arising by reason of any loss or improper use of any such instrument except for
the gross negligence or willful misconduct of such Canadian Revolving
Lender.  Each Canadian Revolving Lender
shall maintain a record with respect to Bankers’ Acceptances held by it in
blank hereunder, voided by it for any reason, accepted and purchased by it
hereunder, and canceled at their respective maturities.


(v)           Execution.  Drafts drawn by the Canadian Borrower to be
accepted as Bankers’ Acceptances shall be signed by a duly authorized officer
or officers of the Canadian Borrower or by its attorneys-in-fact, including
attorneys-in-fact appointed pursuant to this Section.  Notwithstanding that any person whose
signature appears on any Bankers’ Acceptance may no longer be an authorized
signatory for the Canadian Borrower at the time of issuance of a Bankers’
Acceptance, that signature shall nevertheless be valid and sufficient for all
purposes as if the authority had remained in force at the time of issuance and
any Bankers’ Acceptance so signed shall be binding on the Canadian
Borrower.  Any executed drafts or orders
to be used as Bankers’ Acceptances shall be held in safekeeping with the same
degree of care as if they were Lender’s own property.


(vi)          Issuance.  The Canadian Administrative Agent, promptly
following receipt of a Borrowing Request or Interest Election Request for
Bankers’ Acceptances, shall advise the Canadian Revolving Lenders of the notice
and the face amount of Bankers’ Acceptances to be accepted by it and the
applicable Interest Period (which shall be identical for all Canadian Revolving
Lenders).  The aggregate face amount of
Bankers’ Acceptances to be accepted by a Canadian Revolving Lender shall be
determined by reference to such Canadian Revolving Lender’s Canadian Pro Rata
Percentage of the issue of Bankers’ Acceptances, except that, if the face
amount of a Bankers’ Acceptance which would otherwise be accepted by a Canadian
Revolving 



 60
 









Lender would
not be Can$500,000 or a whole multiple thereof, the face amount shall be
increased or reduced by the Canadian Administrative Agent in its sole
discretion to Can$100,000, or the nearest whole multiple of that amount, as
appropriate; provided that after such issuance,
no Canadian Revolving Lender shall have aggregate outstanding Canadian Exposure
in excess of its Canadian Revolving Commitment.


(vii)         Waiver of Presentment and Other
Conditions.  The Canadian Borrower
waives presentment for payment and any other defense to payment of any amounts
due to any Canadian Revolving Lender in respect of a Bankers’ Acceptance
accepted and purchased by it pursuant to this Agreement which might exist
solely by reason of the Bankers’ Acceptance being held, at the maturity
thereof, by such Canadian Revolving Lender in its own right and the Canadian
Borrower agrees not to claim any days of grace if the Canadian Revolving Lender
as holder sues or otherwise commences legal proceedings against the Canadian
Borrower on the Bankers’ Acceptance for payment of the amount payable by the Canadian
Borrower thereunder.


(viii)        BA Equivalent Loans by Non-BA Lenders.  Whenever the Canadian Borrower requests a
Canadian Revolving Loan under this Agreement by way of Bankers’ Acceptances,
each Non-BA Lender (or, at its option, any other Canadian Revolving Lender),
shall, in lieu of accepting a Bankers’ Acceptance, make a BA Equivalent Loan in
an amount equal to such Non-BA Lender’s Canadian Pro Rata Percentage of such
Canadian Revolving Loan.


(ix)           Terms Applicable to Discount Notes.  As set out in the definition of “Bankers’
Acceptances”, that term includes Discount Notes and BA Equivalent Loans not
evidenced by Discount Notes and all terms of this Agreement applicable to
Bankers’ Acceptances shall apply equally to BA Equivalent Loans and Discount
Notes evidencing BA Equivalent Loans with such changes as may in the context be
necessary.  For greater certainty:


(1)           the term of a Discount Note shall be
the same as the Interest Period for Bankers’ Acceptances accepted and purchased
on the same date in respect of the same Canadian Revolving Loan;


(2)           an acceptance fee will be payable in
respect of a Discount Note and shall be calculated at the same rate and in the
same manner as the Acceptance Fee in respect of a Bankers’ Acceptance; and


(3)           the Discount Rate applicable to a
Discount Note shall be the Discount Rate applicable to BA Equivalent Loans made
on the same date in respect of the same Canadian Revolving Loan.


Notwithstanding the foregoing, it is understood and
agreed that any Non-BA Lender may agree, in lieu of receiving any Discount
Notes, that such Discount Notes may be uncertificated and the applicable BA
Equivalent Loan shall be evidenced by a loan account, which such Non-BA Lender
shall maintain in its name, and in such event such loan account shall be
entitled to all the benefits of Discount Notes in respect of BA Equivalent
Loans.



 61
 









(x)            Depository Bills and Notes Act.  At the option of the Canadian Borrower and
any Canadian Revolving Lender, Bankers’ Acceptances under this Agreement to be
accepted by such Canadian Revolving Lender may be issued in the form of
depository bills for deposit with The Canadian Depository for Securities
Limited pursuant to the Depository Bills and Notes
Act  (Canada).  All depository bills so issued shall be
governed by the provisions of this Section.


(xi)           Prepayments and Mandatory Payments.  If at any time any Bankers’ Acceptances are
to be paid prior to their maturity, the Canadian Borrower shall be required to
deposit the face amount of such Bankers’ Acceptances being prepaid in an
interest-bearing cash collateral account with the Canadian Administrative Agent
until the date of maturity of such Bankers’ Acceptances.  The cash collateral account shall be under
the sole control of the Canadian Administrative Agent and shall be subject to
no Liens, except for Liens in favor of the Canadian Administrative Agent in its
capacity as such.  Except as contemplated
by this Section, neither the Canadian Borrower nor any person claiming on its
behalf shall have any right to any of the cash in the cash collateral
account.  The Canadian Administrative
Agent shall apply the cash held in the cash collateral account and interest
earned thereon to the face amount of such Bankers’ Acceptances at maturity,
whereupon any cash remaining in the cash collateral account shall be released
by the Canadian Administrative Agent to the Canadian Borrower.


(c)           Appointment
of Administrative Borrower.  Each
Borrower hereby irrevocably appoints and constitutes Administrative Borrower as
its agent to request and receive Loans and Letters of Credit pursuant to this
Agreement in the name or on behalf of such Borrower.  The Administrative Agents and Lenders may
disburse the Loans to such bank account of Administrative Borrower or a
Borrower or otherwise make such Loans to a Borrower and provide such Letters of
Credit to a Borrower as Administrative Borrower may designate or direct,
without notice to any other Borrower or Guarantor.  Administrative Borrower hereby accepts the
appointment by Borrowers to act as the agent of Borrowers and agrees to ensure
that the disbursement of any Loans to a Borrower requested by or paid to or for
the account of such Borrower, or the issuance of any Letter of Credit for a
Borrower hereunder, shall be paid to or for the account of such Borrower.  Each Borrower hereby irrevocably appoints and
constitutes Administrative Borrower as its agent to receive statements on
account and all other notices from the Agents and Lenders with respect to the
Obligations or otherwise under or in connection with this Agreement and the
other Loan Documents.  Any notice,
election, representation, warranty, agreement or undertaking by or on behalf of
any other Borrower by Administrative Borrower shall be deemed for all purposes
to have been made by such Borrower, as the case may be, and shall be binding
upon and enforceable against such Borrower to the same extent as if made
directly by such Borrower.  No purported
termination of the appointment of Administrative Borrower as agent as aforesaid
shall be effective, except after ten (10) days’ prior written notice to
Administrative Agents.


(d)           Additional
Functions of Administrative Borrower. 
The Administrative Borrower operates a centralized cash management
system for the Borrowers and their Subsidiaries, including the Borrowing Base
Guarantor Intercompany Loan Amounts and all other intercompany accounts owing
among the Loan Parties.  All Loans or
Letters of Credit requested by the Administrative Borrower for ultimate use by
Loan Parties other than LNT or Canadian 



 62
 









Borrower shall be drawn or obtained in the name of the
Administrative Borrower.  Upon request,
Administrative Borrower shall promptly confirm for the Administrative Agents
that each Loan or Letter of Credit has been issued in the name of the
appropriate Borrower and, in the event of any error, the respective records
shall be adjusted without prejudice to the rights of the Agents and Lenders.


SECTION 2.04.  Evidence
of Debt; Repayment of Loans.


(a)           Promise to Repay.  The US Borrowers hereby unconditionally
promise to pay (i) to the US Administrative Agent for the account of each
Revolving Lender, the then unpaid principal amount of each US Revolving Loan of
such Revolving Lender on the Revolving Maturity Date and (ii) to the US
Swingline Lender, the then unpaid principal amount of each US Swingline Loan on
the earlier of the Revolving Maturity Date and the first date after such
Swingline Loan is made that is the 15th or last day of a calendar month and is
at least two (2) Business Days after such Swingline Loan is made; provided that on each date that a US
Revolving Loan is made, the US Borrowers shall repay all US Swingline Loans
that were outstanding on the date such Borrowing was requested.  Canadian Borrower hereby unconditionally promises
to pay (i) to Canadian Administrative Agent for the account of each Canadian
Revolving Lender, the then unpaid principal amount of each Canadian Revolving
Loan of such Canadian Revolving Lender on the Revolving Maturity Date and (ii)
to the Canadian Swingline Lender, the then unpaid principal amount of each
Canadian Swingline Loan on the earlier of the Revolving Maturity Date and the
first date after such Swingline Loan is made that is the 15th or last day of a calendar month and is at
least two (2) Business Days after such Swingline Loan is made; provided that on
each date that a Canadian Revolving Loan is made, the Canadian Borrower shall
repay all Canadian Swingline Loans that were outstanding on the date such
Borrowing was requested.  All payments or
repayments of Loans made pursuant to this Section 2.04(a) shall be made
in the Approved Currency in which such Loan is denominated.


(b)           Lender and Administrative Agent
Records.  Each Lender shall maintain
in accordance with its usual practice an account or accounts evidencing the
indebtedness of the applicable Borrower 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 under this Agreement.  The applicable Administrative Agent shall
maintain accounts in which it will record (i) the amount and Approved
Currency of each Loan made hereunder, the Type and Class thereof, the name of
the applicable Borrower and the Interest Period applicable thereto;
(ii) the amount of any principal or interest due and payable or to become
due and payable from the applicable Borrower to each applicable Lender
hereunder; and (iii) the amount of any sum received by such Administrative
Agent hereunder for the account of the applicable Lenders and each such Lender’s
share thereof.  The entries made in the
accounts maintained pursuant to this paragraph shall be prima facie evidence of the existence and
amounts of the obligations therein recorded as well as the Borrower which
received such Loans or Letters of Credit; provided
that the failure of any Lender or such Administrative Agent to maintain such
accounts or any error therein shall not in any manner affect the obligations of
the Borrowers to repay the Loans in accordance with their terms.


(c)           Promissory Notes.  Any Lender by written notice to
Administrative Borrower (with a copy to the Administrative Agents) may request
that Loans of any Class made by it be 



 63
 









evidenced by a
promissory note (unless already evidenced by a Bankers’ Acceptance).  In such event, the applicable Borrower shall
prepare, execute and deliver to such Lender a promissory note payable to the
order of such Lender (or, if requested by such Lender, to such Lender and its registered
assigns) in the form of Exhibit K-1, K-2, K-3 or K-4
as the case may be.  Thereafter, the
Loans evidenced by such promissory note and interest thereon shall at all times
(including after assignment pursuant to Section 11.04) be represented by
one or more promissory notes in such form payable to the order of the payee
named therein (or, if such promissory note is a registered note, to such payee
and its registered assigns).


SECTION 2.05.  Fees.


(a)           Commitment Fee.  The Borrowers agree to pay to the applicable
Administrative Agent for the account of each Lender a commitment fee (a “Commitment Fee”) equal to the Applicable Fee per annum on
the average daily unused amount of each Commitment of such Lender during the
period from and including the date hereof to but excluding the date on which
such Commitment terminates.  Accrued
Commitment Fees shall be payable in arrears (A) on the last Business Day
of March, June, September and December of each year, commencing on the first
such date to occur after the date hereof, and (B) on the date on which
such Commitment terminates.  Commitment
Fees shall be computed on the basis of a year of 360 days and shall be
payable for the actual number of days elapsed (including the first day but
excluding the last day).  For purposes of
computing Commitment Fees with respect to Revolving Commitments a Revolving
Commitment of a Lender shall be deemed to be used to the extent of the
outstanding Revolving Loans and LC Exposure of such Lender (and the Swingline
Exposure of such Lender shall be disregarded for such purpose).


(b)           Administrative Agent Fees.  The Borrowers agree to pay to the US
Administrative Agent, for the accounts of the applicable Administrative Agents,
the administrative fees (to be allocated between the Administrative Agents in a
manner to be mutually agreed upon by the Administrative Agents) payable in the
amounts and at the times set forth in the Fee Letter (the “Administrative Agent Fees”).


(c)           Collateral Monitoring Fee.  The Borrowers agree to pay to the US
Administrative Agent, for the accounts of the applicable Collateral Agents, a
collateral monitoring fee (to be allocated among the Collateral Agents in a
manner to be mutually agreed upon by the Collateral Agents)  payable in the amounts and at the times set
forth in the Fee Letter (the “Collateral
Monitoring Fees”).


(d)           LC and Fronting Fees.  The US Borrowers agree to pay (i) to the
US Administrative Agent for the account of each Revolving Lender (other than a
Canadian Revolving Lender) a participation fee (“Standby LC Participation
Fee”) with respect to its participations in Standby Letters of
Credit, which shall accrue at a rate equal to the Applicable Margin from time
to time used to determine the interest rate on Eurodollar Revolving Loans
pursuant to Section 2.06 on the average daily amount of such Lender’s LC
Exposure (excluding any portion thereof attributable to Reimbursement
Obligations), as appropriate, during the period from and including the Closing
Date to but excluding the later of the date on which such Lender’s Revolving
Commitment terminates and the date on which such Lender ceases to have any LC
Exposure, (ii) to the US Administrative Agent for the account of each Revolving
Lender



 64















a participation fee (“Commercial LC Participation Fee” and
together with the Standby LC Participation Fee, the “LC Participation Fee”) with respect to its participation in
Commercial Letters of Credit, which shall accrue at a rate equal to the greater
of (A) the Applicable Margin from time to time used to determine the interest
rate on Eurodollar Revolving Loans pursuant to Section 2.06 on the
average daily amount of such Lender’s LC Exposure (excluding any portion
thereof attributable to Reimbursement Obligations), as appropriate, during the
period from and including the Closing Date to but excluding the later of the
date on which such Lender’s Revolving Commitment terminates and the date on
which such Lender ceases to have any LC Exposure minus 0.50% and (B)
0.50%, and (iii) to the Issuing Bank a fronting fee (“Fronting Fee”), which shall accrue at the rate of 0.125% per
annum on the average daily amount of the LC Exposure (excluding any portion
thereof attributable to Reimbursement Obligations) during the period from and
including the Closing Date to but excluding the later of the date of
termination of the Revolving Commitments and the date on which there ceases to
be any LC Exposure, as well as the Issuing Bank’s customary fees with respect
to the issuance, amendment, renewal or extension of any Letter of Credit or
processing of drawings thereunder. 
Accrued LC Participation Fees and Fronting Fees shall be payable in
arrears (i) on the last Business Day of March, June, September and
December of each year, commencing on the first such date to occur after the
Closing Date, and (ii) on the date on which the Revolving Commitments
terminate.  Any such fees accruing after
the date on which the Revolving Commitments terminate shall be payable on
demand.  Any other fees payable to the
Issuing Bank pursuant to this paragraph shall be payable within 10 days
after demand therefor.  All LC
Participation Fees and Fronting Fees shall be computed on the basis of a year
of 360 days and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day).  During the continuance of a Default, the LC
Participation Fee shall be increased to a per annum rate equal to 2% plus the
otherwise applicable rate with respect thereto.


(e)           All Fees shall be paid on the dates
due, in immediately available funds in dollars, to the applicable
Administrative Agent for distribution, if and as appropriate, among the
applicable Lenders, except that the US Borrowers shall pay the Fronting Fees
directly to the Issuing Bank.  Once paid,
none of the Fees shall be refundable under any circumstances.


SECTION
2.06.  Interest on Loans.


(a)           ABR Loans.  Subject to the provisions of Section
2.06(e), the Loans comprising each ABR Borrowing, including each Swingline
Loan, shall bear interest at a rate per annum equal to the Alternate Base Rate
plus the Applicable Margin in effect from time to time.


(b)           Canadian Prime Rate Loans.  Subject to Section 2.06(e), the Loans
comprising each Canadian Prime Rate Borrowing shall bear interest at a rate per
annum equal to the Canadian Prime Rate plus the Applicable Margin in effect
from time to time.


(c)           Eurodollar Loans.  Subject to the provisions of Section
2.06(e), the Loans comprising each Eurodollar Borrowing shall bear interest
at a rate per annum equal to the Adjusted LIBOR Rate for the Interest Period in
effect for such Borrowing plus the Applicable Margin in effect from time to
time.



 65
 









(d)           Bankers’ Acceptances.  Subject to Section 2.06(e), upon
acceptance of a Bankers’ Acceptance by a Lender, Canadian Borrower shall pay to
Canadian Administrative Agent on behalf of such Lender a fee (the “Acceptance Fee”) calculated on the face
amount of such Bankers’ Acceptance at a rate per annum equal to the Applicable
Margin on the basis of the number of days in the Interest Period applicable to
such Bankers’ Acceptance and a year of 365 or 366 days, as applicable.


(e)           Default Rate.  Notwithstanding the foregoing, during an
Event of Default, all Obligations shall, to the extent permitted by applicable
law, bear interest, after as well as before judgment, at a per annum rate equal
to (i) in the case of principal and premium, if any, of or interest on any
Loan, 2% plus the rate otherwise
applicable to such Loan as provided in the preceding paragraphs of this Section
2.06 or (ii) in the case of any other amount, 2% plus the rate applicable to ABR Revolving
Loans in the case of Borrowings in dollars, or Canadian Prime Rate Loans, in
the case of Borrowings in Canadian dollars, as provided in Section 2.06(a)
or (b), respectively (in either case, the “Default Rate”).


(f)            Interest Payment Dates.  Accrued interest on each Loan shall be
payable in arrears on each Interest Payment Date for such Loan; provided that (i) interest accrued
pursuant to Section 2.06(e) shall be payable on demand, (ii) in the
event of any repayment or prepayment of any Loan (other than a prepayment of an
ABR Revolving Loan, Canadian Prime Rate Loan or a Swingline Loan without a
permanent reduction in Revolving Commitments), accrued interest on the
principal amount repaid or prepaid shall be payable on the date of such
repayment or prepayment and (iii) in the event of any conversion of any
Eurodollar Loan prior to the end of the current Interest Period therefor,
accrued interest on such Loan shall be payable on the effective date of such
conversion.


(g)           Interest Calculation.  All interest hereunder shall be computed on
the basis of a year of 360 days, except that interest computed by
reference to the Alternate Base Rate, the Canadian Prime Rate or Bankers’
Acceptances shall be computed on the basis of a year of 365 days (or
366 days in a leap year), and in each case shall be payable for the actual
number of days elapsed (including the first day but excluding the last day).  The applicable Alternate Base Rate, Adjusted
LIBOR Rate, Canadian Prime Rate or Acceptance Fee shall be determined by the
applicable Administrative Agent in accordance with the provisions of this
Agreement and such determination shall be conclusive absent manifest error.


(h)           Currency for Payment of Interest.  All interest paid or payable pursuant to this
Section 2.06 shall be paid in the Approved Currency in which the Loan
giving rise to such interest is denominated.


(i)            Interest Act (Canada).  For the purposes of the Interest Act
(Canada), in any case in which an interest or fee rate is stated in
this Agreement to be calculated on the basis of a number of days that is other
than the number in a calendar year, the yearly rate, to which such interest or
fee rate is equivalent, is equal to such interest or fee rate multiplied by the
actual number of days in the year in which the relevant interest or fee payment
accrues and divided by the number of days used as the basis for such
calculation.



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SECTION 2.07.  Termination
and Reduction of Commitments.


(a)           Termination of Commitments.  The Revolving Commitments, the US Swingline
Commitment, the Canadian Swingline Commitment and the LC Commitment shall
automatically terminate on the Revolving Maturity Date.


(b)           Optional Terminations and
Reductions.  At their option,
Borrowers may at any time terminate, or from time to time permanently reduce,
the Commitments of any Class; provided
that (i) each reduction of the Commitments of any Class shall be in an
amount that is an integral multiple of $1.0 million and not less than $5.0
million and (ii) the Revolving Commitments shall not be terminated or
reduced if, after giving effect to any concurrent prepayment of the Revolving
Loans in accordance with Section 2.10, the aggregate amount of Revolving
Exposures would exceed the aggregate amount of Revolving Commitments.  Any permanent reduction of the Revolving
Commitment shall result in a pro rata permanent reduction in the Canadian
Revolving Commitments.


(c)           Notice by the Borrowers.  The applicable Borrower shall notify the
applicable Administrative Agent in writing of any election to terminate or
reduce the Commitments under Section 2.07(b) at least three Business
Days prior to the effective date of such termination or reduction, specifying such
election and the effective date thereof. 
Promptly following receipt of any notice, such Administrative Agent
shall advise the Lenders of the contents thereof.  Each notice delivered by such Borrower
pursuant to this Section shall be irrevocable; provided
that a notice of termination of the Commitments delivered by any Borrower may
state that such notice is conditioned upon the effectiveness of other credit
facilities, in which case such notice may be revoked by such Borrower (by
notice to such Administrative Agent on or prior to the specified effective
date) if such condition is not satisfied. 
Any termination or reduction of the Commitments of any Class shall be
permanent.  Each reduction of the
Commitments of any Class shall be made ratably among the Lenders in accordance
with their respective Commitments of such Class.


SECTION 2.08.  Interest
Elections.


(a)           Generally.  Each Revolving Borrowing including each
Canadian Revolving Borrowing initially shall be of the Type specified in the
applicable Borrowing Request and, in the case of a Eurodollar Borrowing and a
Bankers’ Acceptance, shall have an initial Interest Period as specified in such
Borrowing Request.  Thereafter, the
applicable Borrower may elect to convert such Borrowing to a different Type or
to rollover or continue such Borrowing and, in the case of a Eurodollar
Borrowing or a Bankers’ Acceptance, may elect Interest Periods therefor, all as
provided in this Section (except that only the Canadian Borrower may elect
Canadian Prime Rate Borrowings or Bankers’ Acceptances).  Borrowings consisting of Canadian Revolving
Loans may only be converted to a different Type of Canadian Revolving
Loan.  The applicable Borrower may elect
different options with respect to different portions of the affected Borrowing,
in which case each such portion shall be allocated ratably among the Lenders
holding the Loans comprising such Borrowing, and the Loans comprising each such
portion shall be considered a separate Borrowing.  Notwithstanding anything to the contrary, the
applicable Borrower shall not be entitled to request any conversion, rollover
or continuation that, if made, would result in more than eight Eurodollar
Borrowings or Bankers’ Acceptances having more than eight different Interest
Periods being outstanding hereunder at any one time.  This Section shall not apply to Borrowings of
Swingline Loans, which may not be converted or continued.



 67
 









(b)           Interest Election Notice.  To make an election pursuant to this Section,
the applicable Borrower shall deliver, by hand delivery or telecopier, a duly
completed and executed Interest Election Request to the applicable
Administrative Agent not later than the time that a Borrowing Request would be
required under Section 2.03 if such Borrower were requesting a Revolving
Borrowing of the Type resulting from such election to be made on the effective
date of such election.  Each Interest
Election Request shall be irrevocable. 
Each Interest Election Request shall specify the following information
in compliance with Section 2.02:


(i)            the Borrowing to which such Interest
Election Request applies and, if different options are being elected with
respect to different portions thereof, or if outstanding Borrowings are being
combined, allocation to each resulting Borrowing (in which case the information
to be specified pursuant to clauses (iii), (iv) and (v) below shall be
specified for each resulting Borrowing);


(ii)           the effective date of the election
made pursuant to such Interest Election Request, which shall be a Business Day;


(iii)          the Approved Currency of the resulting
Borrowing;


(iv)          whether the resulting Borrowing is to
be an ABR Borrowing, Canadian Prime Rate Borrowing, a Eurodollar Borrowing or
an advance by way of Bankers’ Acceptance; and


(v)           if the resulting Borrowing is a
Eurodollar Borrowing or an advance by way of Bankers’ Acceptance, the Interest
Period to be applicable thereto after giving effect to such election, which
shall be a period contemplated by the definition of the term “Interest Period”.


If any such Interest Election Request requests a
Eurodollar Borrowing or an advance by way of Bankers’ Acceptance but does not
specify an Interest Period, then such Borrower shall be deemed to have selected
an Interest Period of one month’s duration.


Promptly following receipt of an Interest Election
Request, such Administrative Agent shall advise each Lender of the details
thereof and of such Lender’s portion of each resulting Borrowing.


(c)           Automatic Conversion to ABR
Borrowing or Canadian Prime Rate Borrowings.  If an Interest Election Request with respect
to a Eurodollar Borrowing or a Bankers’ Acceptance is not timely delivered
prior to the end of the Interest Period applicable thereto, then, unless such
Borrowing or Bankers’ Acceptance is repaid as provided herein, at the end of
such Interest Period such Eurodollar Borrowing or Bankers’ Acceptance shall be
converted to (i) in the case of a Eurodollar Borrowing, an ABR Borrowing and
(ii) in the case of a Bankers’ Acceptance, a Canadian Prime Rate
Borrowing.  Notwithstanding any contrary
provision hereof, if an Event of Default has occurred and is continuing, the
applicable Administrative Agent or the Required Lenders may require, by notice
to the applicable Borrower, that (i) no outstanding Borrowing may be
converted to or continued as a Eurodollar Borrowing or a Bankers’ Acceptance
and (ii) unless repaid, each Eurodollar Borrowing shall be converted to an
ABR Borrowing and each 



 68
 









Banker’s
Acceptance shall be converted into a Canadian Prime Rate Loan, in each case, at
the end of the Interest Period applicable thereto.


(d)           Existing
Borrowings.  Any Existing ABR
Borrowing outstanding on the Closing Date shall be deemed to be refinanced on
the Closing Date with a new ABR Borrowing, bearing interest as provided in this
Agreement, and such new Borrowing shall be deemed to be advanced under this
Agreement to repay such Existing ABR Borrowings.  Each Existing Eurodollar Revolving Borrowing
outstanding on the Closing Date shall remain outstanding and in all respects be
continuing after the Closing Date and shall be deemed to be a Eurodollar
Revolving Borrowing hereunder, having the Interest Period that commenced on the
date of such Existing Eurodollar Revolving Borrowing (each such Eurodollar
Revolving Borrowing being a “Grandfathered Eurodollar Borrowing” and
each such Interest Period being a “Grandfathered Interest Period”).  From  and
including the Closing Date until and including the last day of the relevant
Grandfathered Interest Period, each Grandfathered Eurodollar Revolving Borrowing
shall bear interest per annum equal to the Adjusted LIBOR Rate for the
applicable Grandfathered Interest Period plus the Applicable Margin
applicable thereto under the Original Credit Agreement.  Thereafter, the applicable Borrower may make
elections with respect to the Grandfathered Eurodollar Borrowings as provided
in Section 2.08, and all such Loans shall bear interest as provided in
this Agreement.


SECTION 2.09.  [Intentionally
Deleted].


SECTION 2.10.  Optional
and Mandatory Prepayments of Loans.


(a)           Optional Prepayments.  Each Borrower shall have the right at any
time and from time to time to prepay any Borrowing, in whole or in part,
subject to the requirements of this Section 2.10 and subject to the
provisions of Section 9.02(g); provided
that each partial prepayment shall be in an amount that is an integral multiple
of $1.0 million (or, if applicable, Can$100,000) and not less than $3.0 million
(or, if applicable, Can$1.0 million) or, if less, the outstanding principal
amount of such Borrowing.


(b)           Certain Revolving
Loan Prepayments.


(i)            In the event of the termination of
all the Revolving Commitments, each Borrower shall, on the date of such
termination, repay or prepay all its outstanding Revolving Borrowings and all
outstanding Swingline Loans and replace all outstanding Letters of Credit or
cash collateralize all outstanding Letters of Credit in accordance with the
procedures set forth in Section 2.18(i).


(ii)           In the event of any partial reduction
of the Revolving Commitments, then (x) at or prior to the effective date
of such reduction, the Administrative Agents shall notify Borrowers and the
Revolving Lenders of the sum of the Revolving Exposures after giving effect
thereto and (y) if the sum of the Revolving Exposures would exceed the aggregate
amount of Revolving Commitments after giving effect to such reduction, then
Borrowers shall, on the date of such reduction, first, repay or prepay Swingline Loans, second, repay or prepay Revolving
Borrowings and third, replace
outstanding Letters of Credit or cash collateralize outstanding Letters of
Credit in accordance with 



 69
 









the procedures set forth in Section
2.18(i), in an aggregate amount sufficient to eliminate such excess.


(iii)          In the event that (x) the sum of all
Lenders’ Revolving Exposures exceeds the Revolving Commitments then in effect
(including on any date on which Dollar Equivalents are determined pursuant to Section 11.17)
or (y) the sum of all Lenders’ Canadian Exposures exceeds the Canadian
Revolving Commitments then in effect (including on any date on which Dollar
Equivalents are determined pursuant to Section 11.17), then in each
case, Borrowers shall, without notice or demand, immediately first, repay or prepay Revolving
Borrowings, and second, replace
outstanding Letters of Credit or cash collateralize outstanding Letters of
Credit in accordance with the procedures set forth in Section 2.18(i),
in an aggregate amount sufficient to eliminate such excess.


(iv)          In the event that the aggregate LC
Exposure exceeds the LC Commitment then in effect (including on any date on
which Dollar Equivalents are determined pursuant to Section 11.17),
US Borrowers shall, without notice or demand, immediately replace outstanding
Letters of Credit or cash collateralize outstanding Letters of Credit in accordance
with the procedures set forth in Section 2.18(i), in an aggregate amount
sufficient to eliminate such excess.


(v)           In the event that (x) the sum of all
Lenders’ US Revolving Exposures exceeds the Borrowing Base then in effect or
(y) the sum of all Lenders’ Canadian Exposures exceeds the Canadian Borrowing
Base then in effect, the Borrowers shall, without notice or demand, immediately
apply an amount equal to such excess to prepay the Loans and any interest
accrued thereon, in accordance with this Section 2.10(b)(v).  The Borrowers shall make prepayments in
accordance with Section 2.10(f) in an amount sufficient to eliminate
such excess.


(vi)          In the event an Activation Notice has
been given (as contemplated by Section 9.02), the Borrowers shall pay all
proceeds of Collateral (other than proceeds of a Casualty Event or an Asset
Sale that do not require a permanent repayment) into the Collection Account,
for application in accordance with Section 9.02(g).


(vii)         Borrowings by way of Bankers’
Acceptance may only be prepaid by cash collateralizing the same in accordance
with Section 2.03(b)(xi).


(c)           Asset Sales.  Not later than one Business Day following the
receipt of any Net Cash Proceeds of any Asset Sale by Holdings or any of its
Subsidiaries, Borrowers shall make any prepayments required by Section
2.10(b) as well as prepayments in accordance with Section 2.10(f)
and (g) in an aggregate amount equal to 100% of such Net Cash Proceeds; provided that:


(i)            no such prepayment shall be required
under this Section 2.10(c)(i) with respect to (A) any Asset Sale
permitted by Section 6.06(a), (B) the disposition of property which
constitutes a Casualty Event, or (C) Asset Sales for fair market value
resulting in no more than the Dollar Equivalent of $100,000 in Net Cash
Proceeds per Asset Sale (or series of related Asset Sales) and less than the
Dollar Equivalent of



 70
 









$1.0 million in Net Cash Proceeds in any
fiscal year; provided that
clause (C) shall not apply in the case of any Asset Sale described in
clause (b) of the definition thereof; and


(ii)           subject to Section 2.10(g) and
any requirement for a prepayment made under Section 2.10(b) and so long
as no Default shall then exist or would arise therefrom, such proceeds shall
not be required to be so applied on such date to the extent that Borrowers
shall have delivered an Officers’ Certificate to the applicable Administrative
Agent on or prior to such date stating that such Net Cash Proceeds are expected
to be reinvested in fixed or capital assets within 365 days following the
date of such Asset Sale (which Officers’ Certificate shall set forth the
estimates of the proceeds to be so expended); provided
that if all or any portion of such Net Cash Proceeds is not so reinvested
within such 365-day period, such unused portion shall be applied on the last
day of such period as a mandatory prepayment as provided in this Section
2.10(c); provided, further,
that if the property subject to such Asset Sale constituted Collateral, then
all property purchased with the Net Cash Proceeds thereof pursuant to this
subsection shall be made subject to the Lien of the applicable Security
Documents in favor of the applicable Collateral Agents for their benefit and
for the benefit of the other Secured Parties in accordance with Section 5.11
and Section 5.12.


(d)           Casualty Events.  Not later than one Business Day following the
receipt of any Net Cash Proceeds from a Casualty Event by Holdings or any of
its Subsidiaries, the applicable Borrower shall make any prepayments required
by Section 2.10(b) as well as any prepayments in accordance with Sections 2.10(f)
and (g) in an aggregate amount equal to 100% of such Net Cash Proceeds; provided that:


(i)            so long as no Default shall then
exist or arise therefrom, such proceeds (other than amounts required under Section
2.10(b) to be prepaid) shall not be required to be so applied on such date
to the extent that Borrowers shall have delivered an Officers’ Certificate to
the Administrative Agents on or prior to such date stating that such proceeds
are expected to be used to repair, replace or restore any property in respect
of which such Net Cash Proceeds were paid or to reinvest in other fixed or
capital assets, no later than 180 days following the date of receipt of
such proceeds; provided that if
the property subject to such Casualty Event constituted Collateral under the
Security Documents, then all property purchased with the Net Cash Proceeds
thereof pursuant to this subsection shall be made subject to the Lien of the
applicable Security Documents in favor of the applicable Collateral Agents for
their benefit and for the benefit of the other Secured Parties in accordance
with Section 5.11 and Section 5.12; and


(ii)           if any portion of such Net Cash
Proceeds shall not be so applied within such 180-day period, such unused
portion shall be applied on the last day of such period as a mandatory
prepayment as provided in this Section 2.10(d).


(e)           [Intentionally
Deleted].


(f)            Application of Prepayments.  (i) Prior to any optional or mandatory
prepayment hereunder, Borrowers shall select the Borrowing or Borrowings to be
prepaid and shall specify 



 71
 









such selection
in the notice of such prepayment pursuant to Section 2.10(g), subject to
the provisions of this Section 2.10(f). 
Any mandatory prepayments (other than those required by Section
2.10(b)) shall be applied to the Revolving Loans and, upon the
Administrative Agent’s election, the Revolving Commitments shall be permanently
reduced ratably among the Revolving Lenders in accordance with their applicable
Revolving Commitments in an aggregate amount equal to such prepayment and
Borrower shall comply with Section 2.10(b).


(ii) Notwithstanding the
foregoing, in the event that Borrowers have delivered an Officers’ Certificate
in accordance with Section 2.10(c) or in accordance with Section
2.10(d), (A) the applicable Net Cash Proceeds shall be applied against
the outstanding Revolving Loans, without a permanent reduction in the
Commitments, (B) both a Reserve and a reserve against the Commitments (“Line Reserve”) shall be established (in the amount of the
Net Cash Proceeds less any amounts used for prepayments that were required by Sections
2.10(b) because of the sale or disposition of Inventory outside of the
ordinary course of business) which Reserve and Line Reserve shall each be
released simultaneously with and to the extent of any Loans advanced to the
Borrowers for the purpose of purchasing assets in accordance with Section
2.10(c) or Section 2.10(d), as applicable; provided Borrowers submit
(with the applicable Borrowing Request) an Officer’s Certificate setting forth
the use of proceeds of the requested Loan and confirming that such use is in
compliance with Section 2.10(c) or Section 2.10(d), as
applicable, and (C) in the event that any part or all of the Reserve
remains in place at the end of the time period set forth in Section 2.10(c)
or Section 2.10(d), as applicable, the Commitments shall be permanently
reduced by an amount equal to such remaining Reserve and, simultaneously with
the such reduction, the remaining Line Reserve shall be released.


(iii)  Amounts
to be applied pursuant to this Section 2.10 to the prepayment of
Revolving Loans shall, in the absence of direction from the Borrowers pursuant
to Section 2.10(g)(i), be applied to the prepayment of the ABR Loans and
Canadian Prime Rate Loans in the discretion of the Administrative Agents.  Any amounts remaining after each such
application shall be applied to prepay Eurodollar Revolving Loans or Bankers’
Acceptances, as applicable. 
Notwithstanding the foregoing, if the amount of any prepayment of Loans
required under this Section 2.10 shall be in excess of the amount of the
ABR Loans and Canadian Prime Rate Loans at the time outstanding (an “Excess Amount”), only the portion of the amount of such
prepayment as is equal to the amount of such outstanding ABR Loans and Canadian
Prime Rate Loans shall be immediately prepaid and, at the election of the
applicable Borrower, the Excess Amount shall be either (A) deposited in an
escrow account on terms satisfactory to the applicable Collateral Agents and
applied to the prepayment of Eurodollar Loans or Bankers’ Acceptances on the
last day of the then next-expiring Interest Period for the applicable
Eurodollar Loans or Bankers’ Acceptances, as the case may be; provided that (i) interest in respect of such Excess
Amount shall continue to accrue thereon at the rate provided hereunder for the
Loans which such Excess Amount is intended to repay until such Excess Amount
shall have been used in full to repay such Loans and (ii) at any time
while a Default has occurred and is continuing, the Administrative Agent may,
and upon written direction from the Required Lenders shall, apply any or all
proceeds then on deposit to the payment of such Loans in an amount equal to such
Excess Amount or (B) prepaid immediately, together with any amounts owing
to the Lenders under Section 2.13.



 72
 









(g)           Notice of Prepayment.  The applicable Borrower shall notify the
applicable Administrative Agent (and, in the case of prepayment of a Swingline
Loan, the applicable Swingline Lender) by written notice of any prepayment
hereunder (i) in the case of prepayment of a Eurodollar Borrowing or
Bankers’ Acceptances, not later than 11:00 a.m., New York City time, three
Business Days before the date of prepayment, (ii) in the case of
prepayment of an ABR Borrowing or a Canadian Prime Rate Loan, not later than
11:00 a.m., New York City time, one Business Day before the date of prepayment
and (iii) in the case of prepayment of a Swingline Loan, not later than
11:00 a.m., New York City time, on the date of prepayment.  Each such notice shall be irrevocable; provided that, if a notice of prepayment
is given in connection with a conditional notice of termination of the
Commitments as contemplated by Section 2.07, then such notice of
prepayment may be revoked if such termination is revoked in accordance with Section
2.07.  Each such notice shall specify
the prepayment date, the principal amount of each Borrowing or portion thereof
to be prepaid and, in the case of a mandatory prepayment, a reasonably detailed
calculation of the amount of such prepayment. 
Promptly following receipt of any such notice (other than a notice
relating solely to Swingline Loans), such Administrative Agent shall advise the
Lenders of the contents thereof.  Each
partial prepayment of any Borrowing shall be in an amount that would be
permitted in the case of a Credit Extension of the same Type as provided in Section
2.02, except as necessary to apply fully the required amount of a mandatory
prepayment.  Each prepayment of a
Borrowing shall be applied ratably to the Loans included in the prepaid
Borrowing and otherwise in accordance with this Section 2.09.  Prepayments shall be accompanied by accrued
interest to the extent required by Section 2.06.


SECTION 2.11.  Alternate
Rate of Interest.


(a)           If prior to the commencement of any
Interest Period for a Eurodollar Borrowing:


(i)            the applicable Administrative Agent
determines (which determination shall be final and conclusive absent manifest
error) that adequate and reasonable means do not exist for ascertaining the
Adjusted LIBOR Rate for such Interest Period; or


(ii)           the applicable Administrative Agent
is advised in writing by the Required Lenders that the Adjusted LIBOR Rate for
such Interest Period will not adequately and fairly reflect the cost to such
Lenders of making or maintaining their Loans included in such Borrowing for
such Interest Period;


then such Administrative Agent shall give written
notice thereof to the applicable Borrower and the Lenders as promptly as
practicable thereafter and, until such Administrative Agent notifies such
Borrower and the Lenders that the circumstances giving rise to such notice no
longer exist, (i) any Interest Election Request that requests the
conversion of any Borrowing to, or continuation of any Borrowing as, a
Eurodollar Borrowing shall be ineffective and (ii) if any Borrowing
Request requests a Eurodollar Borrowing, such Borrowing shall be made as an ABR
Borrowing.


(b)           If
prior to the commencement of any Interest Period relating to a Bankers’
Acceptance, the Canadian Administrative Agent determines (which determination
shall be final and conclusive absent manifest error) that, by reason of
circumstances affecting the money 



 73
 









markets, there is no active market for Bankers’ Acceptances or the
demand for Bankers’ Acceptances is insufficient to allow the sale or trading of
the Bankers’ Acceptances to be created hereunder, then:


(i)            the
right of the Canadian Borrower to request a Canadian Revolving Loan by means of
a Bankers’ Acceptance shall be suspended until such time as the Canadian
Administrative Agent determines that the circumstances causing such suspension
no longer exist and the Canadian Administrative Agent so notifies the Canadian
Borrower;


(ii)           any
Borrowing Request which calls for the issuance of a Bankers’ Acceptance which
is outstanding shall be cancelled and such Borrowing Request shall be deemed to
be a request for a Canadian Prime Rate Loan in the face amount of the requested
Bankers’ Acceptance;


(iii)          any
outstanding Interest Election Request requesting a conversion of a Canadian
Prime Rate Loan into Bankers’ Acceptances or BA Equivalent Loan shall be deemed
to be revoked; and


(iv)          any
outstanding Interest Election Request requesting a rollover of Bankers’
Acceptances or BA Equivalent Loans shall (unless revoked by the Canadian
Borrower before the Borrowing) be deemed to be an Interest Election Request
requesting a conversion of such Loans into Canadian Prime Rate Loans.


SECTION 2.12  Yield
Protection.


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


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


(ii)           subject any Lender or the Issuing
Bank to any tax of any kind whatsoever with respect to this Agreement, any
Letter of Credit, any participation in a Letter of Credit or any Eurodollar
Loan made by it or any Bankers’ Acceptance purchased or accepted by it, or
change the basis of taxation of payments to such Lender or the Issuing Bank in
respect thereof (except for Indemnified Taxes or Other Taxes covered by Section
2.15 and the imposition of, or any change in the rate of, any Excluded Tax
payable by such Lender or the Issuing Bank); or


(iii)          impose on any Lender or the Issuing
Bank or the London interbank market any other condition, cost or expense (other
than any Taxes) affecting this Agreement or Eurodollar Loans made by such
Lender or any Bankers’ Acceptance purchased or accepted by such Lender or any
Letter of Credit or participation therein;


and the result of any of the foregoing shall be to
increase the cost to such Lender of making or maintaining any Eurodollar Loan
(or of maintaining its obligation to make any such Loan or purchasing or
accepting any Bankers’ Acceptance), or to increase the cost to such Lender, the




 74
 









Issuing Bank or such Lender’s or the Issuing Bank’s
holding company, if any, of participating in, issuing or maintaining any Letter
of Credit (or of maintaining its obligation to participate in or to issue any
Letter of Credit), or to reduce the amount of any sum received or receivable by
such Lender or the Issuing Bank hereunder (whether of principal, interest or
any other amount), then, upon request of such Lender or the Issuing Bank, the
applicable Borrower will pay to such Lender or the Issuing Bank, as the case
may be, such additional amount or amounts as will compensate such Lender or the
Issuing Bank, as the case may be, for such additional costs incurred or
reduction suffered.


(b)           Capital Requirements.  If any Lender or the Issuing Bank determines
(in good faith, but in its sole absolute discretion) that any Change in Law
affecting such Lender or the Issuing Bank or any lending office of such Lender
or such Lender’s or the Issuing Bank’s holding company, if any, regarding
capital requirements has or would have the effect of reducing the rate of
return on such Lender’s or the Issuing Bank’s capital or on the capital of such
Lender’s or the Issuing Bank’s holding company, if any, as a consequence of
this Agreement, the Commitments of such Lender or the Loans made by, the
Bankers’ Acceptances purchased or accepted by, or participations in Letters of
Credit held by, such Lender, or the Letters of Credit issued by the Issuing
Bank, to a level below that which such Lender or the Issuing Bank or such
Lender’s or the Issuing Bank’s holding company could have achieved but for such
Change in Law (taking into consideration such Lender’s or the Issuing Bank’s
policies and the policies of such Lender’s or the Issuing Bank’s holding
company with respect to capital adequacy), then from time to time the
applicable Borrower will pay to such Lender or the Issuing Bank, as the case
may be, such additional amount or amounts as will compensate such Lender or the
Issuing Bank or such Lender’s or the Issuing Bank’s holding company for any
such reduction suffered.


(c)           Certificates for Reimbursement.  A certificate of a Lender or the Issuing Bank
setting forth the amount or amounts necessary to compensate such Lender or the
Issuing Bank or its holding company, as the case may be, as specified in
paragraph (a) or (b) of this Section 2.12 and delivered to the
applicable Borrower shall be conclusive absent manifest error.  The applicable Borrower shall pay such Lender
or the Issuing Bank, as the case may be, the amount shown as due on any such
certificate within 10 days after receipt thereof.


(d)           Delay in Requests.  Failure or delay on the part of any Lender or
the Issuing Bank to demand compensation pursuant to this Section 2.12
shall not constitute a waiver of such Lender’s or the Issuing Bank’s right to
demand such compensation; provided
that Borrowers shall not be required to compensate a Lender or the Issuing Bank
pursuant to this Section for any increased costs incurred or reductions
suffered more than nine months prior to the date that such Lender or the
Issuing Bank, as the case may be, notifies the applicable Borrower of the
Change in Law giving rise to such increased costs or reductions and of such
Lender’s or the Issuing Bank’s intention to claim compensation therefor (except
that, if the Change in Law giving rise to such increased costs or reductions is
retroactive, then the nine-month period referred to above shall be extended to
include the period of retroactive effect thereof).


SECTION 2.13.  Breakage
Payments.  In the event of
(a) the payment or prepayment, whether optional or mandatory, of any
principal of any Eurodollar Loan earlier than the last day of an Interest
Period applicable thereto (including as a result of an Event of Default),
(b) the conversion of any Eurodollar Loan earlier than the last day of the
Interest Period applicable 



 75
 









thereto, (c) the failure to borrow, convert,
continue or prepay any Revolving Loan on the date specified in any notice
delivered pursuant hereto (regardless of whether such prepayment notice is
later revoked in accordance with Section 2.10(g)), (d) the
assignment of any Eurodollar Loan earlier than the last day of the Interest
Period applicable thereto as a result of a request by Borrowers pursuant to Section
2.16(b) or (e) the reallocation of Loans pursuant to Section
2.19(d) or adjustments to Borrowings and Commitments pursuant to Section
12.02, then, in any such event, the applicable Borrower shall compensate
each applicable Lender for the loss, cost and expense attributable to such event.  In the case of a Eurodollar Loan, such loss,
cost or expense to any Lender shall be deemed to include an amount determined
by such Lender to be the excess, if any, of (i) the amount of interest
which would have accrued on the principal amount of such Loan had such event
not occurred, at the Adjusted LIBOR Rate that would have been applicable to
such Loan, for the period from the date of such event to the last day of the
then current Interest Period therefor (or, in the case of a failure to borrow,
convert or continue, for the period that would have been the Interest Period
for such Loan), over (ii) the amount of interest which would accrue on
such principal amount for such period at the interest rate which such Lender
would bid were it to bid, at the commencement of such period, for dollar
deposits of a comparable amount and period from other banks in the Eurodollar
market.  A certificate of any Lender
setting forth in reasonable detail any amount or amounts that such Lender is
entitled to receive pursuant to this Section 2.13 shall be delivered to
the applicable Borrower (with a copy to the Administrative Agents) and shall be
conclusive and binding absent manifest error. 
The applicable Borrower shall pay such Lender the amount shown as due on
any such certificate within 5 days after receipt thereof.


SECTION 2.14.  Payments
Generally; Pro Rata Treatment; Sharing of Setoffs.


(a)           Payments Generally.  Borrowers shall make each payment required to
be made by it hereunder or under any other Loan Document (whether of principal,
interest, fees or Reimbursement Obligations, or of amounts payable under Section
2.12, Section 2.13, Section 2.15 or Section 11.03, or
otherwise) on or before the time expressly required hereunder or under such
other Loan Document for such payment (or, if no such time is expressly
required, prior to 2:00 p.m., New York City time), on the date when due, in
immediately available funds, without setoff, deduction or counterclaim.  Any amounts received after such time on any
date may, in the discretion of the applicable Administrative Agent, be deemed
to have been received on the next succeeding Business Day for purposes of
calculating interest thereon.  All such
payments shall be made to the applicable Administrative Agent at the office
designated by it from time to time, except payments to be made directly to the
Issuing Bank or a Swingline Lender as expressly provided herein and except that
payments pursuant to Section 2.12, Section 2.13, Section 2.15
and Section 11.03 shall be made directly to the persons entitled thereto
and payments pursuant to other Loan Documents shall be made to the persons
specified therein.  The applicable
Administrative Agent shall distribute any such payments received by it for the
account of any other person to the appropriate recipient promptly following
receipt thereof.  If any payment under
any Loan Document shall be due on a day that is not a Business Day, unless
specified otherwise, the date for payment shall be extended to the next
succeeding Business Day, and, in the case of any payment accruing interest,
interest thereon shall be payable for the period of such extension.  All payments under each Loan Document shall
be made in dollars, except as expressly specified otherwise.



 76
 









(b)           Pro Rata Treatment.


(i)            Each payment by Borrowers of
interest in respect of its Loans shall be applied to the amounts of such
Borrower’s obligations owing to the applicable Lenders pro rata according to the respective
amounts then due and owing to such Lenders.


(ii)           Each payment by Borrowers on account
of principal of the Revolving Borrowings shall be made to the applicable
Lenders  pro
rata based on the principal amounts of the Revolving Loans then held
by the Revolving Lenders.


(c)           Insufficient Funds.  If at any time insufficient funds are
received by and available to the applicable Administrative Agent to pay fully
all amounts of principal, Reimbursement Obligations, interest and fees then due
hereunder, such funds shall be applied (i) first, toward payment of interest and fees then due
hereunder, ratably among the parties entitled thereto in accordance with the
amounts of interest and fees then due to such parties, and (ii) second, toward payment of principal and
Reimbursement Obligations then due hereunder, ratably among the parties entitled
thereto in accordance with the amounts of principal and Reimbursement
Obligations then due to such parties.


(d)           Sharing of Set-Off.  Subject to the terms of the Intercreditor
Agreement, if any Lender (and/or the Issuing Bank, which shall be deemed a “Lender”
for purposes of this Section 2.14(d)) shall, by exercising any right of
setoff or counterclaim or otherwise, obtain payment in respect of any principal
of or interest on any of its Loans or other Obligations resulting in such
Lender’s receiving payment of a proportion of the aggregate amount of its Loans
and accrued interest thereon or other Obligations greater than its pro  rata
share thereof as provided herein, then the Lender receiving such greater
proportion shall (a) notify the applicable Administrative Agent of such
fact, and (b) purchase (for cash at face value) participations in the
Loans and such other obligations of the other applicable Lenders, or make such
other adjustments as shall be equitable, so that the benefit of all such payments
shall be shared by the applicable Lenders ratably in accordance with the
aggregate amount of principal of and accrued interest on their respective Loans
and other amounts owing them, provided
that:


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


(ii)           the provisions of this paragraph
shall not be construed to apply to (x) any payment made by Borrowers
pursuant to and in accordance with the express terms of this Agreement or
(y) any payment obtained by a Lender as consideration for the assignment
of or sale of a participation in any of its Loans or participations in LC Disbursements
to any assignee or participant, other than to Borrowers or any Subsidiary
thereof (as to which the provisions of this paragraph shall apply).


Each Loan Party consents to the foregoing and agrees,
to the extent it may effectively do so under applicable Requirements of Law,
that any Lender acquiring a participation pursuant to the foregoing
arrangements may exercise against such Loan Party rights of setoff and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of such Loan 



 77
 









Party in the amount of such participation.  If under applicable bankruptcy, insolvency or
any similar law any Secured Party receives a secured claim in lieu of a setoff
or counterclaim to which this Section 2.14(d) applies, such Secured
Party shall to the extent practicable, exercise its rights in respect of such
secured claim in a manner consistent with the rights to which the Secured Party
is entitled under this Section 2.14(d) to share in the benefits of the
recovery of such secured claim.


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


(f)            Lender Default.  If any Lender shall fail to make any payment
required to be made by it pursuant to Section 2.02(c), Section
2.14(e), Section 2.17(d), Section 2.18(d), Section 2.18(e)
or Section 11.03(c), then the applicable Administrative Agent may, in
its discretion (notwithstanding any contrary provision hereof), apply any
amounts thereafter received by such Administrative Agent for the account of
such Lender to satisfy such Lender’s obligations under such Sections until all
such unsatisfied obligations are fully paid.


SECTION 2.15.  Taxes.


(a)           Payments Free of Taxes.  Any and all payments by or on account of any
obligation of the Loan Parties hereunder or under any other Loan Document shall
be made free and clear of and without deduction or withholding for any
Indemnified Taxes or Other Taxes; provided that if the Loan Parties
shall be required by applicable Requirements of Law to deduct any Indemnified
Taxes (including any Other Taxes) from such payments, then (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section) the applicable Administrative Agent, the applicable Collateral
Agent, Lender or Issuing Bank, as the case may be, receives an amount equal to
the sum it would have received had no such deductions been made, (ii) the
applicable Loan Party shall make such deductions and (iii) the applicable
Loan Party shall timely pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable Requirements of Law.


(b)           Payment of Other Taxes by
Borrowers.  Without limiting the
provisions of paragraph (a) above, Borrowers shall timely pay any Other Taxes
to the relevant Governmental Authority in accordance with applicable
Requirements of Law.



 78
 









(c)           Indemnification by Borrowers.  Borrowers shall indemnify the Agents, each Lender
and the Issuing Bank, within 10 days after demand therefor, for the full amount
of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other
Taxes imposed or asserted on or attributable to amounts payable under this
Section) paid by the Agents, such Lender or the Issuing Bank, as the case may
be, and any penalties, interest and reasonable expenses arising therefrom or
with respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental
Authority.  A certificate as to the
amount of such payment or liability delivered to Borrowers by a Lender or the
Issuing Bank (with a copy to the Administrative Agents), or by the Agents on
their own behalf or on behalf of a Lender or the Issuing Bank, shall be
conclusive absent manifest error.


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


(e)           Status of Lenders.  Any Foreign Lender that is entitled to an
exemption from or reduction of withholding tax under the law of the
jurisdiction in which US Borrowers are resident for tax purposes, or any treaty
to which such jurisdiction is a party, with respect to payments hereunder or
under any other Loan Document shall, to the extent it may lawfully do so,
deliver to US Borrowers (with a copy to the Administrative Agents), at the time
or times prescribed by applicable Requirements of Law or as reasonably
requested by US Borrowers or the Administrative Agents, such properly completed
and executed documentation prescribed by applicable Requirements of Law as will
permit such payments to be made without withholding or at a reduced rate of
withholding.  In addition, any Lender, if
requested by US Borrowers or either Administrative Agent, shall deliver such
other documentation prescribed by applicable Requirements of Law or reasonably
requested by US Borrowers or the Administrative Agents as will enable US
Borrowers or the Administrative Agents to determine whether or not such Lender
is subject to backup withholding or information reporting requirements.  Notwithstanding anything to the contrary in
the above two sentences, in the case of non-U.S. withholding taxes the
completion, execution and submission of non-U.S. forms shall not be required if
in the Lender’s judgment such completion, execution or submission would subject
such Lender to any material unreimbursed cost or expense or would be otherwise
disadvantageous to such Lender in any material respect.


Each initial
Canadian Lender of the Canadian Borrower represents and warrants to the
Canadian Borrower that on the Closing Date (a) (i)  it is not a “non-resident” within the meaning
of the ITA; or (ii) it is an “authorized foreign bank” within the meaning of
the Bank Act for purposes of the
ITA, and is entering into this Agreement in the ordinary course of its trade
and business that is its “Canadian banking business” for purposes of the ITA,
and each amount paid or credited by or to it in respect of the transactions
contemplated hereunder is, and will be brought into account and recorded and
reported in computing its income for Canadian tax purposes as having been made
or received as the case may be, in respect of its “Canadian banking business”
as so defined; and (b) has no present intention to withdraw from this
Agreement.  Upon the written request of
the Canadian Administrative Agent or the Canadian 



 79
 









Borrower acting reasonably, each such
Canadian Lender shall use its best efforts to deliver to the Canadian
Administrative Agent and Canadian Borrower such certificates, documents or
other evidence as may be required from time to time, properly completed and
duly executed by such Canadian Lender, to confirm the continuing accuracy of
the foregoing representation or alternatively, shall deliver a notice to the
Canadian Borrower indicating the facts and circumstances (other than facts and
circumstances brought about unilaterally by such Canadian Lender) which have
resulted in the above representation and warranty no longer continuing to be
true and accurate.  If such Canadian
Lender fails to deliver such requested certificates, documents, other evidence
on the one hand, or such notice on the other or, for greater certainty, the
facts and circumstances relating to the change of the status of the Canadian
Lender have been brought about unilaterally by such Canadian Lender, then the
Canadian Borrower or the Canadian Administrative Agent, as the case may be,
shall withhold from any interest payment to such Canadian Lender an amount
equivalent to the applicable Canadian withholding tax imposed by applicable
Canadian laws (including any applicable tax treaty) and the Canadian Borrower
shall not be required to pay any additional or other amounts to such Canadian
Lender under Section 2.15(a).  From
time to time, each such Canadian Lender shall (i) promptly submit to the
Canadian Administrative Agent and the Canadian Borrower such certificates,
documents, other evidence or notice as aforesaid, (ii) promptly notify the
Canadian Administrative Agent and the Canadian Borrower of any change in
circumstances which would result in the above representation and warranty no
longer continuing to be true and accurate, and (iii) take such steps as shall
not be materially disadvantageous to it, in the reasonable judgment of such
Canadian Lender, and as may be reasonably necessary (including the
re-designation of its Lending Office) to avoid any requirement of applicable
laws that the Canadian Borrower make any deduction or withholding for Taxes
from amounts payable to such Canadian Lender. 
Notwithstanding the foregoing, but subject to Section 11.04(b)(v),
the Borrowers acknowledge that the rights and obligations of a Canadian Lender
hereunder may be assigned to an Eligible Assignee that does not qualify as an
Eligible Canadian Lender and further agree that any Borrower approval required
in respect of such an assignment shall not be withheld on such basis.


  Without
limiting the generality of any of the foregoing, any Foreign Lender shall, to
the extent it may lawfully do so, deliver to US Borrowers and the
Administrative Agents (in such number of copies as shall be requested by the
recipient) on or prior to the date on which such Foreign Lender becomes a
Lender under this Agreement (and from time to time thereafter upon the request
of Administrative Borrower or either Administrative Agent, but only if such
Foreign Lender is legally entitled to do so), whichever of the following is
applicable:


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


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


(iii)          in the case of a Foreign Lender
claiming the benefits of the exemption for portfolio interest under Section
881(c) of the Code, (x) a certificate, in substantially the form of Exhibit Q,
or any other form approved by the applicable Administrative Agent, to the effect
that such Foreign Lender is not (A) a “bank” within the meaning of Section
881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of any Borrower



 80















within the meaning of Section 881(c)(3)(B) of
the Code, or (C) a “controlled foreign corporation” described in Section
881(c)(3)(C) of the Code and (y) duly completed copies of  Internal Revenue Service Form W-8BEN, or


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


(v)           any Lender that is not a Foreign Lender and has not
otherwise established to the reasonable satisfaction of the Administrative
Borrower and the Administrative Agent
that it is an exempt recipient (as defined in Section 6049(b)(4) of the Code
and the regulations thereunder) shall deliver to the Administrative Borrower (with a copy to the US
Administrative Agent) on or prior to the date on which such Lender becomes a
Lender under this Agreement (and from time to time thereafter as prescribed by
Applicable Law or upon the request of the Administrative Borrower or the US Administrative Agent) two
duly executed and properly completed copies of Internal Revenue Service Form
W-9 (or applicable successor form).  Each
Lender (other than a Foreign Lender) shall promptly notify the Administrative
Borrower and the US Administrative
Agent at any time that it determines any previously delivered form or
certification is no longer accurate.


Each Foreign Lender shall promptly notify the
Administrative Borrower and each Administrative Agent at any time that a
previously delivered form of certificate is no longer accurate.


(f)            Treatment
of Certain Refunds.  If either
Administrative Agent, a Lender or the Issuing Bank determines, in its sole
discretion, that it has received a refund of any Indemnified Taxes or Other
Taxes as to which it has been indemnified by Borrowers or with respect to which
Borrowers have paid additional amounts pursuant to this Section, it shall pay
to Borrowers an amount equal to such refund (but only to the extent of
indemnity payments made, or additional amounts paid, by Borrowers under this
Section with respect to the Indemnified Taxes or Other Taxes giving rise to
such refund), net of all out-of-pocket expenses of such Administrative Agent,
such Lender or the Issuing Bank, as the case may be, and without interest
(other than any interest paid by the relevant Governmental Authority with
respect to such refund); provided that
Borrowers, upon the request of either Administrative Agent, such Lender or the
Issuing Bank, agrees to repay the amount paid over to Borrowers (plus any
penalties, interest or other charges imposed by the relevant Governmental
Authority) to such Administrative Agent, such Lender or the Issuing Bank in the
event such Administrative Agent, such Lender or the Issuing Bank is required to
repay such refund to such Governmental Authority.  If and to the extent that any Lender is able,
in its sole opinion, to apply or otherwise take advantage of any offsetting tax
credit or other similar tax benefit arising out of or in conjunction with any
deduction or withholding which gives rise to an obligation of a Borrower to pay
any additional amount pursuant to this Section 2.15, then such Lender shall, to
the extent that in its sole opinion it can do so without prejudice to the
retention of the amount of such credit or benefit and without any other adverse
tax consequences for such Lender, reimburse such  Borrower at such time as such tax credit or
benefit shall have actually been received by such Lender such amount as such 



 81
 









Lender shall, in its sole opinion, have determined to
be attributable to the relevant deduction or withholding and as will leave such
Lender in no better or worse position than it would have been in if the payment
of such additional amount had not been required.  (net of all out-of-pocket expenses of such
Administrative Agent, such Lender or the Issuing Bank, as the case may be);
provided that the Borrowers upon the request of either Administrative Agent,
such Lender or the Issuing Bank agrees to repay the amount paid over to the
Borrowers (plus any penalties, interest or other charges imposed by the
relevant Governmental Authority) in the event Governmental Authority
successfully challenges such tax credits or other tax benefits.


This section shall not be construed to
require either Administrative Agent, any Lender or the Issuing Bank to make
available its tax returns (or any other information relating to its taxes that
it deems confidential) to Borrowers or any other person.  Notwithstanding anything to the contrary, in
no event will any Administrative Agent, any Lender or the Issuing Bank be
required to pay any amount to Borrowers the payment of which would place such
Lender, such Administrative Agent or the Issuing Bank in a less favorable net
after-tax position than such Lender, such Administrative Agent or the Issuing
Bank would have been in if the additional amounts giving rise to such refund of
any Indemnified Taxes or Other Taxes had never been paid.


(g)           Upon the reasonable request of the
Canadian Borrower, and at the Canadian Borrower’s expense, a Canadian Lender
shall use its reasonable efforts to co-operate with the Canadian Borrower with
a view to obtaining a refund of any Tax which is not, in the Canadian Borrower’s
reasonable opinion, correctly or legally imposed and for which the Canadian
Borrower has indemnified the Canadian Lender under this Agreement, if obtaining
such refund would not, in the sole judgment of the Canadian Lender, be
disadvantageous to the Canadian Lender; provided that nothing in this clause
shall be construed to require the Canadian Lender to institute any
administrative proceeding (other than the filing of a claim for any such refund)
or judicial proceeding to obtain any such refund.  If such Canadian Lender shall receive a
refund from a taxing authority (as a result of any error in the imposition of
Taxes by such taxing authority) or any Taxes paid by the Canadian Borrower
pursuant to this Agreement, the Canadian Lender shall promptly pay to the
Canadian Borrower the amount so received, less any Taxes imposed on the
Canadian Lender as a result of such amount and net out-of-pocket expenses
provided that the Canadian Lender shall only be required to pay the Canadian
Borrower such amounts as the Canadian Lender determines are attributable to
Taxes paid by the Canadian Borrower.  In
the event that the Canadian Lender is required to repay the amount of such
refund (including interest, if any), the Canadian Borrower, upon the request of
the Canadian Lender, agrees to promptly return to the Canadian Lender the
amount of such refund and interest, if any (plus penalties, interest and other
charges imposed in connection with the repayment of such amounts by the
Canadian Lender).


SECTION
2.16.  Mitigation Obligations; Replacement of
Lenders.


(a)           Designation of a Different Lending
Office.  If any Lender requests
compensation under Section 2.12, or requires Borrowers to pay any
additional amount to any Lender or any Governmental Authority for the account
of any Lender pursuant to Section 2.15, then such Lender shall use
reasonable efforts to designate a different lending office for funding or
booking its Loans hereunder or to assign its rights and obligations hereunder
to another of its offices, 



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branches or
affiliates, if, in the judgment of such Lender, such designation or assignment
(i) would eliminate or reduce amounts payable pursuant to Section 2.12
or Section 2.15, as the case may be, in the future and (ii) would
not subject such Lender to any unreimbursed cost or expense and would not
otherwise be disadvantageous to such Lender. 
Borrower hereby agrees to pay all reasonable costs and expenses incurred
by any Lender in connection with any such designation or assignment.  A certificate setting forth such costs and
expenses submitted by such Lender to Borrower shall be conclusive absent
manifest error.


(b)           Replacement of Lenders.  If any Lender requests compensation under Section
2.12, or if Borrowers are required to pay any additional amount to any
Lender or any Governmental Authority for the account of any Lender pursuant to Section
2.15, or if any Lender defaults in its obligation to fund Loans hereunder,
or if Borrowers exercises their replacement rights under Section 11.02(d),
then Borrowers may, at their sole expense and effort, upon notice to such
Lender and the Administrative Agents, require such Lender to assign and
delegate, without recourse (in accordance with and subject to the restrictions
contained in, and consents required by, Section 11.04), all of its
interests, rights and obligations under this Agreement and the other Loan
Documents to an Eligible Assignee that shall assume such obligations (which
assignee may be another Lender, if a Lender accepts such assignment); provided that:


(i)            Borrowers shall have paid to the
applicable Administrative Agent the processing and recordation fee specified in
Section 11.04(b);


(ii)           such Lender shall have received
payment of an amount equal to the outstanding principal of its Loans and
participations in LC Disbursements and Swingline Loans, accrued interest
thereon, accrued fees and all other amounts payable to it hereunder and under
the other Loan Documents (including any amounts under Section 2.13), from
the assignee (to the extent of such outstanding principal and accrued interest
and fees) or Borrowers(in the case of all other amounts);


(iii)          in the case of any such assignment
resulting from a claim for compensation under Section 2.12 or payments
required to be made pursuant to Section 2.15, such assignment will
result in a reduction in such compensation or payments thereafter; and


(iv)          such assignment does not conflict with
applicable Requirements of Law.


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


SECTION
2.17.  Swingline Loans.


(a)           US Swingline Commitment.  Subject to the terms and conditions set forth
herein, the US Swingline Lender agrees to make US Swingline Loans to US
Borrowers from time to time during the Revolving Availability Period, in an
aggregate principal amount at any time outstanding that will not result in the
aggregate principal amount of outstanding US Swingline Loans exceeding $35
million and provided that after making a US Swingline Loan, the sum of 



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the total US
Revolving Exposures shall not exceed the lesser of (A) the total Revolving Commitments
minus any Line Reserve and (B) the Borrowing Base then in effect; provided that the US Swingline Lender
shall not be required to make a US Swingline Loan to refinance an outstanding
Swingline Loan.  Within the foregoing
limits and subject to the terms and conditions set forth herein, US Borrowers
may borrow, repay and reborrow US Swingline Loans.


(b)           US Swingline Loans.  To request a US Swingline Loan,
Administrative Borrower shall deliver, by hand delivery or telecopier, a duly
completed and executed Borrowing Request to the US Administrative Agent and the
US Swingline Lender, not later than 2:00 p.m., New York City time, on the day
of a proposed Swingline Loan.  Each such
notice shall be irrevocable and shall specify the requested date (which shall
be a Business Day) and the amount of the requested US Swingline Loan.  Each US Swingline Loan shall be an ABR
Loan.  The US Swingline Lender shall make
each US Swingline Loan available to the applicable US Borrower by means of a
credit to the general deposit account of such US Borrower with the US Swingline
Lender (or, in the case of a US Swingline Loan made to finance the
reimbursement of an LC Disbursement as provided in Section 2.18(e), by
remittance to the Issuing Bank) by 3:00 p.m., New York City time, on the
requested date of such US Swingline Loan. 
US Borrowers shall not request a US Swingline Loan if at the time of or
immediately after giving effect to the extension of credit contemplated by such
request a Default has occurred and is continuing or would result
therefrom.  US Swingline Loans shall be
made in minimum amounts of $1.0 million and integral multiples of $500,000
above such amount.


(c)           Prepayment.  US Borrowers shall have the right at any time
and from time to time to repay any US Swingline Loan, in whole or in part, upon
giving written notice to the US Swingline Lender and the US Administrative
Agent before 12:00 (noon), New York City time, on the proposed date of
repayment.


(d)           Canadian Swingline Commitment.  Subject to the terms and conditions set forth
herein, the Canadian Swingline Lender agrees to make Canadian Swingline Loans
to Canadian Borrower from time to time during the Revolving Availability
Period, in an aggregate principal amount at any time outstanding that will not
result in the aggregate principal amount of outstanding Canadian Swingline
Loans exceeding $5.0 million and provided that after making a Canadian
Swingline Loan, the sum of the total Canadian Exposures shall not exceed the
lesser of (A) the total Canadian Revolving Commitments minus any Line Reserve
allocated to the Canadian Revolving Commitments and (B) the Canadian Borrowing
Base then in effect; provided
that the Canadian Swingline Lender shall not be required to make a Canadian
Swingline Loan to refinance an outstanding Swingline Loan.  Within the foregoing limits and subject to
the terms and conditions set forth herein, Canadian Borrower may borrow, repay
and reborrow Canadian Swingline Loans.


(e)           Canadian Swingline Loans.  To request a Swingline Loan, Administrative
Borrower shall deliver, by hand delivery or telecopier, a duly completed and
executed Borrowing Request to the Canadian Administrative Agent and the
Canadian Swingline Lender, not later than 2:00 p.m., New York City time, on the
day of a proposed Canadian Swingline Loan. 
Each such notice shall be irrevocable and shall specify the requested
date (which shall be a Business Day) and the amount of the requested Canadian
Swingline Loan.  Each Canadian Swingline
Loan shall be a Canadian Prime Rate Loan. 
The Canadian Swingline Lender shall make each 



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Canadian
Swingline Loan available to Canadian Borrower by means of a credit to the
general deposit account of Canadian Borrower with the Canadian Swingline Lender
by 3:00 p.m., New York City time, on the requested date of such Canadian
Swingline Loan.  Canadian Borrower shall
not request a Canadian Swingline Loan if at the time of or immediately after
giving effect to the extension of credit contemplated by such request a Default
has occurred and is continuing or would result therefrom.  Canadian Swingline Loans shall be made in
minimum amounts of Can$1.0 million and integral multiples of Can$500,000 above
such amount.


(f)            Prepayment.  Canadian Borrower shall have the right at any
time and from time to time to repay any Canadian Swingline Loan, in whole or in
part, upon giving written notice to the Canadian Swingline Lender and the
Canadian Administrative Agent before 12:00 (noon), New York City time, on the
proposed date of repayment.


(g)           Participations.  Either Swingline Lender may at any time in
its discretion by written notice given to the applicable Administrative Agent (provided such notice requirement shall not
apply if either (i) the US Swingline Lender and the US Administrative Agent are
the same entity or (ii) the Canadian Swingline Lender and the Canadian
Administrative Agent are the same entity, as applicable) not later than 11:00
A.M., New York City time, on the next succeeding Business Day following such
notice require the Revolving Lenders to acquire participations on such Business
Day in all or a portion of the Swingline Loans then outstanding.  Such notice shall specify the aggregate
amount of Swingline Loans in which Revolving Lenders will participate.  Promptly upon receipt of such notice, the applicable
Administrative Agent will give notice thereof to each Revolving Lender,
specifying in such notice such Lender’s Pro Rata Percentage of such Swingline
Loan or Loans.  Each Revolving Lender
hereby absolutely and unconditionally agrees, upon receipt of notice as
provided above, to pay to the applicable Administrative Agent, for the account
of the applicable Swingline Lender, such Lender’s Pro Rata Percentage of such
Swingline Loan or Swingline Loans.  Each
Revolving Lender acknowledges and agrees that its obligation to acquire
participations in Swingline Loans pursuant to this paragraph is absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including the occurrence and continuance of a Default or reduction or termination
of the Commitments, and that each such payment shall be made without any
offset, abatement, withholding or reduction whatsoever (so long as such payment
shall not cause such Lender’s Revolving Exposure to exceed such Lender’s
Revolving Commitment).  Each Revolving
Lender shall comply with its obligation under this paragraph by wire transfer
of immediately available funds, in the same manner as provided in Section
2.02(c) with respect to Loans made by such Lender (and Section 2.02
shall apply, mutatis mutandis, to
the payment obligations of the Revolving Lenders), and the applicable
Administrative Agent shall promptly pay to the applicable Swingline Lender the
amounts so received by it from the Revolving Lenders.  The applicable Administrative Agent shall
notify Administrative Borrower of any participations in any Swingline Loan
acquired by the Revolving Lenders pursuant to this paragraph, and thereafter
payments in respect of such Swingline Loan shall be made to such Administrative
Agent and not to such Swingline Lender. 
Any amounts received by any Swingline Lender from any Borrower (or other
party on behalf of Borrowers) in respect of a Swingline Loan after receipt by
such Swingline Lender of the proceeds of a sale of participations therein shall
be promptly remitted to the Administrative Agents.  Any such amounts received by the
Administrative Agents shall be promptly remitted by the Administrative Agents
to the Revolving Lenders that shall have made their payments pursuant to this
paragraph, as their 



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interests may
appear.  The purchase of participations
in a Swingline Loan pursuant to this paragraph shall not relieve Borrowers of
any default in the payment thereof.


SECTION 2.18.  Letters
of Credit.


(a)           General.  Subject to the terms and conditions set forth
herein, US Borrowers may request the Issuing Bank, and the Issuing Bank agrees,
to issue Letters of Credit denominated in any Approved Currency for its own
account or the account of a Subsidiary in a form reasonably acceptable to the
US Administrative Agent and the Issuing Bank, at any time and from time to time
during the Revolving Availability Period (provided
that US Borrowers shall be a co-applicant, and be jointly and severally liable,
with respect to each Letter of Credit issued for the account of a
Subsidiary).  Upon receipt of an LC
Request in accordance with Section 2.18(b) below, the US Administrative
Agent shall notify the Issuing Bank as to whether the issuance of such Letter
of Credit is authorized.  The Issuing
Bank shall not issue any Letter of Credit without first receiving such
authorization and US Borrowers shall not request the issuance of, any Letter of
Credit at any time if after giving effect to such issuance, the LC Exposure
would exceed the LC Commitment or the total Revolving Exposure would exceed the
limits set forth in clause (b) below.  In
the event of any inconsistency between the terms and conditions of this
Agreement and the terms and conditions of any form of letter of credit application
or other agreement submitted by US Borrowers to, or entered into by US
Borrowers with, the Issuing Bank relating to any Letter of Credit, the terms
and conditions of this Agreement shall control. 
Borrowers and Guarantors hereby acknowledge and agree that, effective as
of the Original Closing Date, each of the Existing Issuing Bank Letters of
Credit shall be deemed and shall each constitute a Letter of Credit as if such
Existing Issuing Bank Letters of Credit were originally issued as a Letter of
Credit under the Original Credit Agreement and shall be subject to the terms
and conditions of this Agreement.


(b)           Request for Issuance, Amendment,
Renewal, Extension; Certain Conditions and Notices.  To request the issuance of a Letter of Credit
or the amendment, renewal or extension of an outstanding Letter of Credit, US
Borrowers shall deliver, by hand or telecopier (or transmit by electronic
communication, if arrangements for doing so have been approved by the Issuing
Bank), an LC Request to the Issuing Bank and the US Administrative Agent not later
than 11:00 a.m. on the third Business Day preceding the requested date of
issuance, amendment, renewal or extension (or such later date and time as is
acceptable to the Issuing Bank).


Each LC Request for an initial issuance of a Letter of
Credit shall specify in form and detail satisfactory to the Issuing Bank the
following:


(i)            the proposed issuance date of the
requested Letter of Credit (which shall be a Business Day);


(ii)           the amount and the currency thereof
(which shall be any Approved Currency);


(iii)          the expiry date thereof (which shall
not be later than the close of business on the Letter of Credit Expiration
Date);



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(iv)          the name and address of the
beneficiary thereof;


(v)           whether the Letter of Credit is to be
issued for its own account or for the account of one of its Subsidiaries (provided that US Borrowers shall be a
co-applicant, and therefor jointly and severally liable, with respect to each
Letter of Credit issued for the account of a Subsidiary);


(vi)          the documents to be presented by such
beneficiary in connection with any drawing thereunder;


(vii)         the full text of any certificate to be
presented by such beneficiary in connection with any drawing thereunder; and


(viii)        such other matters as the Issuing Bank
may require.


A request for an amendment, renewal or extension of
any outstanding Letter of Credit shall specify in form and detail satisfactory
to the Issuing Bank:


(i)            the Letter of Credit to be amended,
renewed or extended;


(ii)           the proposed date of amendment,
renewal or extension thereof (which shall be a Business Day);


(iii)          the nature of the proposed amendment,
renewal or extension; and


(iv)          such other matters as the Issuing Bank
may require.


If requested by the Issuing Bank, US Borrowers also
shall submit a letter of credit application on the Issuing Bank’s standard form
in connection with any request for a Letter of Credit, but in the event of any
inconsistency between such standard form and this Agreement, the terms of this
Agreement shall control.  A Letter of
Credit shall be issued, amended, renewed or extended only if (and, upon
issuance, amendment, renewal or extension of each Letter of Credit, US
Borrowers shall be deemed to represent and warrant that), after giving effect
to such issuance, amendment, renewal or extension, (i) the LC Exposure
shall not exceed the LC Commitment, (ii) the total Revolving Exposures
shall not exceed the lesser of (A) the total Revolving Commitments minus any
Line Reserve and (B) the Borrowing Base then in effect and (iii) the conditions
set forth in Article IV in respect of such issuance, amendment, renewal
or extension shall have been satisfied. 
Unless the Issuing Bank shall agree otherwise, no Letter of Credit shall
be in an initial amount less than $100,000, in the case of a Commercial Letter
of Credit, or $500,000, in the case of a Standby Letter of Credit.


Upon the issuance of any Letter of Credit or
amendment, renewal, extension or modification to a Letter of Credit, the
Issuing Bank shall promptly notify the US Administrative Agent, who shall promptly
notify each Revolving Lender, thereof, which notice shall be accompanied by a
copy of such Letter of Credit or amendment, renewal, extension or modification
to a Letter of Credit and the amount of such Lender’s respective participation
in such Letter of Credit pursuant to Section 2.18.  On the first Business Day of each calendar
month, the Issuing Bank shall provide to the US Administrative Agent a report
listing all 



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outstanding Letters of Credit and the outstanding
amounts and beneficiaries thereof and the amount and maturities of any LC
Acceptances and the US Administrative Agent shall promptly provide such report
to each Revolving Lender.


(c)           Expiration Date.  Each Letter of Credit shall expire (or be
subject to non-renewal or termination by the US Administrative Agent) at or
prior to the close of business on the earlier of (x) the date which is one
year after the date of the issuance of such Letter of Credit (or, in the case
of any renewal or extension thereof, one year after such renewal or extension)
and (y) the Letter of Credit Expiration Date.


(d)           Participations.  By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the Issuing Bank or the Lenders, the Issuing Bank
hereby irrevocably grants to each Revolving Lender, and each Revolving Lender
hereby acquires from the Issuing Bank, a participation in such Letter of Credit
equal to such Revolving Lender’s Pro Rata Percentage of the aggregate amount available
to be drawn under such Letter of Credit. 
In consideration and in furtherance of the foregoing, each Revolving
Lender hereby absolutely and unconditionally agrees to pay to the US
Administrative Agent, for the account of the Issuing Bank, such Revolving
Lender’s Pro Rata Percentage of each LC Disbursement made by the Issuing Bank
and not reimbursed by US Borrowers on the date due as provided in Section
2.18(d), or of any reimbursement payment required to be refunded to US
Borrowers for any reason.  Each Revolving
Lender acknowledges and agrees that its obligation to acquire participations
pursuant to this paragraph in respect of Letters of Credit is absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including any amendment, renewal or extension of any Letter of Credit or the
occurrence and continuance of a Default or reduction or termination of the
Commitments, or expiration, termination or cash collateralization of any Letter
of Credit and that each such payment shall be made without any offset,
abatement, withholding or reduction whatsoever.


(e)           Reimbursement.


(i)            If the Issuing Bank shall make any
LC Disbursement in respect of a Letter of Credit or LC Acceptance, US Borrowers
(or Canadian Borrower, in the first instance, and US Borrowers, alternatively,
for Letters of Credit governed by Section 2.18(m)) shall reimburse such
LC Disbursement by paying to the Issuing Bank an amount equal to such LC
Disbursement not later than 3:00 p.m.,
New York City time, on the date that such LC Disbursement is made if
Administrative Borrower shall have received notice of such LC Disbursement
prior to 11:00 a.m., New York City time, on such date, or, if such notice has
not been received by Administrative Borrower prior to such time on such date,
then not later than 3:00 p.m., New York City time, on the Business Day
immediately following the day that Administrative Borrower receives such
notice; provided that US
Borrowers may, subject to the conditions to borrowing set forth herein, request
in accordance with Section 2.03 that such payment be financed with ABR
Revolving Loans or Swingline Loans in an equivalent amount and, to the extent
so financed, Administrative Borrowers’ obligation to make such payment shall be
discharged and replaced by the resulting ABR Revolving Loans or Swingline
Loans.



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(ii)           If US Borrowers (or Canadian Borrower
and US Borrowers for Letters of Credit governed by Section 2.18(m)) fail
to make such payment when due, the Issuing Bank shall notify the US Administrative
Agent and the US Administrative Agent shall notify each Revolving Lender of the
applicable LC Disbursement, the payment then due from US Borrowers in respect
thereof and such Revolving Lender’s Pro Rata Percentage thereof.  Each Revolving Lender shall pay by wire
transfer of immediately available funds to the US Administrative Agent not
later than 2:00 p.m., New York City time, on such date (or, if such Revolving
Lender shall have received such notice later than 12:00 noon, New York City
time, on any day, not later than 11:00 a.m., New York City time, on the
immediately following Business Day), an amount equal to such Revolving Lender’s
Pro Rata Percentage of the unreimbursed LC Disbursement in the same manner as
provided in Section 2.02(c) with respect to Revolving Loans made by such
Revolving Lender, and the US Administrative Agent will promptly pay to the
Issuing Bank the amounts so received by it from the Revolving Lenders.  The US Administrative Agent will promptly pay
to the Issuing Bank any amounts received by it from US Borrowers or Canadian
Borrower, as the case may be, pursuant to the above paragraph prior to the time
that any Revolving Lender makes any payment pursuant to the preceding sentence
and any such amounts received by the US Administrative Agent from US Borrowers
or Canadian Borrower, as the case may be, thereafter will be promptly remitted
by the US Administrative Agent to the Revolving Lenders that shall have made
such payments and to the Issuing Bank, as appropriate.


(iii)          If any Revolving Lender shall not have
made its Pro Rata Percentage of such LC Disbursement available to the US
Administrative Agent as provided above, each of such Revolving Lender and US
Borrowers severally agree to pay interest on such amount, for each day from and
including the date such amount is required to be paid in accordance with the
foregoing to but excluding the date such amount is paid, to the US
Administrative Agent for the account of the Issuing Bank at (i) in the
case of US Borrower, the rate per annum set forth in Section 2.18(h) and
(ii) in the case of such Lender, at a rate determined by the US
Administrative Agent in accordance with banking industry rules or practices on
interbank compensation.


(iv)          All payments made pursuant to this Section
2.18(e) shall be in the Approved Currency in which the LC Disbursement
giving rise to such payment is denominated.


(f)            Obligations Absolute.  The Reimbursement Obligation of US Borrowers
and Canadian Borrower, as applicable, as provided in Section 2.18(e)
shall be absolute, unconditional and irrevocable, and shall be paid and
performed strictly in accordance with the terms of this Agreement 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 being proved to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect; (iii) payment by the Issuing Bank (or creation of an LC
Acceptance) under a Letter of Credit against presentation of a draft or other
document that fails to comply with the terms of such Letter of Credit;
(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
2.18, 



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constitute a
legal or equitable discharge of, or provide a right of setoff against, the
obligations of US Borrowers and Canadian Borrower, as applicable, hereunder;
(v) the fact that a Default shall have occurred and be continuing; or
(vi) any material adverse change in the business, property, results of
operations, prospects or condition, financial or otherwise, of US Borrowers and
its Subsidiaries.  None of the Agents,
the Lenders, the Issuing Bank or any of their Affiliates shall have any
liability or responsibility by reason of or in connection with the issuance or
transfer of any Letter of Credit or any LC Acceptance 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 Issuing Bank; provided that
the foregoing shall not be construed to excuse the Issuing Bank from liability
to US Borrowers or Canadian Borrower, as applicable, to the extent of any
direct damages (as opposed to consequential damages, claims in respect of which
are hereby waived by Borrowers to the extent permitted by applicable
Requirements of Law) suffered by US Borrowers or Canadian Borrower, as
applicable, that are caused by the Issuing Bank’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 Issuing Bank (as finally determined by a
court of competent jurisdiction), the Issuing Bank 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 Issuing Bank 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.


(g)           Disbursement Procedures.  The Issuing Bank shall, promptly following
its receipt thereof, examine all documents purporting to represent a demand for
payment (or creation of an LC Acceptance) under a Letter of Credit.  The Issuing Bank shall promptly give written
notice to the US Administrative Agent and US Borrowers of such demand for payment
and whether the Issuing Bank has made or will make an LC Disbursement
thereunder (or, in the case of the creation of an LC Acceptance, the date
payment is due thereunder); provided
that any failure to give or delay in giving such notice shall not relieve
Administrative Borrower or Canadian Borrower, as applicable, of its
Reimbursement Obligation to the Issuing Bank and the Revolving Lenders with
respect to any such LC Disbursement (other than with respect to the timing of
such Reimbursement Obligation set forth in Section 2.18(e)).


(h)           Interim Interest.  If the Issuing Bank shall make any LC
Disbursement, then, unless US Borrowers or Canadian Borrower, as applicable,
shall reimburse such LC Disbursement in full on the date such LC Disbursement
is made, the unpaid amount thereof shall bear interest payable on demand, for
each day from and including the date such LC Disbursement is made to but
excluding the date that US Borrowers or Canadian Borrower, as applicable,
reimburse such LC Disbursement, at the rate per annum determined pursuant to Section
2.06(e).  Interest accrued pursuant
to this paragraph shall be for the account of the Issuing Bank, except that
interest accrued on and after the date of payment by any Revolving 



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Lender
pursuant to Section 2.18(e) to reimburse the Issuing Bank shall be for
the account of such Lender to the extent of such payment.


(i)            Cash Collateralization.  If any Event of Default shall occur and be
continuing, on the Business Day that Administrative Borrower receives notice
from the US Administrative Agent or the Required Lenders (or, if the maturity
of the Loans has been accelerated, Revolving Lenders with LC Exposure
representing greater than 50% of the total LC Exposure) demanding the deposit
of cash collateral pursuant to this paragraph, US Borrowers shall deposit on
terms and in accounts satisfactory to the applicable Collateral Agents, in the
name of the applicable Collateral Agents and for the benefit of the Revolving
Lenders, an amount in cash equal to the LC Exposure as of such date plus any
accrued and unpaid interest thereon; provided
that the obligation to deposit such cash collateral shall become effective
immediately, and such deposit shall become immediately due and payable, without
demand or other notice of any kind, upon the occurrence of any Event of Default
with respect to US Borrowers described in Section 8.01(g) or Section
8.01(h).  Funds so deposited shall be
applied by the applicable Collateral Agents to reimburse the Issuing Bank for
LC Disbursements for which it has not been reimbursed and, to the extent not so
applied, shall be held for the satisfaction of outstanding Reimbursement
Obligations or, if the maturity of the Loans has been accelerated (but subject
to the consent of Revolving Lenders with LC Exposure representing greater than
50% of the total LC Exposure), be applied to satisfy other Obligations of US
Borrowers under this Agreement.  If US
Borrowers are required to provide an amount of cash collateral hereunder as a
result of the occurrence of an Event of Default, such amount plus any accrued interest or realized
profits with respect to such amounts (to the extent not applied as aforesaid)
shall be returned to US Borrowers within three Business Days after all Events
of Default have been cured or waived.


(j)            Additional Issuing Banks.  US Borrowers may, at any time and from time
to time, designate one or more additional Revolving Lenders to act as an
issuing bank under the terms of this Agreement, with the consent of the US
Administrative Agent (which consent shall not be unreasonably withheld), the
Issuing Bank and such Revolving Lender(s). 
Any Lender designated as an issuing bank pursuant to this
paragraph (j) shall be deemed (in addition to being a Revolving Lender) to
be the Issuing Bank with respect to Letters of Credit issued or to be issued by
such Revolving Lender, and all references herein and in the other Loan
Documents to the term “Issuing Bank” shall, with respect to such Letters of
Credit, be deemed to refer to such Revolving Lender in its capacity as Issuing
Bank, as the context shall require.


(k)           Resignation or Removal of the
Issuing Bank.  The Issuing Bank may
resign as Issuing Bank hereunder at any time upon at least 30 days’ prior
notice to the Lenders, the Administrative Agents and Administrative
Borrower.  The Issuing Bank may be
replaced at any time by written agreement among US Borrowers, each Agent, the
replaced Issuing Bank and the successor Issuing Bank.  US Administrative Agent shall notify the
Lenders of any such replacement of the Issuing Bank or any such additional
Issuing Bank.  At the time any such
resignation or replacement shall become effective, US Borrowers shall pay all
unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section
2.05(c).  From and after the
effective date of any such resignation or replacement or addition, as
applicable, (i) the successor or additional Issuing Bank shall have all
the rights and obligations of the Issuing Bank under this Agreement with
respect to Letters of Credit to be issued by it thereafter and (ii) references
herein to the term “Issuing Bank” shall be deemed to refer to such successor or




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such addition
or to any previous Issuing Bank, or to such successor or such addition and all
previous Issuing Banks, as the context shall require.  After the resignation or replacement of an
Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto
and shall continue to have all the rights and obligations of an Issuing Bank
under this Agreement with respect to Letters of Credit issued by it prior to
such resignation or replacement, but shall not be required to issue additional
Letters of Credit.  If at any time there
is more than one Issuing Bank hereunder, US Borrowers may, in their discretion,
select which Issuing Bank is to issue any particular Letter of Credit.


(l)            Other.  The Issuing Bank shall be under no obligation
to issue any Letter of Credit if


(i)            any order, judgment or decree of any
Governmental Authority or arbitrator shall by its terms purport to enjoin or
restrain the Issuing Bank from issuing such Letter of Credit, or any
Requirement of Law applicable to the Issuing Bank or any request or directive
(whether or not having the force of law) from any Governmental Authority with
jurisdiction over the Issuing Bank shall prohibit, or request that the Issuing
Bank refrain from, the issuance of letters of credit generally or such Letter
of Credit in particular or shall impose upon the Issuing Bank with respect to
such Letter of Credit any restriction, reserve or capital requirement (for which
the Issuing Bank is not otherwise compensated hereunder) not in effect on the
Closing Date, or shall impose upon the Issuing Bank any unreimbursed loss, cost
or expense which was not applicable on the Closing Date and which the Issuing
Bank in good faith deems material to it; or


(ii)           the issuance of such Letter of Credit
would violate one or more policies of the Issuing Bank.


The Issuing Bank shall be under no obligation to amend
any Letter of Credit if (A) the Issuing Bank would have no obligation at
such time to issue such Letter of Credit in its amended form under the terms
hereof, or (B) the beneficiary of such Letter of Credit does not accept
the proposed amendment to such Letter of Credit.


(m)          Notwithstanding
the foregoing, at no time shall there be greater than $10 million outstanding
of Letters of Credit issued for the account of Canadian Borrower and/or
Canadian Guarantors and any such Letters of Credit issued for the account of
Canadian Borrower and/or the Canadian Guarantors shall be treated as if issued
for the account of a US Borrower for purposes of calculating the Borrowing
Base.  The Canadian Borrower shall have
the primary responsibility for the Reimbursement Obligation with respect to any
such Letter of Credit through the borrowing of Canadian Revolving Loans;
provided, that in the event Canadian Borrower shall not reimburse such Issuing
Bank then such obligation shall be for the account of US Borrowers as provided
in Section 2.18(e).


SECTION 2.19.  Increase
in Commitments.


(a)           Borrower
Request.  The Borrowers may by
written notice to the Administrative Agents elect to request prior to the
Revolving Maturity Date, an increase to the existing Revolving Commitments by
an amount not in excess of $100 million in the aggregate and not 



 92
 









less than $50 million individually (unless otherwise
agreed to by the Administrative Agents). 
Each such notice shall specify (i) the date on which the Borrowers
propose that the increased or new Commitments shall be effective (each, an “Increase Effective Date”) and the time
period within which each Lender is requested to respond, which in each case
shall be a date not less than ten (10) Business Days after the date on which
such notice is delivered to the Administrative Agents and the Lenders.  The Administrative Agents shall promptly
circulate such notice to each of the Lenders and each Lender in its sole and
absolute discretion may notify Administrative Agents within such time period
whether or not it agrees to increase its Commitment and, if so, whether by an amount
equal to, greater than, or less than its Pro Rata Percentage of such requested
increase.  Any Lender not responding
within such time period shall be deemed to have declined to increase its
Commitment.  Administrative Agents shall
notify Borrowers and each Lender of the Lenders’ responses to each request made
hereunder.  If the existing Lenders do
not agree to the full amount of a requested increase, Borrowers may then invite
a Lender or any Lenders to increase their Commitments or invite additional financial
institutions (reasonably satisfactory to Administrative Agents, the Arranger
and solely to the extent otherwise permitted by Section 11.04) to become
Lenders pursuant to an Increase Joinder (as defined below).


(b)           Conditions.  The increased or new Commitments shall become
effective, as of such Increase Effective Date; provided
that:


(i)            each of the conditions set forth in Section
4.02 shall be satisfied;


(ii)           no Default shall have occurred and be
continuing or would result from the borrowings to be made on the Increase
Effective Date;


(iii)          if on the Increase Effective Date
(prior to giving effect to the borrowings or the increase in commitments to be
made on the Increase Effective Date) the Excess Availability is less than $75
million then, after giving pro forma effect to the borrowings to be made on the
Increase Effective Date and to any change in Consolidated Cash Flow and any
increase in Indebtedness resulting from the consummation of any Permitted
Acquisition concurrently with such borrowings as of the date of the most recent
financial statements delivered pursuant to Section 5.01(a) or Section
5.01(b), Borrowers shall be in compliance with each of the covenants set
forth in Section 6.10;


(iv)          Borrowers shall make any payments
required pursuant to Section 2.13 in connection with any adjustment of
Revolving Loans pursuant to Section 2.19(d); and


(v)           Borrowers shall deliver or cause to
be delivered any legal opinions or other documents reasonably requested by the
applicable Administrative Agent in connection with any such transaction.


(c)           Terms of New Loans and Commitments.  The terms and provisions of the Revolving
Loans made pursuant to the new Commitments shall be identical to the Revolving
Loans.  The increased or new Commitments
shall be effected by a joinder agreement (the “Increase Joinder”) executed by the Borrowers, the
Administrative Agents and each Lender making such increased or new Commitment,
in form and substance satisfactory to each of them.  



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The Increase
Joinder may, without the consent of any other Lenders, effect such amendments
to this Agreement and the other Loan Documents as may be necessary or
appropriate, in the opinion of the Administrative Agents, to effect the
provisions of this Section 2.19.


(d)           Adjustment of Revolving Loans.  Each of the Revolving Lenders (other than
Canadian Revolving Lenders) having a Revolving Commitment prior to such
Increase Effective Date (the “Pre-Increase
Revolving Lenders”) shall
assign to any Revolving Lender which is acquiring a new or additional Revolving
Commitment on the Increase Effective Date (the “Post-Increase
Revolving Lenders”), and such Post-Increase Revolving Lenders shall
purchase from each Pre-Increase Revolving Lender, at the principal amount
thereof, such interests in the Revolving Loans and participation interests in
LC Exposure and Swingline Loans outstanding on such Increase Effective Date as
shall be necessary in order that, after giving effect to all such assignments
and purchases, such Revolving Loans and participation interests in LC Exposure
and Swingline Loans will be held by Pre-Increase Revolving Lenders and
Post-Increase Revolving Lenders ratably in accordance with their Revolving
Commitments after giving effect to such increased Revolving Commitments.


(e)           Adjustment of Canadian Revolving
Loans.  Each of the Canadian
Revolving Lenders having a Canadian Revolving Commitment prior to such Increase
Effective Date (the “Canadian Pre-Increase Revolving Lenders”) shall assign to any Revolving Lender which is acquiring a
new or additional Canadian Revolving Commitment on the Increase Effective Date
(the “Canadian  Post-Increase Revolving Lenders”), and such Canadian
Post-Increase Revolving Lenders shall purchase from each Canadian Pre-Increase
Revolving Lender, at the principal amount thereof, such interests in the
Canadian Revolving Loans outstanding on such Increase Effective Date as shall
be necessary in order that, after giving effect to all such assignments and
purchases, such Revolving Loans will be held by Canadian Pre-Increase Revolving
Lenders and Canadian Post-Increase Revolving Lenders ratably in accordance with
their Canadian Revolving Commitments after giving effect to such increased
Canadian Revolving Commitments.


(f)            Equal and Ratable Benefit.  The Loans and Commitments established
pursuant to this paragraph shall constitute Loans and Commitments under, and
shall be entitled to all the benefits afforded by, this Agreement and the other
Loan Documents, and shall, without limiting the foregoing, benefit equally and
ratably from the Guarantees and security interests created by the Security
Documents, except that the new Loans may be subordinated in right of payment or
the Liens securing the new Loans may be subordinated, in each case, as set
forth in the Increase Joinder.  The Loan
Parties shall take any actions reasonably required by the Administrative Agents
to ensure and/or demonstrate that the Lien and security interests granted by
the Security Documents continue to be perfected under the UCC or the PPSA, as
applicable, or otherwise after giving effect to the establishment of any such
new Commitments.


SECTION
2.20.           Determination
of Borrowing Base.


(a)           Eligible
Accounts.  On any date of determination of the Borrowing Base, the term “Eligible Accounts” as used herein shall comprise all of the Credit
Card Receivables of US Borrowers and any of the US Borrowing Base Guarantors as
arise in the ordinary course of business, which have been earned by
performance, that are not excluded as ineligible by virtue of



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one or more of the criteria set forth below
and are reflected in the most recent Borrowing Base Certificate delivered by
the Borrowers to the Collateral Agents and the Administrative Agents.  None of the following shall be deemed to be
Eligible Accounts:


(i)               Credit Card
Receivables due from major credit card processors that have been outstanding
for more than five (5) Business Days from the date of sale, or for such longer
period(s) as may be approved by the applicable Collateral Agents;


(ii)              Credit Card Receivables
due from major credit card processors with respect to which US Borrowers or any
of the US Borrowing Base Guarantors do not have good, valid and marketable
title thereto, free and clear of any Lien (other than Liens granted to the
applicable Administrative Agent for its own benefit and the benefit of the
other Secured Parties pursuant to the Security Documents, those Liens specified
in Section 6.02 (a), (e) and (i) and Permitted Liens having priority by
operation of applicable law over the Lien of the Collateral Agents);


(iii)             Credit Card
Receivables due from major credit card processors that are not subject to a
first priority (except as provided in clause (ii), above) security interest in
favor of the Collateral Agents, as applicable, for its own benefit and the
benefit of the other Secured Parties;


(iv)             Credit Card
Receivables due from major credit card processors which are disputed, or with
respect to which a claim, counterclaim, offset or chargeback has been asserted,
by the related credit card processor (but only to the extent of such dispute,
counterclaim, offset or chargeback) (it being the intent that chargebacks in
the ordinary course by the credit card processors as contemplated by the
applicable Control Agreement shall not be deemed violative of this clause);


(v)              Except as otherwise
approved by the US Administrative Agent and applicable Collateral Agents,
Credit Card Receivables due from major credit card processors as to which the
credit card processor has the right under certain circumstances to require the
US Borrowers or any of the US Borrowing Base Guarantors to repurchase such
Accounts from such credit card processor;


(vi)             Except
as otherwise approved by the US Administrative Agent and applicable Collateral
Agents, Credit Card Receivables due from major
credit card processors as to which the US Administrative Agent and the
applicable Collateral Agents have not received an acceptable Control Agreement;


(vii)             Accounts due
from major credit card processors (other than Visa, Mastercard, American
Express, Diners Club and Discover) which the applicable Collateral Agents
determine in their commercially reasonable discretion, acting in good faith, to
be unlikely to be collected; or


(viii)           Except as otherwise
approved by the applicable Collateral Agents in their sole discretion, Credit Card Receivables of US Borrowers and any of
the US Borrowing Base Guarantors arising from Private Label Credit Cards.



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Notwithstanding the above, the applicable
Collateral Agents and the US Administrative Agent reserve the right, at any
time and from time to time after the Closing Date, to adjust the criteria set
forth above, to establish new criteria and to adjust the applicable advance
rate with respect to Eligible Accounts, in their Permitted Discretion, subject to
the approval of the Supermajority Lenders in the case of adjustments, new
criteria or changes in the applicable advance rates which have the effect of
making more credit available.  The Collateral Agents shall have the right to
establish, modify or eliminate Reserves against Eligible Accounts (including,
without limitation, for estimates, chargeback or other accrued liabilities or
offsets by credit card processors and amounts to adjust for material claims,
offsets, defenses or counterclaims or other material disputes described in Section
9.01) from time to time in their Permitted Discretion.


(b)           Eligible Inventory.  For purposes of this Agreement, Eligible
Inventory shall exclude any Inventory to which any of the exclusionary criteria
set forth below applies.  The Collateral
Agents shall have the right to establish, modify or eliminate Reserves against
Eligible Inventory from time to time in their Permitted Discretion.  In addition, the Collateral Agents and the
Administrative Agents reserve the right, upon two (2) Business Day’s prior
written notice to the Administrative Borrower, at any time and from time to
time after the Closing Date, to adjust any of the criteria set forth below, to
establish new criteria and to adjust the applicable advance rate with respect
to Eligible Inventory, in their Permitted Discretion, subject to the approval
of the Supermajority Lenders in the case of adjustments, new criteria, changes
in the applicable advance rate or the elimination of Reserves which have the
effect of making more credit available. 
Eligible Inventory shall not include any Inventory of US Borrowers or
any US Borrowing Base Guarantor that:


(i)               the applicable
Collateral Agents, on behalf of Secured Parties, do not have a first priority
and exclusive perfected Lien on such Inventory;


(ii)              (1) is stored at a
leased or rented location where the aggregate value of Inventory exceeds
$250,000 unless the applicable Collateral Agents have given their prior consent
thereto or unless either (x) a Landlord Access Agreement in respect of such
location has been delivered to the applicable Collateral Agents, or (y)
Reserves reasonably satisfactory to the applicable Collateral Agents have been
established with respect thereto or (2) is stored with a bailee or warehouseman
where the aggregate value of Inventory exceeds $250,000 unless either (x) an
acknowledged bailee waiver letter which is in form and substance satisfactory
to the applicable Collateral Agents and the US Administrative Agent has been
received by the applicable Collateral Agents or (y) Reserves reasonably
satisfactory to the applicable Collateral Agents have been established with
respect thereto, or (3) is located at an owned location subject to a mortgage
in favor of a lender other than any of the Collateral Agents and the Senior
Note Collateral Agent where the aggregate value of Inventory exceeds $250,000
unless either (x) mortgagee waiver which is in form and substance satisfactory
to the applicable Collateral Agents and the US Administrative Agent has been delivered
to the applicable Collateral Agents or (y) Reserves reasonably satisfactory to
the applicable Collateral Agents have been established with respect thereto;


(iii)             (1) is placed on
consignment by a third party consignor with any US Borrower or US Borrowing
Base Guarantor as consignee or (2) is placed on 



 96
 









consignment by any US Borrower or US
Borrowing Base Guarantor as consignor with any third party as consignee, unless
a valid consignment agreement which is reasonably satisfactory to applicable
Collateral Agents is in place with respect to such Inventory;


(iv)             is covered by a
negotiable document of title, unless such document has been delivered to the
applicable Collateral Agents with all necessary endorsements, free and clear of
all Liens except those in favor of the Collateral Agents and the Lenders and
landlords, carriers, bailees and warehousemen if clause (ii) above has
been complied with;


(v)              is to be returned to
suppliers;


(vi)             is obsolete,
unsalable, shopworn, seconds, damaged or unfit for sale;


(vii)            consists of display
items, samples or packing or shipping materials, manufacturing supplies,
work-in-process Inventory, replacement parts or spare parts;


(viii)           is not finished goods
held for sale in the ordinary course of US Borrower’s or any US Borrowing Base
Guarantor’s, as applicable, business;


(ix)             breaches any of the
representations or warranties pertaining to Inventory set forth in the Loan
Documents;


(x)              consists of
Hazardous Material or goods that, in either case, can be transported or sold only
with licenses that are not readily available;


(xi)             is not covered by
casualty insurance maintained as required by Section 5.04;


(xii)            supplies used or
consumed in US Borrower’s business;


(xiii)           bill and hold goods;


(xiv)           unserviceable or slow
moving Inventory;


(xv)            inventory returned by
retail customers that is not held for resale;


(xvi)           inventory subject to
deposit made by retail customers for sale of Inventory that have not been
delivered to the extent of such deposits; or


(xvii)          is subject to any licensing
arrangement the effect of which would be to limit the ability of any Collateral
Agent, or any person selling the Inventory on behalf of such Collateral Agent,
to sell such Inventory in enforcement of such Collateral Agent’s Liens, without
further consent or payment to the licensor or other person.


SECTION 2.21.           Determination of
Canadian Borrowing Base.


(a)           Eligible Canadian Accounts.  On any date of determination of the Canadian
Borrowing Base the term “Eligible Canadian
Accounts” as used herein shall comprise all of the 



 97
 









Credit Card Receivables of Canadian Borrower and any of Canadian
Borrowing Base Guarantors as arise in the ordinary course of business, which
have been earned by performance, that are not excluded as ineligible by virtue
of one or more of the criteria set forth below and are reflected in the most
recent Borrowing Base Certificate delivered by the Borrowers to the Collateral
Agents and the Administrative Agents. 
None of the following shall be deemed to be Eligible Accounts:


(i)               Credit Card
Receivables due from major credit card processors that have been outstanding
for more than five (5) Business Days from the date of sale or, in the case of
Accounts due from American Express to the Canadian Borrower or any of the
Canadian Borrowing Base Guarantors, that have been outstanding for more than
ten (10) Business Days from the date of sale, or for such longer period(s) as
may be approved by the applicable Collateral Agents;


(ii)              Credit Card
Receivables due from major credit card processors with respect to which
Canadian Borrower or any of the Canadian Borrowing Base Guarantors do not have
good, valid and marketable title thereto, free and clear of any Lien (other
than Liens granted to the applicable Administrative Agent for its own benefit and
the benefit of the other Secured Parties pursuant to the Security Documents,
those Liens specified in Section 6.02 (a), (e) and (i) and Permitted
Liens having priority by operation of applicable law over the Lien of the
applicable Collateral Agents);


(iii)             Credit Card
Receivables due from major credit card processors that are not subject to a
first priority (except as provided in clause (ii), above) security interest in
favor of the Collateral Agents, as applicable, for its own benefit and the
benefit of the other Secured Parties;


(iv)             Credit Card
Receivables due from major credit card processors which are disputed, or with
respect to which a claim, counterclaim, offset or chargeback has been asserted,
by the related credit card processor (but only to the extent of such dispute,
counterclaim, offset or chargeback) (it being the intent that chargebacks in
the ordinary course by the credit card processors shall not be deemed violative
of this clause);


(v)              Except as otherwise
approved by the Canadian Administrative Agent and applicable Collateral Agents,
Credit Card Receivables due from major credit card processors as to which the
credit card processor has the right under certain circumstances to require the
Canadian Borrower or any of the Canadian Borrowing Base Guarantors to
repurchase such Accounts from such credit card processor;


(vi)             Except
as otherwise approved by the Canadian Administrative Agent and applicable
Collateral Agents, Credit Card Receivables due
from major credit card processors as to which the Canadian Administrative Agent
and the applicable Collateral Agents have not received an acceptable Control
Agreement;


(vii)             Accounts due
from major credit card processors (other than Visa, Mastercard, American
Express, Diners Club and Discover) which the applicable 



 98
 









Collateral Agents determine in their
commercially reasonable discretion, acting in good faith, to be unlikely to be
collected.; or


(viii)           Except as otherwise
approved by the applicable Collateral Agents in their sole discretion, Credit Card Receivables of Canadian Borrower and any
of the Canadian Borrowing Base Guarantors arising from Private Label Credit
Cards.


Notwithstanding the above, the applicable
Collateral Agents and the Canadian Administrative Agent reserve the right, at
any time and from time to time after the Closing Date, to adjust the criteria
set forth above, to establish new criteria and to adjust the applicable advance
rate with respect to Eligible Canadian Accounts, in their Permitted Discretion,
subject to the approval of the Supermajority Lenders in the case of
adjustments, new criteria or changes in the applicable advance rates which have
the effect of making more credit available. The
Collateral Agents shall have the right to establish, modify or eliminate
Reserves against Eligible Canadian Accounts (including, without limitation, for
estimates, chargeback or other accrued liabilities or offsets by credit card
processors and amounts to adjust for material claims, offsets, defenses or
counterclaims or other material disputes described in Section 9.01) from
time to time in their Permitted Discretion.


(b)           Eligible Inventory.  For purposes of this Agreement, Eligible
Canadian Inventory shall exclude any Canadian Inventory to which any of the
exclusionary criteria set forth below applies. 
The applicable Collateral Agents shall have the right to establish,
modify or eliminate Reserves against Eligible Canadian Inventory from time to
time in their Permitted Discretion.  In
addition, the applicable Collateral Agents and the Canadian Administrative
Agent reserve the right, upon two (2) Business Day’s prior written notice to
the Administrative Borrower, at any time and from time to time after the
Closing Date, to adjust any of the criteria set forth below, to establish new
criteria and to adjust the applicable advance rate with respect to Eligible
Canadian Inventory, in their Permitted Discretion, subject to the approval of
the Supermajority Lenders in the case of adjustments, new criteria, changes in
the applicable advance rate or the elimination of Reserves which have the
effect of making more credit available. 
Eligible Canadian Inventory shall not include any Canadian Inventory of
Canadian Borrower or any of the Canadian Borrowing Base Guarantors that:


(i)               the applicable
Collateral Agents, on behalf of Secured Parties, do not have a first priority
and exclusive perfected Lien on such Canadian Inventory;


(ii)              (1) is stored at a
leased or rental location where the aggregate value of Canadian Inventory
exceeds $250,000 unless the applicable Collateral Agents have given their prior
consent thereto or unless either (x) a Landlord Access Agreement in respect of
such location has been delivered to the applicable Collateral Agents, or (y)
Reserves reasonably satisfactory to the applicable Collateral Agents have been
established with respect thereto or (2) is stored with a bailee or warehouseman
where the aggregate value of Canadian Inventory exceeds $250,000 unless either
(x) an acknowledged bailee waiver letter which is in form and substance satisfactory
to the applicable Collateral Agents and the Canadian Administrative Agent has
been received 



 99
 









by the applicable Collateral Agents or (y)
Reserves reasonably satisfactory to the applicable Collateral Agents have been
established with respect thereto, or (3) is located at an owned location
subject to a mortgage in favor of a lender other than the Collateral Agents and
the Senior Note Collateral Agent where the aggregate value of such Canadian
Inventory exceeds $250,000 unless either (x) a mortgagee waiver which is in
form and substance satisfactory to the applicable Collateral Agents and the
Canadian Administrative Agent has been delivered to the applicable Collateral
Agents or (y) Reserves reasonably satisfactory to the applicable Collateral
Agents have been established with respect thereto;


(iii)             (1) is placed on
consignment by a third party consignor with any Canadian Borrower or any
Canadian Borrowing Base Guarantor as consignee or (2) is placed on consignment
by any Canadian Borrower or Canadian Borrowing Base Guarantor as consignor with
any third party as consignee, unless a valid consignment agreement which is
reasonably satisfactory to applicable Collateral Agent is in place with respect
to such Canadian Inventory;


(iv)             is covered by a
negotiable document of title, unless such document has been delivered to one of
the applicable Collateral Agents with all necessary endorsements, free and
clear of all Liens except those in favor of the Collateral Agents and the
Lenders and landlords, carriers, bailees and warehousemen if clause (ii)
above has been complied with;


(v)              is to be returned to
suppliers;


(vi)             is obsolete,
unsalable, shopworn, seconds, defective, damaged or unfit for sale;


(vii)            consists of display
items, samples or packing or shipping materials, manufacturing supplies,
work-in-process Canadian Inventory, replacement or spare parts;


(viii)           is not finished goods
held for sale in the ordinary course of Canadian Borrower’s or any of the
Canadian Borrowing Base Guarantor’s, as applicable, business;


(ix)             breaches any of the
representations or warranties pertaining to Canadian Inventory set forth in the
Loan Documents;


(x)              consists of
Hazardous Material or goods that, in either case, can be transported or sold
only with licenses that are not readily available;


(xi)             is not covered by casualty insurance
maintained as required by Section 5.04;


(xii)            supplies used or
consumed in Canadian Borrower’s business;


(xiii)           bill and hold goods;



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(xiv)           unserviceable or slow
moving Canadian Inventory;


(xv)            inventory returned by
retail customers that is not held for resale;


(xvi)           inventory subject to
deposit made by retail customers for sale of Inventory that have not been
delivered to the extent of such deposits; or


(xvii)          is subject to any
licensing arrangement the effect of which would be to limit the ability of any
Collateral Agent, or any person selling the Canadian Inventory on behalf of
such Collateral Agent, to sell such Canadian Inventory in enforcement of such
Collateral Agent’s Liens, without further consent or payment to the licensor or
other person.


SECTION 2.22.    Collection Allocation
Mechanism.


(a)           Notwithstanding any
other provision of this Agreement or any Loan Document, on the CAM Exchange
Date, (i) all Commitments shall automatically and without further act be
terminated as provided in Section 8 and (ii) the Lenders shall
automatically and without further act be deemed to have exchanged interests in
the Loans such that in lieu of the interest of each Lender in each Loan in
which it shall participate as of such date, such Lender shall hold an interest
in every one of the Loans, whether or not such Lender shall previously have
participated therein, equal to such Lender’s CAM Percentage thereof; provided
that such CAM Exchange will not affect the aggregate amount of the obligations
of the Loan Parties to the Lenders under the Loan Documents.  Each Lender and each Loan Party hereby
consents and agrees to the CAM Exchange, and each Lender agrees that the CAM
Exchange shall be binding upon its successors and assigns and any person that
acquires a participation in its interests in any Loan.  Each Loan Party agrees from time to time to
execute and deliver to the Agents all promissory notes and other instruments
and documents as the Agents shall reasonably request to evidence and confirm
the respective interests of the Lenders after giving effect to the CAM
Exchange, and each Lender agrees to surrender any promissory notes originally
received by it in connection with its Loans hereunder to the Agents against delivery
of new promissory notes evidencing its interests in the Loans; provided,
however, that the failure of any Loan Party to execute or deliver or of
any Lender to accept any such promissory note, instrument or document shall not
affect the validity or effectiveness of the CAM Exchange.


(b)           As a result of the CAM
Exchange, upon and after the CAM Exchange Date, each payment received by the
Administrative Agents pursuant to any Loan Document in respect of the Specified
Obligations, and each distribution made by the Administrative Agents pursuant
to any Loan Document in respect of the Specified Obligations, shall be
distributed to the Lenders pro rata in accordance with their respective CAM
Percentages.  Any direct payment received
by a Lender upon or after the CAM Exchange Date, including by way of setoff, in
respect of a Specified Obligation, shall be paid over to the US Administrative
Agent or the Canadian Administrative Agent, as applicable, for distribution to
the Lenders in accordance herewith.


(c)           In the event that on
the CAM Exchange Date any Letter of Credit shall be outstanding and undrawn in
whole or in part, or any amount drawn under any Letter of Credit shall remain
unpaid, each Lender shall, before giving effect to the CAM Exchange, promptly
pay 



 101
 









over to the Administrative Agents, in immediately
available funds and in the currency that such Letter of Credit is denominated,
an amount (determined after deducting any cash collateral held by the
Collateral Agents on behalf of the Loan Parties with respect to such Letter of
Credit) equal to such Lender’s Pro Rata Percentage (as notified to such Lender
by the Administrative Agents), of such Letter of Credit’s undrawn face amount
or (to the extent it has not already done so) any unpaid LC Disbursement under Section
2.18(e)(ii), together with interest thereon from the CAM Exchange Date to
the date on which such amount shall be paid to the applicable Administrative
Agent, at the rate that would be applicable at the time to a Revolving Loan
that is an ABR Loan accruing interest at the ABR Rate in a principal amount
equal to such amount.  The Administrative
Agents shall establish a separate account or accounts for each Lender (each, an
“L/C Reserve Account”) for the amounts
received with respect to each such Letter of Credit pursuant to the preceding
sentence.  The applicable Administrative
Agent shall deposit in each Lender’s L/C Reserve Account such Lender’s CAM
Percentage of the amounts received from the Lenders as provided above.  The Administrative Agents shall have sole
dominion and control over each L/C Reserve Account, and the amounts deposited
in each L/C Reserve Account shall be held in such L/C Reserve Account until
withdrawn as provided in paragraph (d), (e), (f) or (g) below.  The applicable Administrative Agent shall
maintain records enabling it to determine the amounts paid over to it and
deposited in the L/C Reserve Accounts in respect of each Letter of Credit and
the amounts on deposit in respect of each Letter of Credit attributable to each
Lender’s CAM Percentage.  The amounts
held in each Lender’s L/C Reserve Account shall be held as a reserve against
the LC Obligations due and owing , shall be the property of such Lender, shall
not constitute Loans to or give rise to any claim of or against any Loan Party
and shall not give rise to any obligation on the part of any Borrower to pay
interest to such Lender, it being agreed that the reimbursement obligations in
respect of Letters of Credit shall arise only at such times as drawings are
made thereunder, as provided in Section 2.18.


(d)           In the event that after
the CAM Exchange Date any drawing shall be made in respect of a Letter of
Credit, the applicable Administrative Agent shall, at the request of the
Issuing Bank in respect of such Letter of Credit, withdraw from the L/C Reserve
Account of each Lender any amounts, up to the amount of such Lender’s CAM
Percentage of such drawing, deposited in respect of such Letter of Credit and
remaining on deposit and deliver such amounts to such Issuing Bank in satisfaction
of the reimbursement obligations of the Lenders under Section 2.18 (but
not of any Borrower under Section 2.18). 
In the event any Lender shall default on its obligation to pay over any
amount to the Administrative Agents in respect of any Letter of Credit as
provided in this Section 2.22, the Issuing Bank in respect thereof
shall, in the event of a drawing thereunder, have a claim against such Lender
to the same extent as if such Lender had defaulted on its obligations under Section
2.18, but shall have no claim against any other Lender in respect of such
defaulted amount, notwithstanding the exchange of interests in the
reimbursement obligations pursuant to Section 2.22(a).  Each other Lender shall have a claim against
such defaulting Lender for any damages sustained by it as a result of such
default, including, in the event such Letter of Credit shall expire undrawn,
its CAM Percentage of the defaulted amount.


(e)           In the event that after the CAM Exchange
Date any Letter of Credit shall expire undrawn, the applicable Administrative
Agent shall withdraw from the L/C Reserve Account of each Lender the amount
remaining on deposit therein in respect of such Letter of Credit and distribute
such amount to such Lender.



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(f)            With the prior written approval of the US
Administrative Agent or the Canadian Administrative Agent, as applicable, and
the Issuing Bank in respect of such Letter of Credit, any Lender may withdraw
the amount held in its L/C Reserve Account in respect of the undrawn amount of
any Letter of Credit.  Any Lender making
such a withdrawal shall be unconditionally obligated, in the event there shall
subsequently be a drawing under such Letter of Credit, to pay over to the
applicable Administrative Agent for the account of such Issuing Bank on demand,
its CAM Percentage of such drawing.


(g)           Pending the withdrawal by any Lender of any
amounts from its L/C Reserve Account as contemplated by the above paragraphs,
the applicable Administrative Agent will, at the direction of such Lender and
subject to such rules as the applicable Administrative Agent may prescribe for
the avoidance of inconvenience, invest such amounts in Cash Equivalents.  Each Lender that has not withdrawn the
amounts in its L/C Reserve Account as provided in Section 2.22(f) above
shall have the right, at intervals reasonably specified by the applicable
Administrative Agent to withdraw the earnings on investments so made by the
Administrative Agents with amounts in its L/C Reserve Account and to retain
such earnings for its own account.


(h)           Notwithstanding any other provision of this
Agreement, if, as a direct result of the implementation of the CAM Exchange,
any Borrower is required to withhold Taxes from amounts payable to any Agent,
any Lender or any Participant hereunder, the amounts so payable to such Agent,
such Lender or such Participant shall be increased to the extent necessary to
yield to such Agent, such Lender or such Participant (after payment of all
Taxes) interest or any such other amounts payable hereunder at the rates or in
the amounts specified in this Agreement; provided, however, that
such Borrower shall not be required to increase any such amounts payable to
such Lender or Participant under this Section 2.22 (but, rather, shall
be required to increase any such amounts payable to such Lender or Participant
to the extent required by Section 2.15) if such Lender or Participant
was prior to or on the CAM Exchange Date already a Lender or Participant with
respect to such Borrower.  If a Lender
that is not incorporated in the United States, in its good faith judgment, is
eligible for an exemption from, or reduced rate of, U.S. federal withholding
tax on payments by the U.S. Borrower under this Agreement, the U.S. Borrowers
shall not be required to increase any such amounts payable to such Lender if
such Lender fails to comply with the requirements of Section 2.15(e).


ARTICLE
III.



REPRESENTATIONS AND WARRANTIES


Each Loan Party represents and warrants to the
Administrative Agents, the Collateral Agents, the Issuing Bank and each of the
Lenders that:


SECTION 3.01.    Organization;
Powers.  Each Company (a) is
duly organized and validly existing under the laws of the jurisdiction of its
organization, (b) has all requisite power and authority to carry on its
business as now conducted and to own and lease its property and (c) is
qualified and in good standing (to the extent such concept is applicable in the
applicable jurisdiction) to do business in every jurisdiction where such
qualification is required, except in such jurisdictions where the failure to so
qualify or be in good standing, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.  There is no 



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existing default under any Organizational Document of
any Company or any event which, with the giving of notice or passage of time or
both, would constitute a default by any party thereunder.


SECTION 3.02.    Authorization;
Enforceability.  The transactions
contemplated by the Loan Documents to be entered into by each Loan Party are
within such Loan Party’s powers and have been duly authorized by all necessary
action on the part of such Loan Party. 
This Agreement has been duly executed and delivered by each Loan Party
and constitutes, and each other Loan Document to which any Loan Party is to be
a party, when executed and delivered by such Loan Party, will constitute, a
legal, valid and binding obligation of such Loan Party, enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors’ rights generally
and subject to general principles of equity, regardless of whether considered
in a proceeding in equity or at law.


SECTION 3.03.    No Conflicts.  Except as set forth on Schedule 3.03,
the execution, delivery and performance of the Loan Documents (a) do not
require any consent or approval of, registration or filing with, or any other
action by, any Governmental Authority, except (i) such as have been
obtained or made and are in full force and effect, (ii) filings necessary
to perfect Liens created by the Loan Documents and (iii) consents,
approvals, registrations, filings, permits or actions the failure to obtain or
perform which could not reasonably be expected to result in a Material Adverse
Effect, (b) will not violate the Organizational Documents of any Company,
(c) will not violate any Requirement of Law, except for violations, defaults or
the creation of such rights that could not reasonably be expected to result in
a Material Adverse Effect, (d) will not violate or result in a default or
require any consent or approval under any indenture, agreement or other
instrument binding upon any Company or its property, or give rise to a right
thereunder to require any payment to be made by any Company, except for
violations, defaults or the creation of such rights that could not reasonably
be expected to result in a Material Adverse Effect, and (e) will not
result in the creation or imposition of any Lien on any property of any
Company, except Liens created by the Loan Documents and Permitted Liens.


SECTION 3.04.    Financial Statements;
Projections.


(a)           Historical Financial
Statements.  The Borrowers have
heretofore delivered to the Lenders (i) the consolidated balance sheets
and related statements of income, stockholders’ equity and cash flows of the
Acquired Business as of and for the fiscal years ended January 3, 2004, January
1, 2005, December 31, 2005 and December 30, 2006, audited by and accompanied by
the unqualified opinion of KPMG LLP, independent public accountants (the “Accountants”) and (ii) the unaudited consolidated
balance sheets and related statements of income, stockholders’ equity and cash
flows of the Acquired Business as of and for the fiscal quarter ended March 31,
2007 (with respect to which the Accountants have performed SAS 100 reviews), in
each case, certified by the chief financial officer of US Borrowers.  Such financial statements and all financial
statements delivered pursuant to Section 5.01(a), Section 5.01(b)
and Section 5.01(c) since the Original Closing Date have been prepared
in accordance with GAAP and present fairly and accurately the financial
condition and results of operations and cash flows of the Acquired Business as
of the dates and for the periods to which they relate, subject in the case of
unaudited statements, to year-end audit adjustments.



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(b)           No Liabilities.  Except as set forth in the financial
statements referred to in Section 3.04(a) (including the notes thereto),
there are no liabilities of any Company of any kind, whether accrued,
contingent, absolute, determined, determinable or otherwise, which could
reasonably be expected to result in a Material Adverse Effect, and there is no
existing condition, situation or set of circumstances which could reasonably be
expected to result in such a liability, other than liabilities under the Loan
Documents and the Senior Note Documents. 
Since December 30, 2006, there has been no event, change, circumstance
or occurrence that, individually or in the aggregate, has had or could reasonably
be expected to result in a Material Adverse Effect.


(c)           Forecasts.  The forecasts of financial performance of
Holdings and its Subsidiaries furnished to the Lenders have been prepared in
good faith by the Borrowers and based on assumptions believed by the Borrowers
to be reasonable.


SECTION
3.05.    Properties.


(a)           Generally.  Each Company has good title to, or valid
leasehold interests in, all its property material to its business, free and
clear of all Liens except for, Permitted Liens and minor irregularities or
deficiencies in title that, individually or in the aggregate, do not interfere
with its ability to conduct its business as currently conducted or to utilize
such property for its intended purpose. 
The property of the Companies, taken as a whole, (i) is in good
operating order, condition and repair (ordinary wear and tear excepted), except
to the extent that the failure to be in such condition could not reasonably be
expected to result in a Material Adverse Effect and (ii) constitutes all the
property which is required for the business and operations of the Companies as
presently conducted.


(b)           Real Property.


(i)               Schedules 8(a)
and 8(b) to the Perfection Certificate dated the Closing Date contain a
true and complete list of each interest in Real Property (x) owned by any
Company as of the date hereof and describes the type of interest therein held
by such Company and whether such owned Real Property is leased and if leased
whether the underlying Lease contains any option to purchase all or any portion
of such Real Property or any interest therein or contains any right of first
refusal relating to any sale of such Real Property or any portion thereof or
interest therein and (y) leased, subleased or otherwise occupied or
utilized by any Company, as lessee, sublessee, franchisee or licensee, as of
the date hereof and describes the type of interest therein held by such
Company.  No such Lease requires the
consent of the landlord or tenant thereunder, or other party thereto, to the
Transactions, except (x) for such consents which have been obtained or (y) to
the extent that failure to obtain such consent could not reasonably be expected
to result in a Material Adverse Effect.


(ii)              The fair market
value (net of existing mortgage debt secured by each such property) of the Real
Property owned by US Borrowers or their US Subsidiaries located in Colorado
Springs, Colorado and Newport News, Virginia does not exceed $500,000
individually for any such property or $1,000,000 in the aggregate for all such
properties.



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(c)           No Casualty Event.  No Company has received any written notice
of, nor has any knowledge of, the occurrence or pendency of any Casualty Event
affecting all or any material portion of its property.  No Mortgage encumbers improved Real Property
that is located in an area that has been identified by the Secretary of Housing
and Urban Development as an area having special flood hazards within the
meaning of the National Flood Insurance Act of 1968 unless flood insurance
available under such Act has been obtained in accordance with Section 5.04
or the applicable Collateral Agent has waived such requirement in the Mortgage.


(d)           Collateral.  Each Company owns or has rights to use all of
the Collateral and all rights with respect to any of the foregoing used in,
necessary for or material to each Company’s business as currently
conducted.  The use by each Company of
such Collateral and all such rights with respect to the foregoing do not
infringe on the rights of any person other than such infringement which could
not, individually or in the aggregate, reasonably be expected to result in a
Material Adverse Effect.  No claim has
been made and remains outstanding that any Company’s use of any Collateral does
or may violate the rights of any third party that could, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect.


SECTION
3.06.    Intellectual
Property.


(a)           Ownership/No Claims.  Each Loan Party owns, or is licensed to use,
all patents, patent applications, trademarks, industrial designs, trade names,
servicemarks, copyrights, technology, trade secrets, proprietary information,
domain names, know-how and processes necessary for the conduct of its business
as currently conducted (the “Intellectual Property”),
except for those the failure to own or license which, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.  No claim has been asserted and
is pending by any person challenging or questioning the use of any such Intellectual
Property or the validity or effectiveness of any such Intellectual Property in
any material respect, nor does any Loan Party know of any valid basis for any
such claim.  The use of such Intellectual
Property by each Loan Party does not infringe the rights of any person, except
for such claims and infringements that, individually or in the aggregate, could
not reasonably be expected to result in a Material Adverse Effect.


(b)           Registrations.  Except pursuant to licenses and other user
agreements entered into by each Loan Party in the ordinary course of business
that are listed in Schedule 12(a) or 12(b) to the Perfection
Certificate, on and as of the date hereof (i) each Loan Party owns and
possesses the right to use, and has done nothing to authorize or enable any
other person to use, any copyright, patent, industrial designs or trademark (as
such terms are defined in the Security Agreement) listed in Schedule 12(a)
or 12(b) to the Perfection Certificate and (ii) all registrations
listed in Schedule 12(a) or 12(b) to the Perfection Certificate
are valid and in full force and effect.


(c)           No Violations or
Proceedings.  To each Loan Party’s
knowledge, on and as of the date hereof, there is no material violation by
others of any right of such Loan Party with respect to any copyright, patent,
industrial designs or trademark listed in Schedule 12(a) or 12(b)
to the Perfection Certificate, pledged by it under the name of such Loan Party.


SECTION
3.07.    Equity
Interests and Subsidiaries.


(a)           Equity Interests.
 Schedules 1(a) and 10(a) to the
Perfection Certificate dated the Closing Date set forth a list of (i) all
the Subsidiaries of Holdings and their jurisdictions of 



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organization
as of the Closing Date and (ii) the number of each class of its Equity
Interests authorized, and the number outstanding, on the Closing Date and the
number of shares covered by all outstanding options, warrants, rights of
conversion or purchase and similar rights at the Closing Date.  All Equity Interests of each Company are duly
and validly issued and are fully paid and non-assessable, and, other than the
Equity Interests of US Borrowers, are owned by LNT Center, directly or
indirectly through Wholly Owned Subsidiaries. 
All Equity Interests of LNT are owned directly by Holdings.  Each Loan Party is the record and beneficial
owner of, and has good and marketable title to, the Equity Interests pledged by
it under the Security Agreement, free of any and all Liens, rights or claims of
other persons, except the security interest created by the Security Agreement,
and there are no outstanding warrants, options or other rights to purchase, or
shareholder, voting trust or similar agreements outstanding with respect to, or
property that is convertible into, or that requires the issuance or sale of,
any such Equity Interests.


No Consent of Third Parties Required.  No consent of any person including any other
general or limited partner, any other member of a limited liability company,
any other shareholder or any other trust beneficiary is necessary or reasonably
desirable (from the perspective of a secured party) in connection with the
creation, perfection or First Priority status of the security interest of the
applicable Collateral Agent in any Equity Interests pledged to such Collateral
Agent for the benefit of the Secured Parties under the Security Agreements or
the exercise by such Collateral Agent of the voting or other rights provided
for in any such Security Agreement or the exercise of remedies in respect
thereof, except to the extent that, with respect only to the
transfer of any Equity Interests in a Nova Scotia unlimited company pledged to
a Collateral Agent, the approval of the board of directors of the
relevant Nova Scotia unlimited company or the pledgor of its Equity
Interests therein may be required under any applicable corporate and securities
laws.


(b)           Organizational Chart.  An accurate organizational chart, showing the
ownership structure of Holdings, the Borrowers and each Subsidiary on the
Closing Date is set forth on Schedule 10(a) to the Perfection
Certificate dated the Closing Date.


SECTION 3.08.    Litigation; Compliance
with Laws.  There are no actions,
suits or proceedings at law or in equity by or before any Governmental
Authority now pending or, to the knowledge of any Company, threatened against
or affecting any Company or any business, property or rights of any Company
(i) that involve any Loan Document or any of the Transactions or
(ii) as to which there is a reasonable possibility of an adverse
determination and that, if adversely determined, could reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect.  Except for matters covered by Section 3.18,
no Company or any of its property is in violation of, nor will the continued
operation of its property as currently conducted violate, any Requirements of
Law (including any zoning or building ordinance, code or approval or any
building permits) or any restrictions of record or agreements affecting any
Company’s Real Property or is in default with respect to any Requirement of
Law, where such violation or default, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect.



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SECTION 3.09.    Agreements.  No Company is a party to any agreement or
instrument or subject to any corporate or other constitutional restriction that
has resulted or could reasonably be expected to result in a Material Adverse
Effect.  No Company is in default in any
manner under any provision of any indenture or other agreement or instrument
evidencing Indebtedness, or any other agreement or instrument to which it is a
party or by which it or any of its property is or may be bound, where such
default could reasonably be expected to result in a Material Adverse Effect,
and no condition exists which, with the giving of notice or the lapse of time
or both, would constitute such a default. 
Schedule 3.09 accurately and completely lists all material
agreements (other than leases of Real Property set forth on Schedule 8(a) or
8(b) to the Perfection Certificate dated the Closing Date) to which any
Company is a party which are in effect on the date hereof in connection with
the operation of the business conducted thereby and Borrower has delivered to
the Administrative Agents complete and correct copies of all such material
agreements, including any amendments, supplements or modifications with respect
thereto, and all such agreements are in full force and effect.


SECTION 3.10.    Federal Reserve
Regulations.  No Company is engaged
principally, or as one of its important activities, in the business of
extending credit for the purpose of buying or carrying Margin Stock.  No part of the proceeds of any Loan or any
Letter of Credit will be used, whether directly or indirectly, and whether
immediately, incidentally or ultimately, for any purpose that entails a
violation of, or that is inconsistent with, the provisions of the regulations
of the Board, including Regulation T, U or X. 
The pledge of the Securities Collateral pursuant to the Security Agreements
does not violate such regulations.


SECTION 3.11.    Investment Company Act.  No Company is an “investment company” or a
company “controlled” by an “investment company,” as defined in, or subject to
regulation under, the Investment Company Act of 1940, as amended.


SECTION 3.12.    Use of Proceeds.  The Borrowers will use the proceeds of their
respective Revolving Loans and Swingline Loans for working capital and general
corporate purposes (including to effect Permitted Acquisitions) on and after
the Closing Date.


SECTION 3.13.    Taxes.  Each Company has (a) timely filed or
caused to be timely filed all federal Tax Returns and all material state,
provincial, territorial, local and foreign Tax Returns or materials required to
have been filed by it and all such Tax Returns are true and correct in all
material respects and (b) duly and timely paid, collected or remitted or
caused to be duly and timely paid, collected or remitted all Taxes (whether or
not shown on any Tax Return) due and payable, collectible or remittable by it
and all assessments received by it, except Taxes (i) that are being
contested in good faith by appropriate proceedings and for which such Company
has set aside on its books adequate reserves in accordance with GAAP and
(ii) which could not, individually or in the aggregate, have a Material
Adverse Effect.  Each Company has made
adequate provision in accordance with GAAP for all material Taxes not yet due
and payable.  Each Company is unaware of
any proposed or pending tax assessments, deficiencies or audits that could be
reasonably expected to, individually or in the aggregate, result in a Material
Adverse Effect.  No Company has ever been
a party to any understanding or arrangement constituting a “tax shelter” within
the meaning of Section 6111(c), Section 6111(d) or Section 6662(d)(2)(C)(iii)
of the Code, or has ever “participated” in a “reportable transaction” within
the meaning of Treasury Regulation Section 1.6011-4, except as, in each case,
could not be 



 108
 









reasonably expected to, individually or in the
aggregate, result in a Material Adverse Effect in respect of Taxes.


SECTION 3.14.    No Material
Misstatements.  No information,
report, financial statement, certificate, Borrowing Request, LC Request,
exhibit or schedule furnished by or on behalf of any Company to the
Administrative Agents or any Lender in connection with the negotiation of any
Loan Document or included therein or delivered pursuant thereto, taken as a
whole, contained or contains any material misstatement of fact or omitted or
omits to state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were or are made, not
misleading as of the date such information is dated or certified; provided that to the extent any such information,
report, financial statement, exhibit or schedule was based upon or constitutes
a forecast or projection, each Company represents only that it acted in good
faith and utilized reasonable assumptions and due care in the preparation of
such information, report, financial statement, exhibit or schedule.


SECTION 3.15.    Labor Matters.  As of the Closing Date, there are no strikes,
lockouts or slowdowns against any Company pending or, to the knowledge of any
Company, threatened.  The hours worked by
and payments made to employees of any Company have not been in violation of the
Fair Labor Standards Act of 1938, as amended, or any other applicable federal,
state, provincial, territorial, local or foreign law dealing with such matters
in any manner which could reasonably be expected to result in a Material
Adverse Effect.  All payments due from
any Company, or for which any claim may be made against any Company, on account
of wages and employee health and welfare insurance and other benefits, have
been paid or accrued as a liability on the books of such Company except where
the failure to do so could not reasonably be expected to result in a Material
Adverse Effect.  Each Loan Party has
withheld all employee withholdings and has made all employer contributions to
be withheld and made by it pursuant to applicable law on account of any
employee benefit plans, employment insurance and employee income taxes except
where such failure to do so could not reasonably be expected to result in a
Material Adverse Effect.  The
consummation of the Transactions did not and will not give rise to any right of
termination or right of renegotiation on the part of any union under any
collective bargaining agreement to which any Company is bound.


SECTION 3.16.    Solvency.  As of the Closing Date and after giving
effect to the transactions contemplated by the Loan Documents and after giving
effect to the application of the proceeds of each Loan and the operation of the
Contribution, Intercompany Contracting and Offset Agreement, (a) the fair
value of the assets of each Loan Party (individually and on a consolidated
basis with its Subsidiaries) will exceed its debts and liabilities,
subordinated, contingent or otherwise; (b) the present fair saleable value
of the property of each Loan Party (individually and on a consolidated basis
with its Subsidiaries) will be greater than the amount that will be required to
pay the probable liability of its debts and other liabilities, subordinated,
contingent or otherwise, as such debts and other liabilities become absolute
and matured; (c) each Loan Party (individually and on a consolidated basis
with its Subsidiaries) will be able to pay its debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured; (d) each Loan Party (individually and on a
consolidated basis with its Subsidiaries) will not have unreasonably small
capital with which to conduct its business in which it is engaged as such
business is now conducted and is proposed to be conducted 



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following the Closing Date and (e) each Loan Party is
not “insolvent” as such term is defined under any bankruptcy, insolvency or
similar laws of any jurisdiction.


SECTION 3.17.    Employee Benefit Plans.  Each Company and its ERISA Affiliates is in
compliance in all material respects with the applicable provisions of ERISA and
the Code and the regulations and published interpretations thereunder, except
where such failure could not reasonably be expected to result in a Material
Adverse Effect.  No ERISA Event has
occurred or is reasonably expected to occur that, when taken together with all
other such ERISA Events, could reasonably be expected to result in a Material
Adverse Effect of any Company or any of its ERISA Affiliates or the imposition
of a Lien on any of the property of any Company.  The present value of all accumulated benefit
obligations of all underfunded Plans (based on the assumptions used for
purposes of Statement of Financial Accounting Standards No. 87) did not,
as of the date of the most recent financial statements reflecting such amounts,
exceed by more than $1,000,000 the fair market value of the property of all
such underfunded Plans.  Using actuarial
assumptions and computation methods consistent with subpart I of subtitle E of
Title IV of ERISA, the aggregate liabilities of each Company to all
Multiemployer Plans in the event of a complete withdrawal therefrom, as of the
close of the most recent fiscal year of each such Multiemployer Plan, could not
reasonably be expected to result in a Material Adverse Effect.


To the extent applicable, each Foreign Plan
has been maintained in substantial compliance with its terms and with the
requirements of any and all applicable Requirements of Law and has been
maintained, where required, in good standing with applicable regulatory
authorities except where failure to do so could not reasonably be expected to
result in a Material Adverse Effect.  No
Company has incurred any obligation in connection with the termination of or
withdrawal from any Foreign Plan except where such obligation could not
reasonably be expected to result in a Material Adverse Effect.  The present value of the accrued benefit
liabilities (whether or not vested) under each Foreign Plan which is funded,
determined as of the end of the most recently ended fiscal year of the
respective Company on the basis of actuarial assumptions, each of which is
reasonable, did not exceed by $1,000,000 the current value of the property of
such Foreign Plan, and for each Foreign Plan which is not funded, the
obligations of such Foreign Plan are properly accrued except where such failure
to accrue could not reasonably be expected to result in a Material Adverse
Effect.


SECTION
3.18.    Environmental
Matters.


(a)           Except as, individually
or in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect:


(i)               The Companies and
their businesses, operations and Real Property are in compliance with, and the
Companies have no liability under, any applicable Environmental Law; and under the
currently effective business plan of the Companies, no expenditures or
operational adjustments will be required in order to comply with applicable
Environmental Laws during the next five years;


(ii)              The Companies have
obtained all Environmental Permits required for the conduct of their businesses
and operations, and the ownership, operation and use of their property, under
Environmental Law, all such Environmental Permits are valid and in good
standing and, under the currently effective business plan of the Companies, no



 110















expenditures or operational adjustments will
be required in order to renew or modify such Environmental Permits during the
next five years;


(iii)             There has been no
Release or threatened Release of Hazardous Material on, at, under or from any
Real Property or facility presently or formerly owned, leased or operated by
the Companies or their predecessors in interest that could reasonably be
expected to result in liability by the Companies under any applicable
Environmental Law;


(iv)             There is no
Environmental Claim pending or, to the knowledge of the Companies, threatened
against the Companies, or relating to the Real Property currently or formerly
owned, leased or operated by the Companies or their predecessors in interest or
relating to the operations of the Companies, and there are no actions,
activities, circumstances, conditions, events or incidents that could
reasonably be expected to form the basis of such an Environmental Claim; and


(v)              No person with an
indemnity or contribution obligation to the Companies relating to compliance
with or liability under Environmental Law is in default with respect to such
obligation.


(b)           (i) No Company is
obligated to perform any action or otherwise incur any expense under
Environmental Law pursuant to any order, decree, judgment or agreement by which
it is bound or has assumed by contract, agreement or operation of law, and no
Company is conducting or financing any Response pursuant to any Environmental
Law with respect to any Real Property or any other location;


(ii)              No Real Property or
facility owned, operated or leased by the Companies and, to the knowledge of
the Companies, no Real Property or facility formerly owned, operated or leased
by the Companies or any of their predecessors in interest is (i) listed or
proposed for listing on the National Priorities List promulgated pursuant to
CERCLA or (ii) listed on the Comprehensive Environmental Response,
Compensation and Liability Information System promulgated pursuant to CERCLA or
(iii) included on any similar list maintained by any Governmental
Authority including any such list relating to petroleum;


(iii)             No Lien has been
recorded or, to the knowledge of any Company, threatened under any
Environmental Law with respect to any Real Property or other assets of the
Companies;


(iv)             The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby will not require any notification,
registration, filing, reporting, disclosure, investigation, remediation or
cleanup pursuant to any Governmental Real Property Disclosure Requirements or
any other applicable Environmental Law; and


(v)              The Companies have
made available to the Lenders all material records and files in the possession,
custody or control of, or otherwise reasonably available to, 



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the Companies concerning compliance with or
liability under Environmental Law, including those concerning the actual or
suspected existence of Hazardous Material at Real Property or facilities
currently or formerly owned, operated, leased or used by the Companies.


SECTION 3.19.    Insurance.  Schedule 3.19 sets forth a true,
complete and correct description of all insurance maintained by each Company as
of the Closing Date.  All insurance
maintained by the Companies is in full force and effect, all premiums have been
duly paid, no Company has received notice of violation or cancellation thereof,
the Premises, and the use, occupancy and operation thereof, comply in all
material respects with all Insurance Requirements, and there exists no default under
any Insurance Requirement, except for minor defaults that, taken as a whole, do
not adversely affect the coverage provided by such insurance.  Each Company has insurance in such amounts
and covering such risks and liabilities as are customary for companies of a
similar size engaged in similar businesses in similar locations.


SECTION 3.20.    Security Documents.


(a)           Security Agreements.  The execution and delivery of the Security
Documents by the Loan Parties on the Original Closing Date, together with the actions
taken on or prior to the date hereof (including (i) the filing of
financing statements and other filings in appropriate form in the offices
specified on Schedule 7 to the initial Perfection Certificate, (ii) the
filing of the Security Agreements or a short form thereof in the United States
Patent and Trademark Office, the United States Copyright Office or the Canadian
Intellectual Property Office, as applicable, and (iii) the delivery to the
applicable Collateral Agent of the Security Agreement Collateral with respect
to which a security interest may be perfected only by possession or control
(all of which Collateral has been so delivered to the extent possession or
control by such Collateral Agent is required by the applicable Security
Document) was and continues to be effective to create in favor of the
Collateral Agents for the benefit of the Secured Parties, a legal, valid and
enforceable security interest in and Lien on the Security Agreement Collateral,
subject to no Liens other than Permitted Liens, and all filings and other
actions necessary or desirable to perfect and maintain the perfection and First
Priority status of such Liens have been duly made or taken and remain in full
force and effect, other than (i) the periodic filing of UCC continuation
statements and PPSA renewal financing change statements in respect of UCC and
PPSA financing statements filed by or on behalf of the Collateral Agent and
(ii) such Security Agreement Collateral subject to or referenced in the US
Security Agreement or Canadian Security Agreements in which a security interest
cannot be perfected (x) under the UCC or PPSA as in effect at the relevant time
in the relevant jurisdiction or (y) by other filings in appropriate form filed
in the offices specified on Schedule 7 to the initial Perfection
Certificate.


(b)           [Intentionally
Omitted.]


(c)           [Intentionally
Omitted.]


(d)           Mortgages.  Each Mortgage is effective to create, in
favor of the applicable Collateral Agent, for its benefit and the benefit of
the Secured Parties, legal, valid and enforceable First Priority Liens on, and
security interests in, all of the Loan Parties’ right, title and interest in
and to the Mortgaged Properties thereunder and the proceeds thereof, subject
only 



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to Permitted
Liens or other Liens reasonably acceptable to the Senior Note Collateral Agent,
and when the Mortgages are filed in the offices specified on Schedule 8(a)
to the Perfection Certificate dated the Closing Date (or, in the case of any
Mortgage executed and delivered after the date thereof in accordance with the
provisions of Section 5.11 and Section 5.12, unless a Loan Party
has disclosed in writing any issues related to perfection thereof or the
security interest therein to the applicable Collateral Agent when such Mortgage
is filed in the offices specified in the local counsel opinion delivered with
respect thereto in accordance with the provisions of Section 5.11 and Section
5.12), the Mortgages shall constitute fully perfected First Priority Liens
on, and security interests in, all right, title and interest of the Loan
Parties in the Mortgaged Properties and the proceeds thereof, in each case
prior and superior in right to any other person, other than Liens permitted by
such Mortgage.


(e)           Valid Liens.  Each Security Document, unless a Loan Party
has disclosed in writing any issues related to the legality, enforceability,
validity or security interest therein, delivered pursuant to Section 5.11
and Section 5.12 will, upon execution and delivery thereof, be effective
to create in favor of the applicable Collateral Agent, for the benefit of the
applicable Secured Parties, legal, valid and enforceable Liens on, and security
interests in, all of the Loan Parties’ right, title and interest in and to the
Collateral thereunder, and when all appropriate filings or recordings are made
in the appropriate offices as may be required under applicable law, such
Security Document will constitute fully perfected First Priority Liens on, and
security interests in, all right, title and interest of the Loan Parties in
such Collateral, in each case subject to no Liens other than the applicable
Permitted Liens.


SECTION 3.21.    [Intentionally Omitted].


SECTION 3.22.    Anti-Terrorism Law.  No Loan Party and, to the knowledge of the
Loan Parties, none of its Affiliates is in violation of any Requirement of Law
relating to terrorism or money laundering (“Anti-Terrorism
Laws”), including Executive Order No. 13224 on Terrorist
Financing, effective September 24, 2001 (the “Executive
Order”), and the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001,
Public Law 107-56.


No Loan Party and to the knowledge of the Loan Parties, no Affiliate or
broker or other agent of any Loan Party acting or benefiting in any capacity in
connection with the Loans is any of the following:


(i)               a person that is
listed in the annex to, or is otherwise subject to the provisions of, the
Executive Order;


(ii)              a person owned or
controlled by, or acting for or on behalf of, any person that is listed in the
annex to, or is otherwise subject to the provisions of, the Executive Order;


(iii)             a person with which
any Lender is prohibited from dealing or otherwise engaging in any transaction
by any Anti-Terrorism Law;


(iv)             a person that commits,
threatens or conspires to commit or supports “terrorism” as defined in the
Executive Order; or



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(v)              a person that is
named as a “specially designated national and blocked person” on the most
current list published by the U.S. Treasury Department Office of Foreign Assets
Control (“OFAC”) at its official website or any
replacement website or other replacement official publication of such list.


No Loan Party and, to the knowledge of the Loan Parties, no broker or
other agent of any Loan Party acting in any capacity in connection with the
Loans (i) conducts any business or engages in making or receiving any
contribution of funds, goods or services to or for the benefit of any person
described in paragraph (b) above, (ii) deals in, or otherwise engages
in any transaction relating to, any property or interests in property blocked
pursuant to the Executive Order, or (iii) engages in or conspires to
engage in any transaction that evades or avoids, or has the purpose of evading
or avoiding, or attempts to violate, any of the prohibitions set forth in any
Anti-Terrorism Law.


SECTION 3.23.    [Intentionally
Deleted].


SECTION 3.24.    Executive Offices;
Location of Material Inventory.  Schedule
3.24 sets forth as of the Closing Date all locations in the United States
and Canada where the aggregate value of Inventory owned by the Loan Parties
exceeds $250,000.  As of the Closing
Date, the location in Canada of each chief executive office, principal place of
business and domicile (within the meaning of the Civil Code of Quebec), as
applicable, of each Canadian Loan Party is as set out in Schedule 3.24.


SECTION 3.25.    Accuracy of Borrowing
Base.  At the time any Borrowing Base
Certificate is delivered pursuant to this Agreement, (i) each Account and each
item of Inventory included in the calculation of the Borrowing Base satisfies
all of the criteria stated herein to be an Eligible Account and an item of
Eligible Inventory, respectively and (ii) each Account and each item of
Inventory included in the calculation of the Canadian Borrowing Base satisfies
all of the criteria stated herein to be an Eligible Canadian Account and an
item of Eligible Canadian Inventory, respectively.


SECTION 3.26.    [Intentionally
Omitted.]


SECTION 3.27.    Common Enterprise.  The successful operation and condition of
each of the Loan Parties is dependent on the continued successful performance
of the functions of the group of the Loan Parties as a whole and the successful
operation of each of the Loan Parties affects the successful performance and
operation of each other Loan Party.  Each
Loan Party expects to derive benefit (and its board of directors or other
governing body has determined that it may reasonably be expected to derive
benefit), directly or indirectly, from (i) successful operations of each of the
other Loan Parties, and (ii) the credit extended by the Lenders to the
Borrowers hereunder, both in their separate capacities and as members of the
group of companies.  Each Loan Party has
determined that execution, delivery, and performance of this Agreement and any
other Loan Documents to be executed by such Loan Party is within its purpose,
will be of direct and indirect benefit to such Loan Party, and is in its best
interest.



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ARTICLE
IV.



CONDITIONS TO CREDIT EXTENSIONS


SECTION 4.01.    Conditions to
Effectiveness of this Agreement. 
This Agreement shall become effective and the obligations of each Lender
hereunder to undertake and continue the Commitments shall be subject to the
prior or concurrent satisfaction (except to the extent that such conditions are
permitted to be satisfied on a post-closing basis pursuant to Section 5.14
herein) of each of the conditions precedent set forth in this Section 4.01.


(a)           Loan Documents.  All legal matters incident to this Agreement,
the Credit Extensions hereunder and the other Loan Documents shall be
satisfactory to the Lenders, to the Issuing Bank, the Collateral Agents and to
the Administrative Agents and there shall have been delivered to the
Administrative Agents an executed counterpart of each of the Loan Documents and
the Perfection Certificate.


(b)           Corporate Documents.  The Administrative Agents shall have
received:


(i)            a
certificate of the secretary or assistant secretary of each Loan Party dated
the Closing Date, certifying (A) that attached thereto is a true and
complete copy of each Organizational Document of such Loan Party certified (to
the extent applicable) as of a recent date by the Secretary of State of the
state of its organization, (B) that attached thereto is a true and
complete copy of resolutions duly adopted by the Board of Directors of such
Loan Party authorizing the execution, delivery and performance of the Loan
Documents to which such person is a party and, in the case of the Borrowers,
the borrowings hereunder, and that such resolutions have not been modified,
rescinded or amended and are in full force and effect and (C) as to the
incumbency and specimen signature of each officer executing any Loan Document
or any other document delivered in connection herewith on behalf of such Loan
Party (together with a certificate of another officer as to the incumbency and
specimen signature of the secretary or assistant secretary executing the
certificate in this clause (i));


(ii)           a
certificate as to the good standing of each Loan Party (in so-called “long-form”
if available) as of a recent date, from such Secretary of State (or other
applicable Governmental Authority); and


(iii)          such other documents as the Lenders, the
Issuing Bank or the Administrative Agents may reasonably request.


(c)           Officers’ Certificate.  The Administrative Agents shall have received
a certificate, dated the Closing Date and signed by the chief executive
officer(s) and the chief financial officer(s) of the Borrowers, confirming
compliance with the conditions precedent set forth in this Section 4.01
and Section 4.02(b), (c) and (e).


(d)           Financings and Other
Transactions, Etc.  The terms of the
Equity Financing shall not require any payments or other distributions of cash
or property in respect thereof other than payments in kind, or any purchases,
redemptions or other acquisitions thereof for cash or 



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property other than payments in kind, in each case
prior to the payment in full of all obligations under the Loan Documents and
the Senior Notes, except as permitted by the Loan Documents.


(e)           Financial
Statements; Projections.  The Lenders
shall have received the financial statements described in Section 3.04
and with the forecasts of the Borrowing Base and the financial performance of
Holdings, the Borrowers, and their respective Subsidiaries.


(f)            Indebtedness and
Minority Interests.  After giving
effect to the Transactions and the other transactions contemplated hereby, no
Company shall have outstanding any Indebtedness or preferred stock other than
(i) the Loans and Credit Extensions hereunder, (ii) the Senior Notes,
(iii) the Indebtedness listed on Schedule 6.01(b) and
(iv) Indebtedness owed to any Borrower or any Guarantor.


(g)           Opinions of Counsel.  The Administrative Agents shall have
received, on behalf of themselves, the other Agents, the Arranger, the Lenders
and the Issuing Bank, a favorable written opinion of (i) Morgan, Lewis &
Bockius LLP, special counsel for the Loan Parties, and (ii) each local and
foreign counsel listed on Schedule 4.01(g), in each case
(A) dated the Closing Date, (B) addressed to the Agents, the Issuing
Bank and the Lenders and (C) covering the matters set forth in Exhibit
N and such other matters relating to the Loan Documents as the
Administrative Agents shall reasonably request.


(h)           [Intentionally Omitted].


(i)            Requirements of Law.  The Lenders shall be satisfied that Holdings,
its Subsidiaries and the Transactions shall be in full compliance with all
material Requirements of Law, including Regulations T, U and X of the Board,
and shall have received satisfactory evidence of such compliance reasonably
requested by them.


(j)            Consents.  The Lenders shall be satisfied that all
requisite Governmental Authorities and third parties shall have approved or
consented to the transactions contemplated hereby, except for such consents or
approvals the absence of which could not reasonably be expected to have a
Material Adverse Effect, and there shall be no governmental or judicial action,
actual or threatened, that has or would have, singly or in the aggregate, a reasonable
likelihood of restraining, preventing or imposing burdensome conditions on the
transactions contemplated hereby.


(k)           Litigation.  There shall be no litigation, public or
private, or administrative proceedings, governmental investigation or other legal
or regulatory developments, actual or threatened, that, singly or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect,
or could materially and adversely affect the ability of Holdings, the Borrowers
and their respective Subsidiaries to fully and timely perform their respective
obligations under the Transaction Documents, or the ability of the parties to
consummate the financings or transactions contemplated hereby.


(l)            Sources and Uses.  The sources and uses of the Loans shall be as
set forth in Section 3.12.



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(m)          Fees.  The Arranger, Administrative Agents and
Collateral Agents shall have received (i) all of the accrued and unpaid Fees,
interest  and other amounts which are due
and payable under the Original Credit Agreement or any other Prior Loan
Document, (ii) all Fees, interest and other amounts due and payable on or prior
to the Closing Date, including, to the extent invoiced, reimbursement or
payment of all reasonable out-of-pocket expenses (including the reasonable
legal fees and expenses of Latham & Watkins, LLP, special counsel to the
applicable Administrative Agents and the applicable Collateral Agents, and the
reasonable fees and expenses of any local counsel, foreign counsel, appraisers,
consultants and other advisors) required to be reimbursed or paid by the
Borrowers hereunder or under any other Loan Document and including all fees and
expenses due under that certain letter agreement dated as of May 1, 2007 among
Borrowers, UBS and UBSS relating to the increase in the revolving commitments
and other amendments to the Original Credit Agreement and (iii) all of the
unpaid interest accrued under the Original Credit Agreement up to, but
excluding, the Closing Date.


(n)           Security Documents.  The Agents shall have received (i) a
Reaffirmation Agreement, (ii) a Canadian Reaffirmation Agreement, (iii) all
necessary amendments, modifications and/or confirmations to the Security
Documents in effect on and after the Original Closing Date and
(iv) evidence that all other actions that Agents may deem necessary or
desirable in order to perfect and protect, and continue the perfection and
protection of, the First Priority Liens and security interests created under
the Security Documents have been taken.


(o)           Real Property Requirements.  The applicable Collateral Agents shall have
received:


(i)               a Mortgage
encumbering each Mortgaged Property owned by a US Borrower or US Subsidiary
that, together with any improvements thereon, individually has a fair market
value (net of existing mortgage debt secured by each such property) of greater
than $500,000, in each case, in favor of the applicable Collateral Agents, for
the benefit of the Secured Parties, duly executed and acknowledged by each Loan
Party that is the owner of or holder of any interest in such Mortgaged
Property, and otherwise in form for recording in the recording office of each
applicable political subdivision where each such Mortgaged Property is
situated, together with such certificates, affidavits, questionnaires or returns
as shall be required in connection with the recording or filing thereof to
create a lien under applicable Requirements of Law, and such financing
statements and any other instruments necessary to grant a mortgage lien under
the laws of any applicable jurisdiction, all of which shall be in form and
substance reasonably satisfactory to such Collateral Agent;


(ii)              with respect to each
such Mortgaged Property, such consents, approvals, amendments, supplements,
estoppels, tenant subordination agreements or other instruments as shall
reasonably be deemed necessary by such Collateral Agent in order for the owner
or holder of the fee or leasehold interest constituting such Mortgaged Property
to grant the Lien contemplated by the Mortgage with respect to such Mortgaged
Property;


(iii)             with respect to each
Mortgage required under clause (i) above, a policy of title insurance (or
marked up title insurance commitment having the effect of a policy 



 117
 









of title insurance) insuring the Lien of such
Mortgage as a valid First Priority mortgage Lien on the Mortgaged Property and
fixtures described therein in the amount equal to not less than 115% of the
fair market value of such Mortgaged Property and fixtures, which policy (or
such marked-up commitment) (each, a “Title Policy”)
shall (A) be issued by the Title Company, (B) contain a “tie-in” or “cluster”
endorsement, if available under applicable law (i.e., policies which insure against losses regardless of
location or allocated value of the insured property up to a stated maximum
coverage amount), (C) have been supplemented by such endorsements (or
where such endorsements are not available, opinions of special counsel,
architects or other professionals reasonably acceptable to such Collateral
Agent) as shall be reasonably requested by such Collateral Agent (including
endorsements on matters relating to usury, first loss, last dollar, zoning,
contiguity, revolving credit, doing business, non-imputation, public road
access, survey, variable rate, environmental lien, subdivision, mortgage
recording tax, separate tax lot, and so-called comprehensive coverage over
covenants and restrictions), and (D) contain no exceptions to title other
than Permitted Liens and other exceptions acceptable to such Collateral Agent;


(iv)             with respect to each
such Mortgaged Property, such affidavits, certificates, information (including
financial data) and instruments of indemnification (including a so-called “gap”
indemnification) as shall be reasonably required to induce the Title Company to
issue the Title Policy/ies and endorsements contemplated above;


(v)              evidence reasonably
acceptable to such Collateral Agent of payment by or on behalf of the Borrowers
of all Title Policy premiums, search and examination charges, escrow charges
and related charges, mortgage recording taxes, fees, charges, costs and
expenses required for the recording of the Mortgages and issuance of the Title
Policies referred to above;


(vi)             with respect to each
such Mortgaged Property, copies of all Leases in which any Borrower or any
Subsidiary holds the lessor’s interest. 
To the extent any of the foregoing affect any Mortgaged Property, such
agreement shall be subordinate to the Lien of the Mortgage to be recorded
against such Mortgaged Property, either expressly by its terms or pursuant to a
subordination, non-disturbance and attornment agreement, and shall otherwise be
acceptable to such Collateral Agent;


(vii)            with respect to each
such Mortgaged Property, each Company shall have made all notifications,
registrations and filings, to the extent required by, and in accordance with,
all Governmental Real Property Disclosure Requirements applicable to such
Mortgaged Property;


(viii)           Surveys reasonably
acceptable to Collateral Agents with respect to each such Mortgaged Property;
and


(ix)             a completed Federal
Emergency Management Agency Standard Flood Hazard Determination with respect to
each such Mortgaged Property.



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(p)           Insurance.  The Administrative Agents shall have
confirmed receipt by Collateral Agents of copies of, or certificates as to
coverage under, the insurance policies and endorsements required by Section
5.04 and the applicable provisions of the Security Documents, each of which
shall be in form and substance satisfactory to the Administrative Agents and
Collateral Agents.


(q)           USA Patriot Act.  The Lenders shall have received, sufficiently
in advance of the Closing Date, all documentation and other information
required by bank regulatory authorities under applicable “know your customer”
and anti-money laundering rules and regulations, including without limitation,
the United States PATRIOT Act (Title III of Pub. L. 107-56 (signed into law
October 26, 2001)) including, without limitation, the information described in Section
11.13.


(r)            Initial Borrowing
Base Certificate.  The Collateral
Agents and the Administrative Agents shall have received a Borrowing Base
Certificate dated as of the last day of the fiscal month of April.


(s)           Excess Availability.  As of the Closing Date, Excess Availability
shall not be less than $100,000,000 or such lesser amount as UBS, after
consultation with the Lenders, may approve.


SECTION 4.02.    Conditions to All
Credit Extensions.  The obligation of
each Lender and each Issuing Bank to make any Credit Extension (including on
the Closing Date) shall be subject to, and to the satisfaction of, each of the
conditions precedent set forth below.


(a)           Notice.  The applicable Administrative Agent shall
have received a Borrowing Request as required by Section 2.03 (or such
notice shall have been deemed given in accordance with Section 2.03) if
Loans are being requested or, in the case of the issuance, amendment, extension
or renewal of a Letter of Credit, the Issuing Bank and the applicable
Administrative Agent shall have received an LC Request as required by Section
2.18(b) or, in the case of the Borrowing of a Swingline Loan, the
applicable Swingline Lender and the applicable Administrative Agent shall have
received a Borrowing Request as required by Section 2.17(b).


(b)           No Default.  The Borrowers and each other Loan Party shall
be in compliance in all material respects with all the terms and provisions set
forth herein and in each other Loan Document on its part to be observed or
performed, and, at the time of and immediately after giving effect to such
Credit Extension and the application of the proceeds thereof, no Default shall
have occurred and be continuing on such date.


(c)           Representations and
Warranties.  Each of the
representations and warranties made by any Loan Party set forth in Article
III hereof or in any other Loan Document shall be true and correct in all
material respects (except that any representation and warranty that is
qualified as to “materiality” or “Material Adverse Effect” shall be true and
correct in all respects) on and as of the date of such Credit Extension with
the same effect as though made on and as of such date, except to the extent
such representations and warranties expressly relate to an earlier date.



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(d)           Compliance with
Borrowing Base.  After giving pro forma effect to the proposed Credit Extension, the
outstanding Revolving Exposure shall not exceed the Borrowing Base plus
(without duplication) the Canadian Borrowing Base, in each case then in effect.


(e)           No Legal Bar.  No order, judgment or decree of any
Governmental Authority shall purport to restrain any Lender from making any
Loans to be made by it.  No injunction or
other restraining order shall have been issued, shall be pending or noticed
with respect to any action, suit or proceeding seeking to enjoin or otherwise
prevent the consummation of, or to recover any damages or obtain relief as a
result of, the transactions contemplated by this Agreement or the making of
Loans hereunder.


Each of the delivery of a Borrowing Request or an LC
Request and the acceptance by the Borrowers of the proceeds of such Credit
Extension shall constitute a representation and warranty by the Borrowers and
each other Loan Party that on the date of such Credit Extension (both
immediately before and after giving effect to such Credit Extension and the application
of the proceeds thereof) the conditions contained in Section 4.02(b) — (e)
have been satisfied.  The Borrowers shall
provide such information (including calculations in reasonable detail of the
covenants in Section 6.10) as the Administrative Agents and Collateral
Agents may reasonably request to confirm that the conditions in Section
4.02(b) — (e) have been satisfied.


ARTICLE
V.



AFFIRMATIVE COVENANTS


Each Loan Party warrants, covenants and agrees with
each Administrative Agent, Collateral Agent and Lender that so long as this
Agreement shall remain in effect and until the Commitments have been terminated
and the principal of and interest on each Loan, all Fees and all other expenses
or amounts payable under any Loan Document shall have been paid in full and all
Letters of Credit have been canceled or have expired or been fully cash
collateralized and all amounts drawn thereunder have been reimbursed in full,
unless the Required Lenders shall otherwise consent in writing, each Loan Party
will, and will cause each of its Subsidiaries to:


SECTION 5.01.    Financial Statements,
Reports, etc.  Furnish to the
Administrative Agents and each Lender:


(a)           Annual Reports.  As soon as available and in any event, not
later than April 1, 2006, an annual report of Holdings on form 10-K as would be
required to be filed with the SEC (whether or not such report is actually
required to be filed) and a consolidating year end balance sheet for the fiscal
year ending December 31, 2005.  As soon
as available and in any event, within 90 days after the end of each fiscal
year, beginning with the fiscal year ending December 31, 2006, (i) the
consolidated balance sheet of Holdings as of the end of each such fiscal year
and related consolidated statements of income, cash flows and stockholders’
equity for such fiscal year in comparative form with such financial statements
as of the end of, and for, the preceding fiscal year (except that comparative
statements of income and cash flows for the fiscal year ending December 31,
2005 shall not be required), and, in each case, notes thereto (including a note
with a consolidating balance sheet and statements of income and cash flows
separating out the results of Holdings, the Borrowers, each Borrowing Base
Guarantor and the aggregate results 



 120
 









of all Subsidiaries), all prepared in accordance with
Regulation S-X and accompanied by an opinion of KPMG LLP or other independent
public accountants of recognized national standing satisfactory to the
Administrative Agents (which opinion shall not be qualified as to scope or
contain any going concern or other qualification), stating that such financial
statements fairly present, in all material respects, the consolidated financial
condition, results of operations, cash flows of Holdings as of the dates and
for the periods specified in accordance with GAAP, (ii) a management
report in a form reasonably satisfactory to the Administrative Agents setting
forth (A) statement of income items and Consolidated Cash Flow of Holdings for
such fiscal year, showing variance, by dollar amount and percentage, from
amounts for the previous fiscal year and budgeted amounts and (B) key
operational information and statistics for such fiscal year consistent with
internal and industry-wide reporting standards, including same-store sales, and
(iii) a narrative report and management’s discussion and analysis, in a
form reasonably satisfactory to the Administrative Agents, of the financial
condition and results of operations of Holdings for such fiscal year, as
compared to amounts for the previous fiscal year and budgeted amounts (it being
understood that the information required by clause (i) may be furnished in the
form of a Form 10-K);


(b)           Quarterly Reports.  As soon as available and in any event within
45 days after the end of each of the first three fiscal quarters of each
fiscal year, beginning with the first fiscal quarter of the 2006 fiscal year,
(i)(A) the consolidated balance sheet of Holdings as of the end of each of
the first three fiscal quarters of the 2006 fiscal year and related
consolidated statements of income and cash flows for each such fiscal quarter
and for the then elapsed portion of the fiscal year and (B) the consolidated
balance sheet of Holdings as of the end of each of the first three fiscal
quarters of the 2007 fiscal year and of each fiscal year thereafter and related
consolidated statements of income and cash flows for such fiscal quarter and
for the then elapsed portion of the fiscal year, in comparative form with the
consolidated statements of income and cash flows for the comparable periods in
the previous fiscal year, and notes, in each case, thereto (including a note
with a consolidating balance sheet and statements of income and cash flows
separating out Holdings, the Borrowers and the Subsidiaries), all prepared in
accordance with Regulation S-X under the Securities Act and accompanied by a
certificate of a Financial Officer stating that such financial statements
fairly present, in all material respects, the consolidated financial condition,
results of operations and cash flows of Holdings as of the date and for the
periods specified in accordance with GAAP consistently applied, and on a basis
consistent with audited financial statements referred to in clause (a) of
this Section, subject to normal year-end audit adjustments, (ii) a
management report in a form reasonably satisfactory to the Administrative
Agents setting forth (A) statement of income items and Consolidated Cash
Flow of Holdings for such fiscal quarter and for the then elapsed portion of
the fiscal year, showing variance, by dollar amount and percentage, from
amounts for the comparable periods in the previous fiscal year and budgeted
amounts and (B) key operational information and statistics for such fiscal
quarter and for the then elapsed portion of the fiscal year consistent with
internal and industry-wide reporting standards, including same-store sales and
(iii) management’s discussion and analysis, in a form reasonably
satisfactory to the Administrative Agents, of the financial condition and
results of operations for such fiscal quarter and the then elapsed portion of
the fiscal year, as compared to the comparable periods in the previous fiscal
year and budgeted amounts (it being understood that the information required by
clause (i) may be furnished in the form of a Form 10-Q);



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(c)           Monthly Reports. Within 30 days
after the end of each of the first two months of each fiscal quarter (i) the
unaudited consolidated balance sheet of Holdings and its Subsidiaries as of the
end of such two months and the related consolidated statements of income and
cash flows of Holdings and its Subsidiaries for such month and for the then
elapsed portion of the fiscal year, in comparative form with the consolidated
statements of income and cash flows for the comparable periods in the previous
fiscal year (except that comparative statements of income and cash flows for
the fiscal year ending December 31, 2005 shall not be required), and (ii) same
store sales information and statistics for such month and for the then elapsed
portion of the fiscal year consistent with internal and industry-wide reporting
standards, each in form and substance reasonably satisfactory to the
Administrative Agent;


(d)           Financial Officer’s
Certificate.  (i) Concurrently
with any delivery of financial statements under Section 5.01(a) or (b),
a Compliance Certificate (A) certifying that no Default has occurred or, if
such a Default has occurred, specifying the nature and extent thereof and any
corrective action taken or proposed to be taken with respect thereto, (B)
beginning with the first fiscal quarter of the 2006 fiscal year, setting forth
computations in reasonable detail satisfactory to the Administrative Agents
demonstrating compliance with the covenants contained in Section 6.10
(including the aggregate amount of Excluded Issuances for such period and the
uses therefor) and (C) showing a reconciliation of Consolidated Cash Flow to
the net income set forth on the statement of income; and (ii) concurrently
with any delivery of financial statements under Section 5.01(a) above,
beginning with the fiscal year ending December 31, 2006, a report of the
accounting firm opining on or certifying such financial statements stating that
in the course of its regular audit of the financial statements of Holdings and
its Subsidiaries, which audit was conducted in accordance with generally
accepted auditing standards, such accounting firm obtained no knowledge that
any Default insofar as it relates to financial or accounting matters has occurred
or, if in the opinion of such accounting firm such a Default has occurred,
specifying the nature and extent thereof;


(e)           Financial Officer’s
Certificate Regarding Collateral. 
Concurrently with any delivery of financial statements under Section
5.01(a), a certificate of a Financial Officer setting forth the information
required pursuant to the Perfection Certificate Supplement or confirming that
there has been no change in such information since the date of the Perfection
Certificate or latest Perfection Certificate Supplement;


(f)            Public Reports.  Promptly after the same become publicly
available, copies of all periodic and other reports, proxy statements and other
materials filed by any Company with the Securities and Exchange Commission, the
Ontario Securities Commission or any Governmental Authority succeeding to any
or all of the functions of any said Commission, or with any national or other
securities exchange or securities commission, or distributed to holders of its
Indebtedness pursuant to the terms of the documentation governing such
Indebtedness (or any trustee, agent or other representative therefor), as the
case may be;


(g)           Management Letters.  Promptly after the receipt thereof by any
Company, a copy of any “management letter” received by any such person from its
certified public accountants and the management’s responses thereto;



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(h)           Budgets.  Within 30 days after the beginning of
each fiscal year, a budget for Holdings in form reasonably satisfactory to the
Administrative Agents, but to include balance sheets, statements of income and
sources and uses of cash, for (i) each month of such fiscal year prepared
in detail, including line items for budgeted Borrowing Base levels and
utilization of Revolving Loans and (ii) each fiscal year thereafter,
through and including the fiscal year in which the Final Maturity Date occurs,
prepared in summary form, in each case, of Holdings, Borrowers and their
respective Subsidiaries, with appropriate presentation and discussion of the
principal assumptions upon which such budgets are based, accompanied by the
statement of a Financial Officer of Borrower to the effect that the budget of
Holdings is a reasonable estimate for the periods covered thereby and, promptly
when available, any material revisions of such budget;


(i)            Organization.  Concurrently with any delivery of financial
statements under Section 5.01(a), an accurate organizational chart as
required by Section 3.07(c), or confirmation that there are no changes
to Schedule 10(a) to the Perfection Certificate;


(j)            Organizational
Documents.  Promptly provide copies
of any Organizational Documents that have been amended or modified in
accordance with the terms hereof and deliver a copy of any notice of default
given or received by any Company under any Organizational Document within 15
days after such Company gives or receives such notice; and


(k)           Other Information.  Promptly, from time to time, such other
information regarding the operations, business affairs and financial condition
of any Company, or compliance with the terms of any Loan Document or matters
regarding the Collateral (beyond the requirements contained in Section 9.04)
as the Administrative Agents or any Lender may reasonably request.


SECTION 5.02.    Litigation and Other
Notices.  Furnish to the Administrative
Agents and each Lender written notice of the following promptly (and, in any
event, within three Business Days of the occurrence thereof):


(a)           any Default, specifying
the nature and extent thereof and the corrective action (if any) taken or proposed
to be taken with respect thereto;


(b)           the filing or
commencement of, or any threat or notice of intention of any person to file or
commence, any action, suit, litigation or proceeding, whether at law or in
equity by or before any Governmental Authority, (i) against any Company or
any Affiliate thereof that could reasonably be expected to result in a Material
Adverse Effect or (ii) with respect to any Loan Document;


(c)           any development that
has resulted in, or could reasonably be expected to result in a Material
Adverse Effect;


(d)           the occurrence of a
Casualty Event; and


(e)           (i) the incurrence
of any material Lien (other than Permitted Liens) on, or claim asserted against
any of the Collateral or (ii) the occurrence of any other event which
could materially affect the value of the Collateral.



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SECTION 5.03.    Existence; Businesses
and Properties.


(a)           Do or cause to be done
all things necessary to preserve, renew and maintain in full force and effect
its legal existence, except as otherwise expressly permitted under Section
6.05 or Section 6.06 or, in the case of any Subsidiary, where the
failure to perform such obligations, individually or in the aggregate, could
not reasonably be expected to result in a Material Adverse Effect.


(b)           Do or cause to be done
all things necessary to obtain, preserve, renew, extend and keep in full force
and effect the rights, licenses, permits, privileges, franchises,
authorizations, patents, copyrights, trademarks and trade names material to the
conduct of its business except where such failure could reasonably be expected
to result in a Material Adverse Effect; maintain and operate such business in
substantially the manner in which it is presently conducted and operated;
comply with all applicable Requirements of Law (including any and all zoning,
building, Environmental Law, ordinance, code or approval or any building
permits or any restrictions of record or agreements affecting the Real
Property) and decrees and orders of any Governmental Authority, whether now in
effect or hereafter enacted, except where the failure to comply, individually
or in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect; pay and perform its obligations under all Leases and
Transaction Documents; and at all times maintain, preserve and protect all
property material to the conduct of such business and keep such property in
good repair, working order and condition (other than wear and tear occurring in
the ordinary course of business) and from time to time make, or cause to be
made, all needful and proper repairs, renewals, additions, improvements and
replacements thereto necessary in order that the business carried on in
connection therewith may be properly conducted at all times; provided that nothing in this Section
5.03(b) shall prevent (i) sales of property, consolidations or mergers
or amalgamations by or involving any Company in accordance with Section 6.05
or Section 6.06; (ii) the withdrawal by any Company of its
qualification as a foreign corporation in any jurisdiction where such
withdrawal, individually or in the aggregate, could not reasonably be expected
to result in a Material Adverse Effect; or (iii) the abandonment by any
Company of any rights, franchises, licenses, trademarks, trade names, copyrights
or patents that such person reasonably determines are not useful to its
business or no longer commercially desirable.


SECTION 5.04     Insurance.


(a)           Generally.  Keep its insurable property adequately
insured at all times by financially sound and reputable insurers; maintain such
other insurance, to such extent and against such risks as is customary with
companies in the same or similar businesses operating in the same or similar
locations, including insurance with respect to Mortgaged Properties and other
properties material to the business of the Companies against such casualties
and contingencies and of such types and in such amounts with such deductibles
as is customary in the case of similar businesses operating in the same or
similar locations, including (i) physical hazard insurance on an “all risk”
basis, (ii) commercial general liability against claims for bodily injury,
death or property damage covering any and all insurable claims,
(iii) explosion insurance in respect of any boilers, machinery or similar
apparatus constituting Collateral, (iv) business interruption insurance,
(v) worker’s compensation insurance and such other insurance as may be
required by any Requirement of Law and (vi) such other insurance against
risks as the 



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Administrative
Agents and the Collateral Agents may from time to time reasonably require (such
policies to be in such form and amounts and having such coverage as may be
reasonably satisfactory to the applicable Administrative Agent and applicable
Collateral Agent); provided that
with respect to physical hazard insurance, neither Collateral Agent nor the
applicable Company shall agree to the adjustment of any claim for more than
$5.0 million thereunder without the consent of the other (such consent not to
be unreasonably withheld or delayed); provided,
further, that no consent of any Company shall be required during an
Event of Default.


(b)           Requirements of
Insurance.  All such insurance shall
(i) provide that no cancellation, material reduction in amount or material
reduction in coverage thereof shall be effective until at least 30 days
after receipt by the applicable Collateral Agent of written notice thereof,
(ii) with respect to the Collateral, name the applicable Collateral Agents
as mortgagee (in the case of property insurance) or additional insured on
behalf of the applicable Secured Parties (in the case of liability insurance)
or loss payee (in the case of property insurance), as applicable, (iii) if
reasonably requested by such Collateral Agents, include a breach of warranty
clause and (iv) be reasonably satisfactory in all other respects to such
Collateral Agents.


(c)           Notice to Agents.  Notify the Administrative Agents and the
Collateral Agents immediately whenever any separate insurance concurrent in
form or contributing in the event of loss with that required to be maintained
under this Section 5.04 is taken out by any Company; and promptly
deliver to the Administrative Agents and the Collateral Agents a duplicate
original copy of such policy or policies.


(d)           Flood Insurance.  With respect to each Mortgaged Property,
obtain flood insurance in such total amount as the Administrative Agents or the
Required Lenders may from time to time reasonably require, if at any time the
area in which any improvements located on any Mortgaged Property is designated
a “flood hazard area” in any Flood Insurance Rate Map published by the Federal
Emergency Management Agency (or any successor agency), and otherwise comply
with the National Flood Insurance Program as set forth in the Flood Disaster
Protection Act of 1973, as amended from time to time.


(e)           Broker’s Report.  Deliver to the Administrative Agents and the
Collateral Agents and the Lenders a report of a reputable insurance broker with
respect to such insurance and such supplemental reports with respect thereto as
the Administrative Agents or the Collateral Agents may from time to time
reasonably request.


(f)            Mortgaged
Properties.  Each Loan Party shall
otherwise comply in all material respects with all Insurance Requirements in
respect of the Premises; provided, however,
that each Loan Party may, at its own expense and after written notice to the
Administrative Agents and the Collateral Agents, (i) contest the
applicability or enforceability of any such Insurance Requirements by
appropriate legal proceedings, or (ii) cause the Insurance Policy
containing any such Insurance Requirement to be replaced by a new policy
complying with the provisions of this Section 5.04.


SECTION 5.05.    Obligations and Taxes.


(a)           Payment of
Obligations.  Pay its Indebtedness
and other obligations promptly and in accordance with their terms and pay and
discharge promptly when due all Taxes, assessments 



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and
governmental charges or levies imposed upon it or upon its income or profits or
in respect of its property, before the same shall become delinquent or in
default, as well as all lawful claims for labor, services, materials and
supplies or otherwise that, if unpaid, might give rise to a Lien other than a
Permitted Lien upon such properties or any part thereof; provided that such payment and discharge
shall not be required with respect to any such Tax, assessment, charge, levy or
claim so long as (x)(i) the validity or amount thereof shall be contested
in good faith by appropriate proceedings timely instituted and diligently
conducted and the applicable Company shall have set aside on its books adequate
reserves or other appropriate provisions with respect thereto in accordance
with GAAP, (ii) such contest operates to suspend collection of the
contested obligation, Tax, assessment or charge and enforcement of a Lien other
than a Permitted Lien and (iii) in the case of Collateral, the applicable
Company shall have otherwise complied with the Contested Collateral Lien
Conditions and (y) the failure to pay could not reasonably be expected to
result in a Material Adverse Effect.


(b)           Filing of Returns.  Timely and correctly file all material Tax
Returns required to be filed by it. 
Withhold, collect and remit all Taxes that it is required to collect,
withhold or remit.


(c)           Tax Shelter
Reporting.  Each Borrower does not
intend to treat the Loans as being a “reportable transaction” within the
meaning of Treasury Regulation Section 1.6011-4.  In the event any Borrower determines to take
any action inconsistent with such intention, such Borrower will promptly notify
the Administrative Agents thereof.


SECTION 5.06.    Employee Benefits.  (a) Comply in all material respects with the
applicable provisions of ERISA and the Code except where such non-compliance
could not reasonably be expected to result in a Material Adverse Effect and
(b) furnish to the Administrative Agents (x) as soon as possible
after, and in any event within 5 Business Days after any Responsible
Officer of any Company knows or has reason to know that, any ERISA Event has
occurred that, alone or together with any other ERISA Event could reasonably be
expected to result in liability of the Companies or any of their ERISA
Affiliates in an aggregate amount that could reasonably be expected to result
in a Material Adverse Effect or the imposition of a Lien, a statement of a
Financial Officer of the Borrowers setting forth details as to such ERISA Event
and the action, if any, that the Companies propose to take with respect
thereto, and (y) upon request by the Administrative Agents, copies of
(i) each Schedule B (Actuarial Information) to the annual report
(Form 5500 Series) filed by any Company with the Internal Revenue Service with
respect to each Plan; (ii) the most recent actuarial valuation report for
each Plan; (iii) all notices received by any Company from a Multiemployer
Plan sponsor or any governmental agency concerning an ERISA Event; and
(iv) such other documents or governmental reports or filings relating to
any Plan as the Administrative Agents shall reasonably request.



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SECTION
5.07.    Maintaining
Records; Access to Properties and Inspections; Annual Meetings.


(a)           Keep proper books of
record and account in which full, true and correct entries in conformity with
GAAP and all Requirements of Law are made of all dealings and transactions in
relation to its business and activities, including, without limitation, proper
records of intercompany transaction and the Borrowing Base Guarantor
Intercompany Loan Amounts with full, true and correct entries reflecting all
payments received and paid (including, without limitation, funds received by or
for the account of Borrower from deposit accounts of the other Companies).  Each Company will permit any representatives
designated by the Administrative Agents or any Lender to visit and inspect the
financial records and the property of such Company at reasonable times during
regular business hours and as often as reasonably requested and to make
extracts from and copies of such financial records, and permit any
representatives designated by the Administrative Agents or any Lender to
discuss the affairs, finances, accounts and condition of any Company with the
officers and employees thereof and advisors therefor (including independent
accountants).


(b)           Within 150 days
after the end of each fiscal year of the Companies, at the request of the
Administrative Agents or Required Lenders, hold a meeting (at a mutually
agreeable location, venue and time or, at the option of the Administrative
Agents, by conference call, the costs of such venue or call to be paid by the
Borrowers) with all Lenders who choose to attend such meeting, at which meeting
shall be reviewed the financial results of the previous fiscal year and the
financial condition of the Companies and the budgets presented for the current
fiscal year of the Companies.


SECTION 5.08.    Use of Proceeds.  Use the proceeds of the Loans only for the
purposes set forth in Section 3.12 and request the issuance of Letters
of Credit only for the purposes set forth in the definition of Commercial
Letter of Credit or Standby Letter of Credit, as the case may be.


SECTION 5.09.    Compliance with
Environmental Laws; Environmental Reports.


(a)           Comply, and cause all
lessees and other persons occupying Real Property of any Company to comply, in
all material respects with all Environmental Laws and Environmental Permits
applicable to its operations and Real Property; obtain and renew all material
Environmental Permits applicable to its operations and Real Property; and
conduct all Responses required by, and in accordance with, Environmental Laws; provided that no Company shall be required
to undertake any Response to the extent that its obligation to do so is being
contested in good faith and by proper proceedings and appropriate reserves are
being maintained with respect to such circumstances in accordance with GAAP.


(b)           If a Default caused by
reason of a breach of Section 3.18 or Section 5.09(a) shall have
occurred and be continuing for more than 20 days without the Companies
commencing activities reasonably likely to cure such Default in accordance with
Environmental Laws, at the written request of the Administrative Agents or the
Required Lenders through the Administrative Agents, provide to the Lenders
within 45 days after such request, at the expense of the Borrowers, an
environmental assessment report regarding the matters which are the subject of
such Default, including, where appropriate in the reasonable judgment of the
Administrative Agents, soil and/or groundwater sampling, prepared by an
environmental consulting firm and, in the form and substance, reasonably
acceptable to the Administrative Agents and indicating the 



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presence or
absence of Hazardous Materials and the estimated cost of any compliance or
Response to address them.


SECTION 5.10.    [Intentionally Deleted].


SECTION 5.11.    Additional Collateral;
Additional Guarantors.


(a)           Subject to the terms of
the Intercreditor Agreement and this Section 5.11, with respect to any
property acquired after the Original Closing Date by any Loan Party that is
intended to be subject to the Lien created by any of the Security Documents (as
specified in this Section 5.11), promptly (and in any event within
60 days after the acquisition thereof) (i) execute and deliver to the
applicable Administrative Agent and the applicable Collateral Agents such
amendments or supplements to the relevant Security Documents or such other
documents as such Administrative Agent or such Collateral Agents shall deem
reasonably necessary or advisable to grant to such Collateral Agents, for their
benefit and for the benefit of the Secured Parties, a Lien on such property
subject to no Liens other than Permitted Liens, and (ii) take all actions
necessary to cause such Lien to be duly perfected to the extent required by
such Security Document in accordance with all applicable Requirements of Law,
including the filing of financing statements in such jurisdictions as may be
reasonably requested by such Administrative Agent.  The Borrowers shall otherwise take such actions
and execute and/or deliver to the applicable Collateral Agents such documents
as the applicable Administrative Agent or such Collateral Agents shall require
to confirm the validity, perfection and priority of the Lien of the Security
Documents against such after-acquired properties.


(b)           Subject to the terms of
the Intercreditor Agreement, with respect to any person that is or becomes a
Subsidiary after the Original Closing Date, promptly (and in any event within
30 days after such person becomes a Subsidiary) (i) pledge and deliver
to the applicable Collateral Agent the certificates, if any, representing all
of the Equity Interests of such Subsidiary, provided that with respect to any
Foreign Subsidiary no more than 65% of the Equity Interests of any first-tier
Foreign Subsidiary of US Borrowers or any US Subsidiary (and no stock of any
other Foreign Subsidiary) shall be so pledged and delivered as security for the
US Obligations, together with undated stock powers or other appropriate
instruments of transfer executed and delivered in blank by a duly authorized
officer of the holder(s) of such Equity Interests, (ii)(A) deliver to the US
Collateral Agent as security for the US Obligations all intercompany notes
owing from such Subsidiary to any Loan Party that is a US Borrower or US
Subsidiary and (B) deliver to the Canadian Collateral Agent as security for the
Canadian Obligations all intercompany notes owing from such Subsidiary to any
Loan Party that is a Canadian Borrower or Foreign Subsidiary, in each case,
together with instruments of transfer executed and delivered in blank by a duly
authorized officer of such Loan Party and 
(iii) (A) if such new Subsidiary is a US Subsidiary, cause such new US
Subsidiary to execute and deliver a Joinder Agreement or such comparable
documentation to become a Subsidiary Guarantor and a joinder agreement to the
applicable Security Agreement, substantially in the form annexed thereto, (B)
if such new Subsidiary is a Foreign Subsidiary, cause such new Foreign
Subsidiary to execute and deliver a pledge agreement, security agreement and
guarantee substantially in the form of the applicable Canadian Pledge
Agreement, Canadian Security Agreement and Canadian Guaranty and (C) cause
to take all actions necessary or advisable in the opinion of the applicable Administrative
Agent or the applicable Collateral Agent to cause the Lien created by the 



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applicable
Security Agreement to be duly perfected to the extent required by such
agreement in accordance with all applicable Requirements of Law, including the
filing of financing statements in such jurisdictions as may be reasonably
requested by the applicable Administrative Agent or the applicable Collateral
Agent.


(c)           Subject to the terms of
the Intercreditor Agreement, promptly grant to the applicable Collateral
Agents, within 60 days of the acquisition thereof, a security interest in
and Mortgage on each Real Property owned in fee by such Loan Party that is a US
Borrower or US Subsidiary, as is acquired by such Loan Party after the Closing
Date and that, together with any improvements thereon, individually has a fair
market value of at least $5,000,000, in each case, as additional security for
the Secured Obligations (unless the subject property is already mortgaged to a
third party to the extent permitted by Section 6.02).  Subject to the terms of the Intercreditor
Agreement, such Mortgages shall be granted pursuant to documentation reasonably
satisfactory in form and substance to the applicable Administrative Agents and
the applicable Collateral Agents and shall constitute valid and enforceable
perfected First Priority Liens subject only to Permitted Liens or other Liens
reasonably acceptable to the such Collateral Agent.  Subject to the terms of the Intercreditor
Agreement, the Mortgages or instruments related thereto shall be duly recorded
or filed in such manner and in such places as are required by law to establish,
perfect, preserve and protect the First Priority Liens in favor of the
applicable Collateral Agents required to be granted pursuant to the Mortgages
and all taxes, fees and other charges payable in connection therewith shall be
paid in full.  Such Loan Party shall
otherwise take such actions and execute and/or deliver to the applicable
Collateral Agents such documents as the applicable Administrative Agent or such
Collateral Agent shall reasonably require to confirm the validity, perfection
and priority of the Lien of any existing Mortgage or new Mortgage against such
after-acquired Real Property (including a Title Policy, a Survey and local
counsel opinion (in form and substance reasonably satisfactory to such
Administrative Agent and such Collateral Agent) in respect of such Mortgage).


(d)           The Borrowers may
designate any Subsidiary acquired or formed after the Original Closing Date as
a Non-Guarantor Subsidiary by written notice to the applicable Administrative
Agent; provided, however, that if
at any time any Non-Guarantor Subsidiary or group of Non-Guarantor Subsidiaries
in the aggregate (other than any Foreign Subsidiary not otherwise subject to Section
5.11(b)) has assets with either a book value or fair market value in excess
of $1.0 million, then the Borrowers shall, and shall cause one or more of such
Subsidiaries to, comply with Section 5.11(b) within the time frames set
forth therein so that no Non-Guarantor Subsidiary or group of Non-Guarantor
Subsidiaries in the aggregate holds property having either a book value or fair
market value in excess of $1.0 million.


SECTION 5.12.    Security Interests;
Further Assurances.  Subject to the
terms of the Intercreditor Agreement, promptly, upon the reasonable request of
any Administrative Agent, Collateral Agent or Lender, at the applicable
Borrower’s expense, execute, acknowledge and deliver, or cause the execution,
acknowledgment and delivery of, and thereafter register, file or record, or
cause to be registered, filed or recorded, in an appropriate governmental
office, any document or instrument supplemental to or confirmatory of the
Security Documents or otherwise deemed by such Administrative Agent or such Collateral
Agent reasonably necessary or desirable for the continued validity, perfection
and priority of the Liens on the Collateral covered thereby subject to no other
Liens except as permitted by the applicable Security Document or 



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this Agreement, or obtain any consents or waivers as
may be reasonably necessary or appropriate in connection therewith.  Deliver or cause to be delivered to the
applicable Administrative Agent and the applicable Collateral Agents from time
to time such other documentation, consents, authorizations, approvals and
orders in form and substance reasonably satisfactory to such Administrative
Agent and such Collateral Agents as such Administrative Agent and such
Collateral Agents shall reasonably deem necessary to perfect or maintain the
Liens on the Collateral pursuant to the Security Documents.  Upon the exercise by any Administrative
Agent, Collateral Agent or Lender of any power, right, privilege or remedy
pursuant to any Loan Document which requires any consent, approval, registration,
qualification or authorization of any Governmental Authority execute and
deliver all applications, certifications, instruments and other documents and
papers that such Administrative Agent, Collateral Agent or Lender may require.  If any Administrative Agent, any Collateral
Agent or the Required Lenders determine that they are required by a Requirement
of Law to have appraisals prepared in respect of the Real Property of any Loan
Party constituting Collateral, the Borrowers shall provide to the applicable
Administrative Agent appraisals that satisfy the applicable requirements of the
Real Estate Appraisal Reform Amendments of FIRREA, as applicable, and are
otherwise in form and substance satisfactory to such Administrative Agent and
the applicable Collateral Agent.


SECTION
5.13.    Information
Regarding Collateral.


(a)           Not effect any change
(i) in any Loan Party’s legal name or in any trade name used to identify
it in the conduct of its business or in the ownership of its properties,
(ii) in the location of any Loan Party’s chief executive office, its
principal place of business, any office in which it maintains books or records
relating to Collateral owned by it, domicile (within the meaning of the Quebec
Civil Code) or any office or facility (other than any Store) at which
Collateral owned by it with a value of more than $250,000 is located (including
the establishment of any such new office or facility), (iii) in any Loan
Party’s identity or organizational structure, (iv) in any Loan Party’s
Federal Taxpayer Identification Number or organizational identification number,
if any, or (v) in any Loan Party’s jurisdiction of organization (in each
case, including by merging or amalgamating with or into any other entity,
reorganizing, dissolving, liquidating, reorganizing or organizing in any other
jurisdiction), until (A) it shall have given the applicable Collateral
Agents and the applicable Administrative Agent not less than 30 days’
prior written notice (in the form of an Officers’ Certificate), or such lesser
notice period agreed to by such Collateral Agents, of its intention so to do,
clearly describing such change and providing such other information in
connection therewith as such Collateral Agents or such Administrative Agent may
reasonably request and (B) it shall have taken all action reasonably
satisfactory to such Collateral Agents to maintain the perfection and priority
of the security interest of such Collateral Agents for the benefit of the
Secured Parties in the Collateral, if applicable.  Each Loan Party agrees to promptly provide
the applicable Collateral Agents with certified Organizational Documents
reflecting any of the changes described in the preceding sentence.  Each Loan Party also agrees to promptly notify
the applicable Collateral Agents of any change in the location of any office in
which it maintains books or records relating to Collateral owned by it or any
office or facility at which Collateral is located (including the establishment
of any such new office or facility), other than changes in location to a
Mortgaged Property or a leased property subject to a Landlord Access Agreement.



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(b)           Concurrently with the
delivery of financial statements pursuant to Section 5.01(a), deliver to
the applicable Administrative Agents and applicable Collateral Agents a
Perfection Certificate Supplement and a certificate of a Financial Officer and
the chief legal officer(s) of the Borrowers certifying that all UCC financing
statements (including fixture filings, as applicable), PPSA financing
statements or financing change statements or other appropriate filings,
recordings or registrations, including all refilings, rerecordings and
reregistrations, containing a description of the Collateral have been filed of
record in each governmental, municipal or other appropriate office in each
jurisdiction necessary to protect and perfect the security interests and Liens
under the Security Documents for a period of not less than 18 months after the
date of such certificate (except as noted therein with respect to any continuation
statements to be filed within such period).


SECTION 5.14.    Post-Closing Collateral
Matters.  Execute and deliver the
documents and complete the tasks set forth on Schedule 5.14, in
each case within the time limits specified on such schedule.


SECTION 5.15.    Affirmative Covenants
with Respect to Leases.  With respect
to each Lease, the respective Loan Party shall perform all the obligations
imposed upon the landlord under such Lease and enforce all of the tenant’s
obligations thereunder, except where the failure to so perform or enforce could
not reasonably be expected to result in a Material Adverse Effect.


SECTION 5.16.    Interest Rate
Agreements.  Within one hundred
eighty (180) days after the Original Closing Date, US Borrowers shall enter
into, and shall maintain, Hedging Agreements providing for interest rate
protection for an amount equal to fifty percent (50%) of the outstanding
principal due on the Senior Notes at any time on terms and conditions
reasonably satisfactory to US Administrative Agent.


ARTICLE
VI.



NEGATIVE COVENANTS


Each Loan Party warrants, covenants and agrees with
each Administrative Agent, each Collateral Agent and each Lender that, so long
as this Agreement shall remain in effect and until the Commitments have been
terminated and the principal of and interest on each Loan, all Fees and all
other expenses or amounts payable under any Loan Document have been paid in
full and all Letters of Credit have been canceled or have expired or been fully
cash collateralized and all amounts drawn thereunder have been reimbursed in
full, unless the Required Lenders shall otherwise consent in writing, no Loan
Party will, nor will they cause or permit any Subsidiaries to:


SECTION 6.01.    Indebtedness.  Incur, create, assume or permit to exist, directly
or indirectly, any Indebtedness, except


(a)           Indebtedness incurred
under this Agreement and the other Loan Documents;



 131
 









(b)           (i) Indebtedness
outstanding on the Original Closing Date and listed on Schedule 6.01(b)
to the Original Credit Agreement, (ii) refinancings or renewals thereof; provided that (A) any such
refinancing Indebtedness is in an aggregate principal amount not greater than
the aggregate principal amount of the Indebtedness being renewed or refinanced,
plus the amount of any premiums
required to be paid thereon, accrued or capitalized interest and reasonable
fees and expenses associated therewith, (B) such refinancing Indebtedness
has a later or equal final maturity and longer or equal weighted average life
than the Indebtedness being renewed or refinanced and (C) the covenants,
events of default, subordination and other provisions thereof (including any
guarantees thereof) shall be, in the aggregate, no less favorable to the
Lenders than those contained in the Indebtedness being renewed or refinanced
and (iii) the Senior Notes and Senior Note Guarantees (including any notes
and guarantees issued in exchange therefor in accordance with the registration
rights document entered into in connection with the issuance of the Senior
Notes and Senior Note Guarantees);


(c)           Indebtedness of any
Company under Hedging Agreements;


(d)           Indebtedness permitted
by Section 6.04(i);


(e)           To the extent recorded
in the Companies’ intercompany account ledgers, intercompany Indebtedness of
the Companies outstanding to the extent permitted by Section 6.04(d);


(f)            Indebtedness in
respect of Purchase Money Obligations and Capital Lease Obligations, and
refinancings or renewals thereof (other than refinancings funded with
intercompany advances), in an aggregate amount not to exceed the greater of (i)
$15 million or (ii) 1% of Consolidated Net Tangible Assets, in either case, at
any time outstanding;


(g)           Indebtedness incurred
by Foreign Subsidiaries and/or Non-Guarantor Subsidiaries in an aggregate
amount not to exceed $15 million at any time outstanding;


(h)           Indebtedness in respect
of workers’ compensation claims, self-insurance obligations, performance bonds,
surety appeal or similar bonds and completion guarantees provided by a Company
in the ordinary course of its business;


(i)            Contingent Obligations
of any Loan Party in respect of Indebtedness otherwise permitted under this Section
6.01;


(j)            Indebtedness arising
from the honoring by a bank or other financial institution of a check, draft or
similar instrument inadvertently (except in the case of daylight overdrafts)
drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness
is extinguished within five Business Days of incurrence;


(k)           Indebtedness of any
seller, the business, person or properties acquired in a Permitted Acquisition;


(l)            Indebtedness arising
in connection with endorsement of instruments for deposit in the ordinary
course of business;



 132
 









(m)          [Intentionally Omitted].


(n)           unsecured Indebtedness
of any Company in an aggregate amount not to exceed $100 million at any time
outstanding.


SECTION 6.02.    Liens.  Create, incur, assume or permit to exist,
directly or indirectly, any Lien on any property now owned or hereafter
acquired by it or on any income or revenues or rights in respect of any
thereof, except the following (collectively, the “Permitted Liens”):


(a)           inchoate Liens for
taxes, assessments or governmental charges or levies not yet due and payable or
delinquent and Liens for taxes, assessments or governmental charges or levies,
which (i) are being contested in good faith by appropriate proceedings for
which adequate reserves have been established in accordance with GAAP, which
proceedings (or orders entered in connection with such proceedings) have the effect
of preventing the forfeiture or sale of the property subject to any such Lien,
and (ii) in the case of any such charge or claim which has or may become a
Lien against any of the Collateral, such Lien and the contest thereof shall
satisfy the Contested Collateral Lien Conditions;


(b)           Liens in respect of
property of any Company imposed by Requirements of Law, and do not secure
Indebtedness for borrowed money, such as carriers’, warehousemen’s, materialmen’s,
landlords’, workmen’s, suppliers’, repairmen’s and mechanics’ Liens and other
similar Liens, and (i) which do not in the aggregate materially detract
from the value of the property of the Companies, taken as a whole, and do not
materially impair the use thereof in the operation of the business of the Companies,
taken as a whole, (ii) which, if they secure obligations that are then due
and unpaid, are being contested in good faith by appropriate proceedings for
which adequate reserves have been established in accordance with GAAP, which
proceedings (or orders entered in connection with such proceedings) have the
effect of preventing the forfeiture or sale of the property subject to any such
Lien, and (iii) in the case of any such Lien which has become a Lien
against any of the Collateral, such Lien and the contest thereof shall satisfy
the Contested Collateral Lien Conditions;


(c)           any Lien in existence
on the Original Closing Date and set forth on Schedule 6.02(c) to
the Original Credit Agreement and any Lien granted as a replacement or
substitute therefor; provided
that any such replacement or substitute Lien (i) except as permitted by Section
6.01(b) (ii)(A), does not secure an aggregate amount of Indebtedness, if
any, greater than that secured on the Closing Date and (ii) does not
encumber any property other than the property subject thereto on the Closing
Date (any such Lien, an “Existing Lien”);


(d)           easements,
rights-of-way, restrictions (including zoning restrictions), covenants,
licenses, encroachments, protrusions and other similar charges or encumbrances,
and minor title deficiencies on or with respect to any Real Property, in each
case whether now or hereafter in existence, not (i) securing Indebtedness,
(ii) individually or in the aggregate materially impairing the value or
marketability of such Real Property or (iii) individually or in the
aggregate materially interfering with the ordinary conduct of the business of
the Companies at such Real Property;



 133
 









(e)           Liens arising out of
judgments, attachments or awards not resulting in a Default and in respect of
which such Company shall in good faith be prosecuting an appeal or proceedings
for review in respect of which there shall be secured a subsisting stay of
execution pending such appeal or proceedings and, in the case of any such Lien
which has or may become a Lien against any of the Collateral, such Lien and the
contest thereof shall satisfy the Contested Collateral Lien Conditions;


(f)            Liens (other than any
Lien imposed by ERISA) (x) imposed by Requirements of Law or deposits made
in connection therewith in the ordinary course of business in connection with
workers’ compensation, unemployment insurance, social security and similar
legislation, (y) incurred in the ordinary course of business to secure the
performance of tenders, statutory obligations (other than excise taxes),
surety, stay, customs and appeal bonds, statutory bonds, bids, leases,
government contracts, trade contracts, performance and return of money bonds
and other similar obligations (exclusive of obligations for the payment of
borrowed money) or (z) arising by virtue of deposits made in the ordinary
course of business to secure liability for premiums to insurance carriers; provided that (i) with respect to
clauses (x), (y) and (z) of this paragraph (f), such Liens are for
amounts not yet due and payable or delinquent or, to the extent such amounts
are so due and payable, such amounts are being contested in good faith by
appropriate proceedings for which adequate reserves have been established in
accordance with GAAP, which proceedings or orders entered in connection with
such proceedings have the effect of preventing the forfeiture or sale of the
property subject to any such Lien, (ii) to the extent such Liens are not
imposed by Requirements of Law, such Liens shall in no event encumber any property
other than cash and Cash Equivalents, (iii) in the case of any such Lien
against any of the Collateral, such Lien and the contest thereof shall satisfy
the Contested Collateral Lien Conditions and (iv) the aggregate amount of
deposits at any time pursuant to clause (y) and clause (z) of this
paragraph (f) shall not exceed $250,000 in the aggregate;


(g)           Leases of the
properties of any Company, so long as such Leases are subordinate in all
respects to the Liens granted and evidenced by the Security Documents and do
not, individually or in the aggregate, (i) interfere in any material
respect with the ordinary conduct of the business of any Company or
(ii) materially impair the use (for its intended purposes) or the value of
the property subject thereto;


(h)           Liens arising out of
conditional sale, title retention, consignment or similar arrangements for the
sale of goods entered into by any Company in the ordinary course of business in
accordance with the past practices of such Company;


(i)            Liens securing
Indebtedness incurred pursuant to Section 6.01(f); provided that any such Liens attach only
to the property being financed pursuant to such Indebtedness and do not
encumber any other property of any Company;


(j)            bankers’ Liens, rights
of setoff and other similar Liens existing solely with respect to cash and Cash
Equivalents on deposit in one or more accounts maintained by any Company, in
each case granted in the ordinary course of business in favor of the bank or
banks with which such accounts are maintained, securing amounts owing to such
bank with respect to cash management and operating account arrangements,
including those involving pooled accounts and netting arrangements; provided that, unless such Liens are
non-consensual and arise by operation 



 134
 









of law, in no
case shall any such Liens secure (either directly or indirectly) the repayment
of any Indebtedness;


(k)           Liens on property of a
person existing at the time such person is acquired or merged with or into or
consolidated with any Company to the extent permitted hereunder (and not
created in anticipation or contemplation thereof); provided that such Liens do not extend to property not
subject to such Liens at the time of acquisition (other than improvements
thereon) and are no more favorable to the lienholders than such existing Lien;


(l)            Liens granted pursuant
to the Security Documents to secure the Secured Obligations;


(m)          licenses of Intellectual
Property granted by any Company in the ordinary course of business and not
interfering in any material respect with the ordinary conduct of business of
the Companies;


(n)           the filing of UCC
financing statements or PPSA financing statements or financing change
statements solely as a precautionary measure in connection with operating
leases or consignment of goods;


(o)           Liens securing
Indebtedness incurred pursuant to Section 6.01(g); provided that (i) such Liens do not
extend to, or encumber, property which constitutes Collateral and
(ii) such Liens extend only to the property (or Equity Interests) of the
Foreign Subsidiary incurring such Indebtedness;


(p)           the existence of the “equal
and ratable” clause in the Senior Note Documents (but not any security
interests granted pursuant thereto); and


(q)           Liens with respect to
obligations that do not in the aggregate exceed $10 million at any time
outstanding;


provided, however,
that no consensual Liens shall be permitted to exist, directly or indirectly,
on any Securities Collateral, other than Liens granted pursuant to the Security
Documents or the Senior Note Documents. 
Furthermore, notwithstanding anything to the contrary contained herein
(including any provision for, reference to, or acknowledgement of, any Lien or
Permitted Lien), nothing herein and no approval by any Administrative Agent,
Collateral Agent or Lender of any Lien or Permitted Lien (whether such approval
is verbal or in writing) shall be construed as or deemed to constitute a
subordination by any Administrative Agent, Collateral Agent or Lender of any
Lien or vary any of the terms or priorities established by the Intercreditor
Agreement or other right or interest held by or for the benefit of any of them
in or to any Collateral of any of the Loan Parties or any part thereof in favor
of any Lien or Permitted Lien held by or for the benefit of any other person.


SECTION 6.03.    Sale and Leaseback
Transactions.  Enter into any Sale and Leaseback Transaction unless
it makes any mandatory prepayment required by Section 2.10.


SECTION 6.04.    Investment, Loan and
Advances.  Directly or indirectly,
lend money or credit (by way of guarantee or otherwise) or make advances to any
person, or purchase or 



 135
 









acquire any stock, bonds, notes, debentures or other
obligations or securities of, or any other interest in, or make any capital
contribution to, any other person, or purchase or own a futures contract or
otherwise become liable for the purchase or sale of currency or other
commodities at a future date in the nature of a futures contract (all of the
foregoing, collectively, “Investments”),
except that the following shall be permitted:


(a)           the Companies may
consummate the Transactions in accordance with the provisions of the
Transaction Documents;


(b)           Investments outstanding
on the Original Closing Date and identified on Schedule 6.04(b) to
the Original Credit Agreement;


(c)           the Companies may
(i) acquire and hold accounts receivables owing to any of them if created
or acquired in the ordinary course of business and payable or dischargeable in
accordance with customary terms, (ii) invest in, acquire and hold cash and
Cash Equivalents, (iii) endorse negotiable instruments held for collection
in the ordinary course of business or (iv) make lease, utility and other
similar deposits in the ordinary course of business;


(d)           any Borrowing Base
Guarantor (other than Holdings) may make intercompany loans and advances to any
other Borrowing Base Guarantor (other than Holdings) that is a Wholly Owned
Subsidiary; provided, that such loan shall simultaneously
be recorded on such Borrowing Base Guarantor’s ledgers as an intercompany loan,
evidenced by a promissory notes and shall be pledged (and delivered) by such
Borrowing Base Guarantor that is the lender of such intercompany loan as
Collateral pursuant to the Security Agreement, provided  further that (i) no Borrowing Base Guarantor
may make loans to any Foreign Subsidiary pursuant to this paragraph (d) unless
permitted under Section 6.01(g) and (ii) any loans made pursuant to this
paragraph (d) shall be subordinated to the obligations of the Borrowing Base
Guarantors pursuant to an intercompany note in substantially the form of Exhibit
P and may only be repaid in accordance with Section 6.09(b);


(e)           The Borrowers and the
Borrowing Base Guarantors may make loans and advances (including payroll,
travel and entertainment related advances) in the ordinary course of business
to their respective employees (other than any loans or advances to any director
or executive officer (or equivalent thereof) that would be in violation of
Section 402 of the Sarbanes-Oxley Act) so long as the aggregate principal
amount thereof at any time outstanding (determined without regard to any
write-downs or write-offs of such loans and advances) shall not exceed $1.0
million;


(f)            Any Borrower may enter
into Hedging Agreements to the extent permitted by Section 6.01(c);


(g)           The Borrowers and the
Borrowing Base Guarantors may sell or transfer amounts and acquire assets to
the extent permitted by Section 6.06;


(h)           loans and advances to
directors, employees and officers of the Borrowers and the Subsidiaries for bona fide business purposes and to
purchase Equity Interests of Holdings, in aggregate amount not to exceed $1.0
million at any time outstanding;



 136
 









(i)            Investments
(i) by any Company in any Borrower or any Subsidiary Guarantor,
(ii) by a Subsidiary Guarantor in another Subsidiary Guarantor and
(iii) by a Subsidiary that is not a Subsidiary Guarantor in any other
Subsidiary that is not a Subsidiary Guarantor; provided
that any Investment in the form of a loan or advance shall be evidenced by the
Intercompany Note and, in the case of a loan or advance by a Loan Party,
pledged by such Loan Party as Collateral pursuant to the Security Documents;


(j)            Investments in
securities of trade creditors or customers in the ordinary course of business
received upon foreclosure or pursuant to any plan of reorganization or
liquidation or similar arrangement upon the bankruptcy or insolvency of such
trade creditors or customers;


(k)           Investments made by any
Borrower or any Subsidiary as a result of consideration received in connection
with an Asset Sale made in compliance with Section 6.06;


(l)            other Investments in
an aggregate amount not to exceed $35 million at any time outstanding; and


(m)          An Investment shall be
deemed to be outstanding to the extent not returned in the same form as the original
Investment to any Borrower or any Subsidiary Guarantor.


SECTION 6.05.    Mergers and
Consolidations.  Wind up, liquidate
or dissolve its affairs or enter into any transaction of merger, amalgamation
or consolidation (or agree to do any of the foregoing at any future time),
except that the following shall be permitted:


(a)           the Transactions as
contemplated by the Transaction Documents;


(b)           Asset Sales in
compliance with Section 6.06;


(c)           acquisitions in
compliance with Section 6.07;


(d)           any Company may merge
or consolidate with or into any Borrower or any Subsidiary Guarantor (as long
as such Borrower is the surviving person in the case of any merger,
amalgamation or consolidation involving such Borrower and such Subsidiary
Guarantor is the surviving person and remains a Wholly Owned Subsidiary of
Holdings in any other case); provided
that the Lien on and security interest in such property granted or to be
granted in favor of the applicable Collateral Agents under the Security
Documents shall be maintained or created in accordance with the provisions of Section
5.11 or Section 5.12, as applicable; and


(e)           any Subsidiary may
dissolve, liquidate or wind up its affairs at any time; provided that such dissolution,
liquidation or winding up, as applicable, could not reasonably be expected to
have a Material Adverse Effect.


To the extent the Required Lenders waive the
provisions of this Section 6.05 with respect to the sale of any
Collateral, or any Collateral is sold as permitted by this Section 6.05,
such Collateral (unless sold to a Company) shall be sold, subject to the terms
of the Intercreditor Agreement, free and clear of the Liens created by the
Security Documents, and the Agents shall take all actions they deem appropriate
in order to effect the foregoing.



 137
 









SECTION 6.06.    Asset Sales.  Effect any Asset Sale, or agree to effect any
Asset Sale, except that the following shall be permitted:


(a)           disposition of used,
worn out, obsolete or surplus property by any Company in the ordinary course of
business and the abandonment or other disposition of Intellectual Property that
is, in the reasonable judgment of the Borrowers, no longer economically
practicable to maintain or useful in the conduct of the business of the
Companies taken as a whole;


(b)           Asset Sales (other than
Sale and Leaseback Transactions); provided
that the aggregate consideration received in respect of all Asset Sales (other
than Sale and Leaseback Transactions) pursuant to this clause (b) shall
not exceed $100 million in any four consecutive fiscal quarters of the
Borrowers;


(c)           dispositions as part of
Sale and Leaseback Transactions with respect to any Store, distribution center
or corporate office building constructed or owned by US Borrowers or any of
their Subsidiaries;


(d)           leases and subleases of
real or personal property in the ordinary course of business and in accordance
with the applicable Security Documents;


(e)           the Transactions as
contemplated by the Transaction Documents;


(f)            mergers, amalgamations
and consolidations in compliance with Section 6.05; and


(g)           Investments in
compliance with Section 6.04.


To the extent the Required Lenders waive the
provisions of this Section 6.06 with respect to the sale of any
Collateral, or any Collateral is sold as permitted by this Section 6.06,
such Collateral (unless sold to a Company) shall be sold free and clear of the
Liens created by the Security Documents, and the Agents shall take all actions
they deem appropriate in order to effect the foregoing.


SECTION 6.07.    Acquisitions.  Purchase or otherwise acquire (in one or a
series of related transactions) any part of the property (whether tangible or
intangible) of any person (or agree to do any of the foregoing at any future
time), except that the following shall be permitted:


(a)           Capital Expenditures by
the Borrowers and the Subsidiaries;


(b)           purchases and other
acquisitions of inventory, materials, equipment and intangible property in the
ordinary course of business;


(c)           Investments in
compliance with Section 6.04;


(d)           leases or subleases of
real or personal property in the ordinary course of business and in accordance
with the applicable Security Documents;


(e)           the Transactions as
contemplated by the Transaction Documents;



 138
 









(f)            Permitted
Acquisitions; and


(g)           Mergers, amalgamations
and consolidations in compliance with Section 6.05;


provided that the
Lien on and security interest in such property granted or to be granted in
favor of the applicable Collateral Agents under the Security Documents shall be
maintained or created in accordance with the provisions of Section 5.11
or Section 5.12, as applicable.


SECTION 6.08.    Dividends.  Authorize, declare or pay, directly or
indirectly, any Dividends with respect to any Company, except that the
following shall be permitted:


(a)           Dividends by any
Company to any Borrower or any Guarantor that is a Wholly Owned Subsidiary of
any Borrower;


(b)           so long as no Default
shall then exist or would arise therefrom, payments to Holdings to permit
Holdings, and the subsequent use of such payments by Holdings, to repurchase or
redeem Qualified Capital Stock of Holdings held by officers, directors or
employees or former officers, directors or employees (or their transferees,
estates or beneficiaries under their estates) of any Company, upon their death,
disability, retirement, severance or termination of employment or service; provided that the aggregate cash
consideration paid for all such redemptions and payments shall not exceed $2.5
million, in any fiscal year, (and up to 100% of such $2.5 million not used in
any fiscal year may be carried forward to the next succeeding (but no other)
fiscal year);


(c)           so long as no Default
shall then exist or would arise therefrom, (A) to the extent actually used by
Holdings to pay such taxes, costs and expenses, payments by any Borrower to or
on behalf of Holdings in an amount sufficient to pay franchise taxes and other
fees required to maintain the legal existence of Holdings and (B) payments
by any Borrower to or on behalf of Holdings in an amount sufficient to pay
out-of-pocket legal, accounting and filing costs and other expenses in the
nature of overhead in the ordinary course of business of Holdings, in the case
of clauses (A) and (B) in an aggregate amount not to exceed $5 million in
any fiscal year;


(d)           Permitted Tax
Distributions, so long as Holdings uses such distributions to pay its taxes;
and


(e)           payments to Holdings by
any Company to permit distributions by Holdings, and the subsequent use of such
payments by Holdings to make distributions, in an aggregate amount not
exceeding the sum of 50% of Consolidated Net Income for the period from October
2, 2005 to the end of the most recent fiscal quarter for which financial
statements are available plus 100% of the Net Cash Proceeds of Equity Issuances
after the Original Closing Date (to the extent not used for Permitted
Acquisitions), so long as at the time of such distribution (i) Administrative
Borrower has given five (5) Business Days written notice to Administrative
Agents of its intention to make such distribution, which notice shall specify
the amount of such distribution, (ii) no Triggering Event has occurred and is
continuing and (iii) Excess Availability, after giving effect to such
distribution, shall be greater than $90 million.


SECTION 6.09.    Transactions with
Affiliates.  Enter into, directly or
indirectly, any transaction or series of related transactions, whether or not
in the ordinary course of business, 



 139
 









with any Affiliate of any Company (other than between
or among one or both Borrowers and one or more Subsidiary Guarantors), other
than on terms and conditions at least as favorable to such Company as would
reasonably be obtained by such Company at that time in a comparable arm’s-length
transaction with a person other than an Affiliate, except that the following
shall be permitted:


(a)           Dividends permitted by Section
6.08;


(b)           Investments permitted
by Section 6.04(h) and Section 6.04(i);


(c)           reasonable and
customary director, officer and employee compensation (including bonuses) and
other benefits (including retirement, health, stock option and other benefit
plans) and indemnification arrangements, which in the case of director and
executive officer compensation is approved by the Board of Directors of
Borrower;


(d)           transactions with
customers, clients, suppliers, joint venture partners or purchasers or sellers
of goods and services, in each case in the ordinary course of business and
otherwise not prohibited by the Loan Documents;


(e)           so long as no Default
exists, (i) the payment of regular management fees to Sponsor in the amounts
and at the times specified in the Management Services Agreement, as in effect
on the Original Closing Date or as thereafter amended or replaced in any
manner, that, taken as a whole, is not more adverse to the interests of the
Lenders in any material respect than such agreement as it was in effect on the
Original Closing Date; provided
that payments under this clause (e)(i) shall in any event not exceed $2.0
million per fiscal year plus out of pocket expenses and (ii) the payment of the
“Transaction Fee” as defined in the Management Services Agreement;


(f)            the existence of, and
the performance by any Loan Party of its obligations under the terms of, any
limited liability company, limited partnership or other Organizational Document
or securityholders agreement (including any registration rights agreement or
purchase agreement related thereto) to which it is a party on the Original
Closing Date and which has been disclosed to the Lenders as in effect on the
Original Closing Date, and similar agreements that it may enter into
thereafter; provided, however,
that the existence of, or the performance by any Loan Party of obligations
under, any amendment to any such existing agreement or any such similar
agreement entered into after the Original Closing Date shall only be permitted
by this Section 6.09(f) to the extent not more adverse to the interest
of the Lenders in any material respect, when taken as a whole, than any of such
documents and agreements as in effect on the Original Closing Date;


(g)           sales of Qualified
Capital Stock of Holdings to Affiliates of the Borrowers not otherwise
prohibited by the Loan Documents and the granting of registration and other
customary rights in connection therewith;


(h)           any transaction with an
Affiliate where the only consideration paid by any Loan Party is Qualified
Capital Stock of Holdings; and


(i)            the Transactions as
contemplated by the Transaction Documents.



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SECTION 6.10.    Financial Covenants.


(a)           Maximum Total
Leverage Ratio.  At any time when the
Excess Availability does not exceed $70,000,000, permit the Total Leverage
Ratio during the applicable Test Period set forth in the table below, to exceed
the ratio set forth opposite such period in the table below:


	
  Test Period Ending on the
  Following Dates

  	
   

  	
  Leverage Ratio

  
	
  March 31, 2006

  	
   

  	
  5.05 to 1.00

  
	
  June 30, 2006

  	
   

  	
  5.50 to 1.00

  
	
  September 30,
  2006

  	
   

  	
  5.10 to 1.00

  
	
  December 31,
  2006

  	
   

  	
  4.80 to 1.00

  
	
  March 31, 2007

  	
   

  	
  4.75 to 1.00

  
	
  June 30, 2007

  	
   

  	
  4.75 to 1.00

  
	
  September 30,
  2007

  	
   

  	
  4.50 to 1.00

  
	
  December 31,
  2007

  	
   

  	
  4.50 to 1.00

  
	
  March 31, 2008

  	
   

  	
  4.50 to 1.00

  
	
  June 30, 2008

  	
   

  	
  4.50 to 1.00

  
	
  September 30,
  2008

  	
   

  	
  4.25 to 1.00

  
	
  December 31,
  2008

  	
   

  	
  4.00 to 1.00

  
	
  March 31, 2009

  	
   

  	
  4.00 to 1.00

  
	
  June 30, 2009

  	
   

  	
  4.00 to 1.00

  
	
  September 30,
  2009

  	
   

  	
  3.75 to 1.00

  
	
  December 31,
  2009

  	
   

  	
  3.50 to 1.00

  
	
  March 31, 2010

  	
   

  	
  3.50 to 1.00

  
	
  June 30, 2010

  	
   

  	
  3.50 to 1.00

  
	
  September 30,
  2010

  	
   

  	
  3.25 to 1.00

  
	
  December 31,
  2010 and thereafter

  	
   

  	
  3.00 to 1.00

  



 



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(b)           Minimum Fixed Charge
Coverage Ratio.  At any time when the
Excess Availability does not exceed $70,000,000, permit the Consolidated Fixed
Charge Coverage Ratio during the applicable Test Period set forth in the table
below, to be less than the ratio set forth opposite such period in the table
below:


	
  

  Test Period Ending on the Following Dates

  	
   

  	
  Fixed Charge

  Coverage Ratio

  
	
  March 31, 2006
  through and including December 31, 2007

  	
   

  	
  1.0 to 1.0

  
	
  March 31, 2008
  and thereafter

  	
   

  	
  1.1 to 1.0

  



 


SECTION 6.11.    Prepayments of Other
Indebtedness; Modifications of Organizational Documents and Other Documents,
etc.  Directly or indirectly:


(a)           make (or give any
notice in respect thereof) any voluntary or optional payment or prepayment on
or redemption or acquisition for value of, or any prepayment or redemption as a
result of any asset sale, change of control or similar event of, any
Indebtedness outstanding under the Senior Notes unless (i) the Administrative
Borrower shall have given the Administrative Agents five (5) Business Day’s
prior written notice of its intention to make such payment or prepayment, which
notice shall specify the amount of such payment or prepayment, (ii) no
Triggering Event has occurred and is continuing and (ii) Excess Availability,
after giving effect to such payment or prepayment, shall be greater than $90
million;


(b)           amend or modify, or
permit the amendment or modification of, any provision of any Transaction
Document in any manner that is adverse in any material respect to the interests
of the Lenders; or


(c)           terminate, amend,
modify (including electing to treat any Pledged Interests (as defined in the
Security Agreement) as a “security” under Section 8-103 of the UCC or under the
PPSA) or change any of its Organizational Documents (including by the filing or
modification of any certificate of designation) or any agreement to which it is
a party with respect to its Equity Interests (including any stockholders’
agreement), or enter into any new agreement with respect to its Equity
Interests, other than any such amendments, modifications or changes or such new
agreements which are not adverse in any material respect to the interests of
the Lenders; provided that
Holdings may issue such Equity Interests, so long as such issuance is not
prohibited by Section 6.13 or any other provision of this Agreement, and
may amend its Organizational Documents to authorize any such Equity Interests.


SECTION 6.12.    Limitation on Certain
Restrictions on Subsidiaries. 
Directly or indirectly, create or otherwise cause or suffer to exist or
become effective any encumbrance or restriction on the ability of any
Subsidiary to (a) pay dividends or make any other distributions on its
capital stock or any other interest or participation in its profits owned by
the Borrowers or



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any Subsidiary, or pay any Indebtedness owed to the
Borrowers or a Subsidiary, (b) make loans or advances to the Borrowers or
any Subsidiary or (c) transfer any of its properties to the Borrowers or
any Subsidiary, except for such encumbrances or restrictions existing under or
by reason of (i) applicable Requirements of Law; (ii) this Agreement
and the other Loan Documents; (iii) the Senior Note Documents, as in
effect on the Original Closing Date; (iv) customary provisions restricting
subletting or assignment of any lease governing a leasehold interest of a
Subsidiary; (v) customary provisions restricting assignment of any
agreement entered into by a Subsidiary in the ordinary course of business;
(vi) any holder of a Lien permitted by Section 6.02 restricting the
transfer of the property subject thereto; (vii) customary restrictions and
conditions contained in any agreement relating to the sale of any property
permitted under Section 6.06 pending the consummation of such sale;
(viii) any agreement in effect at the time such Subsidiary becomes a
Subsidiary of the Borrowers, so long as such agreement was not entered into in
connection with or in contemplation of such person becoming a Subsidiary of the
Borrowers; (ix) without affecting the Loan Parties’ obligations under Section
5.11, customary provisions in partnership agreements, limited liability
company organizational governance documents, asset sale and stock sale
agreements and other similar agreements entered into in the ordinary course of
business that restrict the transfer of ownership interests in such partnership,
limited liability company or similar person; (x) restrictions on cash or other
deposits or net worth imposed by suppliers or landlords under contracts entered
into in the ordinary course of business; (xi) any instrument governing
Indebtedness assumed in connection with any Permitted Acquisition, which
encumbrance or restriction is not applicable to any person, or the properties
or assets of any person, other than the person or the properties or assets of
the person so acquired; (xii) in the case of any joint venture which is
not a Loan Party in respect of any matters referred to in clauses (b) and
(c) above, restrictions in such person’s Organizational Documents or pursuant
to any joint venture agreement or stockholders agreements solely to the extent
of the Equity Interests of or property held in the subject joint venture or
other entity; or (xiii) any encumbrances or restrictions imposed by any
amendments or refinancings that are otherwise permitted by the Loan Documents
or the contracts, instruments or obligations referred to in clauses (iii)
or (viii) above; provided that
such amendments or refinancings are no more materially restrictive with respect
to such encumbrances and restrictions than those prior to such amendment or
refinancing.


SECTION
6.13.    Limitation
on Issuance of Capital Stock.


(a)           With respect to
Holdings, issue any Equity Interest that is not Qualified Capital Stock.


(b)           With respect to the
Borrowers or any Subsidiary, issue any Equity Interest (including by way of
sales of treasury stock) or any options or warrants to purchase, or securities
convertible into, any Equity Interest, except (i) for stock splits, stock
dividends and additional issuances of Equity Interests which do not decrease
the aggregate percentage ownership of the Borrowers and their Subsidiaries in
any class of the Equity Interest of any other Subsidiary;
(ii) Subsidiaries of the Borrowers formed after the Closing Date in
accordance with Section 6.14 may issue Equity Interests to Borrower or
the Subsidiary of the Borrowers which is to own such Equity Interests; and
(iii) the Borrowers may issue common stock that is Qualified Capital Stock
to Holdings.  All Equity Interests issued
in accordance with this Section 6.13(b) shall, to the 



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extent
required by Section 5.11 and Section 5.12 or any Security
Agreement, be delivered to the applicable Collateral Agent for pledge pursuant
to the applicable Security Agreement.


SECTION 6.14.    Limitation on Creation
of Subsidiaries.  Establish, create
or acquire any additional Subsidiaries without the prior written consent of the
Required Lenders; provided that,
without such consent, the Borrowers may (i) establish or create one or
more Wholly Owned Subsidiaries of the Borrowers, (ii) establish, create or
acquire one or more Subsidiaries in connection with an Investment made pursuant
to Section 6.04(i), or (iii) acquire one or more Subsidiaries in
connection with a Permitted Acquisition, so long as, in each case, Section
5.11(b) shall be complied with.


SECTION 6.15.    Business.


(a)           With respect to
Holdings, engage in any business activities or have any properties or
liabilities, other than (i) its ownership of the Equity Interests of the
Borrowers, (ii) obligations under the Loan Documents and the Senior Note
Documents and (iii) activities and properties incidental to the foregoing
clauses (i) and (ii).


(b)           With respect to the
Borrowers and the Subsidiaries, engage (directly or indirectly) in any business
other than those businesses in which the Borrowers and its Subsidiaries are
engaged on the Original Closing Date as described in the Confidential
Information Memorandum (or, in the good faith judgment of the Board of
Directors, which are substantially related thereto or are reasonable extensions
thereof).


SECTION 6.16.    Limitation on
Accounting Changes.  Make or permit
any change in accounting policies or reporting practices, without the consent
of the Required Lenders, which consent shall not be unreasonably withheld,
except changes that are required by GAAP.


SECTION 6.17.    Fiscal Year.  Change its fiscal year-end more than one time
prior to the Revolving Maturity Date (provided that, Administrative Borrower
shall provide the Administrative Agents with forty-five (45) day’s advance
written notice of such change).


SECTION 6.18.    No Further Negative
Pledge.  Enter into any agreement,
instrument, deed or lease which prohibits or limits the ability of any Loan
Party to create, incur, assume or suffer to exist any Lien upon any of their
respective properties or revenues, whether now owned or hereafter acquired, or
which requires the grant of any security for an obligation if security is
granted for another obligation, except the following:  (1) this Agreement and the other Loan
Documents; (2) covenants in documents creating Liens permitted by Section
6.02 prohibiting further Liens on the properties encumbered thereby;
(3) the Senior Note Documents, as in effect on the Original Closing Date;
(4) any other agreement that does not restrict in any manner (directly or
indirectly) Liens created pursuant to the Loan Documents on any Collateral
securing the Secured Obligations and does not require the direct or indirect
granting of any Lien securing any Indebtedness or other obligation by virtue of
the granting of Liens on or pledge of property of any Loan Party to secure the
Secured Obligations; and (5) any prohibition or limitation that
(a) exists pursuant to applicable Requirements of Law, (b) consists
of customary restrictions and conditions contained in any agreement relating to
the sale of any property permitted under Section 6.06 pending the
consummation of such sale, (c) restricts subletting or assignment of any 



 144
 









lease governing a leasehold interest of the Borrowers
or a Subsidiary, (d) exists in any agreement in effect at the time such
Subsidiary becomes a Subsidiary of the Borrowers, so long as such agreement was
not entered into in contemplation of such person becoming a Subsidiary or
(e) is imposed by any amendments or refinancings that are otherwise
permitted by the Loan Documents of the contracts, instruments or obligations
referred to in clause (3) or (5)(d); provided
that such amendments and refinancings are no more materially restrictive with
respect to such prohibitions and limitations than those prior to such amendment
or refinancing.


SECTION
6.19.    Anti-Terrorism
Law; Anti-Money Laundering.


(a)           Directly or indirectly,
(i) knowingly conduct any business or engage in making or receiving any
contribution of funds, goods or services to or for the benefit of any person
described in Section 3.22, (ii) knowingly deal in, or otherwise
engage in any transaction relating to, any property or interests in property
blocked pursuant to the Executive Order or any other Anti-Terrorism Law, or
(iii) knowingly engage in or conspire to engage in any transaction that
evades or avoids, or has the purpose of evading or avoiding, or attempts to
violate, any of the prohibitions set forth in any Anti-Terrorism Law (and the
Loan Parties shall deliver to the Lenders any certification or other evidence
requested from time to time by any Lender in its reasonable discretion,
confirming the Loan Parties’ compliance with this Section 6.19).


(b)           Cause or permit any of
the funds of such Loan Party that are used to repay the Loans to be derived
from any unlawful activity with the result that the making of the Loans would
be in violation of any Requirement of Law.


SECTION 6.20.    Embargoed Person.  Cause or permit (a) any of the funds or
properties of the Loan Parties that are used to repay the Loans to constitute
property of, or be beneficially owned directly or indirectly by, any person
subject to sanctions or trade restrictions under United States law (“Embargoed Person” or “Embargoed Persons”) that is identified on
(1) the “List of Specially Designated Nationals and Blocked Persons”
maintained by OFAC and/or on any other similar list maintained by OFAC pursuant
to any authorizing statute including, but not limited to, the International
Emergency Economic Powers Act, 50 U.S.C. §§ 1701 et seq., The Trading with the Enemy Act,
50 U.S.C. App. 1 et seq., and any
Executive Order or Requirement of Law promulgated thereunder or that is named
as a “listed person” or “listed entity” or any other similar lists made under
any Anti-Terrorism Laws, with the result that the investment in the Loan
Parties (whether directly or indirectly) is prohibited by a Requirement of Law,
or the Loans made by the Lenders would be in violation of a Requirement of Law,
or (2) the Executive Order, any related enabling legislation or any other
similar Executive Orders or (b) any Embargoed Person to have any direct or
indirect interest, of any nature whatsoever in the Loan Parties, with the
result that the investment in the Loan Parties (whether directly or indirectly)
is prohibited by a Requirement of Law or the Loans are in violation of a
Requirement of Law.


ARTICLE
VII.



GUARANTEE


SECTION 7.01.    The Guarantee.  The Guarantors (other than the Canadian
Guarantors which have executed and delivered the Canadian Guaranty) and each US
Borrower hereby 



 145
 









jointly and severally guarantee, as a primary obligor
and not as a surety to each Secured Party and their respective successors and
assigns, the prompt payment in full when due (whether at stated maturity, by
required prepayment, declaration, demand, by acceleration or otherwise) of the
principal of and interest (including any interest, fees, costs or charges that
would accrue but for the provisions of the Title 11 of the United States Code
after any bankruptcy or insolvency petition under Title 11 of the United States
Code or the provisions of any Insolvency Law) on the Loans made by the Lenders
to, and the Notes held by each Lender of, the Borrowers, and all other Secured
Obligations from time to time owing to the Secured Parties by any Loan Party
under any Loan Document or any Hedging Agreement entered into with a
counterparty that is a Secured Party, in each case strictly in accordance with
the terms thereof (such obligations being herein collectively called the “Guaranteed Obligations”).  The Guarantors (other than the Canadian
Guarantors) and each US Borrower hereby jointly and severally agree that if the
Borrowers or other Guarantor(s) shall fail to pay in full when due (whether at
stated maturity, by acceleration or otherwise) any of the Guaranteed
Obligations, such Guarantors and each US Borrower will promptly pay the same in
cash, without any demand or notice whatsoever, and that in the case of any
extension of time of payment or renewal of any of the Guaranteed Obligations,
the same will be promptly paid in full when due (whether at extended maturity,
by acceleration or otherwise) in accordance with the terms of such extension or
renewal.


SECTION 7.02.    Obligations
Unconditional.  The obligations of
the Guarantors and each US Borrower under Section 7.01 shall constitute
a guaranty of payment and to the fullest extent permitted by applicable
Requirements of Law, are absolute, irrevocable and unconditional, joint and
several, irrespective of the value, genuineness, validity, regularity or
enforceability of the Guaranteed Obligations of the Borrowers under this
Agreement, the Notes, if any, or any other agreement or instrument referred to
herein or therein, or any substitution, release or exchange of any other
guarantee of or security for any of the Guaranteed Obligations, and,
irrespective of any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a surety, Guarantor or
US Borrower (except for payment in full). 
Without limiting the generality of the foregoing, it is agreed that the
occurrence of any one or more of the following shall not alter or impair the
liability of such Guarantors and each US Borrower hereunder which shall remain
absolute, irrevocable and unconditional under any and all circumstances as
described above:


(i)               at any time or from
time to time, without notice to the Guarantors or US Borrowers, the time for
any performance of or compliance with any of the Guaranteed Obligations shall
be extended, or such performance or compliance shall be waived;


(ii)              any of the acts
mentioned in any of the provisions of this Agreement or the Notes, if any, or
any other agreement or instrument referred to herein or therein shall be done
or omitted;


(iii)             the maturity of any
of the Guaranteed Obligations shall be accelerated, or any of the Guaranteed
Obligations shall be amended in any respect, or any right under the Loan
Documents or any other agreement or instrument referred to herein or therein
shall be amended or waived in any respect or any other guarantee of any of the
Guaranteed Obligations or any security therefor shall be released or exchanged
in whole or in part or otherwise dealt with;



 146
 









(iv)             any Lien or security
interest granted to, or in favor of, Issuing Bank or any Lender or Agent as
security for any of the Guaranteed Obligations shall fail to be perfected; or


(v)              the release of any
other Guarantor or US Borrower pursuant to Section 7.09 or otherwise.


The Guarantors (other than the Canadian Guarantors)
and each US Borrower hereby expressly waive diligence, presentment, demand of
payment, protest and all notices whatsoever, and any requirement that any
Secured Party exhaust any right, power or remedy or proceed against the
Borrowers under this Agreement or the Notes, if any, or any other agreement or
instrument referred to herein or therein, or against any other person under any
other guarantee of, or security for, any of the Guaranteed Obligations.  The Guarantors (other than the Canadian
Guarantors) and each US Borrower waive any and all notice of the creation,
renewal, extension, waiver, termination or accrual of any of the Guaranteed
Obligations and notice of or proof of reliance by any Secured Party upon this
Guarantee or acceptance of this Guarantee, and the Guaranteed Obligations, and
any of them, shall conclusively be deemed to have been created, contracted or
incurred in reliance upon this Guarantee, and all dealings between the
Borrowers and the Secured Parties shall likewise be conclusively presumed to
have been had or consummated in reliance upon this Guarantee.  This Guarantee shall be construed as a
continuing, absolute, irrevocable and unconditional guarantee of payment
without regard to any right of offset with respect to the Guaranteed
Obligations at any time or from time to time held by Secured Parties, and the
obligations and liabilities of the Guarantors hereunder shall not be
conditioned or contingent upon the pursuit by the Secured Parties or any other
person at any time of any right or remedy against the Borrowers or against any
other person which may be or become liable in respect of all or any part of the
Guaranteed Obligations or against any collateral security or guarantee therefor
or right of offset with respect thereto. 
This Guarantee shall remain in full force and effect and be binding in
accordance with and to the extent of its terms upon the Guarantors and the
successors and assigns thereof, and shall inure to the benefit of the Lenders,
and their respective successors and assigns, notwithstanding that from time to
time during the term of this Agreement there may be no Guaranteed Obligations
outstanding.


SECTION 7.03.    Reinstatement.  The obligations of the Guarantors under this Article
VII shall be automatically reinstated if and to the extent that for any
reason any payment by or on behalf of the Borrowers or other Loan Party in
respect of the Guaranteed Obligations is rescinded or must be otherwise
restored by any holder of any of the Guaranteed Obligations, whether as a
result of any proceedings in bankruptcy or reorganization or otherwise.  The Guarantors jointly and severally agree
that they will indemnify each Secured Party on demand for all reasonable costs
and expenses (including reasonable fees of counsel) incurred by such Secured
Party in connection with such rescission or restoration, including any such
costs and expenses incurred in defending against any claim alleging that such
payment constituted a preference, fraudulent transfer or similar payment under
any bankruptcy, insolvency or similar law, other than any costs or expenses
resulting from the bad faith or willful misconduct of such Secured Party.


SECTION 7.04.    Subrogation;
Subordination.  Each Guarantor hereby
agrees that until the indefeasible payment and satisfaction in full in cash of
all Guaranteed Obligations and the 



 147
 









expiration and termination of the Commitments of the
Lenders under this Agreement it shall waive any claim and shall not exercise
any right or remedy, direct or indirect, arising by reason of any performance
by it of its guarantee in Section 7.01, whether by subrogation or
otherwise, against the Borrowers or any other Guarantor of any of the
Guaranteed Obligations or any security for any of the Guaranteed
Obligations.  Any Indebtedness of any
Loan Party permitted pursuant to Section 6.01(d) shall be subordinated
to such Loan Party’s Secured Obligations in the manner set forth in the
Intercompany Note evidencing such Indebtedness.


SECTION 7.05.    Remedies.  Subject to the terms of the Intercreditor
Agreement, the Guarantors jointly and severally agree that, as between the
Guarantors and the Lenders, the obligations of the Borrowers under this
Agreement and the Notes, if any, may be declared to be forthwith due and
payable as provided in Section 8.01 (and shall be deemed to have become
automatically due and payable in the circumstances provided in Section 8.01)
for purposes of Section 7.01, notwithstanding any stay, injunction or
other prohibition preventing such declaration (or such obligations from
becoming automatically due and payable) as against the Borrowers and that, in
the event of such declaration (or such obligations being deemed to have become
automatically due and payable), such obligations (whether or not due and
payable by the Borrowers) shall forthwith become due and payable by the
Guarantors for purposes of Section 7.01.


SECTION 7.06.    Instrument for the
Payment of Money.  Each Guarantor
hereby acknowledges that the guarantee in this Article VII constitutes
an instrument for the payment of money, and consents and agrees that any Lender
or Agent, at its sole option, in the event of a dispute by such Guarantor in
the payment of any moneys due hereunder, shall have the right to bring a
motion-action under New York CPLR Section 3213.


SECTION 7.07.    Continuing Guarantee.  The guarantee in this Article VII is a
continuing guarantee of payment, and shall apply to all Guaranteed Obligations
whenever arising.


SECTION 7.08.    General Limitation on
Guarantee Obligations.  In any action
or proceeding involving any state corporate limited partnership or limited
liability company law, or any applicable state, provincial, federal or foreign
bankruptcy, insolvency, reorganization or other law affecting the rights of
creditors generally, if the obligations of any Guarantor under Section 7.01
would otherwise be held or determined to be void, voidable, invalid or
unenforceable, or subordinated to the claims of any other creditors, on account
of the amount of its liability under Section 7.01, then, notwithstanding
any other provision to the contrary, the amount of such liability shall,
without any further action by such Guarantor, any Loan Party or any other
person, be automatically limited and reduced to the highest amount that is
valid and enforceable and not subordinated to the claims of other creditors as
determined in such action or proceeding.


SECTION 7.09.    Release of Guarantors.  If, in compliance with the terms and
provisions of the Loan Documents, all or substantially all of the Equity
Interests or property of any Guarantor are sold or otherwise transferred (a “Transferred Guarantor”) to a person or
persons, none of which is a Borrower or a Subsidiary, such Transferred
Guarantor shall, upon the consummation of such sale or transfer, be released
from its obligations under this Agreement 



 148
 









(including under Section 11.03 hereof) and its
obligations to pledge and grant any Collateral owned by it pursuant to any
Security Document and, in the case of a sale of all or substantially all of the
Equity Interests of the Transferred Guarantor, the pledge of such Equity
Interests to the applicable Collateral Agents pursuant to the Security
Agreements shall be released, and the applicable Collateral Agents shall take
such actions as are necessary to effect each release described in this Section
7.09 in accordance with the relevant provisions of the Security Documents,
including the return of any certificates or securities in the possession of
such Collateral Agents; provided
that such Guarantor is also released from its obligations under the Senior Note
Documents, on the same terms.


ARTICLE
VIII.



EVENTS OF DEFAULT


SECTION 8.01.    Events of Default.  Upon the occurrence and during the
continuance of the following events (“Events
of Default”):


(a)           default shall be made
in the payment of any principal of any Loan or any Reimbursement Obligation
when and as the same shall become due and payable, whether at the due date
thereof or at a date fixed for prepayment (whether voluntary or mandatory)
thereof or by acceleration thereof or otherwise;


(b)           default shall be made
in the payment of any interest on any Loan or any Fee or any other amount
(other than an amount referred to in paragraph (a) above) due under any
Loan Document, when and as the same shall become due and payable, and such
default shall continue unremedied for a period of three Business Days;


(c)           any representation or
warranty made or deemed made in or in connection with any Loan Document or the
borrowings or issuances of Letters of Credit hereunder, or any representation,
warranty, statement or information contained in any report, certificate,
financial statement or other instrument furnished in connection with or
pursuant to any Loan Document, shall prove to have been false or misleading in
any material respect when so made, deemed made or furnished;


(d)           default shall be made
in the due observance or performance by any Company of any covenant, condition
or agreement contained in Section 5.02, Section 5.03(a) or Section
5.08 or in Article VI;


(e)           default shall be made
in the due observance or performance by any Company of any covenant, condition
or agreement contained in any Loan Document (other than those specified in
paragraphs (a), (b) or (d) immediately above) and such default shall
continue unremedied or shall not be waived for a period of 30 days after
written notice thereof from the Administrative Agents or any Lender to the
Borrowers;


(f)            any Company shall
(i) fail to pay any principal or interest, regardless of amount, due in
respect of any Indebtedness (other than the Obligations), when and as the same
shall become due and payable beyond any applicable grace period, or
(ii) fail to observe or perform 



 149
 









any other term, covenant, condition or agreement
contained in any agreement or instrument evidencing or governing any such
Indebtedness if the effect of any failure referred to in this clause (ii)
is to cause, or to permit the holder or holders of such Indebtedness or a
trustee or other representative on its or their behalf (with or without the
giving of notice, the lapse of time or both) to cause, such Indebtedness to
become due prior to its stated maturity or become subject to a mandatory offer
purchase by the obligor; provided
that it shall not constitute an Event of Default pursuant to this paragraph
(f) unless the aggregate amount of all such Indebtedness referred to in
clauses (i) and (ii) exceeds $5 million at any one time (provided that, in the case of Hedging
Obligations, the amount counted for this purpose shall be the amount payable by
all Companies if such Hedging Obligations were terminated at such time);


(g)           an involuntary
proceeding shall be commenced (including the filing of any notice of intention
in respect thereof) or an involuntary petition shall be filed in a court of
competent jurisdiction seeking (i) relief in respect of any Company or of
a substantial part of the property of any Company, under Title 11 of the U.S.
Code, as now constituted or hereafter amended, or any other Insolvency Law,
federal, state, provincial or foreign bankruptcy, insolvency, receivership or similar
law; (ii) the appointment of a receiver, interim receiver, receiver and
manager, liquidator, trustee, custodian, sequestrator, conservator or similar
official for any Company or for a substantial part of the property of any
Company; or (iii) the winding-up or liquidation of any Company; and such
proceeding or petition shall continue undismissed for 60 days or an order
or decree approving or ordering any of the foregoing shall be entered;


(h)           any Company shall
(i) voluntarily commence any proceeding or file any petition seeking
relief under Title 11 of the United States Code, as now constituted or
hereafter amended, or any other Insolvency Law, federal, state, provincial or
foreign bankruptcy, insolvency, receivership, incorporation law in any jurisdiction
or similar law; (ii) consent to the institution of, or fail to contest in
a timely and appropriate manner, any proceeding or the filing of any petition
described in clause (g) above; (iii) apply for or consent to the
appointment of a receiver, interim receiver, receiver and manager, liquidator,
trustee, custodian, sequestrator, conservator or similar official for any
Company or for a substantial part of the property of any Company;
(iv) file an answer admitting the material allegations of a petition filed
against it in any such proceeding; (v) make a general assignment for the
benefit of creditors; (vi) become unable, admit in writing its inability
or fail generally to pay its debts as they become due; (vii) take any
action for the purpose of effecting any of the foregoing; or (viii) wind
up or liquidate;


(i)            one or more judgments,
orders or decrees for the payment of money in an aggregate amount in excess of
$5 million shall be rendered against any Company or any combination thereof and
the same shall remain undischarged, unvacated or unbonded for a period of 30
consecutive days during which execution shall not be effectively stayed, or any
action shall be legally taken by a judgment creditor to levy upon properties of
any Company to enforce any such judgment;


(j)            one or more ERISA
Events or noncompliance with respect to Foreign Plans shall have occurred that,
in the reasonable opinion of the Required Lenders, when taken together with all
other such ERISA Events and noncompliance with respect to Foreign Plans, could
reasonably be expected to result in a Material Adverse Effect or in the
imposition of a Lien on any properties of a Company;



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(k)           any security interest
and Lien purported to be created by any Security Document shall cease to be in
full force and effect, or shall cease to give the applicable Collateral Agents
for the benefit of the applicable Secured Parties, the Liens, rights, powers
and privileges purported to be created and granted under such Security Document
(including a perfected first priority security interest in and Lien on all of
the Collateral thereunder (except as otherwise expressly provided in this
Agreement or such Security Document)) in favor of such Collateral Agents, or
shall be asserted by the Borrowers or any other Loan Party not to be a valid,
perfected, first priority (except as otherwise expressly provided in this
Agreement or such Security Document) security interest in or Lien on the
Collateral covered thereby;


(l)            any Loan Document or
any material provisions thereof shall at any time and for any reason be
declared by a court of competent jurisdiction to be null and void, or a
proceeding shall be commenced by any Loan Party or any other person, or by any
Governmental Authority, seeking to establish the invalidity or unenforceability
thereof (exclusive of questions of interpretation of any provision thereof), or
any Loan Party shall repudiate or deny any portion of its liability or
obligation for the Obligations;


(m)          there shall have
occurred a Change in Control;


(n)           any Company shall be
prohibited or otherwise restrained from conducting the business theretofore
conducted by it in any manner that has or could reasonably be expected to
result in a Material Adverse Effect by virtue of any determination, ruling,
decision, decree or order of any court or Governmental Authority of competent
jurisdiction;


then, and in
every such event (other than an event with respect to Holdings or any Borrower
described in paragraph (g) or (h) above), and at any time thereafter
during the continuance of such event, the Administrative Agents may, and at the
request of the Required Lenders shall, by notice to the Borrowers, take either
or both of the following actions, at the same or different times:  (i) terminate forthwith the Commitments
and (ii) declare the Loans and Reimbursement Obligations then outstanding
to be forthwith due and payable in whole or in part, whereupon the principal of
the Loans and Reimbursement Obligations so declared to be due and payable,
together with accrued interest thereon and any unpaid accrued Fees and all
other Obligations of the Borrowers accrued hereunder and under any other Loan
Document, shall become forthwith due and payable, without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived by the Borrowers and the Guarantors, anything contained herein or in any
other Loan Document to the contrary notwithstanding; and in any event, with
respect to Holdings or any Borrower described in paragraph (g) or (h)
above, the Commitments shall automatically terminate and the principal of the
Loans and Reimbursement Obligations then outstanding, together with accrued
interest thereon and any unpaid accrued Fees and all other Obligations of the
Borrowers accrued hereunder and under any other Loan Document, shall
automatically become due and payable, without presentment, demand, protest or
any other notice of any kind, all of which are hereby expressly waived by the
Borrowers and the Guarantors, anything contained herein or in any other Loan
Document to the contrary notwithstanding.


SECTION 8.02.    Rescission.  If at any time after termination of the
Commitments or acceleration of the maturity of the Loans, the Borrowers shall
pay all arrears of interest and all payments on account of principal of the
Loans and Reimbursement Obligations owing by it that 



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shall have become due otherwise than by acceleration
(with interest on principal and, to the extent permitted by law, on overdue
interest, at the rates specified herein) and all Defaults (other than
non-payment of principal of and accrued interest on the Loans due and payable
solely by virtue of acceleration) shall be remedied or waived pursuant Section
11.02, then upon the written consent of the Required Lenders and written
notice to Administrative Borrower, the termination of the Commitments or the
acceleration and their consequences may be rescinded and annulled; but such
action shall not affect any subsequent Default or impair any right or remedy
consequent thereon.  The provisions of
the preceding sentence are intended merely to bind the Lenders and the Issuing
Bank to a decision that may be made at the election of the Required Lenders,
and such provisions are not intended to benefit the Borrowers and do not give
the Borrowers the right to require the Lenders to rescind or annul any
acceleration hereunder, even if the conditions set forth herein are met.


SECTION 8.03.    Application of Proceeds.  Subject to the terms of the Intercreditor
Agreement, the proceeds received by the applicable Collateral Agents in respect
of any sale of, collection from or other realization upon all or any part of
the Collateral pursuant to the exercise by such Collateral Agents of their
remedies shall be applied, in full or in part, together with any other sums then
held by such Collateral Agents pursuant to this Agreement, promptly by such
Collateral Agents as follows:


(a)           First, to the payment of all reasonable
costs and expenses, fees, commissions and taxes of such sale, collection or
other realization including compensation to such Collateral Agents and their
agents and counsel, and all expenses, liabilities and advances made or incurred
by such Collateral Agents in connection therewith and all amounts for which
such Collateral Agents are entitled to indemnification pursuant to the
provisions of any Loan Document, together with interest on each such amount at
the highest rate then in effect under this Agreement from and after the date
such amount is due, owing or unpaid until paid in full;


(b)           Second, to the payment of all other
reasonable costs and expenses of such sale, collection or other realization
including compensation to the other Secured Parties and their agents and
counsel and all costs, liabilities and advances made or incurred by the other
Secured Parties in connection therewith, together with interest on each such
amount at the highest rate then in effect under this Agreement from and after
the date such amount is due, owing or unpaid until paid in full;


(c)           Third, without duplication of amounts
applied pursuant to clauses (a) and (b) above, to the indefeasible payment
in full in cash, pro rata, of
interest and other amounts constituting Obligations (other than principal,
Reimbursement Obligations and obligations of the type described in clause (d)
in the definition of “Obligations”) and any fees, premiums and scheduled
periodic payments due under Hedging Agreements constituting Secured Obligations
and any interest accrued thereon, in each case equally and ratably in
accordance with the respective amounts thereof then due and owing;


(d)           Fourth, to the indefeasible payment in
full in cash, pro rata, of
principal amount of the Obligations (including Reimbursement Obligations, but
excluding obligations of the type described in clause (d) in the definition of “Obligations”)
and any breakage, termination or other 



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payments under
Hedging Agreements constituting Secured Obligations and any interest accrued
thereon;


(e)           Fifth, to the indefeasible payment in full
in cash, pro rata, of obligations
of the type described in clause (d) in the definition of “Obligations”;


(f)            Sixth, the
balance, if any, to the person lawfully entitled thereto (including the
applicable Loan Party or its successors or assigns) or as a court of competent
jurisdiction may direct.


In the event that any such proceeds are insufficient
to pay in full the items described in clauses (a) through (d) of this Section
8.02, the Loan Parties shall remain liable, jointly and severally, for any
deficiency.  Each Loan Party acknowledges
the relative rights, priorities and agreements of the Senior Note Secured
Parties, as set forth in the Intercreditor Agreement and this Agreement,
including as set forth in this Section 8.03.


ARTICLE
IX.



COLLATERAL ACCOUNT; APPLICATION OF COLLATERAL PROCEEDS


Each Loan Party warrants, covenants and agrees with
each Lender that so long as this Agreement shall remain in effect and until the
Commitments have been terminated and the principal of and interest on each
Loan, all Fees and all other expenses or amounts payable under any Loan
Document shall have been paid in full and all Letters of Credit have been
canceled or have expired or been fully cash collateralized and all amounts
drawn thereunder have been reimbursed in full, unless Collateral Agents and
Administrative Agents or the Required Lenders shall otherwise consent in
writing:


SECTION 9.01.    Collateral Accounts.


(a)           The Borrowers and each
Borrowing Base Guarantor shall notify the Collateral Agents promptly of:  (i) any material delay in the
performance by the Borrowers or any Borrowing Base Guarantor of any of their
material obligations to any Account Debtor or the assertion of any material
claims, offsets, defenses or counterclaims by any Account Debtor, or any
material disputes with Account Debtors, or any settlement, adjustment or
compromise thereof, (ii) all material adverse information known to any
Loan Party relating to the financial condition of any Account Debtor and
(iii) any event or circumstance which, to any Loan Party’s knowledge,
would result in any Account no longer constituting an Eligible Account.  The Borrowers and each Borrowing Base
Guarantor hereby agree not to grant to any Account Debtor any credit, discount,
allowance or extension, or to enter into any agreement for any of the
foregoing, without the applicable Collateral Agents consent, except in the
ordinary course of business in accordance with practices and policies
previously disclosed in writing to the Collateral Agents.  So long as no Event of Default exists or has
occurred and is continuing, the Borrowers and each Borrowing Base Guarantor may
settle, adjust or compromise any claim, offset, counterclaim or dispute with
any Account Debtor.  At any time that an
Event of Default exists or has occurred and is continuing, the applicable
Collateral Agents shall, at their option, 



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have the
exclusive right to settle, adjust or compromise any claim, offset, counterclaim
or dispute with Account Debtors of any Loan Party or grant any credits,
discounts or allowances.


(b)           With respect to each
Account:  (i) the amounts shown on
any invoice delivered to Collateral Agents or schedule thereof delivered to
Collateral Agents shall be true and complete in all material respects,
(ii) no payments shall be made thereon except payments immediately
delivered to Collateral Agents pursuant to the terms of this Agreement or any
applicable Security Document (to the extent so required), (iii) there
shall be no setoffs, deductions, contras, defenses, counterclaims or disputes
existing or asserted with respect thereto except as reported to Collateral
Agents and promptly reflected in the reporting of the Borrowing Base, in
accordance with the terms of this Agreement, and (iv) none of the
transactions giving rise thereto will violate any applicable laws or
regulations, all documentation relating thereto will be legally sufficient
under such laws and regulations and all such documentation will be legally
enforceable in accordance with its terms.


(c)           Collateral Agents shall
have the right at any time or times, in Collateral Agents’ name or in the name
of a nominee of a Collateral Agent, to verify the validity, amount or any other
matter relating to any Account or other Collateral, by mail, telephone, e-mail,
facsimile transmission or otherwise.  To
facilitate the exercise of the right described in the immediately preceding
sentence, the Borrowers hereby agrees to provide Collateral Agents upon request
the name and address of each Account Debtor of the Borrowers and Borrowing Base
Guarantors.


SECTION 9.02.    Accounts; Cash
Management.


The Borrowers and each Guarantor shall
maintain a cash management system which is acceptable to the Administrative
Agents and the applicable Collateral Agents (the “Cash Management System”), which shall operate as follows:


(a)           All funds held by
Borrowers or any other Loan Party (other than funds being collected pursuant to
the provisions stated below) shall be deposited in one or more bank accounts or
securities investment accounts, in form and substance reasonably satisfactory
to applicable Collateral Agents subject to the terms of the Security Agreement
and applicable Control Agreements.


(b)           The Borrowers shall
establish and maintain, at their sole expense, and shall cause each Guarantor
to establish and maintain, at its sole expense blocked accounts or lockboxes
and related deposit accounts, which, on the Closing Date, shall consist of
accounts and related lockboxes maintained by the financial institutions as
described on Schedule 9.02 hereto (in each case, “Blocked Accounts”), as the applicable
Collateral Agent may specify, with such banks as are acceptable to the
applicable Collateral Agents into which the Borrowers and Guarantors shall
promptly deposit and direct their respective Account Debtors to directly remit
all payments on Accounts and all payments constituting proceeds of Inventory or
other Collateral (other than proceeds of a Casualty Event or an Asset Sale that
do not require a permanent repayment under Loan Documents) in the identical
form in which such payments are made, whether by cash, check or other manner
and shall be identified and segregated from all other funds of the Loan
Parties.  The Borrowers and Guarantors
shall deliver, or cause to be delivered, to the applicable Collateral Agents a
Control Agreement duly authorized, executed and delivered by each bank 



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where a
Blocked Account for the benefit of the Borrowers or any Guarantor is
maintained, and by each bank where any other deposit account is from time to
time maintained.  The Borrowers shall
further execute and deliver, and shall cause each Guarantor to execute and
deliver, such agreements and documents as the applicable Collateral Agents may
require in connection with such Blocked Accounts and such Control
Agreements.  The Borrowers and Guarantors
shall not establish any deposit accounts after the Closing Date, unless the
Borrowers or Guarantor (as applicable) have complied in full with the
provisions of this Section 9.01 with respect to such deposit
accounts.  Borrowers agree that from and
after the delivery of an Activation Notice (as defined below) all payments made
to such Blocked Accounts or other funds received and collected by the
applicable Collateral Agents or any Lender, whether in respect of the Accounts,
as proceeds of Inventory or other Collateral or otherwise shall be treated as
payments to the applicable Collateral Agents and Lenders in respect of the
Obligations and therefor shall constitute the property of such Collateral
Agents and Lenders to the extent of the then outstanding Obligations.


(c)           With respect to the
Blocked Accounts of US Borrowers and such Guarantors (other than Guarantors
organized under the laws of Canada) as the applicable Collateral Agents shall
determine in their sole discretion, the applicable bank maintaining such
Blocked Accounts shall agree to forward daily all amounts in each Blocked
Account to one of the Blocked Accounts designated as a concentration account in
the name of US Borrowers (the “US  Concentration Account”) at the bank that shall be designated
as the Concentration Account bank for US Borrowers (the “US Concentration Account Bank”),
which, on the Closing Date, shall be account #8900338261 maintained by The Bank
of New York (or other financial institution acceptable to the applicable
Collateral Agents); provided, however, that amounts in the Blocked Accounts
with numbers 2000028308229, 2000028308245, 2000028308261, 2000028308274,
2000028308258 and 2000028308232 maintained at Wachovia Bank, National
Association (the “US Tax Bank”) will be combined into account
#2000028308216 (the “Master Tax Account”) at Wachovia Bank, National
Association.  The US Concentration
Account Bank and US Tax Bank shall agree, from and after the receipt of a
notice (an “Activation Notice”)
from the applicable US Collateral Agent (which Activation Notice may or, upon
instruction of the Required Lenders, shall be given by such Collateral Agent at
any time from and after the occurrence of a Trigger Event which is continuing
at the time of such notice) pursuant to the applicable Control Agreement, to
forward daily all amounts in the US Concentration Account to the account
designated as collection account  (the “US  Collection Account”)
which shall be under the exclusive dominion and control of the US
Administrative Agent.


(d)           With respect to the
Blocked Accounts of Canadian Borrower and such Guarantors organized under the
laws of Canada as the applicable Collateral Agents shall determine in their
sole discretion, the applicable bank maintaining such Blocked Accounts shall
agree to forward daily all amounts in each Blocked Account to one of the
Blocked Accounts designated as a concentration accounts in the name of Canadian
Borrower (the “Canadian  Concentration Accounts” and together with the US
Concentration Account and Master Tax Account, the “Concentration Accounts”) at the bank that shall be designated
as the Concentration Account bank for Canadian Borrower (the “Canadian Concentration
Account Bank” and together with the US Concentration Account Bank,
the “Concentration Account Banks”),
which, on the Closing Date, shall be account nos. 1496-666 and 4688-785
maintained by The Bank of Montreal  (or
other financial institution acceptable to the applicable Collateral
Agents).  The 



 155
 









Canadian
Concentration Account Bank shall agree, from and after the receipt of a notice
an Activation Notice (which Activation Notice may or, upon instruction of the
Required Lenders, shall be given by such Collateral Agent at any time from and
after the occurrence of a Trigger Event which is continuing at the time of such
notice) pursuant to the applicable Control Agreement, to forward daily all
amounts in the Canadian Concentration Account to the account designated as
collection account (the “Canadian Collection Account” and together with the US Collection
Account, the “Collection Accounts”)
which shall be under the exclusive dominion and control of the Canadian
Administrative Agent.


(e)           With respect to the
Blocked Accounts of such Guarantors as the respective Collateral Agents shall
determine in their sole discretion, the applicable bank maintaining such
Blocked Accounts shall agree, from and after the receipt of an Activation
Notice (which Activation Notice may or, upon instruction of the Required
Lenders, shall be given by the applicable Collateral Agents at any time from
and after a Trigger Event), to forward all amounts in each Blocked Account to
the US Collection Account and/or Canadian Collection Account, as applicable,
and to commence the process of daily sweeps from such Blocked Account into the
applicable Collection Accounts.


(f)            Any provision of this Section
9.02 to the contrary notwithstanding, (A) Loan Parties may maintain
payroll accounts and trust accounts that are not a part of the Cash Management
System provided that no Loan Party shall accumulate or maintain cash in
such accounts as of any date of determination in excess of checks outstanding
against such accounts as of that date and amounts necessary to meet minimum
balance requirements and (B) Loan Parties may maintain local cash accounts that
are not a part of the Cash Management System which individually do not at any
time contain funds in excess of $500,000 and, together with all other such
local cash accounts, do not exceed $5 million.


(g)           (i)  The US Administrative Agent shall apply all
funds received in the US Collection Account on a daily basis to the repayment
of the Obligations of the US Borrowers and its US Subsidiaries to either, at
its option, (a) outstanding US Swingline Loans or (b) in accordance with any
instructions received under Section 2.10(g).  From and after the delivery of an Activation
Notice, unless Administrative Agents and Collateral Agents determine to release
such funds to Borrowers in accordance with the following sentence, US
Administrative Agent shall apply all such funds in the US Collection Account on
a daily basis to the repayment of (a) first, Fees and reimbursable
expenses of the US Administrative Agent and the US Collateral Agent then due
and payable; (b) second, to interest then due and payable on all Loans
(other than Canadian Revolving Loans), (c) third, Overadvances (other
than such Overadvances comprised of Canadian Revolving Loans), (d) fourth,
the Swingline Loans, (e) fifth, ABR Revolving Loans (other than Canadian
Revolving Loans), (f) sixth, Eurodollar Revolving Loans (other than
Canadian Revolving Loans), together with all accrued and unpaid interest
thereon (provided, however, payments on Eurodollar Revolving Loans with respect
to which the application of such payment would result in the payment of the
principal prior to the last day of the relevant Interest Period shall be
transferred to the Cash Collateral Account to be applied to the Eurodollar
Revolving Loans (other than Canadian Revolving Loans) on the last day of the
relevant Interest Period of such Eurodollar Revolving Loan or to the Obligations
of the US Borrowers and its Domestic Subsidiaries as they come due (whether at
stated maturity, by acceleration or otherwise)).  Notwithstanding the foregoing sentence, after
payment in full has been made of the 



 156
 









amounts
required under subsections (a)-(c) above, upon US Borrower’s request and as
long as no Default has occurred and is continuing and all other conditions
precedent to a Borrowing have been satisfied, any additional funds deposited in
the US Collection Account or Cash Collateral Account shall be released to US
Borrower.  In addition, if consented to
by the Administrative Agents, the Collateral Agents and the Required Lenders,
such funds in the US Collection Account or Cash Collateral Account may be released
to Borrowers.  Notwithstanding the above,
if the applicable Administrative Agent has declared the Loans and/or
Reimbursement Obligations then outstanding to be forthwith due and payable in
whole or in part pursuant to Section 8.01, the US Administrative Agent
shall apply all funds received in the Collection Account in accordance with Section
8.03.


(ii)  The
Canadian Administrative Agent shall apply all funds received in the Canadian
Collection Account on a daily basis to the repayment of the Canadian
Obligations to either, at its option, (a) outstanding Canadian Swingline Loans
or (b) in accordance with any instructions received under Section 2.10(g).  From and after the delivery of an Activation
Notice, unless Administrative Agents and Collateral Agents determine to release
such funds to Borrowers in accordance with the following sentence, Canadian
Administrative Agent shall apply all such funds in the Canadian Collection
Account on a daily basis to the repayment of 
(a) first, Fees and reimbursable expenses of the Canadian
Administrative Agent and the Canadian Collateral Agent then due and payable;
(b) second, to interest then due and payable on all Canadian Revolving
Loans, (c) third, Overadvances comprised of Canadian Revolving Loans,
(d) fourth, the Swingline Loans,  (e) fifth pro rata, Canadian Prime Rate Loans, and (f) sixth,
Bankers’ Acceptances in accordance with Section 2.03(xi).  Notwithstanding the foregoing sentence, after
payment in full has been made of the amounts required under subsections (a)-(c)
above, upon Canadian Borrower’s request and as long as no Default has occurred
and is continuing and all other conditions precedent to a Borrowing have been
satisfied, any additional funds deposited in the Canadian Collection Account or
Cash Collateral Account shall be released to Canadian Borrower.  In addition, if consented to by the
Administrative Agents, the Collateral Agents and the Required Lenders, such
funds in the Canadian Collection Account or Cash Collateral Account may be
released to Borrowers.  Notwithstanding
the above, if the applicable Administrative Agent has declared the Loans and/or
Reimbursement Obligations then outstanding to be forthwith due and payable in
whole or in part pursuant to Section 8.01, the Collateral Agents shall
apply all funds received in the Collection Account in accordance with Section
8.03.


(h)           The Borrowers and their
directors, employees, agents and other Affiliates and Borrowing Base Guarantors
shall promptly deposit or cause the same to be deposited, any monies, checks,
notes, drafts or any other payment relating to and/or proceeds of Accounts,
Inventory or other Collateral which come into their possession or under their
control in the applicable Blocked Accounts, or remit the same or cause the same
to be remitted, in kind, to the applicable Collateral Agents.  In no event shall the same be commingled with
Borrowers’ own funds.  US Borrowers
agrees to reimburse US Collateral Agents and Canadian Borrower agrees to
reimburse Canadian Collateral Agents, as applicable, on demand for any amounts
owed or paid to any bank at which a Blocked Account is established or any other
bank or person involved in the transfer of funds to or from the Blocked
Accounts arising out of such Collateral Agents’ payments to or indemnification
of such bank or person.



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SECTION 9.03.    Inventory.  With respect to the Inventory:  (a) the Borrowers and Borrowing Base
Guarantors shall at all times maintain records of Inventory reasonably
satisfactory to Collateral Agents, keeping correct and accurate records
itemizing and describing the kind, type, quality and quantity of Inventory, the
cost therefor and daily withdrawals therefrom and additions thereto;
(b) any of the Administrative Agents’ and Collateral Agents’ officers,
employees or agents shall have the right, at any time or times, in the name of
such Administrative Agent or Collateral Agent, as applicable, any designee of
the Administrative Agents, Collateral Agents or the Borrowers, to verify the
validity, amount or any other matter relating to Accounts or Inventory by mail,
telephone, electronic communication, personal inspection or otherwise and to
conduct field audits of the financial affairs and Collateral of the Loan
Parties, and the Borrowers shall cooperate fully with the Administrative Agents
and Collateral Agents in an effort to facilitate and promptly conclude any such
verification process; (c) the Loan Parties shall cooperate fully with the
Collateral Agents and their agents during all Collateral field audits and
Inventory Appraisals which shall be conducted, in each case, (i) by persons
acceptable to the Collateral Agents, (ii) at the expense of the Borrowers and
(iii) (A) (1) not more than once in any twelve (12) month period or (2)
following either (x) a time period when Excess Availability does not exceed
$90,000,000 or (y) a Trigger Event, more frequently at any Collateral Agent’s
reasonable request or (B) at such additional other times as Borrowers shall
reasonably determine; (d) neither the Borrowers nor any Borrowing Base
Guarantor shall sell Inventory to any customer on approval, or any other basis
which entitles the customer to return (except for the right of customers for
Inventory which is defective or non-conforming) or may obligate any Loan Party
to repurchase such Inventory; and (e) Borrowers and Borrowing Base
Guarantor shall keep the Inventory in good and marketable condition.


SECTION 9.04.    Borrowing Base-Related
Reports.  The Borrowers shall deliver
or cause to be delivered (at the expense of the Borrowers) to the Collateral
Agents and the Administrative Agents the following:


(a)           (i) in no event less
frequently than 30 days after the end of the month ending February 28, 2006 and
for each month thereafter through and including the month ending July 31, 2006
and (ii) in no event less frequently than 20 days after the end of the month
ending August 30, 2006 and for each month thereafter, a Borrowing Base
Certificate from the Borrowers accompanied by such supporting detail and
documentation as shall be requested by the applicable Collateral Agent in its
reasonable credit judgment, provided, that if at any time the Average Excess
Availability is less than $90 million and so long as Borrowers do not maintain
Average Excess Availability in excess of $90 million for a period of three (3)
consecutive fiscal months, Borrowers shall deliver additional weekly
roll-forward of Accounts and Inventory referenced in paragraph (b) below within
five (5) Business Days after the end of each calendar week, and, if requested
by the applicable Collateral Agents, a Borrowing Base Certificate (prepared
weekly to reflect results satisfactory to such Collateral Agents) within five
(5) Business Days after the end of each calendar week, or more frequent
Borrowing Base Certificates reflecting shorter periods as reasonably requested
by such Collateral Agents.  Each
Borrowing Base Certificate shall reflect all information through the end of the
appropriate period for Borrowers and each Borrowing Base Guarantor;


(b)           upon request by the
Collateral Agents, and in no event less frequently than 30 days after the end
of (i) each month, a monthly trial balance showing Accounts outstanding aged



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from statement
date as follows:  1 to 30 days, 31 to 60
days, 61 to 90 days and 91 days or more, accompanied by a comparison to the
prior month’s trial balance and such supporting detail and documentation as
shall be requested by the Collateral Agents in their reasonable credit judgment
and (ii) each month, a summary of Inventory by location and type accompanied by
such supporting detail and documentation as shall be requested by the
Collateral Agents in their reasonable credit judgment (in each case, together
with a copy of all or any part of such delivery requested by any Lender in
writing after the Closing Date);


(c)           on the date any
Borrowing Base Certificate is delivered pursuant to Section 9.04(a) or
at such more frequent intervals as the Collateral Agents may request from time
to time (together with a copy of all or any part of such delivery requested by
any Lender in writing after the Closing Date), (i) a copy of the ledger
registering the Borrowing Base Guarantor Intercompany Loan Amount as of the date
of the Borrowing Base Certificate and (ii) a collateral report with respect to
the Loan Parties, including all additions and reductions (cash and non-cash)
with respect to intercompany loan accounts of the Borrowers and Borrowing Base
Guarantors, accompanied by such supporting detail and documentation as shall be
requested by the Collateral Agents in their reasonable credit judgment;


(d)           at the time of delivery
of each of the financial statements delivered pursuant to Section 5.01(a)
and (b), a reconciliation of the Accounts trial balance and quarter-end
Inventory reports of the Borrowers and Borrowing Base Guarantors to the general
ledger of such Loan Party, in each case, accompanied by such supporting detail
and documentation as shall be requested by the Collateral Agents in their
reasonable credit judgment;


(e)           a list of any
applications for the registration of any patent, trademark or copyright with
the United States Patent and Trademark Office, the United States Copyright
Office or any similar office or agency which any Loan Party has filed in the
prior fiscal quarter; and


(f)            such other reports,
statements and reconciliations with respect to the Borrowing Base, Canadian
Borrowing Base or Collateral of any or all Loan Parties as the Collateral
Agents shall from time to time request in its reasonable credit judgment.


The delivery of each certificate and report or any
other information delivered pursuant to this Section 9.04 shall
constitute a representation and warranty by the Borrowers that the statements
and information contained therein are true and correct in all material respects
on and as of such date.


SECTION 9.05.    Rescission of
Activation Notice.  Notwithstanding
any of the provisions of Section 9.02, after Collateral Agents have
delivered an Activation Notice and upon delivery of a certificate (provided,
such certificate may not be delivered more than once in any 360 day period) by
a Financial Officer of the Borrowers to the Collateral Agents certifying that
(i) the Average Excess Availability has exceeded $70 million  for the previous fiscal quarter and (ii) no Default has
occurred or is continuing, the Collateral Agents shall rescind the Activation
Notice by written notice, as necessary, to the applicable Concentration Account
Banks and any such other banks to which Collateral Agents had issued such
Activation Notice and following such rescission the Cash Management System
shall be operated as if no such Activation Notice had been given.



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ARTICLE
X.



THE ADMINISTRATIVE AGENTS AND THE COLLATERAL AGENTS


SECTION
10.01.    Appointment
and Authority.  Each of the Lenders
and the Issuing Bank hereby irrevocably appoints UBS AG, Stamford Branch, to
act on its behalf as the US Administrative Agent and as US Collateral Agent
hereunder and under the other Loan Documents and authorizes such Agent to take
such actions on its behalf and to exercise such powers as are delegated to such
Agent by the terms hereof or thereof, together with such actions and powers as
are reasonably incidental thereto.  Each
of the Lenders and the Issuing Bank hereby irrevocably appoints UBS AG Canada
Branch, to act on its behalf as a Canadian Collateral Agent hereunder and under
the other Loan Documents and authorizes such Agent to take such actions on its
behalf and to exercise such powers as are delegated to such Agent by the terms
hereof or thereof, together with such actions and powers as are reasonably
incidental thereto.  Each of the Lenders
and the Issuing Bank hereby irrevocably appoints The Bank of New York, to act
on its behalf as the Senior Note Collateral Agent hereunder and under the other
Loan Documents and authorizes such Agent to take such actions on its behalf and
to exercise such powers as are delegated to such Agent by the terms hereof or
thereof, together with such actions and powers as are reasonably incidental
thereto.  Each of the Lenders and the
Issuing Bank hereby irrevocably appoints Wachovia Bank, National Association to
act on its behalf as a US Collateral Agent hereunder and under the other Loan
Documents and authorizes such Agent to take such actions on its behalf and to
exercise such powers as are delegated to such Agent by the terms hereof or
thereof, together with such actions and powers as are reasonably incidental
thereto.  Each of the Lenders and the
Issuing Bank hereby irrevocably appoints Wachovia Capital Finance Corporation
(Canada) to act on its behalf as Canadian Administrative Agent and as a
Canadian Collateral Agent hereunder and under the other Loan Documents and
authorizes such Agent to take such actions on its behalf and to exercise such
powers as are delegated to such Agent by the terms hereof or thereof, together
with such actions and powers as are reasonably incidental thereto.  The provisions of this Article are solely for
the benefit of the Administrative Agents, the Collateral Agents, the Lenders
and the Issuing Bank, and neither Borrowers nor any other Loan Party shall have
rights as a third party beneficiary of any of such provisions.


SECTION
10.02.    Rights as
a Lender.  Each person serving as an
Agent hereunder shall have the same rights and powers in its capacity as a
Lender as any other Lender and may exercise the same as though it were not an
Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly
indicated or unless the context otherwise requires, include each person serving
as an Agent hereunder in its individual capacity.  Such person and its Affiliates may accept
deposits from, lend money to, act as the financial advisor or in any other
advisory capacity for and generally engage in any kind of business with the
Borrowers or any Subsidiary or other Affiliate thereof as if such person were
not an Agent hereunder and without any duty to account therefor to the Lenders.



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SECTION 10.03.    Exculpatory Provisions.


(a)           No Agent shall have any
duties or obligations except those expressly set forth herein and in the other
Loan Documents.  Without limiting the
generality of the foregoing, no Agent:


(i)               shall be subject to
any fiduciary or other implied duties, regardless of whether a Default has
occurred and is continuing;


(ii)              shall have any duty
to take any discretionary action or exercise any discretionary powers, except
discretionary rights and powers expressly contemplated hereby or by the other
Loan Documents that such Agent is required to exercise as directed in writing
by the Required Lenders (or such other number or percentage of the Lenders as
shall be expressly provided for herein or in the other Loan Documents); provided that such Agent shall not be
required to take any action that, in its judgment or the judgment of its
counsel, may expose such Agent to liability or that is contrary to any Loan
Document or applicable Requirements of Law; and


(iii)             shall, except as
expressly set forth herein and in the other Loan Documents, have any duty to
disclose, and shall not be liable for the failure to disclose, any information
relating to the Borrowers or any of its Affiliates that is communicated to or
obtained by the person serving as such Agent or any of its Affiliates in any
capacity.


(b)           No Agent shall be
liable for any action taken or not taken by it (x) with the consent or at
the request of the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary, or as such Agent shall believe in good faith shall
be necessary, under the circumstances as provided in Section 11.02) or
(y) in the absence of its own gross negligence or willful misconduct.  No Agent shall be deemed to have knowledge of
any Default unless and until notice describing such Default is given to such
Agent by the Borrowers, a Lender or the Issuing Bank.


(c)           No Agent shall be
responsible for or have any duty to ascertain or inquire into (i) any
statement, warranty or representation made in or in connection with this
Agreement or any other Loan Document, (ii) the contents of any
certificate, report or other document delivered hereunder or thereunder or in
connection herewith or therewith, (iii) the performance or observance of
any of the covenants, agreements or other terms or conditions set forth herein
or therein or the occurrence of any Default, (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement, any other Loan
Document or any other agreement, instrument or document or (v) the
satisfaction of any condition set forth in Article IV or elsewhere
herein, other than to confirm receipt of items expressly required to be
delivered to such Agent.  Without
limiting the generality of the foregoing, the use of the term “agent” in this
Agreement with reference to the Administrative Agents or the Collateral Agents
is not intended to connote any fiduciary or other implied (or express)
obligations arising under agency doctrine of any applicable law.  Instead, such term us used merely as a matter
of market custom and is intended to create or reflect only an administrative
relationship between independent contracting parties.



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(d)           Canadian Administrative
Agent represents and warrants to the Canadian Borrower that on the Closing Date
and throughout the term of this Agreement:


(i)               it is not a “non-resident”
within the meaning of the ITA, or


(ii)              it is an “Authorized
Foreign Bank” within the meaning of the Bank
Act for purposes of the ITA and is entering into this agreement in
the ordinary course of its trade and business that is its “Canadian banking
business” for purposes of the ITA.


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


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


SECTION
10.06.    Resignation
of Agent.  Each Agent may at any time
give notice of its resignation to the Lenders, the Issuing Bank and the
Borrowers.  Upon receipt of any such
notice of resignation, the Required Lenders shall have the right, in
consultation with the Borrowers, to appoint a successor, which shall be a bank with
an office in the United States or in the case of a successor to the Canadian
Administrative Agent, a person which  (i)
(A) is not a “non-resident” within the meaning of the ITA, or (B) is an “Authorized
Foreign Bank” within the meaning of the Bank
Act for purposes of the ITA and which becomes a party hereunder in
the ordinary course of its trade and business that is its “Canadian banking
business” for purposes of the ITA and (ii) which has provided a representation
and warranty substantially in the form of that contained in Section 10.03(d),
or an Affiliate of any such bank with an office in the United States.  If no such successor shall have been so
appointed by the Required Lenders and shall have accepted such appointment
within 30 days after the retiring Agent gives notice of its 



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resignation, then the retiring Agent may on behalf of
the Lenders and the Issuing Bank, appoint a successor Agent meeting the
qualifications set forth above provided that if the Agent shall notify Borrower
and the Lenders that no qualifying person has accepted such appointment, then
such resignation shall nonetheless become effective in accordance with such
notice and (1) the retiring Agent shall be discharged from its duties and
obligations hereunder and under the other Loan Documents (except that in the case
of any collateral security held by such Agent on behalf of the Lenders or the
Issuing Bank under any of the Loan Documents, the retiring Agent shall continue
to hold such collateral security as nominee until such time as a successor
Collateral Agent is appointed) and (2) all payments, communications and
determinations provided to be made by, to or through an Agent shall instead be
made by or to each Lender and the Issuing Bank directly, until such time as the
Required Lenders appoint a successor Agent as provided for above in this
paragraph.  Upon the acceptance of a
successor’s appointment as Agent hereunder, such successor shall succeed to and
become vested with all of the rights, powers, privileges and duties of the
retiring (or retired) Agent, and the retiring Agent shall be discharged from
all of its duties and obligations hereunder or under the other Loan Documents
(if not already discharged therefrom as provided above in this paragraph).  The fees payable by the Borrowers to a
successor Agent shall be the same as those payable to its predecessor unless
otherwise agreed between the Borrowers and such successor.  After the retiring Agent’s resignation
hereunder and under the other Loan Documents, the provisions of this Article
X and Section 11.03 shall continue in effect for the benefit of such
retiring Agent, its sub-agents and their respective Related Parties in
respect of any actions taken or omitted to be taken by any of them while the
retiring Agent was acting as Agent.


SECTION
10.07.    Non-Reliance
on Agent and Other Lenders.  Each
Lender and the Issuing Bank acknowledges that it has, independently and without
reliance upon any Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. 
Each Lender and the Issuing Bank also acknowledges that it will,
independently and without reliance upon any Agent or any other Lender and based
on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement, any other Loan Document or any related
agreement or any document furnished hereunder or thereunder.


SECTION
10.08.    No Other
Duties, etc.  Anything herein to the
contrary notwithstanding, none of the Bookrunners, Arrangers, Syndication
Agents, Documentation Agents listed on the cover page hereof shall have any
powers, duties or responsibilities under this Agreement or any of the other
Loan Documents, except in its capacity, as applicable, as an Administrative
Agent, a Collateral Agent, a Lender or the Issuing Bank hereunder.


SECTION
10.09.    Indemnification.  The Lenders severally agree to indemnify each
Agent in its capacity as such (to the extent not reimbursed by the Borrowers or
the Guarantors and without limiting the obligation of the Borrowers or the
Guarantors to do so), ratably according to their respective outstanding Loans
and Commitments in effect on the date on which indemnification is sought under
this Section 10.09 (or, if indemnification is sought after the date upon
which all Commitments shall have terminated and the Loans shall have been paid
in full, ratably in accordance with such outstanding Loans and Commitments as
in effect immediately prior to such date), from and against any and all
liabilities, obligations, losses, damages, 



 163
 









penalties, actions, judgments, suits, costs, expenses
or disbursements of any kind whatsoever that may at any time (whether before or
after the payment of the Loans) be imposed on, incurred by or asserted against
such Agent in any way relating to or arising out of, the Commitments, this
Agreement, the Original Credit Agreement, any of the other Loan Documents or
any of the other Prior Loan Documents or any documents contemplated by or
referred to herein or therein or the transactions contemplated hereby or
thereby or any action taken or omitted by such Agent under or in connection
with any of the foregoing; provided, that no Lender shall be liable for
the payment of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements that are
found by a final and nonappealable decision of a court of competent
jurisdiction to have resulted from such Agent’s gross negligence or willful
misconduct.  The agreements in this Section
10.09 shall survive the payment of the Loans and all other amounts payable
hereunder.


SECTION
10.10.    Overadvances.  The Administrative Agents shall not, without
the prior consent of Lenders, make (and shall prohibit the Issuing Banks and
Swingline Lenders, as applicable, from making) any Revolving Loans or provide
any Letters of Credit to the Borrowers on behalf of Lenders intentionally and
with actual knowledge that such Revolving Loans, Swingline Loans, or Letters of
Credit would either (i) cause the aggregate amount of the Revolving
Exposure to exceed the Borrowing Base or (ii) be made when one or more of the
other conditions precedent to the making of Loans hereunder cannot be satisfied
except, that, Administrative Agents may make (or cause to be made) such
additional Revolving Loans or Swingline Loans or provide such additional
Letters of Credit on behalf of Lenders (each an “Overadvance” and collectively, the “Overadvances”), intentionally and with actual knowledge that
such Loans or Letters of Credit will be made without the satisfaction of the
foregoing conditions precedent, if the Administrative Agents deem it necessary
or advisable in their discretion to do so, provided, that: (a) the total
principal amount of the Overadvances to the Borrowers which Administrative
Agents may make or provide (or cause to be made or provided) after obtaining
such actual knowledge that the conditions precedent have not been satisfied, shall
not exceed the amount equal to $30
million outstanding at any time and shall not cause the Revolving Exposure to
exceed the Revolving Commitments of all of the Lenders or the Revolving
Exposure of a Lender to exceed such Lender’s Revolving Commitment, (b) without
the consent of all Lenders, (i) no Overadvance shall be outstanding for more
than sixty (60)  days and (ii)
after all Overadvances have been repaid, Administrative Agents shall not make
any additional Overadvance unless sixty (60) days or more have elapsed since
the last date on which any Overadvance was outstanding and (c) Administrative
Agents shall be entitled to recover such funds, on demand from the Borrowers
together with interest thereon for each day from the date such payment was due
until the date such amount is paid to such Administrative Agent at the interest
rate provided for in Section 2.06(e). 
Each Lender shall be obligated to pay such Administrative Agent the
amount of its Pro Rata Percentage of any such Overadvance provided, that such Administrative Agent is acting in accordance with
the terms of this Section 10.10 and provided further, if a CAM
Exchange shall have occurred, then the Pro Rata Percentage of any such
Overadvance shall be calculated by reference to the CAM Percentage.


SECTION
10.11.    Concerning the Collateral and the Related Loan
Documents.  Each Lender and Issuing Bank authorizes and
directs Agents to enter into this
Agreement and the other Loan Documents. 
Further, each Lender and Issuing Bank hereby authorizes and directs
the Agents to enter into any modifications, confirmations, reaffirmations,
acknowledgements or 



 164
 









other amendments to the Security Documents and the
other Loan Documents as such Agent deems necessary or desirable in order to
perfect and protect, and to continue the perfection, priority and protection
of, the Liens and security interests created under the Security Documents
and/or other Loan Documents.  Each Lender agrees that any action taken by Agents or
Required Lenders in accordance with the terms of this Agreement or the other
Loan Documents and the exercise by Agents or Required Lenders of their
respective powers set forth therein or herein, together with such other powers
that are reasonably incidental thereto, shall be binding upon all of the Lenders.


SECTION
10.12.    Field Audit,
Examination Reports and Other Reports.  By signing this Agreement, each
Lender:


(a)           is deemed to have requested that Agents
furnish such Lender, promptly after it becomes available, a copy of each field
audit or examination report and report with respect to the Borrowing Base
prepared or received by Agents (each field audit or examination report and
report with respect to the Borrowing Base being referred to herein as a “Report”
and collectively, “Reports”), appraisals with respect to the Collateral and
financial statements with respect to Borrowers and its Subsidiaries received by
Agents;


(b)           expressly agrees and acknowledges that
Agents (i) does not make any representation or warranty as to the accuracy of
any Report, appraisal or financial statement or (ii) shall not be liable for
any information contained in any Report, appraisal or financial statement;


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


(d)           agrees to keep all Reports confidential and
strictly for its internal use in accordance with the terms of Section 11.12,
and not to distribute or use any Report in any other manner.


ARTICLE
XI.



MISCELLANEOUS


SECTION
11.01.    Notices.


(a)           Generally.  Except in the case of notices and other
communications expressly permitted to be given by telephone (and except as
provided in paragraph (b) below), all notices and other communications provided
for herein shall be in writing and shall be delivered by hand or overnight
courier service, mailed by certified or registered mail or sent by telecopier
as follows:



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(i)                                     if
to any Loan Party, to US Borrowers at:


6 Brighton Road

Clifton, New Jersey 07012

Attention:  Frank Rowan

Telephone: (973) 614-2009

Email:  FRowan@int.com


(ii)                                  if
to UBS AG, Stamford Branch, as US Administrative Agent, US Collateral Agent or
the Issuing Bank, to it at:


UBS AG, Stamford Branch

677 Washington Boulevard

Stamford, Connecticut  06901

Attention:  Tara Cimbrello

Telecopier No.:  (203) 719-4176

Email:  tara.cimbrello@ubs.com


with a copy to each of
the other Agents

as set forth herein and, except with respect to

communications under Sections 5.01 and 9.04, to:


Latham & Watkins, LLP


233 S. Wacker Drive,
Suite 5800


Chicago, IL 60606


Attention: Donald L.
Schwartz


Telecopy No.: (312) 993-9767


(iii)                               if
to UBS AG Canada Branch, as Canadian Collateral Agent, to it at:


UBS AG Canada Branch

161 Bay Street

Suite 4100, BCE Place

Toronto, Ontario M5J2S1

Attention:  Amy Fung

Phone No.:  (416) 350-2261

Email: amy-c.fung@ubs.com


with a copy to the other
Agents as set 

forth herein and, except with respect to communications

under Sections 5.01 and 9.04, to:


Latham & Watkins, LLP


233 S. Wacker Drive,
Suite 5800


Chicago, IL 60606


Attention: Donald L.
Schwartz


Telecopy No.: (312) 993-9767



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(iv)                              if to Wachovia Bank,
National Association, as US Collateral Agent, to it at:


1133 Avenue of the Americas

New York, New York 10036

Attention:  Portfolio Manager 

Telecopier No.:  (212) 445-4283


with a copy to the other Agents as
set 

forth herein


(v)                                 if
to Wachovia Bank, National Association, as Issuing Bank, to it at


Wachovia Bank, National Association


1133 Avenue of the Americas

New York, New York 10036

Attention:  Portfolio Manager 

Telecopier No.:  (212) 545-4283


with a copy to the other Agents as set 

forth herein


(vi)                              if
to Wachovia Capital Finance Corporation (Canada), as Canadian Collateral Agent
or Canadian Administrative Agent, to it at:


Wachovia Capital Finance Corporation (Canada)


141 Adelaide Street West


Suite 1500


Toronto, Ontario M5H 3L5


Attention: Portfolio Manager


Telecopier No.:  (416) 364-6068


with a copy to:


Wachovia Bank, National Association


1133 Avenue of the Americas

New York, New York 10036

Attention:  Portfolio Manager 

Telecopier No.:  (212) 545-4283


and with a copy to the other Agents as set 

forth herein


(vii)         if to a Lender, to it at
its address (or telecopier number) set forth in its Administrative
Questionnaire; and



 167
 









(viii)        if to the US Swingline
Lender, to it at:


UBS Loan Finance LLC

677 Washington Boulevard

Stamford, Connecticut  06901

Attention:  Tara Cimbrello

Telecopier No.:  (203) 719-4176

Email:  tara.cimbrello@ubs.com


(ix)           if to the Canadian
Swingline Lender, to it at:


Wachovia Capital Finance Corporation (Canada)


141 Adelaide Street West


Suite 1500


Toronto, Ontario M5H 3L5


Attention: Portfolio Manager


Telecopier No.:  (416) 364-6068


with a copy to:


Wachovia Bank, National Association


1133 Avenue of the Americas

New York, New York 10036

Attention:  Portfolio Manager 

Telecopier No.:  (212) 545-4283


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


(b)           Electronic
Communications.  Notices and other
communications to the Lenders and the Issuing Bank hereunder may (subject to Section
11.01(d)) be delivered or furnished by electronic communication (including
e-mail and Internet or intranet websites) pursuant to procedures approved by
the Administrative Agents; provided
that the foregoing shall not apply to notices to any Lender or the Issuing Bank
pursuant to Article II if such Lender or the Issuing Bank, as
applicable, has notified the Administrative Agents that it is incapable of
receiving notices under such Article by electronic communication.  The Administrative Agents, the Collateral
Agents or the Borrowers may, in their discretion, agree to accept notices and
other communications to it hereunder by electronic communications pursuant to
procedures approved by it (including as set forth in Section 11.01(d)); provided that approval of such procedures
may be limited to particular notices or communications.


Unless the applicable Administrative Agent otherwise
prescribes, (i) notices and other communications sent to an e-mail address
shall be deemed received upon the sender’s receipt of an acknowledgement from
the intended recipient (such as by the “return receipt requested” function, as
available, return e-mail or other written acknowledgement); provided that 



 168
 









if such notice or other communication is not sent
during the normal business hours of the recipient, such notice or communication
shall be deemed to have been sent at the opening of business on the next
business day for the recipient, and (ii) notices or communications posted
to an Internet or intranet website shall be deemed received upon the deemed
receipt by the intended recipient at its e-mail address as described in the
foregoing clause (i) of notification that such notice or communication is
available and identifying the website address therefor.


(c)           Change of Address,
Etc.  Any party hereto may change its
address or telecopier number for notices and other communications hereunder by
notice to the other parties hereto.


(d)           Posting.  Each Loan Party hereby agrees that it will
provide to the Administrative Agents all information, documents and other
materials that it is obligated to furnish to the Administrative Agents pursuant
to this Agreement and any other Loan Document, including all notices, requests,
financial statements, financial and other reports, certificates and other
information materials, but excluding any such communication that
(i) relates to a request for a new, or a conversion of an existing,
Borrowing or other extension of credit (including any election of an interest
rate or interest period relating thereto), (ii) relates to the payment of
any principal or other amount due under this Agreement prior to the scheduled
date therefor, (iii) provides notice of any Default under this Agreement
or (iv) is required to be delivered to satisfy any condition precedent to
the effectiveness of this Agreement and/or any borrowing or other extension of
credit hereunder (all such non-excluded communications, collectively, the “Communications”), by transmitting the Communications in an
electronic/soft medium in a format reasonably acceptable to the US
Administrative Agent at such e-mail address(es) provided to the Borrowers from
time to time or in such other form, including hard copy delivery thereof, as
the Administrative Agents shall require. 
In addition, each Loan Party agrees to continue to provide the
Communications to the Administrative Agents in the manner specified in this
Agreement or any other Loan Document or in such other form, including hard copy
delivery thereof, as the Administrative Agents shall require.  Nothing in this Section 11.01(d) shall
prejudice the right of the Agents, any Lender or any Loan Party to give any
notice or other communication pursuant to this Agreement or any other Loan
Document in any other manner specified in this Agreement or any other Loan
Document or as any such Agent shall require.


To the extent consented to by any Administrative Agent
in writing from time to time, the applicable Administrative Agent agrees that
receipt of the Communications by such Administrative Agent at its e-mail
address(es) set forth above shall constitute effective delivery of the
Communications to such Administrative Agent for purposes of the Loan Documents;
provided that the Borrowers shall
also deliver to such Administrative Agent an executed original of each
Compliance Certificate required to be delivered hereunder.


Each Loan Party further agrees that the Administrative
Agents may make the Communications available to the Lenders by posting the
Communications on Intralinks or a substantially similar electronic transmission
system (the “Platform”).  The Platform is provided “as is” and “as
available.”  The Agents do not warrant
the accuracy or completeness of the Communications, or the adequacy of the
Platform and expressly disclaim liability for errors or omissions in the
communications.  No warranty of any kind,
express, implied or statutory, including, without limitation, any warranty of
merchantability, fitness for a particular purpose, non-infringement of third
party rights or freedom from viruses or other code defects, is made by 



 169
 









any Agent in connection with the Communications or the
Platform.  In no event shall the
Administrative Agents or any of its Related Parties have any liability to the
Loan Parties, any Lender or any other person for damages of any kind, including
direct or indirect, special, incidental or consequential damages, losses or
expenses (whether in tort, contract or otherwise) arising out of any Loan Party’s
or any Administrative Agent’s transmission of communications through the
Internet, except to the extent the liability of such person is found in a final
non-appealable judgment by a court of competent jurisdiction to have resulted
from such person’s gross negligence or willful misconduct.


SECTION
11.02.    Waivers;
Amendment.


(a)           Generally.  No failure or delay by any Agent, the Issuing
Bank or any Lender in exercising any right or power hereunder or under any
other Loan Document shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power.  The rights and remedies of each Agent, the
Issuing Bank and the Lenders hereunder and under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have.  No waiver of any
provision of any Loan Document or consent to any departure by any Loan Party
therefrom shall in any event be effective unless the same shall be permitted by
this Section 11.02, and then such waiver or consent shall be effective
only in the specific instance and for the purpose for which given.  Without limiting the generality of the
foregoing, the making of a Loan or issuance of a Letter of Credit shall not be
construed as a waiver of any Default, regardless of whether any Agent, any
Lender or the Issuing Bank may have had notice or knowledge of such Default at
the time.  No notice or demand on the
Borrowers in any case shall entitle the Borrowers to any other or further
notice or demand in similar or other circumstances.


(b)           Required Consents.  Subject to the terms of the Intercreditor
Agreement and to Section 11.02(c) and (d) neither this Agreement
nor any other Loan Document nor any provision hereof or thereof may be waived,
amended, supplemented or modified except, in the case of this Agreement,
pursuant to an agreement or agreements in writing entered into by the Borrowers
and the Required Lenders, pursuant to a Financial Covenant Amendment Notice or,
in the case of any other Loan Document, pursuant to an agreement or agreements
in writing entered into by the Administrative Agents, the Collateral Agents (in
the case of any Security Document) and the Loan Party or Loan Parties that are
party thereto, in each case with the written consent of the Required Lenders; provided that no such agreement shall be
effective if the effect thereof would:


(i)               increase the
Commitment of any Lender without the written consent of such Lender (it being
understood that no amendment, modification, termination, waiver or consent with
respect to any condition precedent, covenant or Default shall constitute an
increase in the Commitment of any Lender);


(ii)              reduce the principal
amount or premium of any Loan or LC Disbursement or reduce the rate of interest
thereon (other than interest pursuant to Section 2.06(d)), or reduce any
Fees payable hereunder, or change the form or currency of payment of any
Obligation, without the written consent of each Lender directly affected
thereby (it being understood that any amendment or modification to the 



 170
 









financial definitions in this Agreement shall
not constitute a reduction in the rate of interest for purposes of this
clause (ii));


(iii)             (A) change the
scheduled final maturity of any Loan, (B) postpone the date for payment of any
Reimbursement Obligation or any interest or fees payable hereunder, (C) change
the amount of, waive or excuse any such payment (other than waiver of any
increase in the interest rate pursuant to Section 2.06(e)), or (D)
postpone the scheduled date of expiration of any Commitment or any Letter of
Credit beyond the Revolving Maturity Date, in any case, without the written
consent of each Lender directly affected thereby;


(iv)             increase the maximum
duration of Interest Periods hereunder, without the written consent of each
Lender directly affected thereby;


(v)              permit the
assignment or delegation by the Borrowers of any of their rights or obligations
under any Loan Document, without the written consent of each Lender;


(vi)             release Holdings or
all or substantially all of the Subsidiary Guarantors from their Guarantee
(except as expressly provided in Article VII), or limit their liability
in respect of such Guarantee, without the written consent of each Lender;


(vii)            except as provided for
in the Intercreditor Agreement, release all or a substantial portion of the
Collateral from the Liens of the Security Documents or alter the relative
priorities of the Secured Obligations entitled to the Liens of the Security
Documents, in each case without the written consent of each Lender (it being
understood that additional Classes of Loans pursuant to Section 2.19 or
consented to by the Required Lenders may be equally and ratably secured by the
Collateral with the then existing Secured Obligations under the Security Documents);


(viii)           change Section
2.14(b), (c) or (d) in a manner that would alter the pro rata sharing of payments or setoffs
required thereby or any other provision in a manner that would alter the pro rata allocation among the Lenders of
Loan disbursements, including the requirements of Section 2.02(a), Section
2.17(d) and Section 2.18(d), without the written consent of each
Lender directly affected thereby;


(ix)             change any provision
of this Section 11.02(b), (c), or (d), without the written
consent of each Lender directly affected thereby (except for additional
restrictions on amendments or waivers for the benefit of Lenders of additional
Classes of Loans pursuant to Section 2.19 or consented to by the
Required Lenders);


(x)              change the
percentage set forth in the definition of “Required Lenders,” “Supermajority
Lenders” or any other provision of any Loan Document (including this Section)
specifying the number or percentage of Lenders (or Lenders of any Class)
required to waive, amend or modify any rights thereunder or make any
determination or grant any consent thereunder, without the written consent of
each Lender (or each Lender of such Class, as the case may be), other than to
increase such percentage or 



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number or to give any additional Lender or
group of Lenders such right to waive, amend or modify or make any such
determination or grant any such consent;


(xi)             change the
application of payments as among or between Classes under Section 2.10(f),
Section 8.03 or Section 9.02(g) without the written consent of
the Lenders of each Class that is being allocated a lesser prepayment as a
result thereof (it being understood that the Required Lenders may waive, in
whole or in part, any prepayment under Section 2.10(f) so long as the
application, as between Classes, of any portion of such prepayment that is
still required to be made is not changed and, if additional Classes of
Revolving Loans under this Agreement pursuant to Section 2.19 or
consented to by the Required Lenders are made, such new Revolving Loans may be
included on a pro rata basis in
the various prepayments required pursuant to Section 2.10(f));


(xii)            [Intentionally Deleted];


(xiii)           change or waive any
provision of Article X as the same applies to any Agent, or any other
provision of this Agreement as the same applies to the rights or obligations of
any Agent, in each case without the written consent of such Agent;


(xiv)           change or waive any
obligation of the Lenders relating to the issuance of or purchase of
participations in Letters of Credit, without the written consent of the
applicable Administrative Agent and the Issuing Bank; or


(xv)            change or waive any
provision hereof relating to Swingline Loans (including the definition of “US
Swingline Commitment” or “Canadian Swingline Commitment”), without the written
consent of the applicable Swingline Lender;


provided, further, that


(1)           any waiver, amendment
or modification prior to the completion of the syndication of the Commitments
and Loans (as determined by the Arranger) may not be effected without the
written consent of the Arranger ; and


(2)           any waiver, amendment
or modification of the Intercreditor Agreement (and any related definitions)
may be effected by an agreement or agreements in writing entered into among the
Collateral Agents, the US Administrative Agent, the Required Lenders and the
Senior Note Collateral Agent (without the consent of any Loan Party, so long as
such amendment, waiver or modification does not impose any additional duties or
obligations on the Loan Parties or alter or impair any right of any Loan Party
under the Loan Documents).


(c)           Collateral.  Without the consent of any other person, the
applicable Loan Party or Parties and the Administrative Agents and/or the
Collateral Agents may (in its or their respective sole discretion, or shall, to
the extent required by any Loan Document) enter into any amendment or waiver of
any Loan Document, or enter into any new agreement or instrument, to effect the
granting, perfection, protection, expansion or enhancement of any security
interest in any Collateral or additional property to become Collateral for the
benefit of the Secured Parties, or as 



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required by
local law to give effect to, or protect any security interest for the benefit
of the Secured Parties, in any property or so that the security interests
therein comply with applicable Requirements of Law.


(d)           Dissenting Lenders.  If, in connection with any proposed change,
waiver, discharge or termination of the provisions of this Agreement as
contemplated by Section 11.02(b), the consent of the Required Lenders or
Supermajority Lenders, as applicable, is obtained but the consent of one or
more of such other Lenders whose consent is required is not obtained, then the
Borrowers shall have the right to replace all, but not less than all, of such
non-consenting Lender or Lenders (so long as all non-consenting Lenders are so
replaced) with one or more persons pursuant to Section 2.16 so long as
at the time of such replacement each such new Lender consents to the proposed
change, waiver, discharge or termination.


SECTION
11.03.    Expenses;
Indemnity; Damage Waiver.


(a)           Costs and Expenses.  The Borrowers and Guarantors shall pay
(i) all reasonable out-of-pocket expenses incurred by the
Administrative Agents, the Collateral Agents and their respective Affiliates
(including the reasonable fees, charges and disbursements of counsel for the
Administrative Agents and/or the Collateral Agents) in connection with the
syndication of the credit facilities provided for herein (including the
obtaining and maintaining of CUSIP numbers for the Loans), the preparation,
negotiation, execution, delivery and administration of this Agreement and the
other Loan Documents, including any Inventory Appraisal, or in connection with
any amendments, modifications or waivers of the provisions hereof or thereof
(whether or not the transactions contemplated hereby or thereby shall be
consummated), including in connection with post-closing searches to confirm
that security filings and recordations have been properly made, (ii) all
reasonable out-of-pocket expenses incurred by the Issuing Banks in
connection with the issuance, amendment, renewal or extension of any Letter of
Credit or any demand for payment thereunder, (iii) all reasonable out-of-pocket
expenses incurred by the Administrative Agents, the Collateral Agents, any
Lender or the Issuing Banks (including the reasonable fees, charges and
disbursements of any counsel for the Administrative Agents, the Collateral
Agents, any Lender or the Issuing Banks), in connection with the enforcement or
protection or attempted enforcement or protection of its rights (A) in
connection with this Agreement and the other Loan Documents, including its
rights under this Section 11.03, or (B) in preserving and
protecting, or attempting to preserve or protect its interests in the
Collateral, or (C) in connection with the Loans made or Letters of Credit
issued hereunder, including all such out-of-pocket expenses
incurred during any workout, restructuring or negotiations in respect of such
Loans or Letters of Credit and (iv) all documentary and similar taxes and
charges in respect of the Loan Documents.


(b)           Indemnification by
Borrower.  Each of the Borrowers and
Guarantors shall indemnify the Administrative Agents (and any sub-agent
thereof), the Collateral Agents (and any sub-agent thereof) each Lender and the
Issuing Bank, and each Related Party of any of the foregoing persons (each such
person being called an “Indemnitee”)
against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses (including the fees, charges and
disbursements of any counsel for any Indemnitee) incurred by any Indemnitee or
asserted against any Indemnitee by any third party or by the Borrowers or any
other Loan Party arising out of, in connection with, or as a result of
(i) the execution or delivery 



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of this
Agreement, the Original Credit Agreement, any other Loan Document or any other
Prior Loan Document or any agreement or instrument contemplated hereby or
thereby, the performance by the parties hereto of their respective obligations
hereunder or thereunder or the consummation of the transactions contemplated
hereby or thereby, (ii) any Loan or Letter of Credit or the use or
proposed use of the proceeds therefrom (including any refusal by the Issuing
Bank to honor a demand for payment under a Letter of Credit if the documents
presented in connection with such demand do not strictly comply with the terms
of such Letter of Credit), (iii) any actual or alleged presence or Release
or threatened Release of Hazardous Materials on, at, under or from any property
owned, leased or operated by any Company at any time, or any Environmental
Claim related in any way to any Company, or (iv) any actual or prospective
claim, litigation, investigation or proceeding relating to any of the
foregoing, whether based on contract, tort or any other theory, whether brought
by a third party or by the Borrowers or any other Loan Party, and regardless of
whether any Indemnitee is a party thereto; provided
that such indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, liabilities or related expenses (x) are
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of
such Indemnitee or (y) result from a claim brought by the Borrowers or any
other Loan Party against an Indemnitee for breach in bad faith of such
Indemnitee’s obligations hereunder or under any other Loan Document, if the
Borrowers or such Loan Party has obtained a final and nonappealable judgment in
its favor on such claim as determined by a court of competent jurisdiction.


(c)           Reimbursement by
Lenders.  To the extent that any
Borrowers or Guarantors for any reason fails to indefeasibly pay any amount
required under paragraph (a) or (b) of this Section 11.03 to
be paid by it to the Administrative Agents (or any sub-agent thereof), the
Collateral Agents, the Issuing Bank, the Swingline Lenders or any Related Party
of any of the foregoing, each applicable Lender severally agrees to pay to the
Administrative Agent (or any such sub-agent), the Collateral Agents (or any
sub-agent thereof), the Issuing Bank, the Swingline Lenders or such Related
Party, as the case may be, such Lender’s pro
rata share (determined as of the
time that the applicable unreimbursed expense or indemnity payment is sought)
of such unpaid amount; provided
that the unreimbursed expense or indemnified loss, claim, damage, liability or
related expense, as the case may be, was incurred by or asserted against the
Administrative Agent (or any such sub-agent), the Collateral Agents (or any
sub-agent thereof), the Swingline Lenders or the Issuing Bank in its capacity
as such, or against any Related Party of any of the foregoing acting for the
Administrative Agent (or any such sub-agent), the Collateral Agents (or any
sub-agent thereof), the Swingline Lenders or Issuing Bank in connection with
such capacity.  The obligations of the
Lenders under this paragraph (c) are subject to the provisions of Section
2.14.  For purposes hereof, a Lender’s
“pro  rata share” shall be determined based upon its share of the
sum of the total Revolving Exposure and unused Commitments at the time.


(d)           Waiver of Consequential
Damages, Etc.  To the fullest extent
permitted by applicable Requirements of Law, no Loan Party shall assert, and
each Loan Party 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, any other Loan Document or any agreement or
instrument contemplated hereby, the transactions contemplated hereby or
thereby, any Loan or Letter of 



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Credit or the
use of the proceeds thereof. No Indemnitee referred to in paragraph (b) above
shall be liable for any damages arising from the use by unintended recipients
of any information or other materials distributed by it through
telecommunications, electronic or other information transmission systems in
connection with this Agreement or the other Loan Documents or the transactions
contemplated hereby or thereby.


(e)           Payments.  All amounts due under this Section shall be
payable not later than three (3) Business Days after demand therefor.


SECTION
11.04.  Successors and Assigns.


(a)           Successors and Assigns Generally.  The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that the Borrowers
may not assign or otherwise transfer any of their rights or obligations
hereunder without the prior written consent of the Administrative Agent, the
Collateral Agents, the Issuing Bank, the Swingline Lenders and each Lender and
no Lender may assign or otherwise transfer any of its rights or obligations
hereunder except (i) to an Eligible Assignee in accordance with the
provisions of paragraph (b) of this Section 11.04, (ii) by way
of participation in accordance with the provisions of paragraph (d) of
this Section 11.04 or (iii) by way of pledge or assignment of a
security interest subject to the restrictions of paragraph (f) of this
Section (and any other attempted assignment or transfer by Borrower or any Lender
shall be null and void). Nothing in this Agreement, expressed or implied, shall
be construed to confer upon any person (other than the parties hereto, their
respective successors and assigns permitted hereby, Participants to the extent
provided in paragraph (d) of this Section and, to the extent expressly
contemplated hereby, the other Indemnitees) any legal or equitable right,
remedy or claim under or by reason of this Agreement.


(b)           Assignments by Lenders.  Any Lender may at any time assign to one or
more Eligible Assignees all or a portion of its rights and obligations under
this Agreement (including all or a portion of its Commitment and the Loans at
the time owing to it); provided
that


(i)            except in the case of any assignment
made in connection with the syndication of the Commitment and Loans by UBS or
an assignment of the entire remaining amount of the assigning Lender’s
Commitment and the Loans at the time owing to it or in the case of an
assignment to a Lender or an Affiliate of a Lender or an Approved Fund with
respect to a Lender, the aggregate amount of the Commitment (which for this
purpose includes Loans outstanding thereunder) or, if the applicable Commitment
is not then in effect, the principal outstanding balance of the Loans of the
assigning Lender subject to each such assignment (determined as of the date the
Assignment and Assumption with respect to such assignment is delivered to the
Administrative Agent or, if “Trade Date” is specified in the Assignment and
Assumption, as of the Trade Date) shall not be less than $5.0 million, in the
case of any assignment in respect of Revolving Loans and/or Revolving
Commitments, unless the applicable Administrative Agent and, so long as no
Default has occurred and is continuing, the Borrowers otherwise consent (each
such consent not to be unreasonably withheld or delayed);



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(ii)           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 permit any Lender to
assign all or a portion of its rights and obligations among separate tranches
or to separate Lenders on a non-pro rata
basis;


(iii)          after the Effective Date (as defined
in the related Assignment and Assumption), the assigning Lender shall hold the
same percentage of Canadian Revolving Loans as compared to Revolving Loans as
such Lender held prior to the such Effective Date;


(iv)          the parties to each assignment shall
execute and deliver to the applicable Administrative Agent an Assignment and
Assumption, together with the Assigning Lender’s original Note (if any) and a
processing and recordation fee of $3,500, and the Eligible Assignee, if it
shall not be a Lender, shall deliver to the applicable Administrative Agent an
Administrative Questionnaire; and


(v)           in the case of an assignment of
rights and obligations hereunder by a Canadian Lender, such Lender shall use
its commercially reasonable efforts to assign such rights and obligations to an
Eligible Assignee which qualifies as an Eligible Canadian Lender.


Subject to acceptance and recording thereof by the
applicable Administrative Agent pursuant to paragraph (c) of this Section
11.04, from and after the effective date specified in each Assignment and
Assumption, the Eligible Assignee thereunder shall be a party to this Agreement
and, to the extent of the interest assigned by such Assignment and Assumption,
have the rights and obligations of a Lender, including a Canadian Revolving
Lender, as applicable, under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Assumption, be released from its obligations under this Agreement (and, in the
case of an Assignment and Assumption covering all of the assigning Lender’s
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto) but shall continue to be entitled to the benefits of Section
2.12, Section 2.13, Section 2.15 and Section 11.03
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 paragraph 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
paragraph (d) of this Section 11.04.


(c)           Register.  The applicable Administrative Agent, acting
solely for this purpose as an agent of the Borrowers, shall maintain at one of
its offices, a copy of each Assignment and Assumption delivered to it and a
register for the recordation of the names and addresses of the Lenders, and the
Commitments of, and principal amounts of the Loans and LC Disbursements 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 Agents, the Issuing Bank and the Lenders
may treat each person whose name is recorded in the Register pursuant to the
terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be available for
inspection by the



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Borrowers, the
Issuing Bank, the Collateral Agents, the Swingline Lenders and any Lender (with
respect to its own interest only), at any reasonable time and from time to time
upon reasonable prior notice.


(d)           Participations.  Any Lender may at any time, without the
consent of, or notice to, the Borrowers, the Administrative Agents, the Issuing
Bank or the Swingline Lenders sell participations to any person (other than a
natural person or the Borrowers or any of the Borrowers’ Affiliates or
Subsidiaries) (each, a “Participant”)
in all or a portion of such Lender’s rights and/or obligations under this
Agreement (including all or a portion of its Commitment and/or the Loans owing
to it); provided that
(i) such Lender’s obligations under this Agreement shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations and (iii) the Borrowers,
the Administrative Agents and the Lenders and Issuing Bank shall continue to
deal solely and directly with such Lender in connection with such Lender’s
rights and obligations under this Agreement.


Any agreement or instrument pursuant to which a Lender
sells such a participation shall provide that such Lender shall retain the sole
right to enforce the Loan Documents and to approve any amendment, modification
or waiver of any provision of the Loan Documents; provided that such agreement or instrument may provide that
such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in clause (i), (ii) or (iii) of the
first proviso to Section 11.02(b) that affects such Participant. Subject
to paragraph (e) of this Section, the Borrowers agree that each
Participant shall be entitled to the benefits of Section 2.12, Section
2.13 and Section 2.15 (subject to the requirements of those
Sections) to the same extent as if it were a Lender and had acquired its
interest by assignment pursuant to paragraph (b) of this Section. To the
extent permitted by law, each Participant also shall be entitled to the
benefits of Section 11.08 as though it were a Lender, provided such
Participant agrees to be subject to Section 2.14 as though it were a
Lender.


(e)           Limitations on Participant Rights.  A Participant shall not be entitled to
receive any greater payment under Section 2.12, Section 2.13 and Section
2.15 than the applicable Lender would have been entitled to receive with
respect to the participation sold to such Participant, unless the sale of the
participation to such Participant is made with the Borrowers’ prior written
consent.


(f)            Certain Pledges.  Any Lender may at any time pledge or assign a
security interest in all or any portion of its rights under this Agreement to
secure obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Bank; provided
that no such pledge or assignment shall release such Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto. In the case of any Lender that is a fund that invests
in bank loans, such Lender may, without the consent of the Borrowers or the
Administrative Agents, collaterally assign or pledge all or any portion of its
rights under this Agreement, including the Loans and Notes or any other
instrument evidencing its rights as a Lender under this Agreement, to any
holder of, trustee for, or any other representative of holders of, obligations
owed or securities issued, by such fund, as security for such obligations or
securities.



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SECTION 11.05.  Survival
of Agreement.  All covenants,
agreements, representations and warranties made by the Loan Parties in the Loan
Documents and in the certificates or other instruments delivered in connection
with or pursuant to this Agreement or any other Loan Document shall be
considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of the Loan Documents and the making of any
Loans and issuance of any Letters of Credit, regardless of any investigation
made by any such other party or on its behalf and notwithstanding that the
Agents, the Issuing Bank or any Lender may have had notice or knowledge of any
Default or incorrect representation or warranty at the time any credit is
extended hereunder, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or any fee or any other amount
payable under this Agreement is outstanding and unpaid or any Letter of Credit
is outstanding and so long as the Commitments have not expired or terminated. The
provisions of Section 2.12, Section 2.14, Section 2.15 and
Article X shall survive and remain in full force and effect regardless
of the consummation of the transactions contemplated hereby, the repayment of
the Loans, the payment of the Reimbursement Obligations, the expiration or
termination of the Letters of Credit and the Commitments or the termination of
this Agreement or any provision hereof.


SECTION
11.06. Counterparts; Integration; Effectiveness;
Electronic Execution.


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


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


SECTION 11.07. Severability.  Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.



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SECTION 11.08. Right
of Setoff.  If an Event of Default
shall have occurred and be continuing, each Lender, the Issuing Bank, and each
of their respective Affiliates is hereby authorized at any time and from time
to time, to the fullest extent permitted by applicable Requirements of Law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final, in whatever currency) at any time held and other
obligations (in whatever currency) at any time owing by such Lender, the
Issuing Bank or any such Affiliate to or for the credit or the account of the
Borrowers or any other Loan Party against any and all of the obligations of the
Borrowers or such Loan Party now or hereafter existing under this Agreement or
any other Loan Document to such Lender or the Issuing Bank, irrespective of
whether or not such Lender or the Issuing Bank shall have made any demand under
this Agreement or any other Loan Document and although such obligations of the
Borrowers or such Loan Party may be contingent or unmatured or are owed to a
branch or office of such Lender or the Issuing Bank different from the branch
or office holding such deposit or obligated on such indebtedness. The rights of
each Lender, the Issuing Bank and their respective Affiliates under this
Section are in addition to other rights and remedies (including other rights of
setoff) that such Lender, the Issuing Bank or their respective Affiliates may
have. Each Lender and the Issuing Bank agrees to notify the Borrowers and the
Administrative Agents promptly after any such setoff and application; provided that the failure to give such
notice shall not affect the validity of such setoff and application.


SECTION
11.09. Governing Law; Jurisdiction; Consent to Service of
Process.


(a)           Governing Law.  This Agreement shall be construed in
accordance with and governed by the law of the State of New York, without
regard to conflicts of law principles that would require the application of the
laws of another jurisdiction.


(b)           Submission to Jurisdiction.  Each Loan Party hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the Supreme Court of the State of New York sitting in New York
County and of the United States District Court of the Southern District of New
York, and any appellate court from any thereof and any court of competent
jurisdiction in Ontario, Canada, in any action or proceeding arising out of or
relating to any Loan Document, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in such New York State court, each Ontario court or, to the
fullest extent permitted by applicable law, in such Federal court. Each of the
parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement or
any other Loan Document shall affect any right that the Administrative Agents,
the Issuing Bank or any Lender may otherwise have to bring any action or
proceeding relating to this Agreement or any other Loan Document against any
Loan Party or its properties in the courts of any jurisdiction.


(c)           Waiver of Venue.  Each Loan Party hereby irrevocably and
unconditionally waives, to the fullest extent permitted by applicable
Requirements of Law, any objection which it may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to
this Agreement or any other Loan Document in any court referred to in Section
11.09(b). Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by



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applicable
Requirements of Law, the defense of an inconvenient forum to the maintenance of
such action or proceeding in any such court.


(d)           Service of Process.  Each party hereto irrevocably consents to
service of process in any action or proceeding arising out of or relating to
any Loan Document, in the manner provided for notices (other than telecopier)
in Section 11.01. Nothing in this Agreement or any other Loan Document
will affect the right of any party hereto to serve process in any other manner
permitted by applicable Requirements of Law.


SECTION 11.10. Waiver
of Jury Trial.  Each Loan Party
hereby waives, to the fullest extent permitted by applicable Requirements of
Law, any right it may have to a trial by jury in any legal proceeding directly
or indirectly arising out of or relating to this Agreement, any other Loan
Document or the transactions contemplated hereby (whether based on contract,
tort or any other theory). Each party hereto (a) certifies that no
representative, agent or attorney of any other party has represented, expressly
or otherwise, that such other party would not, in the event of litigation, seek
to enforce the foregoing waiver and (b) acknowledges that it and the other
parties hereto have been induced to enter into this Agreement by, among other
things, the mutual waivers and certifications in this Section.


SECTION 11.11. Headings.  Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of
this Agreement and shall not affect the construction of, or be taken into consideration
in interpreting, this Agreement.


SECTION 11.12. Treatment
of Certain Information; Confidentiality. 
Each of the Administrative Agents, the Lenders and the Issuing Bank
agrees to maintain the confidentiality of the Information (as defined below),
except that Information may be disclosed (a) to its Affiliates and to its
and its Affiliates’ respective partners, directors, officers, employees,
agents, advisors and other representatives (it being understood that the
persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority
purporting to have jurisdiction over it (including any self-regulatory authority,
such as the National Association of Insurance Commissioners), (c) to the
extent required by applicable Requirements of Law or by any subpoena or similar
legal process, (d) to any other party hereto, (e) in connection with
the exercise of any remedies hereunder or under any other Loan Document or any
action or proceeding relating to this Agreement or any other Loan Document or
the enforcement of rights hereunder or thereunder, (f) subject to an
agreement containing provisions substantially the same as those of this Section
11.10, to (i) any assignee of or Participant in, or any prospective
assignee of or Participant in, any of its rights or obligations under this
Agreement, (ii) any actual or prospective counterparty (or its advisors)
to any swap or derivative transaction relating to the Borrowers and their
obligations or (iii) any rating agency for the purpose of obtaining a credit
rating applicable to any Lender, (g) with the consent of the Borrowers or
(h) to the extent such Information (x) becomes publicly available
other than as a result of a breach of this Section or (y) becomes
available to the Administrative Agents, any Lender, the Issuing Bank or any of
their respective Affiliates on a nonconfidential basis from a source other than
the Borrowers. For purposes of this Section, “Information”
means all information received from the Borrowers or any of their Subsidiaries
relating to the Borrowers or any of their Subsidiaries or any of their
respective businesses, other than any such information



 180
 









that is available to the Administrative Agent, any
Lender or the Issuing Bank on a nonconfidential basis prior to disclosure by
Borrower or any of its Subsidiaries; provided that,
in the case of information received from Borrower or any of its Subsidiaries
after the date hereof, such information is clearly identified at the time of
delivery as confidential. Any person required to maintain the confidentiality
of Information as provided in this Section shall be considered to have complied
with its obligation to do so if such person has exercised the same degree of
care to maintain the confidentiality of such Information as such person would
accord to its own confidential information.


SECTION 11.13. USA
PATRIOT Act Notice.  Each Lender that
is subject to the Act (as hereinafter defined) and the Administrative Agents
(for itself and not on behalf of any Lender) hereby notifies the Borrowers that
pursuant to the requirements of the USA PATRIOT Act (Title III of
Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and
record information that identifies the Borrowers, which information includes
the name, address and tax identification number of the Borrowers and other
information regarding the Borrowers that will allow such Lender or the
Administrative Agent, as applicable, to identify the Borrowers in accordance
with the Act. This notice is given in accordance with the requirements of the
Act and is effective as to the Lenders and the Administrative Agents.


SECTION 11.14. Interest
Rate Limitation.  Notwithstanding
anything herein to the contrary, if at any time the interest rate applicable to
any Loan, together with all fees, charges and other amounts which are treated
as interest on such Loan under applicable Requirements of Law (collectively,
the “Charges”), shall exceed the
maximum lawful rate (the “Maximum Rate”)
which may be contracted for, charged, taken, received or reserved by the Lender
holding such Loan in accordance with applicable Requirements of Law, the rate
of interest payable in respect of such Loan hereunder, together with all
Charges payable in respect thereof, shall be limited to the Maximum Rate and,
to the extent lawful, the interest and Charges that would have been payable in
respect of such Loan but were not payable as a result of the operation of this
Section shall be cumulated and the interest and Charges payable to such Lender
in respect of other Loans or periods shall be increased (but not above the
Maximum Rate therefor) until such cumulated amount, together with interest
thereon at the Federal Funds Effective Rate to the date of repayment, shall
have been received by such Lender.


SECTION 11.15. Lender
Addendum.  Each Lender, whether party
to the Original Credit Agreement or to become a party to this Agreement on the
date hereof, shall do so by delivering to the applicable Administrative Agent a
Lender Addendum duly executed by such Lender, the Borrowers and the such
Administrative Agent.


SECTION 11.16. Obligations
Absolute.  To the fullest extent
permitted by applicable Requirements of Law, all obligations of the Loan
Parties hereunder shall be absolute and unconditional irrespective of:


(a)           any bankruptcy, insolvency,
reorganization, arrangement, readjustment, composition, liquidation or the like
of any Loan Party;


(b)           any lack of validity or
enforceability of any Loan Document or any other agreement or instrument
relating thereto against any Loan Party;



 181
 









(c)           any change in the time, manner or
place of payment of, or in any other term of, all or any of the Obligations, or
any other amendment or waiver of or any consent to any departure from any Loan
Document or any other agreement or instrument relating thereto;


(d)           any exchange, release or
non-perfection of any other Collateral, or any release or amendment or waiver
of or consent to any departure from any guarantee, for all or any of the
Obligations;


(e)           any exercise or non-exercise, or any
waiver of any right, remedy, power or privilege under or in respect hereof or
any Loan Document; or


(f)            any other circumstances which might
otherwise constitute a defense available to, or a discharge of, the Loan
Parties.


SECTION 11.17. Dollar
Equivalent Calculations.  For
purposes of this Agreement, the Dollar Equivalent of each Loan that is an
Approved Currency Revolving Loan and the Dollar Equivalent of the stated amount
of each Letter of Credit that is an Approved Currency Letter of Credit shall be
calculated on the date when any such Loan is made, such Letter of Credit is
issued, on the first Business Day of each month and at such other times as
designated by the applicable Administrative Agent. Such Dollar Equivalent shall
remain in effect until the same is recalculated by such Administrative Agent as
provided above and notice of such recalculation is received by the Borrowers,
it being understood that until such notice of such recalculation is received,
the Dollar Equivalent shall be that Dollar Equivalent as last reported to the
Borrowers by such Administrative Agent. Such Administrative Agent shall
promptly notify the Borrowers and the Lenders of each such determination of the
Dollar Equivalent.


SECTION
11.18. Judgment Currency.


(a)           The Borrowers’ obligation hereunder
and under the other Loan Documents to make payments in the applicable Approved
Currency (pursuant to such obligation, the “Obligation Currency”) shall not be discharged or satisfied
by any tender or recovery pursuant to any judgment expressed in or converted
into any currency other than the Obligation Currency, except to the extent that
such tender or recovery results in the effective receipt by the applicable
Administrative Agent or the respective Lender of the full amount of the
Obligation Currency expressed to be payable to such Administrative Agent or
such Lender under this Agreement or the other Loan Documents. If, for the
purpose of obtaining or enforcing judgment against the Borrowers in any court
or in any jurisdiction, it becomes necessary to convert into or from any
currency other than the Obligation Currency (such other currency being
hereinafter referred to as the “Judgment Currency”)
an amount due in the Obligation Currency, the conversion shall be made at the
Dollar Equivalent, and in the case of other currencies, the rate of exchange
(as quoted by such Administrative Agent or if such Administrative Agent does
not quote a rate of exchange on such currency, by a known dealer in such
currency designated by such Administrative Agent) determined, in each case, as
of the Business Day immediately preceding the day on which the judgment is
given (such Business Day being hereinafter referred to as the “Judgment Currency Conversion Date”).



 182
 









(b)           If there is a change in the rate of
exchange prevailing between the Judgment Currency Conversion Date and the date
of actual payment of the amount due, the Borrowers covenant and agree to pay,
or cause to be paid, such additional amounts, if any (but in any event not a
lesser amount) as may be necessary to ensure that the amount paid in the
Judgment Currency, when converted at the rate of exchange prevailing on the date
of payment, will produce the amount of the Obligation Currency which could have
been purchased with the amount of Judgment Currency stipulated in the judgment
or judicial award at the rate of exchange prevailing on the Judgment Currency
Conversion Date.


(c)           For purposes of determining the
Dollar Equivalent or any other rate of exchange for this Section 11.18,
such amounts shall include any premium and costs payable in connection with the
purchase of the Obligation Currency.


SECTION
11.19. Special Provisions Relating to Currencies Other
Than Dollars.


(a)           All funds to be made available to the
applicable Administrative Agent pursuant to this Agreement in Canadian dollars
shall be made available to such Administrative Agent in immediately available,
freely transferable, cleared funds to such account with such bank in such
principal financial center in Canada as such Administrative Agent shall from
time to time nominate for this purpose.


(b)           In relation to the payment of any
amount denominated in Canadian dollars, no Administrative Agent shall be liable
to the Borrowers or any of the Lenders for any delay, or the consequences of
any delay, in the crediting to any account of any amount required by this
Agreement to be paid by such Administrative Agent if such Administrative Agent
shall have taken all relevant and necessary steps to achieve, on the date
required by this Agreement, the payment of such amount in immediately
available, freely transferable, cleared funds (in Canadian dollars) to the
account with the bank in the principal financial center in Canada which the
Borrowers or, as the case may be, any Lender shall have specified for such
purpose. In this Section 11.19(b), “all relevant steps” means all such steps as may be
prescribed from time to time by the regulations or operating procedures of such
clearing or settlement system as such Administrative Agent may from time to
time determine for the purpose of clearing or settling payments of Canadian
dollars. Furthermore, and without limiting the foregoing, such Administrative
Agent shall not be liable to the Borrowers or any of the Lenders with respect
to the foregoing matters in the absence of its gross negligence or willful
misconduct (as determined by a court of competent jurisdiction in a final and
non-appealable decision or pursuant to a binding arbitration award or as
otherwise agreed in writing by the affected parties).


SECTION 11.20. Intercreditor
Agreement.  Notwithstanding anything
herein to the contrary, each Lender acknowledges that the Lien and security
interest granted to the Collateral Agents pursuant to the Security Documents
and the exercise of any right or remedy by such Collateral Agents thereunder
are subject to the provisions of the Intercreditor Agreement. In the event of
any conflict between the terms of the Intercreditor Agreement and the Security
Documents, the terms of the Intercreditor Agreement shall govern and control.



 183
 









ARTICLE
XII.


AMENDMENT
AND RESTATEMENT OF ORIGINAL CREDIT AGREEMENT


SECTION 12.01. Acknowledgments.  The parties hereto agree that, on the Closing
Date, the following transactions shall be deemed to occur automatically,
without further action by any party hereto:


(a)           The
Original Credit Agreement shall be deemed to be amended and restated in its
entirety in the form of this Agreement.


(b)           All
Existing Obligations (including, without limitation, all Letters of Credit
issued pursuant to the Original Credit Agreement) shall in all respects be
continuing after the Closing Date and shall be deemed to be Obligations
governed by this Agreement.


(c)           This
Agreement shall not be deemed to evidence or result in a novation,
extinguishment, discharge or repayment of the Existing Obligations, but the
Existing Obligations under the Original Credit Agreement and the Liens securing
payment and performance thereof shall in all respects be continuing as
Obligations under this Agreement and as Liens securing payment and performance
thereof.


(d)           All
references in the Loan Documents executed in connection with the Original
Credit Agreement, whether on the Original Closing Date or at any time
thereafter but prior to the Closing Date (collectively, the “Prior Loan
Documents”) to (i) the Original Credit Agreement or the “Credit Agreement”
shall be deemed to include references to this Agreement, as amended, restated,
supplemented or otherwise modified from time to time, and (ii) the “Lenders” or
a “Lender”, the “Administrative Agent”, the “Administrative Agents”, the “Collateral
Agent” or the “Collateral Agents” shall mean such terms as defined in this
Agreement. The Prior Loan Documents that are not superseded by corresponding
Loan Documents executed and delivered in connection with this Agreement shall
remain in full force and effect.


(e)           Each
Loan Party hereby acknowledges and agrees that each of the Prior Loan Documents
to which such Loan Party is a party remains in full force and effect and hereby
ratifies and reaffirms all of its respective repayment and performance
obligations, contingent or otherwise, under each of the Prior Loan Documents to
which it is a party and, to the extent such Loan Party granted Liens on or
security interests in any of its properties pursuant to any of the Prior Loan
Documents as security for the Existing Obligations, such Loan Party, as the
case may be, hereby ratifies and reaffirms such grant of security and confirms
and agrees that such Liens and security interests secure all of the Obligations
under this Agreement and remain in full force and effect after giving effect to
this Agreement. The execution, delivery and effectiveness of this Agreement
shall not operate as a waiver of any right, power or remedy of any of the
Agents or Lenders under the Original Credit Agreement or any Prior Loan
Document, nor constitute a waiver of any provision of the Original Credit Agreement
or any Prior Loan Document, except as specifically set forth therein.


(f)            Each
Loan Party hereby acknowledges and agrees that each of the representations and
warranties contained in the Original Credit Agreement is true and correct in
all material



 184
 









respects on and as of the Closing Date as if made on the Closing Date,
except to the extent that such representations and warranties expressly relate
to an earlier date.


SECTION 12.02. Adjustments
to Borrowings and Commitments. 
Borrowers and Loan Parties acknowledge and confirm that as of close of
business on the Closing Date, the outstanding principal balance of all
Borrowings (excluding accrued interest thereon and fees and expenses (including
professional fees and expenses) related thereto) under the Original Credit
Agreement was $291,711,594.32, and that to the best of their knowledge after
diligent inquiry no Borrower or any other Loan Party or other Person has any
defense, counterclaim or setoff with respect to the payment thereof. Each
Lender hereunder that was a party to the Original Credit Agreement immediately
prior to the Closing Date agrees that its “Commitments” (as defined in the
Original Credit Agreement) shall be replaced with the Commitments of such
Lender hereunder. On the Closing Date, each Lender shall make payments to, or
receive payments from, the applicable Administrative Agent such that each
Lender shall have funded its Pro Rata Percentage of each Loan for which such
Lender has a Commitment.


[Signature
Pages Follow]



 185














IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed by their respective authorized officers as
of the day and year first above written.


	
  

  	
   

  	
  US BORROWERS:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LINENS ‘N THINGS, INC.

  
	
   

  	
   

  	
  LINENS ‘N THINGS CENTER, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Francis M. Rowan

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Francis M. Rowan

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President and Chief Financial

  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CANADIAN BORROWER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LINENS ‘N THINGS CANADA CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Francis M. Rowan

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Francis M. Rowan

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President and Chief Financial

  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  HOLDINGS:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LINENS HOLDING CO.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Francis M. Rowan

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Francis M. Rowan

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President and Chief Financial

  Officer

  
						



 


 


[Signature Page to
Amended and Restated Credit Agreement]


 











 


	
  

  	
   

  	
  SUBSIDIARY GUARANTORS:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BLOOMINGTON MN, L.T., INC.

  
	
   

  	
   

  	
  LNT, INC.

  
	
   

  	
   

  	
  LNT SERVICES, INC.

  
	
   

  	
   

  	
  LNT WEST, INC.

  
	
   

  	
   

  	
  VENDOR FINANCE LLC

  
	
   

  	
   

  	
  LNT LEASING II LLC

  
	
   

  	
   

  	
  LNT VIRGINIA LLC

  
	
   

  	
   

  	
  LNT MERCHANDISING COMPANY, LLC

  
	
   

  	
   

  	
  LNT LEASING III LLC

  
	
   

  	
   

  	
  CITIDEL LNT LLC

  
	
   

  	
   

  	
  LINENS ‘N THINGS INVESTMENT CANADA II COMPANY

  
	
   

  	
   

  	
  LINENS ‘N THINGS INVESTMENT CANADA I COMPANY

  
	
   

  	
   

  	
  LINENS ‘N THINGS CANADA LIMITED

  PARTNERSHIP

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
    /s/ Francis
  M. Rowan

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Francis M. Rowan

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President and Chief Financial

  Officer

  



 


 


[Signature Page to
Amended and Restated Credit Agreement]


 











 


	
  

  	
   

  	
  UBS AG, STAMFORD BRANCH,as US Co- 

  
	
   

  	
   

  	
  Collateral Agent, US Administrative Agent and

  
	
   

  	
   

  	
  Issuing Bank

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ David B. Julie

  	
   

  
	
   

  	
   

  	
  Name:

  	
  David B. Julie

  
	
   

  	
   

  	
  Title:

  	
  Associate Director Banking Products

  Services, US

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Mary E. Evans

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Mary E. Evans

  
	
   

  	
   

  	
  Title:

  	
  Associate Director Banking Products

  Services, US

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  UBS AG CANADA BRANCH, as Canadian Co-

  
	
   

  	
   

  	
  Collateral Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Janice L. Randolph

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Janice L. Randolph

  
	
   

  	
   

  	
  Title:

  	
  Associate Director Banking Products

  Services, US

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Toba Lumbantobing

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Toba Lumbantobing

  
	
   

  	
   

  	
  Title:

  	
  Associate Director Banking Products

  Services, US

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  UBS AG LOAN FINANCE LLC, as US Swingline

  
	
   

  	
   

  	
  Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ David B. Julie

  	
   

  
	
   

  	
   

  	
  Name:

  	
  David B. Julie

  
	
   

  	
   

  	
  Title:

  	
  Associate Director Banking Products

  Services, US

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Mary E. Evans

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Mary E. Evans

  
	
   

  	
   

  	
  Title:

  	
  Associate Director Banking Products

  Services, US

  
						



 


 


[Signature Page to
Amended and Restated Credit Agreement]


 











 


	
  

  	
   

  	
  WACHOVIA BANK, NATIONAL 

  
	
   

  	
   

  	
  ASSOCIATION, as US Co-Collateral Agent, Co-

  
	
   

  	
   

  	
  Documentation Agent and Issuing Bank

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Susy Kim

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Susy Kim

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  WACHOVIA CAPITAL FINANCE

  
	
   

  	
   

  	
  CORPORATION (CANADA), as Canadian 

  
	
   

  	
   

  	
  Administrative Agent, Canadian Co-Collateral 

  
	
   

  	
   

  	
  Agent and Canadian Swingline Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Laurence Forte

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Laurence Forte

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  



 


 


[Signature Page to
Amended and Restated Credit Agreement]


 















Annex I


Applicable Margin


	
  

  	
   

  	
  Revolving Loans

  	
   

  
	
   

  	
   

  	
  Eurodollar/

  	
   

  	
  ABR/Canadian

  	
   

  
	
  Average Excess Availability for Preceding

  	
   

  	
  Acceptance

  	
   

  	
  Prime

  	
   

  
	
  Fiscal Quarter

  	
   

  	
  Fees

  	
   

  	
   

  	
   

  
	
  Level I: <$125 million

  	
   

  	
  1.75

  	
  %

  	
  0.25

  	
  %

  
	
  Level II: = $125 million and <
  $350 million

  	
   

  	
  1.50

  	
  %

  	
  0.00

  	
  %

  
	
  Level III: = $350 million and
  < $475 million

  	
   

  	
  1.25

  	
  %

  	
  0.00

  	
  %

  
	
  Level
  IV: = $475 million

  	
   

  	
  1.00

  	
  %

  	
  0.00

  	
  %

  



 


Applicable Fee




	
  

  	
   

  	
  Fee

  	
   

  
	
  Level I

  	
   

  	
  0.375

  	
  %

  
	
  Level II

  	
   

  	
  0.375

  	
  %

  
	
  Level III

  	
   

  	
  0.375

  	
  %

  
	
  Level IV

  	
   

  	
  0.250

  	
  %

  






 


Each change in the Applicable Margin or Applicable Fee
resulting from a change in the Excess Availability shall be effective with
respect to all Loans and Letters of Credit outstanding on and after the date of
delivery to the Administrative Agents of the financial statements and
certificates required by Section 5.01(a) or (b) and Section
5.01(d) (as well as the Borrowing Base Certificate for the last month of
such fiscal quarter), respectively, indicating such change until the date
immediately preceding the next date of delivery of such financial statements
and certificates (and related Borrowing Base Certificate) indicating another
such change.  Notwithstanding the
foregoing, the Average Excess Availability shall be deemed to be in Level II
(i) from the Closing Date to the date of delivery to the Administrative Agents
of the financial statements and certificates required by Section 5.01(b)
and Section 5.01(d) (as well as the Borrowing Base Certificate for the
last month of such fiscal quarter) for the fiscal period ended June 30, 2007,
(ii) at any time during which the Borrowers have failed to deliver the
financial statements and certificates required by Section 5.01(a) or (b)
and Section 5.01(d), respectively, and (iii) at any time during the
existence of an Event of Default.