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Exhibit 10.11  




$700
MILLION TERM LOAN AGREEMENT 


made
and entered into 


as
of August 28, 2007 


by
and among 


WHOLE
FOODS MARKET, INC., 


a
Texas corporation, 


EACH
OF THE FINANCIAL INSTITUTIONS WHICH IS 


A
SIGNATORY HERETO OR WHICH MAY FROM TIME TO 


TIME
BECOME A PARTY HERETO, 


ROYAL
BANK OF CANADA, 


as
Administrative Agent, 


JPMORGAN
CHASE BANK, N.A., 


as
Syndication Agent, 


and
Collateral Agent, 


WELLS
FARGO BANK, N A, WACHOVIA BANK, N.A. 


and
LASALLE BANK MIDWEST, N.A. 


as
Co-Documentation Agents 


and 


RBC
CAPITAL MARKETS(1) AND J. P. MORGAN SECURITIES INC., 


as
Joint Lead Arrangers and Joint Bookrunners 






	(1)
	RBC
Capital Markets is a brand name for the investment banking activities of Royal Bank of Canada. 








  



 
 

TABLE OF CONTENTS    
    



	 
	 	Page

	Article I—DEFINITIONS
	

Section 1.1 Certain Defined Terms	
 	

1
	Section 1.2 Accounting Terms and Determinations	 	17
	

Article II—LOANS; ETC.
	

Section 2.1 Loans	
 	

18
	Section 2.2 Commitment Fees; Termination and Reductions	 	19
	Section 2.3 Mandatory Prepayments; Commitment Reduction	 	19
	Section 2.4 Payments	 	19
	Section 2.5 Prepayments of Loans	 	20
	Section 2.6 Application of Payments and Prepayments	 	21
	Section 2.7 Pro Rata Treatment	 	21
	Section 2.8 Payment Dates on the Loans	 	21
	Section 2.9 Interest Options for Loans	 	21
	Section 2.10 Special Provisions Applicable to LIBOR Rate Borrowings	 	22
	Section 2.11 Payment Dates	 	24
	Section 2.12 Sharing of Payments, Etc 	 	24
	Section 2.13 Use of Proceeds	 	25
	Section 2.14 Evidence of Debt	 	25
	

Article III—CONDITIONS
	

Section 3.1 All Loans	
 	

26
	Section 3.2 First Loan	 	26
	Section 3.3 Determinations Under Section 3.2	 	28
	

Article IV—REPRESENTATIONS AND WARRANTIES
	

Section 4.1 Organization	
 	

28
	Section 4.2 Financial Statements	 	28
	Section 4.3 Enforceable Obligations; Authorization	 	28
	Section 4.4 Other Debt	 	29
	Section 4.5 Litigation	 	29
	Section 4.6 Title	 	29
	Section 4.7 Taxes	 	29
	Section 4.8 Subsidiaries	 	29
	Section 4.9 Representations by Others	 	29
	Section 4.10 Permits, Licenses, Etc 	 	29
	Section 4.11 ERISA	 	29
	Section 4.12 Condition of Property	 	30
	Section 4.13 Assumed Names	 	30
	Section 4.14 Investment Company Act	 	30
	Section 4.15 Margin Stock	 	30
	Section 4.16 Agreements	 	30
	Section 4.17 Environmental Matters	 	30
	Section 4.18 Solvency	 	31
	Section 4.19 Target Representations	 	31
	 	 	 





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Article V—AFFIRMATIVE COVENANTS
	

Section 5.1 Taxes, Existence, Regulations, Property, Etc 	
 	

31
	Section 5.2 Financial Statements and Information	 	31
	Section 5.3 Financial Tests	 	32
	Section 5.4 Inspection	 	32
	Section 5.5 Further Assurances	 	32
	Section 5.6 Books and Records	 	32
	Section 5.7 Insurance	 	32
	Section 5.8 ERISA	 	32
	Section 5.9 Use of Proceeds	 	33
	Section 5.10 Additional Guaranties	 	33
	Section 5.11 Notice of Events	 	33
	Section 5.12 Environmental Matters	 	33
	Section 5.13 End of Fiscal Year	 	34
	Section 5.14 Consummation of Merger	 	34
	Section 5.15 Maintenance of Ratings	 	34
	Section 5.16 Covenant to Guarantee Obligations and Give Security	 	34
	Section 5.17 Covenant to Give Additional Security	 	35
	

Article VI—NEGATIVE COVENANTS
	

Section 6.1 Indebtedness	
 	

35
	Section 6.2 Liens	 	37
	Section 6.3 Contingent Obligations	 	38
	Section 6.4 Mergers, Consolidations and Dispositions and Acquisitions of Assets	 	38
	Section 6.5 Nature of Business	 	39
	Section 6.6 Transactions with Related Parties	 	39
	Section 6.7 Loans and Investments	 	39
	Section 6.8 ERISA Compliance	 	40
	Section 6.9 Credit Extensions	 	40
	Section 6.10 Change in Accounting Method	 	40
	Section 6.11 Redemption, Dividends and Distributions	 	40
	

Article VII—EVENTS OF DEFAULT AND REMEDIES
	

Section 7.1 Events of Default	
 	

41
	Section 7.2 Remedies Cumulative	 	43
	

Article VIII—THE AGENT
	

Section 8.1 Authorization and Action	
 	

43
	Section 8.2 Agents' Reliance, Etc 	 	43
	Section 8.3 Royal Bank and Affiliates	 	44
	Section 8.4 Lender Credit Decision	 	44
	Section 8.5 Indemnification	 	44
	Section 8.6 Successor Agents	 	45
	Section 8.7 Other Agents; Arrangers and Managers	 	45
	

Article IX—MISCELLANEOUS
	

Section 9.1 No Waiver	
 	

45
	Section 9.2 Notices	 	46
	Section 9.3 Jurisdiction; Governing Law; Etc 	 	47
	 	 	 



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	Section 9.4 Survival; Parties Bound	 	48
	Section 9.5 Counterparts	 	48
	Section 9.6 Survival	 	48
	Section 9.7 Captions	 	48
	Section 9.8 Expenses, Etc 	 	48
	Section 9.9 Indemnification	 	49
	Section 9.10 Amendments, Etc 	 	50
	Section 9.11 Successors and Assigns	 	50
	Section 9.12 Entire Agreement	 	 
	Section 9.13 Severability	 	 
	Section 9.14 Disclosures	 	 
	Section 9.15 Capital Adequacy	 	 
	Section 9.16 Withholding Tax	 	 
	Section 9.17 Waiver of Claims	 	 
	Section 9.18 Right of Setoff	 	 
	Section 9.19 USA PATRIOT Act	 	 
	Section 9.20 Non-Consenting Lenders; Other Lenders	 	 
	Section 9.21 Confidentiality	 	 





	EXHIBITS
	

A	
 	

—	
 	

Form of Note
	B	 	—	 	Notice of Assumption
	C	 	—	 	Officer's Certificate
	D	 	—	 	Request for Extension of Credit and Certificate of No Default
	E	 	—	 	Rate Selection Notice
	F	 	—	 	Form of Assignment and Acceptance
	G-A	 	 	 	Form of Security Agreement A
	G-B	 	 	 	Form of Security Agreement B
	H	 	 	 	Form of Guaranty Agreement
	

SCHEDULES
	

1.1(a)	
 	

 	
 	

Disclosed Divestitures
	1.1(b)	 	 	 	EBIT/EBITDA
	1.1(c)	 	 	 	Guarantors
	2.1(a)	 	 	 	Commitments
	4.8	 	 	 	Subsidiaries
	4.13	 	 	 	Assumed Names
	4.16	 	 	 	Agreements
	6.2(a)	 	 	 	Liens




iii









   
        TERM LOAN AGREEMENT (this "Agreement") dated as of August 28, 2007 among WHOLE FOODS MARKET, INC., a Texas corporation (the
"Company"), Royal Bank of Canada ("Royal Bank"), as administrative agent (together with any successor
administrative agent appointed pursuant to Article VII, the "Agent") for the lenders from time to time parties hereto (the
"Lenders"), JPMorgan Chase Bank, N.A., as syndication agent and collateral agent together with any successor collateral agent appointed pursuant
to Security Agreement A or Security Agreement B, as applicable (the "Collateral Agent"), Wells Fargo Bank, N A, Wachovia Bank, N.A.
and LaSalle Bank Midwest, N.A. as co-documentation agents and RBC Capital Markets and J. P. Morgan Securities Inc., as joint lead arrangers and joint bookrunners (in
such capacities, the "Joint Lead Arrangers"). 


        PRELIMINARY
STATEMENTS: 



        (1)   Pursuant
to the agreement and plan of merger dated as of February 21, 2007 (as amended, supplemented or otherwise modified in accordance with its terms, to the
extent permitted hereunder, the "Merger Agreement") among the Company, its wholly-owned subsidiary, WFMI Merger Co., a Delaware corporation
("Merger Sub") and Wild Oats Markets, Inc., a Delaware corporation (the "Target"), the
Company, through Merger Sub, has commenced an offer to purchase all the outstanding shares of the Target (the "Tender Offer"). Following the
successful consummation of the Tender Offer, the Company, through Merger Sub, will acquire 100% of the outstanding shares of the Target and will merge with and into the Target (the
"Merger"). 


        (2)   The
Company has requested that the Lenders lend to the Company up to $700,000,000 for the purposes set forth in Section 2.13. 


        (3)   The
Lenders have indicated their willingness to lend such amount on the terms and conditions of this Agreement. 




        NOW,
THEREFORE, in consideration of the premises and of the mutual covenants and agreements contained herein, the parties hereto hereby agree as follows: 


ARTICLE I—DEFINITIONS  


        Section 1.1    Certain Defined Terms.    Unless a particular word or phrase is otherwise defined or the context
otherwise requires, capitalized words and phrases used in the Loan Documents have the meanings provided below. 



        "Additional Collateral" has the meaning specified in the Security Agreement B attached hereto as Exhibit G-B. 


        "Additional Collateral Trigger" shall mean the date on which (a) the Borrower's corporate credit rating shall be (i) with
respect to S&P's corporate credit rating, equal to or lower than BB-, and (ii) with respect to Moody's corporate rating system, equal to or lower than Ba3; or (b) the
Borrower's corporate credit rating shall be less than (i) with respect to S&P's corporate credit rating, BB-, or (ii) with respect to Moody's corporate rating system, a
rating of Ba3. 


        "Additional Security Period" shall mean the period, if any, beginning with the occurrence of the Additional Collateral Trigger until the
Maturity Date. 


        "Affiliate" shall mean any Person controlling, controlled by or under common control with any other Person; and with respect to an
individual, "Affiliate" shall also mean any other individual related to such individual by blood or marriage. For purposes of this definition, "control" (including "controlled by" and "under common
control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of securities,
partnership or other ownership interests, by contract or otherwise. 



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        "Agent" shall have the meaning ascribed to it in the recital of parties hereto. 



        "Agent's Account" means the Agent's account specified by the Agent in writing to the Company and the Lenders from time to time. 


        "Aggregate Commitment" shall mean, on any day, the aggregate of all of the Commitments of the Lenders on such day. 


        "Agreement" shall have the meaning ascribed to it in the recital of parties hereto. 


        "Agreement Value" means, for each Hedging Agreement, on any date of determination, an amount determined by the Agent equal to the amount,
if any, (a) that would be payable by any Loan Party or any of its Subsidiaries to its counterparty to such Hedging Agreement as if (i) such Hedging Agreement was being terminated early
on such date of determination, (ii) such Loan Party or Subsidiary was the sole "Affected Party" and (iii) the Agent was the sole party determining such payment amount (with the Agent
making such determination pursuant to the terms of the governing documentation); (b) in the case of a Hedge Agreement traded on an exchange, the mark-to-market value of
such Hedge Agreement, which will be the unrealized loss on such Hedge Agreement to the Loan Party or any of its Subsidiaries party to such Hedge Agreement based on the settlement price of such Hedge
Agreement on such date of determination; or (c) in all other cases, the mark-to-market value of such Hedge Agreement, which will be the unrealized loss on such Hedge
Agreement to the Loan Party or Subsidiary of a Loan Party to such Hedge Agreement as the amount, if any, by which (i) the present value of the future cash flows to be paid by such Loan Party or
Subsidiary exceeds (ii) the present value of the future cash flows to be received by such Loan Party or Subsidiary pursuant to such Hedge Agreement. 


        "Alternate Base Rate" shall mean for any day (a) the greater of (i) the Prime Rate and (ii) the Federal Funds Rate  plus 0.50% per annum,
plus (b) the Applicable Margin in effect on such day. For purposes of this
Agreement any change in the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds Rate shall be effective on the effective date of such change in the Prime Rate or Federal Funds
Rate, respectively. If for any reason the Agent shall have determined (which determination shall be conclusive and binding, absent manifest error) that it is unable to ascertain the Federal Funds Rate
for any reason, including the inability or failure of the Agent to obtain sufficient quotations in accordance with the terms hereof, the Alternate Base Rate shall be the Prime Rate  plus the Applicable
Margin. 


        "Alternate Base Rate Borrowing" shall mean that portion of the principal balance of the Loans at any time bearing interest at the
Alternate Base Rate. 


        "Annual Audited Financial Statements" shall mean, with respect to each fiscal year of the Company, the Company's 10-K Report
filed with the Securities Exchange Commission for such fiscal year, prepared in conformity with Generally Accepted Accounting Principles and accompanied by a report and opinion of independent
certified public accountants with an accounting firm of national standing and reputation, which shall state that such financial statements, in the opinion of such accountants, present fairly, in all
material respects, the financial position of the Company and its Subsidiaries, on a consolidated basis, as of the date thereof and the results of its operations and cash flows for the period covered
thereby in conformity with Generally Accepted Accounting Principles. 



2







 




        "Applicable Margin" shall mean with respect to any Loan on any date of determination, the applicable rate per annum for the corresponding
rating of the Company's corporate family ratings, and determined in accordance with the following grid: 



	Moody's and S&P
 
	 	LIBOR Margin

(Per Annum)
	 	ABR Margin

(Per Annum)
	 
	BBB+ or Baa1	 	0.375	%	0.00	%
	

BBB or Baa2	
 	

0.500	
%	

0.00	
%
	

BBB- and Baa3	
 	

0.625	
%	

0.00	
%
	

BBB- or Baa3	
 	

0.875	
%	

0.00	
%
	

BB+ and Ba1	
 	

1.00	
%	

0.00	
%
	

BB+ or Ba1	
 	

1.25	
%	

0.25	
%
	

BB and Ba2	
 	

1.375	
%	

0.375	
%
	

BB or Ba2	
 	

1.50	
%	

0.50	
%
	

Otherwise	
 	

1.75	
%	

0.75	
%






For
purposes of determining the Applicable Margin in the case of split ratings, where applicable, (i) in the event of a single category split in ratings, the higher of the two ratings shall
apply, (ii) in the event of a two-category split in ratings, the rating that is in the middle of the two ratings shall apply and (iii) in the event that there is more than a
two-category split in ratings, the rating that is one category above the lower rating will apply. 



        "Approved Fund" means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans
and similar extensions of credit in the ordinary course of its business and 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. 


        "Borrowing" shall mean an Alternate Base Rate Borrowing or a LIBOR Rate Borrowing. 


        "Business Day" shall mean a day when the main office of the Agent is open for business and banks in New York, New York are generally open
for business. 


        "Business Entity" shall mean corporations, partnerships, joint ventures, joint stock associations, business trusts and other business
entities. 


        "Capital Lease Obligations" shall mean the obligations of the Company and its Subsidiaries on a consolidated basis to pay rent or other
amounts under a lease of (or other agreement conveying the right to use) real and/or personal Property which obligations are required to be classified and
accounted for as a capital lease on a consolidated balance sheet of the Company and its Subsidiaries under Generally Accepted Accounting Principles (including Statement of Financial Accounting
Standards No. 13 of the Financial Accounting Standards Board, as amended) and, for purposes of this Agreement, the amount of such obligations shall be the capitalized amount thereof, determined
in accordance with Generally Accepted Accounting Principles (including such Statement No. 13). 


        "Change of Control" shall mean any change so that any Unrelated Person (or any Unrelated Persons acting together which would constitute a
Group) together with any Affiliate or Related Persons of such Unrelated Person or Unrelated Persons (in each case also constituting Unrelated Persons) shall at any time after the date hereof either
(i) Beneficially Own more than fifty percent (50%) of the aggregate voting power of all classes of Voting Stock of the Company, or (ii) succeed 



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in
having enough of its or their nominees elected by the stockholders to the Board of Directors of the Company so as to constitute a majority of the Board of Directors of the Company. As used herein,
(a) "Beneficially Own" shall mean "beneficially own" as defined in Rule 13d-3 of the Securities and Exchange Act of 1934, as amended (the
"34 Act") or any successor provision thereto; (b) "Group" shall mean a "group" for purposes of Section 13(d) of the 34 Act or any
successor provision; (c) "Unrelated Person" shall mean any Person other than any trust for any employee stock ownership plan of the Company or any Subsidiary of the Company; (d) "Related
Person" shall mean as to any Person, any other Person owning (1) five percent (5%) or more of the outstanding common stock of such Person or (2) five percent (5%) or more of the Voting
Stock of such Person, and (e) "Voting Stock" shall mean as to any Person, the Stock of such Person which ordinarily has voting power for the election of directors (or persons performing similar
functions) of such Person, whether at all times or only so long as no senior class of securities has such voting power by reason of any contingency. 



        "Code" shall mean the Internal Revenue Code of 1986, as amended, as now or hereafter in effect, together with all regulations, rulings and
interpretations thereof or thereunder by the Internal Revenue Service. 


        "Collateral" has the meaning specified in the Security Agreement A attached hereto as Exhibit G-A. 


        "Collateral Agent" shall have the meaning ascribed to it in the recital of parties hereto. 



        "Commitment" shall mean, as to any Lender, the obligation of such Lender to make Loans in an aggregate principal amount at any one time
outstanding up to, but not exceeding, the amount set forth opposite such Lender's name on Schedule 2.1(a) hereto under the caption "Commitment", or as to any Lender that becomes a Party hereto
by executing an Assignment and Acceptance, the amount set forth in such Assignment and Acceptance (in each case, as the same may be reduced from time to time pursuant to Section 2.2 hereof). 


        "Commitment Fee" with respect to any Lender, shall have the meaning assigned to it in Section 2.2. 



        "Commitment Percentage" shall mean, with respect to any Lender, the ratio, expressed as a percentage, of (a) such Lender's
Commitment to (b) the Aggregate Commitment. 


        "Commitment Termination Date" means September 7, 2007. 


        "Confidential Information" means non-public information that any Loan Party furnishes to the Agent or any Lender, unless such
information is or becomes (a) generally available to the public (other than as a result of a breach by the Agent or any Lender of its obligations hereunder) or that is or becomes available to
the Agent or such Lender from a source other than the Loan Parties that is not, to the best of the Agent's or such Lender's knowledge, acting in violation of a confidentiality agreement with a Loan
Party or (b) designated in writing by any Loan Party as non-confidential. 


        "Consequential Loss" shall mean, with respect to (a) the Company's payment of principal of a LIBOR Rate Borrowing on a day other
than the last day of the applicable LIBOR Interest Period, (b) the Company's failure to borrow a LIBOR Rate Borrowing on the date specified by the Company for any reason, (c) the
Company's failure to make any prepayment of the Loans (other than Alternate Base Rate Borrowings) on the date specified by the Company, or (d) any cessation of the LIBOR Rate to apply to the
Loans or any part thereof pursuant to Section 2.10 hereof, in each case whether voluntary or involuntary, any loss, expense, penalty, premium or liability incurred by any of the Lenders or the
Agent, including any interest paid by any of the Lenders to lenders of funds borrowed by them to make or carry the Loans; a "Consequential Loss" shall
mean, 



4







 




with
respect to the termination or cancellation of any LIBOR Rate Borrowing pursuant to Section 2.10 hereof, in each case whether voluntary or involuntary, any loss, expense, penalty, premium
or liability incurred by any of the Lenders or the Agent on account of any reduction resulting from such premature termination or cancellation of such borrowing in such Person's margins or spreads
between its cost of funds and the interest earned on the principal of the borrowing so terminated or canceled, including an amount equal to the excess (if any) of (x) interest that would have
accrued on any such borrowing during the remainder of the applicable LIBOR Interest Period had such borrowing not been terminated or canceled early, over (y) the interest actually accrued on
the principal amount of that terminated or canceled borrowing for such remainder of such LIBOR Interest Period. 



        "Consolidated Net Worth" shall mean, at any time, shareholder's equity of the Company as set forth in the most recent consolidated Annual
Audited Financial Statements of the Company and its
Subsidiaries, determined in accordance with Generally Accepted Accounting Principles, consistently applied. 


        "Contingent Obligations" shall mean, as to any Person, without duplication, any obligation of such Person guaranteeing or intended to
guarantee the payment or performance of any Indebtedness, leases, dividends or other obligations (collectively "primary obligations") of any other Person (the "primary obligor") in any manner, whether
directly or indirectly, including without limitation, any obligation of the Person for whom Contingent Obligations is being determined, whether or not contingent, (a) to purchase any such
primary obligation or other property constituting direct or indirect security therefor, (b) assume or contingently agree to become or be secondarily liable in respect of any such primary
obligation, (c) 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 for the primary
obligor or otherwise to maintain the net worth or solvency of the primary obligor, (d) 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, or (e) otherwise to assure or hold harmless the owner of such primary obligation against
loss in respect thereof; provided, however, that the term "Contingent Obligations" shall not include (x) endorsements of checks or other
negotiable instruments in the ordinary course of business, (y) performance or payment guarantees by the Company of any Indebtedness of any of its Subsidiaries of the type permitted in
Section 6.1(f) hereof, and (z) the obligations and liabilities of each Guarantor to the Agent and the Lenders under the Guaranties. 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 not stated or determinable, the maximum
anticipated liability in respect thereof (assuming the Person for whom Contingent Obligations is being determined is required to perform thereunder) as determined by the Agent in good faith. 



        "Contribution Agreement" shall mean that certain Contribution Agreement of even effective date herewith, by and among the Company and the
Guarantors, as the same may have been or may hereafter be amended, modified, supplemented, restated and joined in pursuant to a Joinder Agreement, from time to time. 


        "Convertible Senior Debentures" shall mean those certain the 3.25% Convertible Senior Debentures due 2034 which are governed by that
certain Indenture dated June 1, 2004, by and between Target and U.S. Bank National Association as trustee. 



        "Credit Facility Hedging Agreements" shall mean any Hedging Agreement now existing or hereafter entered into between the Company and any
lender under the Revolving Credit Facility and/or any of their respective Affiliates in connection with all or any portion of the Loans and/or any of the loans under the Revolving Credit Facility for
purposes of hedging the risk of variable 



5







 




interest
rate volatility or fluctuations of interest rates, as any such Hedging Agreement may be modified, supplemented and in effect from time to time. 



        "Current Sum" shall mean on any day, as to a particular Lender, the sum of the then outstanding principal balance of such Lender's Loans
on such day. 


        "Current Sum Percentage" shall mean, with respect to any Lender, the ratio, expressed as a percentage of (a) such Lender's Current
Sum to (b) the aggregate Current Sum of all Lenders. 


        "Default" means any Event of Default or any other event or circumstance that with the passing of time or the giving of notice, or both,
would constitute an Event of Default. 


        "Disclosed Divestitures" shall mean the proposed divestitures of the Company and its Subsidiaries set forth in Schedule 1.1(a)
hereto. 


        "Discontinued Operations" shall mean, as of any day, operations of the Company or its Subsidiaries which have been discontinued, as
reflected on the most recent Form 10-K or 10-Q for the Company filed with the Security and Exchange Commission, and which, as of such day, have been fully disposed of or
liquidated. 


        "EBIT" shall mean for any period for which EBIT is calculated, Net Income of the Company and its Subsidiaries on a consolidated basis for
such period plus, without duplication, (a) non-recurring, non-cash charges of the Company and its Subsidiaries on a consolidated basis for such period,
(b) non-cash pre-opening rent expenses of the Company and its Subsidiaries on a consolidated basis for such period, (c) taxes of the Company and its Subsidiaries
on a consolidated basis for such period, (d) interest expense of the Company and its Subsidiaries on a consolidated basis for such period and (e) non-cash stock compensation
expense of the Company and its Subsidiaries on a consolidated basis for such period; provided that EBIT for the three quarters immediately prior to the Effective Date shall be as set forth in
Schedule 1.1(b). All components of EBIT shall be determined in accordance with Generally Accepted Accounting Principles, consistently applied. 


        "EBITDA" shall mean for any period for which EBITDA is calculated, Net Income of the Company and its Subsidiaries on a consolidated basis
for such period plus, without duplication, (a) taxes of the Company and its Subsidiaries on a consolidated basis for such period (calculated after excluding any gain or loss attributable to
Discontinued Operations as of such day), (b) depreciation, depletion, obsolescence and amortization of Property of the Company and its Subsidiaries on a consolidated basis for such period
(calculated after excluding any depreciation, depletion, obsolescence and amortization applicable to Discontinued Operations as of such day), (c) interest expense of the Company and its
Subsidiaries on a consolidated basis for such period (calculated after excluding any interest expense paid in connection with Discontinued Operations as of such day),
(d) non-recurring, non-cash charges of the Company and its Subsidiaries on a consolidated basis for such period, (e) non-cash pre-opening
rent expenses of the Company and its
Subsidiaries on a consolidated basis for such period and (f) non-cash stock compensation expense of the Company and its Subsidiaries on a consolidated basis for such period;
provided that EBITDA for the three quarters immediately prior to the Effective Date shall be as set forth in Schedule 1.1(b). All components of EBITDA shall be determined in accordance with
Generally Accepted Accounting Principles, consistently applied. 


        "Effective Date" has the meaning ascribed thereto in Section 3.2. 


        "Eligible Assignee" shall mean (a) a Lender, (b) an Affiliate of a Lender, (c) an Approved Fund or (d) any
other Person (other than an individual) approved by the Agent and, except during the continuance of an Event of Default, the Company (each such consent not to be unreasonably 



6







 




withheld
or delayed); it being understood that none of the Company nor any of its Affiliates shall, in any event, be an Eligible Assignee. 


        "Environmental Claim" shall mean any third party (including any Governmental Authority) action, lawsuit, claim or proceeding (including
claims or proceedings at common law) which seeks to impose or alleges liability for (i) preservation, protection, conservation, pollution, contamination of, or releases or threatened releases
of Hazardous Substances into the air, surface water, ground water or land or the clean-up, abatement, removal, remediation or monitoring of such pollution, contamination or Hazardous
Substances; (ii) generation, recycling, reclamation, handling, treatment, storage, disposal or transportation of Hazardous Substances or solid waste (as defined under the Resource Conservation
and Recovery Act and its regulations, as amended from time to time); (iii) exposure to Hazardous Substances; (iv) the safety or health of employees or other Persons in connection with
any of the activities specified in any other subclause of this definition; or (v) the manufacture, processing, distribution in commerce, presence or use of Hazardous Substances. An
"Environmental Claim" includes a common law action, as well as a proceeding to issue, modify or terminate an Environmental Permit, or to adopt or amend a regulation to the extent that such a
proceeding attempts to redress violations of the applicable permit, license, or regulation as alleged by any Governmental Authority. 



        "Environmental Liabilities" shall mean all liabilities arising from any Environmental Claim, Environmental Permit or Requirement of
Environmental Law under any theory of recovery, at law or in equity, and whether based on negligence, strict liability or otherwise, including: remedial, removal, response, abatement, restoration
(including natural resources) investigative, or monitoring liabilities, personal injury and damage to property, natural resources or injuries to persons, and any other related costs, expenses, losses,
damages, penalties, fines, liabilities and obligations, and all costs and expenses necessary to cause the issuance, reissuance or renewal of any Environmental Permit including attorney's fees and
court costs. Environmental Liability shall mean any one of them. 


        "Environmental Permit" shall mean any permit, license, approval or other authorization under any applicable law, regulation and other
requirement of the United States or of any state, municipality or other subdivision thereof relating to pollution or protection of health or the environment, including laws, regulations or other
requirements relating to emissions, discharges, releases or threatened releases of pollutants, contaminants or Hazardous Substances or toxic materials or wastes into ambient air, surface water, ground
water or land, or otherwise relating to the manufacture, processing, distribution, recycling, presence, use, treatment, storage, disposal, transport, or handling of, wastes, pollutants, contaminants
or Hazardous Substances. 


        "Equipment" shall have the meaning assigned to it in the Texas Business and Commerce Code in force on the date the document using such
term was executed. 


        "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and all rules, regulations, rulings
and interpretations adopted by the Internal Revenue Service or the Department of Labor thereunder. 


        "Eurocurrency Liabilities" has the meaning specified in Regulation D. 



        "Event of Default" shall mean any of the events specified in Section 7.1 hereof or otherwise specified as an Event of Default in
any other Loan Document, provided there has been satisfied any requirement in connection with such event for the giving of notice, or the lapse of time, or the happening of any further condition,
event or act, and Default shall mean any of such events, whether or not any such requirement has been satisfied. 


        "Extraordinary Receipt" means any cash received by or paid to or for the account of any Person not in the ordinary course of business,
including, without limitation, tax refunds (provided



7







 




that,
for greater clarity and without limiting the foregoing, ordinary tax refunds on account of cash taxes actually paid would be considered ordinary course), pension plan reversions, proceeds of
insurance (including, without limitation, any key man life insurance but excluding proceeds of business interruption insurance to the extent such proceeds constitute compensation for lost earnings),
condemnation awards (and payments in lieu thereof), indemnity payments and any purchase price adjustment received in connection with any purchase agreement; provided, however, that an Extraordinary
Receipt shall not include cash receipts received from proceeds of insurance, condemnation awards (or payments in lieu thereof) or indemnity payments to the extent that such proceeds, awards or
payments are received by any Person in respect of any third party claim against such Person and applied to pay (or to reimburse such Person for its prior payment of) such claim and the costs and
expenses of such Person with respect thereto. 


        "Federal Funds Rate" means, for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business
Day, for the next preceding 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 such day
for such transactions received by the Agent from three Federal funds brokers of recognized standing selected by it. 


        "Fee Letter" shall mean that certain fee letter dated as of February 23, 2007 among Royal Bank, JPMorgan Chase Bank, N.A.,
J. P. Morgan Securities Inc. and the Company. 


        "Fixed Charge Coverage Ratio" shall mean as of any day that the Fixed Charge Coverage Ratio is being calculated, the ratio of
(a) EBIT plus Operating Lease Expense to (b) interest expense plus Operating Lease Expense. All components of the Fixed Charge Coverage Ratio shall be computed for the Rolling Four
Quarters as of such day and determined for the Company and its Subsidiaries on a consolidated basis in accordance with Generally Accepted Accounting Principles, consistently applied;  provided, that for
purposes of determining interest expense and Operating Lease Expense in the Fixed Charge Coverage Ratio for the (a) fiscal
quarter ended September 30, 2007, such interest expense and Operating Lease Expense for the measurement period then ended shall equal such items for such fiscal quarter multiplied by 52/13,
(b) fiscal quarter ended January 20, 2008, such interest expense and Operating Lease Expense for the measuring period then ended shall equal such items for the two fiscal quarters then
ended multiplied by 52/29, and (c) fiscal quarter ended April 30, 2008, such interest expense and Operating Lease Expense for the measuring period then ended shall equal such items for
the three fiscal quarters then ended multiplied by 52/41; provided also that EBIT for the three quarters immediately prior to the Effective Date shall
be as set forth in Schedule 1.1(b). 


        "Funded Indebtedness" shall mean (a) all Indebtedness of the Company and its Subsidiaries on a consolidated basis which by its
terms matures more than one year after the applicable date of calculation of Funded Indebtedness (including without limitation, current maturities or scheduled principal payments of Funded
Indebtedness for the applicable period for which Funded Indebtedness is being calculated), and any Indebtedness of the Company and its Subsidiaries on a consolidated basis maturing within one year
from such date and (b) without duplication, Capital Lease Obligations of the Company and its Subsidiaries on a consolidated basis. All components of Funded Indebtedness shall be determined in
accordance with Generally Accepted Accounting Principles, consistently applied. 



        "Generally Accepted Accounting Principles" shall mean, as to a particular Person, those principles and practices (a) which are
recognized as such by the Financial Accounting Standards Board or successor organization, (b) which are applied for all periods after the date hereof in a manner consistent with the manner in
which such principles and practices were applied to the most 



8







 




recent
audited financial statements of the relevant Person furnished to the Agent and the Lenders, and (c) which are consistently applied for all periods after the date hereof so as to reflect
properly the financial condition, and results of operations and changes in financial position, of such Person. 


        "Governmental Authority" shall mean any foreign governmental authority, the United States of America, any state of the United States and
any political subdivision of any of the foregoing, and any agency, instrumentality, department, commission, board, bureau, central bank, authority, court or other tribunal, in each case whether
executive, legislative, judicial, regulatory or administrative, having jurisdiction over the Agent, any of the Lenders or the Company, any of the Company's Subsidiaries or their respective Property. 



        "Guaranties" shall mean that certain Guaranty, substantially in the form of Exhibit H hereto, by the Guarantors party thereto in
favor of the Agent dated as of the date hereof, as the same may be amended, supplemented, modified, joined in pursuant to a Joinder Agreement and restated from time to time, and each and every other
guaranty executed by any or all of the Guarantors from time to time; each a "Guaranty". 


        "Guarantors" shall mean the Persons listed on Schedule 1.1(c) hereto, each Subsidiary that shall hereafter be required to execute
and deliver a Guaranty pursuant to the terms of this Agreement and each and every other Person executing a guaranty from time to time guaranteeing the Indebtedness of the Company owing from time to
time to the Lenders pursuant to this Agreement or the Notes. 


        "Hazardous Substance" shall mean any hazardous or toxic waste, substance or product or material defined or regulated from time to time by
any applicable law, rule, regulation or order described in the definition of "Requirements of Environmental Law," including solid waste (as defined under RCRA or its regulations, as amended from time
to time), petroleum and any fraction thereof, any radioactive materials and waste. 



        "Hedging Agreements" shall mean any transaction (including an agreement with respect thereto) now or hereafter existing which is a rate
swap, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange
transaction, cap transaction, floor transaction, collar transaction, forward transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other similar
transaction (including any option with respect to any of these transactions) or any
combination thereof, whether linked to one or more interest rates, foreign currencies, commodity prices, equity prices or other financial measures. 



        "Incidental Liens" shall mean (i) Liens for taxes, assessments, levies or other governmental charges (but not Liens for clean up
expenses arising pursuant to Requirements of Environmental Law) not yet due (subject to applicable grace periods) or which are being contested in good faith and by appropriate proceedings if adequate
reserves with respect thereto are maintained on the books of the Company in accordance with Generally Accepted Accounting Principles; (ii) carriers', warehousemen's, mechanics', landlords',
vendors', materialmen's, repairmen's, sureties' or other like Liens (other than Liens for clean up expenses arising pursuant to Requirements of Environmental Law) arising in the ordinary course of
business (or deposits to obtain the release of any such Lien) and securing amounts not yet due or which are being contested in good faith and by appropriate proceedings if, in the case of such
contested Liens, adequate reserves with respect thereto are maintained on the books of the Company in accordance with Generally Accepted Accounting Principles; (iii) pledges or deposits in
connection with workers' compensation, unemployment insurance and other social security legislation; (iv) deposits not in excess at any time of $25,000,000 in the aggregate to secure insurance
in the ordinary course of business, the performance of bids, tenders, contracts (other than contracts for the payment of money), leases, licenses, franchises, statutory obligations, surety and appeal
bonds and performance bonds and 



9







 




other
obligations of a like nature incurred in the ordinary course of business and Liens to secure progress or partial payments made to the Company or any Subsidiary and other Liens of like nature
made in the ordinary course of business; (v) easements, rights-of-way, covenants, reservations, exceptions, encroachments, zoning and similar restrictions and other
similar encumbrances or title defects incurred in the ordinary course of business which, in the aggregate, are not substantial in amount, and which do not in any case singly or in the aggregate
materially detract from the value or usefulness of the property subject thereto or materially interfere with the ordinary conduct of the business of the Company and its Subsidiaries, taken as a whole;
(vi) bankers' liens arising by operation of law; (vii) Liens arising pursuant to any order of attachment, distraint or similar legal process arising in connection with any court
proceeding the payment of which is covered in full (subject to customary deductibles) by insurance; (viii) inchoate Liens arising under ERISA to secure contingent liabilities of the Company;
and (ix) rights of lessees and sublessees in assets leased by the Company or any Subsidiary not prohibited elsewhere herein. 


        "Indebtedness" shall mean, as to any Person, without duplication: (a) all indebtedness (including principal, interest, fees and
charges) of such Person for borrowed money or for the deferred purchase price of Property or services; (b) any other indebtedness which is evidenced by a promissory note, bond, debenture or
similar instrument; (c) any obligation under or in respect of outstanding letters of credit, acceptances and similar obligations created for the account of such Person; (d) all Capital
Lease Obligations of such Person; (e) all indebtedness, liabilities, and obligations secured by any Lien on any Property owned by such Person even though such Person has not assumed or has not
otherwise become liable for the payment of any such indebtedness, liabilities or obligations secured by such Lien; (f) net liabilities of such Person under Hedging Agreements (determined by
reference to the Agreement Value thereof) and (g) all Contingent Obligations and Synthetic Indebtedness of such Person; provided, that such term shall not mean or include any Indebtedness in
respect of which monies sufficient to pay and discharge the same in full (either on the expressed date of maturity thereof or on such earlier date as
such Indebtedness may be duly called for redemption and payment) shall be deposited with a depository, agency or trustee acceptable to the Agent in trust for the payment thereof. 


        "Interest Option" shall have the meaning ascribed to it in Section 2.9(a) hereof. 


        "Interest Payment Dates" shall mean (a) for Alternate Base Rate Borrowings, (1) at all times while the Notes are
outstanding, the last Business Day of each March, June, September and December, and (2) the Maturity Date; and (b) for LIBOR Rate Borrowings, (1) if the LIBOR Interest Period
applicable to such LIBOR Rate Borrowing is equal to or less than three (3) months, the end of such LIBOR Interest Period, and (2) in all other cases, on that day which is three
(3) calendar months following the first day of the applicable LIBOR Interest Period (or, if such day is not a Business Day, on the next succeeding day that is a Business Day) and at the end of
such LIBOR Interest Period. 


        "Investment" shall mean the purchase or other acquisition of any securities or Indebtedness of, or the making of any loan, advance,
transfer of Property or capital contribution to, or the incurring of any liability, contingently or otherwise, in respect of the Indebtedness of, any Person. 



        "Investment Grade" shall mean with respect to the Moody's corporate credit rating system a rating of Baa3 or higher and with respect to
the S&P corporate credit rating system a rating of BBB- or higher. 


        "Joinder Agreement" shall mean any agreement, in Proper Form, executed by a Subsidiary of the Company from time to time, pursuant to which
such Subsidiary joins in the execution and delivery of a Guaranty and the Contribution Agreement. 



10







 




        "Joint Lead Arrangers" shall have the meaning ascribed to such term in the recitals hereto. 


        "Legal Requirement" shall mean any law, statute, ordinance, decree, requirement, order, judgment, rule, regulation (or interpretation of
any of the foregoing) of, and the terms of any license or permit issued by, any Governmental Authority. 


        "Lenders" shall have the meaning ascribed to it in the recital of parties hereto. 


        "Leverage Ratio" shall mean as of any day that the Leverage Ratio is calculated, the ratio of Funded Indebtedness of the Company and its
Subsidiaries on a consolidated basis as of such day to EBITDA of the Company and its Subsidiaries on a consolidated basis for the Rolling Four Quarters as of such day;  provided that EBITDA for the three
quarters immediately prior to the Effective Date shall be as set forth in Schedule 1.1(b). 



        "LIBOR Business Day" shall mean a Business Day on which transactions in United States Dollar deposits between banks may be carried on in
the London, England interbank market. 


        "LIBOR Interest Period" shall mean, for each LIBOR Rate Borrowing, a period commencing: 



        (a)   on
the date of such LIBOR Rate Borrowing, or 


        (b)   on
the last day of the immediately preceding LIBOR Interest Period in the case of a rollover to a successive LIBOR Interest Period, and ending on the numerically
corresponding day one, two, three or (as available) six months thereafter, as the Company shall elect in accordance herewith; provided, (w) any LIBOR Interest Period which would otherwise end
on a day which is not a LIBOR Business Day shall be extended to the next succeeding LIBOR Business Day, unless such LIBOR Business Day falls in another calendar month, in which case such LIBOR
Interest Period shall end on the next preceding LIBOR Business Day; (x) any LIBOR Interest Period which begins on the last LIBOR Business Day of a calendar month (or on a day for which there is
no numerically corresponding day in the calendar month at the end of such LIBOR Interest Period) shall end on the last LIBOR Business Day of the appropriate calendar month; (y) no LIBOR
Interest Period shall ever extend beyond the Maturity Date; and (z) LIBOR Interest Periods shall be selected by the Company in such a manner that the LIBOR Interest Period with respect to any
portion of the Loans which shall become due shall not extend beyond such due date. 




        "LIBOR Rate" means, for any LIBOR Interest Period for all LIBOR Rate Borrowings comprising part of the same Borrowing, (a) an
interest rate per annum equal to the rate per annum obtained by dividing (i) the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on the Reuters Screen LIBOR
01 (or any successor page) as the London interbank offered rate for deposits in U.S. dollars at 11:00 A.M. (London time) two Business Days before the first day of such LIBOR Interest Period for
a period equal to such LIBOR Interest Period (provided that, if for any reason such rate is not available, the term "LIBOR" shall mean, for any LIBOR Interest Period for all LIBOR Rate Borrowings
comprising part of the same Borrowing, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBOR 01 as the London interbank offered rate for
deposits in Dollars at approximately 11:00 A.M. (London time) two Business Days prior to the first day of such LIBOR Interest Period for a term comparable to such LIBOR Interest Period;
provided, however, if more than one rate is specified on Reuters Screen LIBOR 01, the applicable rate shall be the arithmetic mean of all such rates) by (ii) a percentage equal to 100% minus
the LIBOR Reserve Percentage for such LIBOR Interest Period plus (b) the Applicable Margin from time to time in effect during such term. 



        "LIBOR Rate Borrowing" shall mean each portion of the principal balance of the Loans at any time bearing interest at the LIBOR Rate. 



11







 




        "Lien" shall mean any mortgage, pledge, charge, encumbrance, security interest, collateral assignment or other lien or restriction of any
kind, whether based on common law, constitutional provision, statute or contract, and shall include reservations, exceptions, encroachments, easements, rights of way, covenants, conditions,
restrictions, leases and other title exceptions. 


        "Loan Documents" shall mean this Agreement, the Notes, the Guaranties, the Contribution Agreement, the Joinder Agreements, the Fee Letter,
Security Agreement A, Security Agreement B, the Credit Facility Hedging Agreements, all instruments, certificates and agreements now or hereafter executed or delivered to the Agent and/or the Lenders
pursuant to any of the foregoing, and all amendments, modifications, renewals, extensions, increases and rearrangements of, and substitutions for, any of the foregoing. 



        "Loan Party" means the Company or any Guarantor. 


        "Loans" shall mean the advances of funds described in Section 2.1 hereof. Loan shall mean any one of the Loans. 


        "Margin Stock" has the meaning specified in Regulation U. 


        "Material Adverse Effect" means a material adverse effect on the validity or enforceability of any material provision of the Loan
Documents, on the ability of the Company to consummate the Transactions, on the financial condition of the Company (either individually or taken as a whole with its Subsidiaries), or on the property,
business, operations or liabilities of the Company (either individually or taken as a whole with its Subsidiaries). 


        "Maturity Date" shall mean the earlier of (a) August 28, 2012 and (b) the date specified by the Agent pursuant to
Section 7.1 hereof. 


        "Merger" shall have the meaning ascribed to it in the Preliminary Statements hereto. 



        "Merger Agreement" shall have the meaning ascribed to it in the Preliminary Statements hereto. 


        "Moody's" shall mean Moody's Investors Service, Inc. 


        "Net Income" shall mean gross revenues and other proper income credits, less all proper income charges, including taxes on income, all
determined in accordance with Generally Accepted Accounting Principles; provided, that there shall not be included in such revenues (i) any income representing the excess of equity in any
Subsidiary at the date of acquisition over the investment in such Subsidiary, (ii) any equity in the undistributed earnings of any Person which is not a Subsidiary, (iii) any earnings of
any Subsidiary for any period prior to the date such Subsidiary was acquired, except as may be permitted under Generally Accepted Accounting Principles in connection with the pooling of interest
method of accounting, and (iv) any gains resulting from the write-up of assets. Net Income shall be determined on a consolidated basis. 


        "Net Proceeds" shall mean: 



        (a)   with
respect to any sale, lease, transfer or other disposition of any asset of the Company or any of its Subsidiaries (except in the case of Disclosed Divestitures
listed in part A of Schedule1.1(a)), the excess, if any, of (i) the sum of cash and Permitted Investment Securities received in connection with such sale, lease, transfer or other
disposition (including any cash or Permitted Investment Securities received by way of deferred payment pursuant to, or by monetization of, a note receivable or otherwise, but only as and when so
received) less (ii) the sum of (A) the principal amount of any Indebtedness (other than Indebtedness under the Loan Documents) that is required to be repaid in connection with such sale,
lease, transfer or other disposition thereof, (B) the reasonable and customary out-of-pocket costs, fees, commissions, premiums and expenses incurred by the Company or
its Subsidiaries, 




12







 


(C) federal,
state, provincial, foreign and local taxes reasonably estimated (on a consolidated basis) to be actually payable within the current or the immediately succeeding tax year as a
result of any gain recognized in connection therewith and (D) a reasonable reserve for any purchase price adjustment or any indemnification payments (fixed and contingent) attributable to the
seller's obligations to the purchaser undertaken by the Company or any of its Subsidiaries in connection with such sale, lease, transfer or other disposition; provided, however, that, Net Proceeds
shall not include any such amounts to the extent such amounts are reinvested or contracted to be so reinvested in capital assets used or useful in the business of the Company and its Subsidiaries
within 270 days after the date of receipt thereof or the date such contact is entered into; and 


        (b)   with
respect to any Extraordinary Receipt that is not otherwise included in clause (a) above, the sum of the cash and Permitted Investment Securities received in
connection therewith (including any cash or Permitted Investment Securities received by way of deferred payment pursuant to, or by monetization of, a note receivable or otherwise, but only as and when
so received) less fees, costs, out of pocket expenses and commissions incurred in connection with the receipt thereof; provided, however, that Net Proceeds shall not include any such amounts from
Extraordinary Receipts (other than in respect of Customer Penalties) to the extent such amounts are reinvested or contracted to be so reinvested in capital assets used or useful in the business of the
Company and its Subsidiaries within 270 days after the date of receipt thereof or the date such contract is entered into. 




        "Non-Consenting Lender" means, in the event that the Required Lenders have agreed to any consent, waiver or amendment pursuant
to Section 9.10 that requires the consent of one or more Lenders in addition to the Required Lenders, any Lender who is entitled to agree to such consent, waiver or amendment but who does not
so agree. 


        "Non-Guarantor Subsidiaries" means (a) Subsidiaries of the Company organized under the laws of a jurisdiction located
outside of the United States, (b) prior to consummation of the Merger, the Target and its Subsidiaries, and (c) any one or more Subsidiaries of the Company designated by the Company in
writing to the Agent from time to time that do not represent, in the aggregate, (i) five percent (5%) or more of the consolidated EBITDA of the Company and its Subsidiaries, or (ii) 5%
or more of the consolidated tangible assets of the Company and its Subsidiaries; provided, that no Subsidiary of the Company shall be a Non-Guarantor Subsidiary to the extent that such
Subsidiary guaranties any other Indebtedness of the Company. 


        "Notes" shall mean the promissory notes, each substantially in the form of Exhibit A attached hereto, of the Company evidencing the
Loans, payable to the order of the respective Lenders in the amount of the sum of said Lender's Unused Commitment and the Current Sum owing to said Lender, and all renewals, extensions, modifications,
rearrangements and replacements thereof and substitutions therefor. Note shall mean any one of them. 


        "Notice of Assumption" shall mean a Notice of Assumption in favor of the Agent, substantially in the form of Exhibit B attached
hereto and otherwise in Proper Form. 


        "Officer's Certificate" shall mean a certificate substantially in the form of Exhibit C attached hereto. 



13









  



        "Operating Lease Expense" shall mean for any period for which Operating Lease Expense is calculated, the aggregate amount of fixed and
contingent rentals (exclusive of payments of Capital Lease Obligations) payable by the Company and its Subsidiaries for such period with respect to leases of Property. Operating Lease Expense shall be
determined for the Company and its Subsidiaries on a consolidated basis in accordance with Generally Accepted Accounting Principles, consistently applied. 


        "Organizational Documents" shall mean, with respect to a corporation, the certificate of incorporation, articles of incorporation and
bylaws of such corporation; with respect to a partnership, the partnership agreement establishing such partnership; with respect to a joint venture, the joint venture agreement establishing such joint
venture, and with respect to a trust, the instrument establishing such trust; in each case including any and all modifications thereof as of the date of the Loan Document referring to such
Organizational Document and any and all future modifications thereof which are consented to by the Agent. 


        "Parties" shall mean all Persons other than the Agent or any Lender executing any Loan Document. 


        "Past Due Rate" shall mean, on any day, the Alternate Base Rate plus two percent (2%). 


        "Permitted Asset Dispositions" shall have the meaning attributed to such terms in Section 6.4(z) hereof. 



        "Permitted Investment Securities" shall mean: (1) readily marketable securities issued or fully guaranteed by the United States of
America or any agency or wholly owned corporation thereof; (2) commercial paper rated "Prime 1" by Moody's Investors Service, Inc. or A-1 by Standard and Poor's Corporation
with maturities of not more than one hundred eighty (180) days and short term notes payable of any Business Entity where said notes are rated at least "Prime 1" by Moody's Investors
Service, Inc. or "A-1" by Standard & Poor's Corporation with maturities of not more than ninety (90) days; (3) certificates of deposit or repurchase
certificates issued by any Lender or any other financial institution acceptable to the Agent, all of the foregoing not having a maturity of more than one (1) year from the date of issuance
thereof; (4) securities issued by municipalities rated AA or better by Standard & Poor's Corporation not having a maturity of more than one (1) year from the date of issuance
thereof; and (5) money market mutual funds having capital surplus of at least $1,000,000,000 and deemed acceptable by the Agent, substantially all of the assets of which are comprised of
securities, commercial paper, certificates of deposit or repurchase certificates of the type described in subclauses (1) through (4) above. 


        "Permitted Stock Dispositions" shall have the meaning attributed to such terms in Section 6.4(z) hereof. 



        "Person" shall mean any individual, corporation, trust, unincorporated organization, Governmental Authority or any other form of entity. 


        "Plan" shall mean any plan subject to Title IV of ERISA and maintained for employees of the Company or of any member of a "controlled
group of corporations", as such term is defined in the Code, of which the Company or any of its Subsidiaries it may acquire from time to time is a part, or any such plan to which the Company or any of
its Subsidiaries it may acquire from time to time is required to contribute on behalf of its employees. 



        "Prime Rate" shall mean, for any day, the corporate base rate of interest publicly announced by the Agent from time to time for borrowings
made in the United States in U.S. Dollars. The corporate base rate is not necessarily the lowest rate charged by the Lender acting as the administrative agent to its customers. 


        "Proper Form" shall mean in form and substance satisfactory to the Agent. 



14







 




        "Property" shall mean any interest in any kind of property or asset, whether real, personal or mixed, tangible or intangible. 


        "Quarterly Unaudited Financial Statements" shall mean, with respect to each fiscal quarter of the Company (except for the last fiscal
quarter), the Company's 10-Q Report filed with the Securities Exchange Commission for such fiscal quarter. All of the Quarterly Unaudited Financial Statements of the Company are to
be prepared in accordance with Generally Accepted Accounting Principles and certified as true and correct by a Responsible Officer of the Company. 



        "Rate Selection Date" shall mean that Business Day which is (a) in the case of Alternate Base Rate Borrowings, the date one
(1) Business Day preceding such borrowing or (b) in the case of LIBOR Rate Borrowings, the date three (3) Business Days preceding the first day of any proposed LIBOR Interest
Period. 


        "Rate Selection Notice" shall have the meaning ascribed to it in Section 2.9(b)(i) hereof. 


        "Register" shall have the meaning assigned to such term in Section 9.11(e). 



        "Regulation D" shall mean Regulation D of the Board of Governors of the Federal Reserve System from time to time in effect
and shall include any successor or other regulation relating to reserve requirements applicable to member banks of the Federal Reserve System. 


        "Regulatory Change" shall mean, with respect to any Lender, any change on or after the date of this Agreement in any Legal Requirement
(including Regulation D) or the adoption or making on or after such date of any interpretation, directive or request applying to a class of banks including such Lender under any Legal
Requirement (whether or not having the force of law) by any Governmental Authority charged with the interpretation or administration thereof. 


        "Request for Extension of Credit and Certificate of No Default" shall mean a written request for extension of credit substantially in the
form of Exhibit D attached hereto. 


        "Required Lenders" shall mean two (2) or more Lenders having a majority or greater of the sum of the Aggregate Commitment or if the
Aggregate Commitment has been terminated the aggregate Current Sum for all Lenders. 



        "Requirements of Environmental Law" shall mean all requirements imposed by any law (including The Resource Conservation and Recovery Act,
The Comprehensive Environmental Response, Compensation, and Liability Act, the Clean Water Act, the Clean Air Act, and any state analogues of any of the foregoing), rule, regulation, or order of any
Governmental Authority now or hereafter in effect which relate to (i) noise; (ii) pollution, protection or clean-up of the air, surface water, ground water or land;
(iii) solid, gaseous or liquid waste or Hazard Substance generation, recycling, reclamation, release, threatened release, treatment, storage, disposal or transportation; (iv) exposure of
Persons or property to Hazardous Substances; (v) the safety or health of employees or other Persons or (vi) the manufacture, presence, processing, distribution in commerce, use,
discharge, releases, threatened releases, emissions or storage of Hazardous Substances into the environment. Requirement of Environmental Law shall mean any one of them. 


        "Responsible Officer" shall mean the chief executive officer, chief financial officer, president of a Loan Party and the general counsel
of the Company. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership
and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party. 



        "Revolving Credit Facility" shall mean the senior revolving credit facility of the Company dated as of the date hereof among the Company,
the financial institutions from time to time parties 



15







 

thereto,
and JPMorgan Chase Bank, N.A., as administrative agent, as the same may be amended from time to time in accordance with the terms of this Agreement. 



        "Rolling Four Quarters" shall mean the then most recently ended four (4) consecutive fiscal quarters of the Company for which, as
of such day, financial statements are required to have been given to the Agent and Lenders pursuant to this Agreement. 


        "Royal Bank" shall have the meaning ascribed to it in the recital of parties hereto. 


        "S&P" shall mean Standard & Poor's, a division of The McGraw Hill Companies, Inc. 



        "Security Agreement A" means a security and pledge agreement substantially in the form of Exhibit G-A hereto. 


        "Security Agreement B" means a security and pledge agreement substantially in the form of Exhibit G-B hereto. 


        "Solvent" and "Solvency" shall mean, with respect to any Person on a particular date, that
on such date (a) the fair value (taken on a going concern basis) of the property of such Person is greater than the total amount of liabilities, including, without limitation, contingent
liabilities, of such Person, (b) the present fair salable value (taken on a going concern basis) of the assets of such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and matured, (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay such debts and liabilities as they mature and (d) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for
which such Person's property would constitute an unreasonably small capital. The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and
circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability. In determining the Solvency of any Loan Party the contribution
rights that such Loan Party will have against the other Loan Parties and the subrogation rights that each Guarantor will have against the Company shall be taken into account. 


        "Stock" shall mean as to a Business Entity, all capital stock or other indicia of equity rights issued by such Business Entity from time
to time. 


        "Subsidiary" of any Person shall mean any corporation, partnership, joint venture, limited liability company, trust or estate of which (or
in which) more than fifty percent (50%) of (a) the issued and outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation
(irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency), (b) the interest
in the capital or profits of such partnership, joint venture or limited liability company or (c) the beneficial interest in such trust or estate is at the time directly or indirectly owned or
controlled by such Person, by such Person and one or more of its other Subsidiaries or by one or more of such Person's other Subsidiaries. 


        "Synthetic Indebtedness" shall mean the monetary obligation of a Person under (a) a so-called synthetic,
off-balance sheet or tax retention lease, or (b) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person
(excluding operating leases) but which upon the insolvency or bankruptcy of such Person, to the extent functioning as debt for borrowed money, would be characterized as the indebtedness of such Person
(without regard to accounting treatment). 


        "Target" shall have the meaning ascribed to it in the Preliminary Statements hereto. 



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        "Target Representations" shall mean the representations and warranties made by or on behalf of the Target and its Subsidiaries and
contained in the Merger Agreement and the representations and warranties of the Company with respect to the Target and its Subsidiaries set forth in Sections 4.1, 4.3, 4.14, 4.15, 4.18 and
4.19. 


        "Target Representation Limitations" means that, on the date of the initial Borrowing hereunder until the earlier of the date of
consummation of the Merger and the Commitment Termination Date, the representations and warranties of the Company set forth in Article IV in respect of the Target and its Subsidiaries shall be
limited to the Target Representations. 


        "Taxes" shall have the meaning ascribed to it in Section 2.10(b) hereof. 


        "Tender Offer" shall have the meaning ascribed to it in the Preliminary Statements hereto. 


        "Transactions" means the consummation of the Merger and the entering into and borrowings under this Agreement. 



        "Unsecured Borrowed Debt" shall mean all Indebtedness resulting from borrowings of the Company (exclusive of intercompany borrowings) from
time to time owing to Persons which is not secured by any Liens (other than borrowings from trade creditors in the ordinary course of business). 


        "Unused Commitment" shall mean, as to a particular Lender, the outstanding Commitment of such Lender giving effect to any Borrowing on any
day. 




        Section 1.2    Accounting Terms and Determinations.    


Except
where specifically otherwise provided: 



        (a)   The
symbol "$" and the word "dollars" shall mean lawful money of the United States of America. 


        (b)   Any
accounting term not otherwise defined shall have the meaning ascribed to it under Generally Accepted Accounting Principles. 



        (c)   Unless
otherwise expressly provided, any accounting concept and all financial covenants shall be determined on a consolidated basis, and financial measurements shall be
computed without duplication. 


        (d)   Wherever
the term "including" or any of its correlatives appears in the Loan Documents, it shall be read as if it were written "including (by way of example and without
limiting the generality of the subject or concept referred to)". 


        (e)   Wherever
the word "herein" or "hereof" is used in any Loan Document, it is a reference to that entire Loan Document and not just to the subdivision of it in which the
word is used. 


        (f)    References
in any Loan Document to Section numbers are references to the Sections of such Loan Document. 


        (g)   References
in any Loan Document to Exhibits, Schedules, Annexes and Appendices are to the Exhibits, Schedules, Annexes and Appendices to such Loan Document, and they
shall be deemed incorporated into such Loan Document by reference. 


        (h)   Any
term defined in the Loan Documents which refers to a particular agreement, instrument or document shall also mean, refer to and include all modifications,
amendments, supplements, restatements, renewals, extensions and substitutions of the same; provided that nothing in this subsection shall be construed to authorize any such modification, amendment,
supplement, restatement, renewal, extension or substitution except as may be permitted by other provisions of the Loan Documents. 



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        (i)    All
times of day used in the Loan Documents mean local time in New York, New York. 


        (j)    Defined
terms may be used in the singular or plural, as the context requires. 



ARTICLE II—LOANS; ETC.  


        Section 2.1    Loans.    


        (a)   Subject
to the terms and conditions hereof, each Lender severally agrees to make up to two loans to the Company from time to time on or prior to the Commitment
Termination Date, in an aggregate principal amount at any one time outstanding up to but not exceeding such Lender's Unused Commitment on such date. Loans repaid may not be reborrowed pursuant to the
terms of this Agreement. Each Loan shall be in an amount of at least (i) $10,000,000 or (ii) the Unused Commitment of the Lenders, whichever is less. Each repayment of the Loans shall be
in an amount of at least $10,000,000 or, if less, the Current Sum. 


        (b)   The
Company shall give the Agent notice of a request for a Loan in accordance with Section 3.1 hereof. Upon receipt of each such notice, the Agent shall promptly
give each of the Lenders notice of receipt thereof, which notice may be by telephone or facsimile. Not later than 12:00 noon on the date specified for the making of such Loan, each Lender shall make
available to the Agent, at the Agent's Account, such Lender's Commitment Percentage of such Loan in immediately available funds for the account of the Company. The amount so received by the Agent
shall, subject to the terms and conditions of this Agreement, be made available to the Company by depositing same, in immediately available funds, in an account designated by the Company maintained
with the Agent or with another financial institution reasonably acceptable to the Agent. If a requested Loan shall not occur on any date specified by the Company as set forth in the applicable Request
for Extension of Credit and Certificate of No Default because all of the conditions for such Loan set forth herein or in any of the other Loan Documents shall have not been met, the Agent shall return
the amounts so received from the Lenders in respect of such requested Loan to the applicable Lenders as soon as practicable; provided, however, if and to the extent that the Agent fails to return any
such amounts to any applicable Lender by the Business Day following the date that the requested Loan was to have been made, the Agent shall pay interest on such unreturned amounts for each date from
such date that the requested Loan was to have been made, to the date that such unreturned amounts are returned to such Lender, such interest to accrue at the Federal Funds Rate and to be payable upon
written request from such Lender. 


        (c)   Unless
the Agent shall have received notice from a Lender prior to the date of any Borrowing that such Lender will not make available to the Agent such Lender's ratable
portions of such Borrowing, the Agent may assume that such Lender has made such portion available to the Agent on the date of such Borrowing in accordance with subsection (b) of this
Section 2.1 and the Agent may, in reliance upon such assumption, make available to the Company on such date a corresponding amount. If and to the extent that such Lender shall not have so made
such ratable portion available to the Agent, such Lender and the Company severally agree to repay or pay to the Agent forthwith on demand such corresponding amount and to pay interest thereon, for
each day from the date such amount is made available to the Borrower until the date such amount is repaid or paid to the Agent, at (i) in the case of the Company, the interest rate applicable
at such time under Section 2.9 to Loans comprising such Borrowing and (ii) in the case of such Lender, the Federal Funds Rate. If such Lender shall pay to the Agent such corresponding
amount, such amount so paid shall constitute such Lender's Loan as part of such Borrowing for all purposes. 



        (d)   The
obligations of the Lenders hereunder are several and not joint; therefore, notwithstanding anything herein to the contrary, (i) no Lender shall be required to
make Loans at any one time outstanding in excess of such Lender's Commitment, (ii) if a Lender fails to make a Loan as and when required hereunder and the Company subsequently makes a repayment
on the Loans, such repayment 


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shall
be split among the non-defaulting Lenders in accordance with their respective Current Sum Percentages until each Lender has its Commitment Percentage of all of the outstanding Loans,
then the balance of such repayment shall be divided among all of the Lenders in accordance with their respective Commitment Percentages (it being understood that any such repayment to a defaulting
Lender shall not be deemed to relieve such defaulting Lender from any liability to the Company resulting from such defaulting Lender's failure to make a Loan as and when required hereunder) and
(iii) the failure of any Lender to make any Loan shall not in itself relieve any other Lender of its obligation to lend hereunder (provided, that no Lender shall be responsible for the failure
of any other Lender to make a Loan such other Lender is obligated to make hereunder). 


        (e)   Notwithstanding
anything to the contrary contained in this Section 2.1 or any other provision of this Agreement, the Company covenants and agrees that in no event
shall the aggregate amount of the Loans outstanding on any day ever exceed the amount of the Aggregate Commitment then in effect as of such day. 


        Section 2.2    Commitment Fees; Termination and Reductions.    In consideration of each Lender's Unused
Commitment, the Company agrees to pay to the Agent for the account of each Lender a commitment fee (each a "Commitment Fee"), starting from the date
hereof and until the Commitment Termination Date, due and payable monthly on the last day of each month and on the Commitment Termination Date, at the rate of 0.15% per annum on the average daily
Unused Commitment of such Lender. All past due Commitment Fees shall bear interest at the Past Due Rate and shall be payable upon demand by the Agent. The Aggregate Commitment may be permanently
terminated or reduced as follows, which such reductions shall be applied pro rata: 



        (a)   the
Company may, upon three (3) Business Days' prior written notice to the Agent, permanently terminate or reduce the aggregate of the Unused Commitments in an
amount of at least $10,000,000 or the amount of the aggregate of the Unused Commitments at such time, whichever is less; and 



        (b)   any
prepayment of the Loans in accordance with the provisions of Section 2.3 hereof shall permanently and automatically reduce the Aggregate Commitment in an
amount equal to any such prepayment. 




        Section 2.3    Mandatory Prepayments; Commitment Reduction.    


        (a)   The
Company shall, not later than five Business Days following the date of receipt of any Net Proceeds by any Loan Party or any of its Subsidiaries, by notice to the
Agent, prepay an aggregate principal amount of the Loans in an amount equal to the amount of such Net Proceeds, such prepayment to be applied to the Loans on a pro rata basis;  provided that this
subsection shall not apply to the first $10,000,000 of Net Proceeds received by the Company and its Subsidiaries in any fiscal year
of the Company. 


        (b)   The
Company shall, on the date that is 90 days following the Effective Date, prepay an aggregate principal amount of the Loans in an amount equal to the excess
above $10,000,000 of the aggregate principal amount of the Target's Convertible Senior Debentures outstanding on such date. 


        (c)   Except
to the extent of any Loans borrowed on or prior to such date, the Unused Commitment of each Lender shall be canceled in full on the Commitment Termination Date. 


        Section 2.4    Payments.    All sums payable by the Company to the Agent hereunder or pursuant to Notes for its
own account or the account of the Lenders shall be payable in United States dollars in immediately available funds not later than 12:00 noon on the date such payment or prepayment is due and shall be
made without set-off, counterclaim or deduction of any kind. Any such payment received and accepted by the Agent after such time shall be considered for all purposes (including the payment
of interest, to the extent permitted by law) as having been made on the next succeeding Business Day. 


19







 



All
such payments shall be made to the Agent at the Agent's Account. If any payment or prepayment becomes due and payable on a day which is not a Business Day, then the date for the payment thereof
shall be extended to the next succeeding Business Day and interest shall be payable thereon at the then applicable rate per annum during such extension. 


        Section 2.5    Prepayments of Loans.    


        (a)   In
addition to the mandatory prepayments required by Section 2.3 hereof, the Company shall have the right, at its option, to prepay the Loans in whole at any time
or in part from time to time, without premium or penalty, except as provided in this Section or subsections (a), (b) or (c) of Section 2.10 hereof. Each partial prepayment under
this subsection shall be a principal amount of not less than $10,000,000 or an integral multiple of $1,000,000 in excess thereof. Each prepayment under this subsection shall be applied to the
prepayment of the aggregate unpaid principal amount of the Notes. Prepayments under this Agreement shall be subject to the following additional conditions: 



        i.      In
giving notice of prepayment as hereinafter provided, the Company shall specify, for the purpose of paragraphs (ii) and (iii) immediately following, the
manner of application of such prepayment as between any outstanding Alternate Base Rate Borrowings and LIBOR Rate Borrowings; provided, that in no event shall any LIBOR Rate Borrowing be partially
prepaid. 


        ii.     Prepayments
applied to any LIBOR Rate Borrowing may be made on any LIBOR Business Day, provided, that (A) the Company shall have given the Agent at least two
(2) LIBOR Business Days' prior irrevocable written or facsimile notice of such prepayment, specifying the principal amount of the LIBOR Rate Borrowing to be prepaid, the particular LIBOR Rate
Borrowing to which such prepayment is to be applied and the prepayment date; and (ii) if such prepayment is made on any day other than the last day of the LIBOR Interest Period corresponding to
the LIBOR Rate Borrowing to be prepaid, the Company shall pay directly to the Agent for the account of the Lenders, on the last day of such LIBOR Interest Period, the Consequential Loss as a result of
such prepayment. 


        iii.    Prepayments
applied to any Alternate Base Rate Borrowing may be made on any Business Day, provided that the Company shall have given the Agent at least five
(5) Business Days prior irrevocable written notice or notice by telephone or facsimile (which is to be promptly confirmed in writing) of such prepayment, specifying the principal amount of the
Alternate Base Rate Borrowing to be prepaid and the prepayment date. 




        (b)   Notice
of any prepayment having been given, the principal amount specified in such notice, together with (in the case of any prepayment of a LIBOR Rate Borrowing)
interest thereon to the date of prepayment, shall be due and payable on such prepayment date. 



        (c)   Any
Lender may, if it so elects, fulfill its obligation as to any LIBOR Rate Borrowing by causing a branch, foreign or otherwise, or Affiliate of such Lender to make
such Loans and may transfer and carry such Loans at, to or for the account of any branch office or Affiliate of such Lender; provided, that in such
event for the purposes of this Agreement such Loans shall be deemed to have been made by such Lender and the obligation of the Company to repay such Loans shall nevertheless be to such Lender and
shall be deemed held by it, to the extent of such portions of the Loan, for the account of such branch or affiliate. 



        (d)   Notwithstanding
any provision of this Agreement to the contrary, each Lender shall be entitled to fund and maintain its funding of all or any part of the Loans hereunder
in any manner it sees fit, it being understood, however, that for the purposes of this Agreement all determinations hereunder shall be made as if such Lender had actually funded and maintained its
portion of each LIBOR Rate Borrowing during each LIBOR Interest Period for the Loans through the purchase of deposits having a maturity corresponding to such LIBOR Interest Period and bearing an
interest rate equal to the London Interbank Rate for such LIBOR Interest Period. 


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        (e)   The
Company's obligation to pay increased costs and Consequential Loss with regard to each LIBOR Rate Borrowing as specified in this Section 2.5 hereof shall
survive termination of this Agreement. 


        Section 2.6    Application of Payments and Prepayments.    Prepayments of the Loans shall be applied first to
the principal amount thereof, with the balance to accrued interest. Regularly scheduled payments of the Loans shall be applied first to accrued interest, the balance to the principal. If the Agent
receives funds on a date when payments of the Loans are due and such funds are not sufficient to pay all of the obligations of the Company hereunder then due, or if the Agent receives any payments or
other amounts owing to Agent or any Lender under any Loan Document, including without limitation, proceeds obtained from the enforcement of the Guaranties, then such funds shall be applied
(a) first to fees or expenses of the Agent then due hereunder or under any other Loan Document which are to be paid by the Company or the applicable Guarantor, (b) second, to fees or
expenses of the Lenders then due hereunder or under any other Loan Document (other than fees or expenses owing under the Credit Facility Hedge Agreements) which are to be paid by the Company or the
applicable Guarantor, and (c) third to the accrued interest on and, to the extent then due, principal of the Loans then outstanding. Each payment received by the Agent hereunder or under any
Note for the account of a Lender shall be paid promptly to such Lender, in immediately available funds. If the Agent fails to send to any Lender the product of such Lender's Current Sum Percentage
times the aggregate amount of any such payment timely received by the Agent for the account of all the Lenders by the close of business on the Business Day following the date such payment was received
by the Agent, the Agent shall pay to such Lender interest on such Lender's pro-rata portion of such payment timely received by the Agent from such date of receipt by the Agent to the date
that such Lender receives its pro-rata portion of such payment, such interest to accrue at the Federal Funds Rate and to be payable upon written request from such Lender. 



        Section 2.7    Pro Rata Treatment.    Except to the extent otherwise provided herein: (a) each borrowing
from the Lenders under Section 2.1 hereof shall be made, each payment of commitment fees shall be made and applied for the account of the Lenders, and each termination or reduction of the
Unused Commitments of the Lenders under Section 2.2 hereof shall be applied, pro rata, according to each Lender's Commitment Percentage; and (b) each payment by the Company of principal
of or interest on Loans shall be made to the Agent for the account of the Lenders pro rata in accordance with the respective Current Sum Percentage of the Lenders. 



        Section 2.8    Payment Dates on the Loans.    Accrued interest on the unpaid balance of the Loans shall be
payable on the Interest Payment Dates and at the Maturity Date, commencing with the first of such dates to occur after the date hereof. After the Maturity Date, accrued interest on the Loans shall be
payable on demand. On the Maturity Date, the outstanding principal balance of the Loans shall be fully due and payable. 


        Section 2.9    Interest Options for Loans.    



        (a)    Options Available.    The Loans shall bear interest at the Alternate Base Rate; provided, that (1) all
past due principal and interest shall bear interest at the Past Due Rate which shall be payable on demand, and (2) subject to the provisions hereof, the Company shall have the option of having
all or any portion of the outstanding principal amount of the Loans bear interest until their respective maturities at a rate per annum equal to the LIBOR Rate (together with the Alternate Base Rate,
individually herein called an "Interest Option" and collectively called "Interest Options"). The records
of the Agent with respect to Interest Options, LIBOR Interest Periods and the amounts of Loans to which they are applicable shall be binding and conclusive, absent manifest error. Interest on the
Loans shall be calculated at the Alternate Base Rate except where it is expressly provided pursuant to this Agreement that the LIBOR Rate is to apply. 


21







 



        (b)    Designation and Conversion.    The Company shall have the right to designate or convert its Interest Options in
accordance with the provisions hereof. Provided no Event of Default has occurred and is continuing and subject to the provisions of the last sentence of Subsection 2.09(a) hereinabove and of
Section 2.10 hereof, the Company may elect to have the LIBOR Rate apply or continue to apply to all or any portion of the outstanding principal balance of the Loans. Each change in Interest
Options shall be a conversion of the rate of interest applicable to the specified portion of the Loans, but such conversion alone shall not change the outstanding principal amount of the Loans and
such conversion shall not be construed to make this Agreement a revolving credit facility. The Interest Options shall be designated or converted in the manner provided below: 



        i.      The
Company shall give the Agent notice by telephone or facsimile promptly confirmed by written notice (the "Rate Selection
Notice") substantially in the form of Exhibit E hereto. Each such telephone or facsimile and written notice shall specify the amount and type of borrowings which are the
subject of the designation, if any; the amount and type of borrowings into which such borrowings are to be converted or for which an Interest Option is designated; the proposed date for the
designation or conversion (which, in the case of conversion of LIBOR Rate Borrowings, shall be the last day of the LIBOR Interest Period applicable thereto) and the LIBOR Interest Period or Periods,
if any, selected by the Company. Such notice by telephone or facsimile shall be irrevocable and shall be given to the Agent no later than the applicable Rate Selection Date. If (a) a new Loan
is to be a LIBOR Rate Borrowing, (b) an existing LIBOR Rate Borrowing is maturing at the time that a new Loan is being requested and the Company is electing to have such existing portion of the
outstanding principal balance of the Loans going forward bear interest at the same Interest Option and for the same LIBOR Interest Period as the new Loan, or (c) a portion of an Alternate Base
Rate Borrowing is to be converted so as to bear interest at the same Interest Option and for the same LIBOR Interest Period as the new Loan, then the Rate Selection Notice shall be included in the
Request for Extension of Credit and Certificate of No Default applicable to the new Loan, which shall be given to the Agent no later than the applicable Rate Selection Date. 



        ii.     No
more than five (5) LIBOR Interest Periods shall be in effect at any one time. Each LIBOR Rate Borrowing shall be in the amount of at least $10,000,000. 


        iii.    Principal
included in any borrowing shall not be included in any other borrowing which exists at the same time. 


        iv.    Each
designation or conversion shall occur on a Business Day (and, for LIBOR Rate Borrowings, on a LIBOR Business Day). 



        v.     Except
as provided in Section 2.10 hereof, no LIBOR Rate Borrowing shall be converted on any day other than the last day of the applicable LIBOR Interest Period. 




        (c)    Computations.    Interest based on the Alternate Base Rate, to the extent determined by reference to the Prime
Rate, will be computed on the basis of 365 (or 366) days and actual days elapsed (including the first day but excluding the last day) occurring in the period for which payable. All other interest and
fees shall be computed on the basis of a year of 360 days and actual days elapsed (including the first day but excluding the last day) occurring in the period for which payable. 



        Section 2.10    Special Provisions Applicable to LIBOR Rate Borrowings.    


        (a)    Options Unlawful.    If, after the date of this Agreement, the adoption of any applicable Legal Requirement or
any change in any applicable Legal Requirement or in the interpretation or administration thereof by any Governmental Authority or compliance by the Agent or any Lender with any request or directive
(whether or not having the force of law) of any Governmental Authority shall at any time make it unlawful or impossible for any Lender to permit the establishment of or to maintain any LIBOR Rate
Borrowing, the commitment of the Lenders to establish or maintain the 


22







 



LIBOR
Rate affected by such adoption or change shall forthwith be canceled and the Company shall forthwith, upon demand by the Agent to the Company, (1) convert the LIBOR Rate with respect to
which such demand was made to the Alternate Base Rate; (2) pay all accrued and unpaid interest to date on the amount so converted; and (3) pay any amounts required to compensate the
Agent and the Lenders for any additional cost or expense which the Agent or any Lender may incur as a result of such adoption of or change in such Legal Requirement or in the interpretation or
administration thereof and any Consequential Loss which the Agent or any Lender may incur as a result of such conversion to the Alternate Base Rate. If, when the Agent so notifies the Company, the
Company has given a Rate Selection Notice specifying one or more borrowings of the type with respect to which such demand was made but the selected LIBOR Interest Period or LIBOR Interest Periods has
not yet begun, such Rate Selection Notice shall be deemed to be of no force and effect, as if never made, and the balance of the Loans specified in such Rate Selection Notice shall bear interest at
the Alternate Base Rate until a different available Interest Option shall be designated in accordance herewith. 



        (b)    Increased Cost of Borrowings.    If the adoption of any applicable Legal Requirement or any change in any
applicable Legal Requirement or in the interpretation or administration thereof by any Governmental Authority or compliance by the Agent or any Lender with any request or directive (whether or not
having the force of law) from any Governmental Authority shall at any time as a result of any portion of the principal balance of the Loans being maintained on the basis of the LIBOR Rate: 



        i.      subject
any Lender (or make it apparent that any Lender is subject) to any tax (including any United States interest equalization tax), levy, impost, duty, charge, fee
(collectively, "Taxes"), or any deduction or withholding for any Taxes on or from the payment due under any LIBOR Rate Borrowing or other amounts due
hereunder, other than income and franchise taxes of the United States and its political subdivisions; or 


        ii.     change
the basis of taxation of payments due from the Company to the Agent or any Lender under any LIBOR Rate Borrowing (otherwise than by a change in the rate of
taxation of the overall net income of the Agent or any Lender); or 


        iii.    impose,
modify, increase or deem applicable any reserve requirement (excluding that portion of any reserve requirement included in the calculation of the Eurocurrency
Reserve Requirement, special deposit requirement or similar requirement (including state law requirements and Regulation D) imposed, modified, increased or deemed applicable by any Governmental
Authority against assets held by the Agent or any Lender, or against deposits or accounts in or for the account of the Agent or any Lender, or against loans made by the Agent or any Lender, or against
any other funds, obligations or other Property owned or held by the Agent or any Lender; or 


        iv.    impose
on the Agent or any Lender any other condition regarding any LIBOR Rate Borrowing; 




and
the result of any of the foregoing is to increase the cost to any Lender of agreeing to make or of making, renewing or maintaining such borrowing on the basis of the LIBOR Rate, or reduce the
amount of principal or interest received by any Lender, then, upon demand by the Agent, the Company shall pay to the Agent, from time to time as specified by the Agent, additional amounts which shall
compensate such Lender for such increased cost or reduced amount. The Agent will promptly notify the Company in writing of any event, upon becoming actually aware of it, which will entitle any Lender
to additional amounts pursuant to this paragraph. The Agent's determination of the amount of any such increased cost, increased reserve requirement or reduced amount shall be conclusive and binding,
absent manifest error, provided that the calculation thereof is set forth in reasonable detail in such notice. 


23







 

        The
Company shall have the right, if it receives from the Agent any notice referred to in the preceding paragraph, upon three (3) Business Days' notice to the Agent, either
(i) to repay in full (but not in part) any borrowing with respect to which such notice was given, together with any accrued interest thereon, or (ii) to convert the LIBOR Rate in effect
with respect to such borrowing to the Alternate Base Rate; provided, that any such repayment or conversion shall be accompanied by payment of (x) the amount required to compensate the
appropriate Lender or Lenders for the increased cost or reduced amount referred to in the preceding paragraph; (y) all accrued and unpaid interest to date on the amount so repaid or converted,
and (z) any Consequential Loss which may be incurred as a result of such repayment or conversion. 



        (c)    Inadequacy of Pricing and Rate Determination.    If for any reason with respect to any LIBOR Interest Period
the Agent shall have determined (which determination shall be conclusive and binding upon the Company, and, in the case of clause (2) below, shall be presumed to be made upon notice from such
Lender) that: (1) the Agent is unable through its customary general practices to determine a rate at which the Agent is offered deposits in United States dollars by prime banks in the interbank
market in London, England in the appropriate amount for the appropriate period, or by reason of circumstances affecting the interbank market in London, England, generally, prime banks are not being
offered deposits in United States dollars in the interbank market in London, England, for the applicable LIBOR Interest Period and in an amount equal to the amount of the LIBOR Rate Borrowing
requested by the Company, or (2) the LIBOR Rate will not adequately and fairly reflect the cost to any Lender of making and maintaining any LIBOR Rate Borrowing hereunder for any proposed LIBOR
Interest Period, then the Agent shall give the Company notice thereof and thereupon, (A) any Rate Selection Notice previously given by the Company designating a LIBOR Rate which has not
commenced as of the date of such notice from the Agent shall be deemed for all purposes hereof to be of no force and effect, as if never given, and (B) until the Agent shall notify the Company
that the circumstances giving rise to such notice from the Agent no longer exist, each Rate Selection Notice requesting a LIBOR Rate Borrowing shall be deemed a request for an Alternate Base Rate
Borrowing, and each outstanding LIBOR Rate Borrowing then in effect shall be converted, without any notice to or from the Company, upon the termination of the LIBOR Interest Period then in effect, to
an Alternate Base Rate Borrowing. 


        (d)    Indemnification.    The Company shall indemnify the Agent and each of the Lenders against and hold each of them
harmless from any loss or expense which they may incur or sustain as a consequence of any untimely payment (mandatory or optional) or default by the Company in the payment of any principal amount of
or interest on the Loans, or any failure by the Company to convert or to borrow any LIBOR Rate Borrowing on the date specified by the Company, in each case including any interest payable by any Lender
to the lenders of the funds obtained by it in order to make or maintain any LIBOR Rate Borrowing (or any portion thereof), and, to the extent not covered above, any Consequential Loss. This agreement
shall survive the payment of the Loans. A certificate as to any additional amounts payable pursuant to this paragraph submitted by the Agent or any Lender to the Company shall be conclusive and
binding upon the Company, absent manifest error, provided the calculation thereof is set forth in reasonable detail in such notice. 


        Section 2.11    Payment Dates.    Whenever any payment to be made hereunder in respect of the Loans shall be
stated to be due on a day which is neither a Business Day nor a LIBOR Business Day, such payment may be made on the next succeeding Business Day, or, subject to the definition of LIBOR Interest Period
in the case of any payment of the Loans to which the LIBOR Rate applies, on the next
succeeding LIBOR Business Day, and such extension of time shall in each such case be included in computing interest and commitment fees in connection with such payment. 


        Section 2.12    Sharing of Payments, Etc.    The Company agrees that, in addition to (and without limitation
of) any right of set-off, bankers' lien or counterclaim a Lender may otherwise have, upon the occurrence and during the continuance of any Event of Default, each Lender shall be entitled,
at its 


24







 



option,
to offset balances held by it for the account of the Company at any of its offices against any principal of or interest on any of such Lender's Loans to the Company hereunder or any other
obligation of the Company hereunder, which is not paid (regardless of whether such balances are then due to the Company), in which case it shall promptly notify the Company and the Agent thereof,
provided that such Lender's failure to give such notice shall not affect the validity thereof. If a Lender shall obtain payment of any principal of or interest on any Loan made by it under this
Agreement or other obligation then due to such Lender hereunder, through the exercise of any right of set-off (including, without limitation, any right of setoff or lien granted under
Section 9.18 hereof), banker's lien, counterclaim or similar right, or otherwise, it shall promptly purchase from the other Lenders participations in the Loans made by, or the other obligations
of the Company hereunder of, the other Lenders in such amounts, and make such other adjustments from time to time as shall be equitable to the end that all the Lenders shall share the benefit of such
payment (net of any expenses which may be incurred by such Lender in obtaining or preserving such benefit) pro rata in accordance with their respective Commitment Percentages. To such end all the
Lenders shall make appropriate adjustments among themselves (by the resale of participations sold or otherwise) if such payment is rescinded or must otherwise be restored. The Company agrees, to the
fullest extent it may effectively do so under applicable law, that any Lender so purchasing a participation in the Loans made by, or other obligations hereunder of, the other Lenders may exercise,
upon the occurrence and during the continuance of any Event of Default, all rights of set-off, bankers' lien, counterclaim or similar rights with respect to such participation as fully as
if such Lender were a direct holder of said Loans or other obligations in the amount of such participation. Nothing contained herein shall require any Lender to exercise any such right or shall affect
the right of any Lender to exercise, and retain the benefits of exercising, any such right with respect to any other indebtedness or obligation of the Company. 



        Section 2.13    Use of Proceeds.    Subject to the terms and conditions contained herein, the proceeds of the
Loans shall be used solely (a) to finance the Tender Offer and the Merger, (b) to refinance certain existing Indebtedness of the Target; and (c) to pay costs and expenses relating
to the Transactions. 


        Section 2.14    Evidence of Debt.    


        (a)   Each
Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Company to such Lender resulting from each
Loan owing to such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder. The Company agrees that upon notice by any
Lender to the Company (with a copy of such notice to the Agent) to the effect that a Note or other evidence of indebtedness is required or appropriate in order for such Lender to evidence (whether for
purposes of enforcement or otherwise) the Loans owing to, or to be made by, such Lender, the Company shall promptly execute and deliver to such Lender Party, with a copy to the Agent, a Note, in
substantially the form of Exhibit A hereto, payable to the order of such Lender in a principal amount equal to the Commitment of such Lender. All references to Notes in the Loan Documents shall
mean Notes, if any, to the extent issued hereunder. 


        (b)   The
Register maintained by the Agent pursuant to Section 9.11(e) shall include a control account, and a subsidiary account for each Lender, in which accounts
(taken together) shall be recorded (i) the date and amount of each Borrowing made hereunder, the Type of Loans comprising such Borrowing and, if appropriate, the LIBOR Interest Period
applicable thereto, (ii) the terms of each Assignment and Acceptance delivered to and accepted by it, (iii) the amount of any principal or interest due and payable or to become due and
payable from the Borrower to each Lender hereunder, and (iv) the amount of any sum received by the Agent from the Borrower hereunder and each Lender's share thereof. 


25









  





        (c)   Entries made in good faith by the Agent in the Register pursuant to subsection (b) above, and by each Lender in its account or accounts pursuant to subsection
(a) above, shall be prima facie evidence of the amount of principal and interest due and payable or to become due and payable from the Company to, in the case of the Register, each Lender and,
in the case of such account or accounts, such Lender, under this Agreement, absent manifest error; provided, however, that the failure of the Agent or
such Lender to make an entry, or any finding that an entry is incorrect, in the Register or such account or accounts shall not limit or otherwise affect the obligations of the Borrower under this
Agreement. 


 
 

ARTICLE III—CONDITIONS    
    



        Section 3.1    All Loans.    The obligation of each Lender to make any Loan is subject to the accuracy of all
representations and warranties of the Company on the date of such Loan, to the performance by the Company of its obligations under the Loan Documents and to the satisfaction of the following further
conditions: 



        (a)   the
Agent shall have received the following, all of which shall be duly executed and in Proper Form: 



        i.      by
no later than 11:00 a.m. (New York City time) on the applicable Rate Selection Date, notice by telephone or facsimile from the Company of the proposed date and
amount of such Loan, and 


        ii.     no
later than 1:00 p.m. (New York City time) on the applicable Rate Selection Date, a Request for Extension of Credit and Certificate of No Default, signed by a
Responsible Officer; 




        (b)   no
Default shall have occurred and be continuing, or would result therefrom; and 



        (c)   the
representations and warranties contained in the Loan Documents are true and correct on and as of such date (except any representation and warranty that expressly
indicates that it is being made as of a specific date, and then as of such date). 




        Section 3.2    First Loan.    In addition to the matters described in Section 3.1 hereof, the obligation
of any Lender to make the initial Loan on the date thereof (the "Effective Date") is subject to the satisfaction of the following conditions precedent: 



        (a)   The
Agent shall have received on or before the Effective Date the following, each dated such day (unless otherwise specified), in Proper Form and (except for the Notes)
in sufficient copies for each Lender: 



        i.      Counterparts
to this Agreement executed by the Company and each Lender; 


        ii.     The
Notes payable to the order of the Lenders to the extent requested by the Lenders pursuant to the terms hereof; 



        iii.    The
Guaranty and the Contribution Agreement duly executed and delivered by each Guarantor as of the Effective Date; 


        iv.    Certified
copies of the resolutions of the board of directors (or equivalent body) of each Loan Party approving the Transaction and each Loan Document to which it is or
is to be a party. 


        v.     a
security agreement in substantially the form of Exhibit G-A authorized and executed by the parties thereto. 



        vi.    copies
of proper financing statements in respect of all the Loan Parties, together with evidence that such financing statements have been presented for filing on or
before the 




26







 





Effective
Date in all jurisdictions that the Agent may deem necessary or desirable in order to perfect and protect the first priority liens and security interests created under the Security Agreement
A, covering the Collateral described therein. 


        vii.   A
copy of a certificate of the Secretary of State of the jurisdiction of incorporation of each Loan Party, dated reasonably near the Effective Date certifying
(A) as to a true and correct copy of the charter of such Loan Party and each amendment thereto on file in such Secretary's office and (B) that (1) such amendments are the only
amendments to such Loan Party's charter on file in such Secretary's office, (2) such Loan Party has paid all franchise taxes to the date of such certificate and (3) such Loan Party is
duly incorporated and in good standing or presently subsisting under the laws of the State of the jurisdiction of its incorporation. 



        viii.  A
certificate of each Loan Party signed on behalf of such Loan Party by its secretary or any assistant secretary, dated the Effective Date (the statements made in
which certificate shall be true on and as of the Effective Date), certifying as to (A) the absence of any amendments to the charter of such Loan Party since the date of the Secretary of State's
certificate referred to in Section 3.2(a)(v), (B) a true and correct copy of the bylaws of such Loan Party as in effect on the date on which the resolutions referred to in
Section 3.2(a)(iv) were adopted and on the Effective Date, (C) the absence of any proceeding for the dissolution or liquidation of such Loan Party, (D) the truth in all
material respects of the representations and warranties contained in the Loan Documents as though made on and as of the Effective Date, (E) the absence of any event occurring and continuing, or
resulting from the initial Borrowing hereunder, that constitutes a Default, and (F) certifying the names and true signatures of the officers of such Loan Party authorized to sign each Loan
Document to which it is or is to be a party and the other documents to be delivered hereunder and thereunder. 


        ix.    A
certificate, in form and substance reasonably satisfactory to the Lenders, attesting to the Solvency of the Company and its Subsidiaries, on a consolidated basis, both
before and after giving effect to the Transactions, from its chief financial officer. 


        x.     Audited
annual financial statements of the Company and the Target for the three fiscal years most recently ended and interim financial statements for the fiscal quarters
ended thereafter and prior to the Effective Date and for the most recent quarter for which financial statements are available, pro forma
financial statements as to the Company and its Subsidiaries giving effect to the Transactions, and forecasts prepared by management of the Company, each in form and substance reasonably satisfactory
to the Lenders, of balance sheets, income statements and cash flow statements on an annual basis for each year following the Effective Date until the Termination Date. 


        xi.    A
favorable opinion of counsel for the Loan Parties, in form and substance reasonably satisfactory to the Lenders. 




        (b)   The
Tender Offer shall have been consummated, or shall be consummated substantially concurrently with the initial Borrowing hereunder, on substantially the terms and
conditions set forth in the Merger Agreement, without any amendment or waiver of any material term thereof that is adverse, in any material respect, to the interests of the Lenders, and the Company
shall have acquired not less than a majority of the capital stock of the Target. 


        (c)   The
Company's existing revolving credit facilities with JPMorgan Chase Bank, N.A. shall have been terminated. 



27







 

        (d)   The
Target's existing credit and letter of credit facilities with Bank of America, N.A. shall have been terminated and all loans, if any, outstanding thereunder, as well
as all accrued interest and fees thereunder, if any, shall have been paid in full. 


        (e)   There
shall exist no action, suit, investigation, litigation or proceeding affecting any Loan Party or any of its Subsidiaries pending or, to the knowledge of the Loan
Parties or any of their Subsidiaries, threatened before any Governmental Authority that has had or could reasonably be expected to have a Material Adverse Effect on the legality, validity or
enforceability of any Loan Document or the consummation of the Transactions. 


        (f)    All
governmental authorizations and third-party consents and approvals required to be obtained under the Merger Agreement in connection with the Transactions shall have
been obtained (without the imposition of any conditions that materially and adversely impair the rights and remedies of the Lenders under the Loan Documents) and shall remain in effect. 


        (g)   The
Company shall have paid all accrued fees and expenses of the Agent that are due and payable in accordance herewith (including the accrued fees and expenses of
counsel to the Agent and fees due and payable to the Joint Lead Arrangers pursuant to the Fee Letter). 




        Section 3.3    Determinations Under Section 3.2.    For purposes of determining compliance with the
conditions specified in Section 3.2, each Lender shall be deemed to have consented to, approved or accepted or to be satisfied with each document or other matter required thereunder to be
consented to or approved by or acceptable or satisfactory to the Lenders unless an officer of the Agent responsible for the transactions contemplated by the Loan Documents shall have received notice
from such Lender prior to the initial Borrowing hereunder specifying its objection thereto and shall not have made available to the Agent such Lender's ratable portion of such Borrowing. 


 
 

ARTICLE IV—REPRESENTATIONS AND WARRANTIES    
    


        To induce the Agent and the Lenders to enter into this Agreement, subject to the Target Representation Limitations, the Company represents and warrants to the
Agent and the Lenders as follows: 


        Section 4.1    Organization.    Each of the Company and its Subsidiaries is duly organized, validly existing
and in good standing under the laws of the state of its incorporation; has all power and authority to conduct its business as presently conducted; and is duly qualified to do business and in good
standing in each and every state in the United States of America where its business requires such qualification, except where failure to qualify could not reasonably be expected to have a Material
Adverse Effect. 


        Section 4.2    Financial Statements.    The financial statements of the Company and its Subsidiaries on a
consolidated basis delivered to the Agent and the Lenders in connection with this Agreement fairly present, in accordance with Generally Accepted Accounting Principles, the financial condition and the
results of operations of the Company and its Subsidiaries as of the dates and for the periods indicated. Since the date of the last audited financial statements of the Company, no event, development
or circumstance has occurred or exists that could reasonably be expected to have a Material Adverse Effect. 


        Section 4.3    Enforceable Obligations; Authorization.    The Loan Documents are legal, valid and binding
obligations of the Company and the Guarantors, enforceable in accordance with their respective terms, except as may be limited by bankruptcy, insolvency and other similar laws affecting creditors
rights generally and by general equitable principles. The execution, delivery and performance of the Loan Documents have all been duly authorized by all necessary action; are within the power and
authority of the Company and the Guarantors; do not and will not contravene or violate any Legal Requirement or the Organizational Documents of the Company or any Guarantors; do not and will not 


28







 



result
in the breach of, or constitute a default under, any agreement or instrument by which the Company or any Guarantors or any of their respective Property may be bound or affected; and do not and
will not result in the creation of any Lien upon any Property of the Company or any Guarantors except as expressly contemplated therein. All necessary permits, registrations and consents for the
execution, delivery and performance by the Company and its Subsidiaries of the Loan Documents have been obtained. 


        Section 4.4    Other Debt.    Neither the Company nor any of its Subsidiaries is in default in the payment of
any other Indebtedness or under any agreement, mortgage, deed of trust, security agreement or lease
to which it is a party, the result of which has, would or could reasonably be expected to have a Material Adverse Effect. 



        Section 4.5    Litigation.    There is no litigation or administrative proceeding pending or, to the knowledge
of the Company, threatened against, nor any outstanding judgment, order or decree affecting, the Company or any of its Subsidiaries before or by any Governmental Authority or arbitral body which in
the aggregate have, or if adversely determined, could reasonably be expected to have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries is in default with respect to any
material judgment, order or decree of any Governmental Authority. 



        Section 4.6    Title.    Each of the Company and its Subsidiaries has good and marketable title to its Property
(other than negligible assets not material to the operations of the Company or any of its Subsidiaries), free and clear of all Liens except for Incidental Liens. 


        Section 4.7    Taxes.    Each of the Company and its Subsidiaries has filed all tax returns required to have
been filed and paid all taxes shown thereon to be due, except those for which extensions have been obtained and except for those which are being contested in good faith and by appropriate proceedings
if adequate reserves with respect thereto are maintained in accordance with Generally Accepted Accounting Principles. 


        Section 4.8    Subsidiaries.    As of the date hereof, the Company has no Subsidiaries other than as listed on
Schedule 4.8 attached hereto. Except as expressly indicated on Schedule 4.8 attached hereto, each of the Company's Subsidiaries is wholly owned by the Company. 



        Section 4.9    Representations by Others.    All representations and warranties made by or on behalf of the
Company or any of its Subsidiaries in any Loan Document shall constitute representations and warranties of the Company hereunder. 


        Section 4.10    Permits, Licenses, Etc.    The Company and each of its Subsidiaries possess all permits,
licenses, patents, patent rights or licenses, trademarks, trademark rights, trade names, trade name rights and copyrights which are required to conduct its business, and which the failure of the
Company or any of its Subsidiaries to so possess would or could reasonably be expected to have a material adverse affect on the financial condition or operations of the Company and its Subsidiaries on
a consolidated basis. 


        Section 4.11    ERISA.    No Reportable Event (as defined in Section 4043(b) of ERISA but excluding
those events as to which the 30-day notice period is waived by applicable regulations) has occurred with respect to any Plan. Each Plan complies in all material respects with all
applicable provisions of ERISA, and the Company and each of its Subsidiaries have filed all reports required by ERISA and the Code to be filed with respect to each Plan. The Company has no knowledge
of any event which could result in a liability of the Company or any of its Subsidiaries to the Pension Benefit Guaranty Corporation other than for applicable premiums. No accumulated funding
deficiency (as defined in Section 302 of ERISA and Section 412 of the Code), whether or not waived, exists with respect to any Plan. No event has occurred and no condition exists that
might reasonably be expected to constitute grounds for a Plan to be terminated under circumstances which would cause the lien provided under Section 4068 of ERISA to attach to any Property of
the Company or any of its 


29







 



Subsidiaries.
No event has occurred and no condition exists that might reasonably be expected to cause the lien provided under Section 302 of ERISA or Section 412 of the Code to attach
to any Property of the Company or any of its Subsidiaries. 


        Section 4.12    Condition of Property.    The Property used or to be used in the continuing operations of the
Company and its Subsidiaries, when taken as a whole, is in good repair, working order and condition. 


        Section 4.13    Assumed Names.    Neither the Company nor any of its Subsidiaries is currently conducting its
business under any assumed name or names, except as set forth on Schedule 4.13 attached hereto. 


        Section 4.14    Investment Company Act.    Neither the Company nor any of its Subsidiaries is an investment
company within the meaning of the Investment Company Act of 1940, as amended, or, directly or indirectly, controlled by or acting on behalf of any Person which is an investment company, within the
meaning of said Act. 


        Section 4.15    Margin Stock.    The Company is not engaged in the business of extending credit for the purpose
of purchasing or carrying Margin Stock, and no proceeds of any Loan will be used to purchase or carry any Margin Stock or to extend credit to others for the purpose of purchasing or carrying any
Margin Stock, other than in respect of the Transaction. 


        Section 4.16    Agreements.    Schedule 4.16 attached hereto is a complete and correct list of
(i) all credit agreements for borrowed money (other than the indebtedness governed hereby), indentures and capitalized leases and all Property subject to any Lien securing such Indebtedness or
lease obligation, (ii) each letter of credit and guaranty for which the liability or potential liability of the Company and its Subsidiaries on a consolidated basis is in excess of $250,000,
(iii) all other material instruments in effect as of the date hereof providing for, evidencing, securing or otherwise relating to any indebtedness for borrowed money of the Company or any of
its Subsidiaries (other than the Indebtedness hereunder and Indebtedness secured by Incidental Liens), and (iv) all obligations of the Company or any of its
Subsidiaries to issuers of appeal bonds issued for account of the Company or any of its Subsidiaries. The Company shall, upon request by the Agent, deliver to the Agent and the Lenders a complete and
correct copy of all such credit agreements, indentures, capitalized leases, letters of credit, guarantees and other instruments or leases described in Schedule 4.16 or arising after the date
hereof, including any modifications or supplements thereto, as in effect on the date hereof. 


        Section 4.17    Environmental Matters.    No activity of the Company or any of its Subsidiaries requires any
Environmental Permit which has not been obtained and which is not now in full force and effect, except to the extent failure to have any such Environmental Permit could not reasonably be expected to
have a Material Adverse Effect. The Company and its Subsidiaries are in compliance with all limitations, restrictions, conditions, standards, prohibitions, requirements, obligations, schedules and
timetables contained in any applicable Requirement of Environmental Law or Environmental Permit, except where failure to be in such compliance could not reasonably be expected to have a Material
Adverse Effect. The Company and its Subsidiaries (and, to the best knowledge of the Company, each of the prior owners or operators and predecessors in interest with respect to any of its or its
Subsidiaries' Property) (i) have obtained and maintained in effect all Environmental Permits, the failure to obtain which could reasonably be expected to have a Material Adverse Effect,
(ii) along with their respective Property have been and are in compliance with all applicable Requirements of Environmental Law and Environmental Permits where such failure to comply therewith
could reasonably be expected to have a Material Adverse Effect, (iii) along with their Property are not subject to any (A) Environmental Claims or (B) Environmental Liabilities,
in either case direct or contingent, and whether known or unknown, arising from or based upon any act, omission, event, condition or circumstance occurring or existing on or prior to the date hereof
which could reasonably be expected to have a Material Adverse Effect, and (iv) have not received individually or collectively 


30







 



any
notice of any violation or alleged violation of any Requirements of Environmental Law or Environmental Permit or any Environmental Claim in connection with their respective Property which could
reasonably be expected to have a Material Adverse Effect. The present and future liability (including any Environmental Liability and any other damage to Persons or Property), if any, of the Company
and with respect to the Property of any of the Company or any of its Subsidiaries which is reasonably expected to arise in connection with Requirements of Environmental Law, Environmental Permits and
other environmental matters will not have a Material Adverse Effect on the Company and its Subsidiaries on a consolidated basis. 


        Section 4.18    Solvency.    The Company and its Subsidiaries are, on a consolidated basis, Solvent. 


        Section 4.19    Target Representations.    As to any date of determination prior to the consummation of the
Merger, the Company makes the Target Representations, except where the failure of any Target Representation to be true and correct on such date would not be material and adverse to the interests of
the Lenders. 


 
 

ARTICLE V—AFFIRMATIVE COVENANTS    
    


        The Company covenants and agrees with the Agent and the Lenders that prior to the termination of this Agreement it will do, cause each of its Subsidiaries to do,
and if necessary cause to be done, each and all of the following: 



        Section 5.1    Taxes, Existence, Regulations, Property, Etc.    At all times (a) pay when due all taxes
and governmental charges of every kind upon it or against its income, profits or property, unless and only to the extent that the same shall be contested in good faith and reserves deemed adequate by
the Agent have been established therefor; (b) do all things necessary to preserve its corporate existence, qualifications, rights and franchises in all States where such qualification is
necessary or desirable; (c) comply in all material respects with all applicable Legal Requirements (including all applicable Requirements of Environmental Laws) in respect of the conduct of its
business and the ownership of its Property; and (d) cause its Property to be protected, maintained and kept in good repair and make all replacements and additions to its Property as may be
reasonably necessary to conduct its business properly and efficiently. 


        Section 5.2    Financial Statements and Information.    Furnish to the Agent and each Lender copies of each of
the following: (a) as soon as available and in any event within ninety (90) days after the end of each fiscal year of the Company, Annual Audited Financial Statements of the Company and
its Subsidiaries, prepared on a consolidated basis; (b) as soon as available and in any event within forty-five (45) days after the end of each quarter (excluding the fourth
quarter) of each fiscal year of the Company, Quarterly Unaudited Financial Statements of the Company and its Subsidiaries, prepared on a consolidated basis; (c) concurrently with the financial
statements provided for in clauses (a) and (b) hereof, an Officer's Certificate which shall include such schedules, computations and other information, in reasonable detail, as may be
reasonably required by the Agent or any Lender to demonstrate compliance with the covenants set forth herein or reflecting any non-compliance therewith as of the applicable date, all
certified as true, correct and complete by a Responsible Officer of the Company; (d) promptly upon their becoming available, all financial statements (other than the Annual Audited Financial
Statements and Quarterly Unaudited Financial Statements), registration statements, reports and proxy statements which the Company or any of its Subsidiaries may file with the Securities and Exchange
Commission, and (e) such other information relating to the financial condition and affairs of the Company and any of its Subsidiaries as from time to time may be reasonably requested by the
Agent or any Lender. In addition to the financial information and reports to be delivered in accordance with the prior sentence, if the most recent Annual Audited Financial Statements or Quarterly
Unaudited Financial Statements of the Company, as applicable, demonstrate that the financial condition of the Company and its Subsidiaries, on a consolidated basis, has been negatively 


31







 



impacted
as at the end of the immediately preceding fiscal quarter or fiscal year represented by such Annual Audited Financial Statements or Quarterly Unaudited Financial Statements, as applicable,
for one or more reasons (said determination of negative impact to be made by the Agent in its reasonable discretion), upon the periodic request of the Agent (until the conditions attributable to such
negative impact have been addressed and rectified to the reasonable satisfaction of the Agent), the Company agrees that it shall promptly provide the Agent and the Lenders with additional information
relating to the financial condition and affairs of the Company and its Subsidiaries as may be reasonably requested by the Agent, including, but not limited to, reports setting out in sufficient detail
the financial performance of each retail location for any and all stores and operations maintained by the Company and/or any of its Subsidiaries. 


        Notwithstanding
the foregoing, information required to be delivered pursuant to clauses (a), (b) and (d) of this Section 5.2 shall be deemed to have been delivered
if such information shall be available on the website of the Securities and Exchange Commission at http://www.sec.gov and the Company shall have notified the Agent of the availability of all such
financial information; provided, that the Company shall deliver paper copies of such information to the Agent or any Lender that reasonably requests such delivery. Information required to be delivered
pursuant to this Section 5.2 (other than a Notice of Default) may also be delivered by electronic means pursuant to Section 9.2(b). 



        Section 5.3    Financial Tests.    (a) Have at all times a FIXED CHARGE COVERAGE RATIO of not less than
1.50 to 1.00; and (b) have at all times a LEVERAGE RATIO of not more than 3.00 to 1.00. 


        Section 5.4    Inspection.    Permit the Agent and the Lenders to inspect its Property, to examine its files,
books and records and make and take away copies thereof, and to discuss its affairs with its officers and accountants, all at such times and intervals and to such extent as the Agent or any Lender may
reasonably desire; provided that, in the absence of an Event of Default, no more than one such visit shall be permitted at the expense of the Company in
any fiscal year. 


        Section 5.5    Further Assurances.    Promptly execute and deliver any and all other and further instruments
which may be requested by the Agent or any Lender to cure any defect in the execution and delivery of any Loan Document or more fully to describe particular aspects of the Company's agreements set
forth in the Loan Documents or so intended to be. 


        Section 5.6    Books and Records.    Maintain books of record and account in accordance with Generally Accepted
Accounting Principles. 


        Section 5.7    Insurance.    Maintain at all times insurance with such insurers, on such of its Property,
officers, directors and employees, in such amounts and against such risks as is customarily maintained by other Persons of similar size and engaged in businesses substantially similar to its
businesses, and furnish the Agent satisfactory evidence thereof promptly upon request. 



        Section 5.8    ERISA.    At all times: (a) make contributions to each Plan in a timely manner and in an
amount sufficient to comply with the minimum funding standards requirements of ERISA; (b) immediately upon acquiring knowledge of (i) any Reportable Event in connection with any Plan for
which no administrative or statutory exemption exists or (ii) any "prohibited transaction", as such term is defined in Section 4975 of the Code, in connection with any Plan, that could
result in the imposition of material damages or a material excise tax on the Company, furnish the Agent a statement executed by a Responsible Officer of the Company setting forth the details thereof
and the action which the Company or any such Subsidiary proposes to take with respect thereto and, when known, any action taken by the Internal Revenue Service with respect thereto; (c) notify
the Agent promptly upon receipt by the Company or any of its Subsidiaries of any notice of the institution of any proceedings or other actions which may result in the termination of any Plan by the
Pension Benefit Guaranty Corporation and furnish the Agent with copies of such notice; (d) pay when due all required premium payments to 


32







 



the
Pension Benefit Guaranty Corporation; (e) furnish the Agent with copies of the annual report for each Plan filed with the Internal Revenue Service not later than ten (10) days after
the Agent requests such report; (f) furnish the Agent with copies of any request for waiver of the funding standards or extension of the amortization periods required by Sections 303 and 304 of
ERISA or Section 412 of the Code promptly after the request is submitted to the Secretary of the Treasury, the Department of Labor or the Internal Revenue Service, as the case may be; and
(g) pay when due all installment contributions required under Section 302 of ERISA or Section 412 of the Code or within 10 days of a failure to make any such required
contributions furnish the Agent with written notice of such failure. 


        Section 5.9    Use of Proceeds.    Subject to the terms and conditions contained herein, use the proceeds of
the Loans (a) to finance the Tender Offer and the Merger, (b) to refinance certain existing Indebtedness of the Target and (c) to pay costs and expenses relating to the
Transactions. No proceeds of the Loans shall be used in violation of Regulation U of the Board of Governors of the Federal Reserve System or any successor regulation thereof or of any other
rule, statute or regulation governing Margin Stock from time to time. 


        Section 5.10    Additional Guaranties.    Notify the Agent promptly upon creation or acquisition by the Company
or any of its Subsidiaries of any additional Subsidiary of the Company after the date hereof, and in connection therewith, furnish the Agent with the Organizational Documents of such newly acquired or
created Subsidiary and sufficient information to disclose to the Agent in reasonable detail the ownership structure and capitalization of such Subsidiary, and, except with respect to a
Non-Guarantor Subsidiary, promptly cause such newly created or acquired Subsidiary of the Company to execute and deliver to the Agent for the ratable benefit of the Lenders and the lenders
under the Revolving Credit Facility, a Joinder Agreement, together with such related certificates, opinions, and documents as the Agent or any Lender may reasonably require. 


        Section 5.11    Notice of Events.    Notify the Agent immediately upon acquiring knowledge of the occurrence
of, or if the Company or any of its Subsidiaries causes or intends to cause, as the case may be: (1) the institution of any lawsuit or administrative proceeding affecting the Company or any of
its Subsidiaries, the adverse determination under which could reasonably be expected to have a Material Adverse Effect; (2) the occurrence of any Material Adverse Effect; (3) any Event
of Default or any Default, together with a detailed statement by an appropriate officer or other responsible party acceptable to the Agent on behalf of the Company of the steps being taken to cure the
effect of such Event of Default or Default; (4) the occurrence of a default or event of default by the Company or any of its Subsidiaries under any agreement or series of related agreements to
which it is a party, which default or event of default could reasonably be expected to have a Material Adverse Effect; and (5) any material change in the accuracy of the representations and
warranties of the Company or any of its Subsidiaries in this Agreement or any other Loan Document. The Company will notify, or cause each Guarantor to notify, the Agent in writing within
30 days prior to the date that the Company or any Guarantor changes its name or the location of its chief executive office or principal place of business or the place where it keeps its books
and records. Any notice of a name change delivered to the Agent shall be accompanied by such certificates of Governmental Authorities as the Agent or any Lender may require substantiating such name
change. 


        Section 5.12    Environmental Matters.    Without limiting the generality of Section 5.1(c) hereof,
(a) comply in all material respects with all limitations, restrictions, conditions, standards, prohibitions, requirements, obligations, schedules and timetables contained in any applicable
Requirement of Environmental Law or Environmental Permit; (b) obtain and maintain in effect all Environmental Permits, the failure to obtain which could reasonably be expected to have a
Material Adverse Effect; and (c) keep its Property free of any Environmental Claims or Environmental Liabilities which could reasonably be expected to have a Material Adverse Effect. 


33







 



        Section 5.13    End of Fiscal Year.    The Company shall cause each of its fiscal years and each of its
Subsidiaries' fiscal years to end on the last Sunday of each September. 


        Section 5.14    Consummation of Merger.    The Company shall use commercially reasonable efforts to consummate
the Merger within 90 days following the Effective Date. 


        Section 5.15    Maintenance of Ratings.    The Company shall use commercially reasonable efforts to maintain
corporate family (or equivalent) ratings from each of Moody's and S&P. 


        Section 5.16    Covenant to Guarantee Obligations and Give Security.    Except in connection with the Disclosed
Divestitures listed in part A of Schedule 1.1(a), the Loan Parties will upon (x) the request of the Agent, (y) the formation or acquisition of any new direct or indirect
Subsidiaries by any Loan Party or (z) the acquisition of any material property by any Loan Party, in each case at the Loan Parties' expense: 



        (a)   Grant
the Collateral Agent for the ratable benefit of the Lenders and the lenders under the Revolving Credit Facility, and upon the terms and conditions set forth in
Security Agreement A, a security interest in, each Loan Party's right, title and interest in and to the Collateral pursuant to the terms of the Security Agreement A. 


        (b)   within
15 days after such request, formation or acquisition, (i) cause each such Subsidiary to duly execute and deliver to the Agent such guaranties or
guaranty supplements so as to cause such Subsidiary to guarantee all of the Guaranteed Obligations, as defined in the Guaranty, (ii) duly execute and deliver, and cause each such Subsidiary and
each direct and indirect parent of such Subsidiary (if it has not already done so) to duly execute and deliver, to the Collateral Agent, pledges, assignments, security agreement supplements and other
security agreements covering the Collateral and, as specified by and in form and substance reasonably satisfactory to the Agent, securing payment of all the obligations of the applicable Loan Party or
such Subsidiary, as the case may be, under the Loan Documents and the Revolving Credit Facility and constituting Liens on all such Collateral, or (iii) take whatever action, including to file
Uniform Commercial Code financing statements, as may be necessary or advisable in the opinion of the Agent to vest in the Collateral Agent (or its designee) valid and subsisting Liens in the
Collateral as provided in this Section 5.16(b), 


        (c)   within
60 days after such request, formation or acquisition, deliver to the Agent, upon the request of the Agent in its sole discretion, a signed copy of a
favorable opinion, addressed to the Collateral Agent and the Lenders, of counsel for the Loan Parties reasonably acceptable to the Agent as to the matters contained in clause (b) above, as to
such guaranties, guaranty supplements, pledges, assignments, security agreement supplements and security agreements being legal, valid and binding obligations of each Loan Party party thereto
enforceable in accordance with their terms, as to the matters contained in clause (b)(ii) above, as to such recordings, filings, notices, endorsements and other actions being sufficient
to create valid perfected Liens on such Collateral to the extent a Lien can be created by
filing under the Uniform Commercial Code, and as to such other matters as the Agent may reasonably request, in each case to the extent that such Collateral has a value in excess of $10,000,000. 


        (d)   The
Loan Parties will, upon the incurrence of inter-company debt not included in Part II of Schedule I to Security Agreement A on the Effective Date,
promptly cause each Subsidiary payee under such inter-company debt to execute and deliver to the Collateral Agent, pledges, assignments, and security agreement supplements and other security
agreements covering such Collateral and as specified by and in form and substance reasonably satisfactory to the Agent, securing payment of all the obligations of the applicable Loan Party or such
Subsidiary, as the case may be, under the Loan Documents and the Revolving Credit Facility and constituting Liens on all such Collateral 



34







 




        (e)   at
any time and from time to time, promptly execute and deliver any and all further instruments and documents and take all such other action as the Agent may reasonably
deem necessary or desirable in obtaining the full benefits of, or in perfecting and preserving the Liens of, such guaranties, pledges, assignments, security agreement supplements and security
agreements in the Collateral. 




        Section 5.17    Covenant to Give Additional Security.    At any time during the Additional Security Period the
Loan Parties will upon (x) the request of the Agent, (y) the formation or acquisition of any new direct or indirect Subsidiaries by any Loan Party or (z) the acquisition of any
material property by any Loan Party, then the Loan Parties shall, in each case at the Loan Parties' expense: 



        (a)   Grant
the Collateral Agent for the ratable benefit of the Lenders and the lenders under the Revolving Credit Facility, and upon the terms and conditions set forth in the
Security Agreement B, a security interest in, each Loan Party's right, title and interest in and to the Additional Collateral pursuant to the terms of the Security Agreement B. 


        (b)   within
15 days after such request, formation or acquisition, (i) duly execute and deliver, and cause each such Subsidiary and each direct and indirect
parent of such Subsidiary (if it has not already done so) to duly execute and deliver, to the Collateral Agent, a supplement to Security Agreement B, securing payment of all the obligations of the
applicable Loan Party or such Subsidiary, as the case may be, under the Loan Documents and the Revolving Credit Facility and constituting Liens on all such properties, provided that no real property
(or interest therein) shall be subjected to a security interest in favor of the Agent for the benefit of the Lenders, or (ii) take whatever action contemplated by Security Agreement B,
including to file Uniform Commercial Code financing statements, as may be necessary or advisable in the opinion of the Agent to vest in the Agent (or its designee) valid and subsisting Liens as
provided in this Section 5.17(b). 


        (c)   within
60 days after such request, formation or acquisition, deliver to the Agent, upon the request of the Collateral Agent in its sole discretion, a signed copy
of a favorable opinion, addressed to the Agent and the Lenders, of counsel for the Loan Parties reasonably acceptable to the Agent as to the matters contained in clauses (a) and
(b) above, as the Agent may reasonably request, in each case to the extent that such Additional Collateral has a value in excess of $10,000,000. 


        (d)   at
any time and from time to time, promptly execute and deliver any and all further instruments and documents and take all such other action contemplated under Security
Agreement B and as the Agent may reasonably deem necessary or desirable in obtaining the full benefits of, or in perfecting and preserving the Liens of, such guaranties, pledges, assignments, security
agreement supplements, intellectual property security agreement supplements and security agreements. 



 
 

ARTICLE VI—NEGATIVE COVENANTS    
    


        The Company covenants and agrees with the Agent and the Lenders that prior to the termination of this Agreement it will not, and will not suffer or permit any of
its Subsidiaries to, do any of the following: 


        Section 6.1    Indebtedness.    Create, incur, suffer or permit to exist, or assume or guarantee, directly or
indirectly, or become or remain liable with respect to any Indebtedness, whether direct, indirect, absolute, contingent or otherwise, except the following: 



        (a)   Indebtedness
pursuant to this Agreement, the Guaranties and any other Loan Document; 


        (b)   Indebtedness
under the Revolving Credit Facility including, without limitation, the letters of credit under the Revolving Credit Facility which are permitted under
Section 6.1(1) hereof, in 



35







 




an
aggregate principal amount (as to the loans thereunder) not to exceed $350,000,000 at any time outstanding; 


        (c)   in
addition to and cumulative of any other Indebtedness permitted in this Section 6, in the case of the Company only, Unsecured Borrowed Debt; provided that,
immediately before and immediately after the incurrence of such Unsecured Borrowed Debt, the Company and its Subsidiaries shall be in pro forma compliance with the financial covenants set forth in
Section 5.3 hereof; 


        (d)   Indebtedness
secured by Liens permitted by Section 6.2 hereof; 


        (e)   secured
Indebtedness of the Company and Indebtedness of any one or more of the Company's Subsidiaries, provided, that the aggregate amount of all such Indebtedness
outstanding at any time (exclusive of Indebtedness permitted in Section 6.1(i) hereof) may not exceed five percent (5%) of Consolidated Net Worth; 


        (f)    other
liabilities existing on the date of this Agreement and set forth on Schedule 4.16 attached hereto, and all renewals and extensions (but not increases)
thereof, provided that there shall be no material change in the obligors thereunder; 



        (g)   current
accounts payable and unsecured current liabilities, not the result of borrowings, to vendors, suppliers and persons providing services, for expenditures on
ordinary trade terms for goods and services normally required by the Company or any of its Subsidiaries in the ordinary course of its business; 


        (h)   agreements
of intent to acquire a Person issued by the Company or any of its Subsidiaries in anticipation of acquiring such Person if such acquisition is permitted under
the terms and conditions of this Agreement; 


        (i)    the
Indebtedness of any Subsidiary of the Company to the Company or to any Guarantor, as permitted in Section 6.7(f) of this Agreement; 



        (j)    guarantees
by the Company or any of its Subsidiaries of the Indebtedness of any of their respective Subsidiaries permitted to be incurred, created or existing pursuant
to Section 6.3, provided, that such guarantees are not directly or indirectly secured by any Liens; 


        (k)   current
and deferred taxes; 


        (l)    any
obligation under or in respect of outstanding letters of credit (including without limitation, letters of credit under the Revolving Credit Facility), acceptances
and similar obligations created for the account of the Company or any of its Subsidiaries, and any Hedging Agreements (other than the Credit Facility Hedging Agreements) entered into by the Company
and its Subsidiaries in the ordinary course; provided that the sum of (i) the aggregate amount of such Indebtedness and (ii) the aggregate
amount of Contingent Obligations outstanding at any time for the Company and its Subsidiaries, on a consolidated basis, may not exceed five percent (5%) of Consolidated Net Worth; 


        (m)  Indebtedness
or other obligations of the Company under Capital Lease Obligations for equipment for use in new retail locations hereafter opened and operated by the
Company or any of its Subsidiaries, so long as the capitalized amount of such obligations hereafter entered into does not exceed five percent (5%) of Consolidated Net Worth in the aggregate, together
with guaranties of such obligations by any or all Subsidiaries of the Company now or hereafter existing; and 



        (n)   Indebtedness
evidenced by those certain zero coupon convertible subordinated debentures of the Company due 2018 which are governed by that certain Indenture dated
March 2, 1998, by 



36







 




and
among the Company and Chase Bank of Texas, National Association, Trustee, outstanding on the date hereof. 


        (o)   Indebtedness
of Target under its Convertible Senior Debentures. 


        (p)   any
obligation under or in respect of outstanding letters of credit (excluding the letters of credit issued under the Revolving Credit Facility) or other workers'
compensation coverage payment or reimbursement obligations secured by cash or cash equivalents created for the account of the Company or any of its Subsidiaries as fiscal security for, or otherwise in
connection with, workers' compensation coverage secured for the Company and/or any of its Subsidiaries (it being agreed that any letters of credit or other such payment or reimbursement obligations
issued in accordance with the provisions of this Section 6.1(p) shall not be included within letters of credit for purposes of determining compliance with Section 6.1(l) hereof or
included within Contingent Obligations for purposes of determining compliance with Section 6.3 hereof). 




The
Company, the Agent, the Lenders and each Guarantor (by its execution of a Guaranty or a Joinder Agreement) agree that, notwithstanding anything contained in this Section 6.1, in
Section 6.7(f) or in any other provision contained in this Agreement which may appear to be to the contrary, any and all Indebtedness of (i) the Company from time to time owed to any
Subsidiary of the Company or of (ii) any Subsidiary of the Company from time to time owed to the Company or to any Guarantor (together with any and all Liens from time to time securing the same
as permitted by Section 6.2(f) hereof) is hereby made and at all times hereafter shall be inferior and subordinate in all respects to the Indebtedness from time to time owing to the Agent or
any Lender pursuant hereto and to any Lien, if any, from time to time hereafter securing any of such Indebtedness pursuant to the terms hereof. 


        Section 6.2    Liens.    Create or suffer to exist any Lien upon any of its Property now owned or hereafter
acquired, or acquire any Property upon any conditional sale or other title retention device or arrangement or any purchase money security agreement; or in any manner directly or indirectly sell,
assign, pledge or otherwise transfer any of its accounts or contract rights; provided, however, that the Company and its Subsidiaries (or any of them)
may create or suffer to exist: 



        (a)   Liens
in effect on the date hereof and which are described on Schedule 6.2(a) attached hereto, provided, that the Property covered thereby does not increase
either in quantity or value; 


        (b)   Liens
securing any Indebtedness otherwise permitted pursuant to Sections 6.1(e) and (l) hereof, provided that the
aggregate amount of all such secured Indebtedness outstanding at any time may not exceed five percent (5%) of Consolidated Net Worth; 



        (c)   Liens
in favor of the Collateral Agent pursuant to the terms of Security Agreement A and/or Security Agreement B, as applicable; 


        (d)   Incidental
Liens; 


        (e)   purchase
money security interests and liens in Equipment and/or real property of the Company or any of its Subsidiaries in favor of the seller or sellers of such
Equipment and/or real property or their successors and assigns, or purchase money security interests and liens in favor of any third-party lender which loaned the money to purchase any such Equipment
and/or real property to the Company or such Subsidiary, provided, that neither the sales price of, nor the amount of any loan made to acquire any of, such Equipment and/or real property is greater
than the fair value of such Equipment and/or real property so acquired; 


        (f)    Liens
in favor of the Company or any Guarantor securing any Indebtedness owed by a Subsidiary of the Company permitted pursuant to Section 6.1(i) hereof; 



37









  



        (g)   informational
filings of financing statements against the Company or any of its Subsidiaries by lessors under any operating lease or any permitted Capital Lease
Obligation now or hereafter entered into by the Company or any of its Subsidiaries with any lessor, so long as the applicable financing statement covers only the asset or assets leased pursuant to the
applicable operating lease or Capital Lease Obligation; and 



        (h)   Liens
against cash or cash equivalents of the Company and/or any of its Subsidiaries securing the obligations of, under or in respect of outstanding letters of credit or
other workers' compensation coverage payment or reimbursement obligations otherwise permitted pursuant to Section 6.1(o) hereof; 




provided, however, that, notwithstanding anything contained above in this Section 6.2 to the contrary, in no event may the Company or any
Subsidiary of the Company ever create or suffer to exist any Lien upon any of the Stock of any of its Subsidiaries, directly or indirectly, in favor of any Person other than the Agent for the benefit
of the Lenders and, subject to subsection (d) above, under the Revolving Credit Facility, create or suffer to exist any agreement, whether oral or in writing, with any Person other than the
Agent and the Lenders pursuant to this Section 6.2, and, subject to subsection (d) above, under the Revolving Credit Facility, which would or could prohibit the Company or any of its
Subsidiaries from creating or permitting to exist any Lien in favor of the Agent or the Lenders for the benefit of all of the Lenders for Indebtedness from time to time arising under this Agreement. 


        Section 6.3    Contingent Obligations.    Except for guaranties by Subsidiaries of the Company which are
otherwise permitted by Sections 6.1(l) and 6.1(m) hereof, and the Guaranties, create, incur, suffer or permit to exist, directly or indirectly, any Contingent Obligations if such Contingent
Obligations would cause the sum of (a) the aggregate amount of Contingent Obligations outstanding for the Company and its Subsidiaries, and (b) the aggregate amount of outstanding
Indebtedness permitted by Section 6.1(l), on a consolidated basis, to exceed five percent (5%) of Consolidated Net Worth. 


        Section 6.4    Mergers, Consolidations and Dispositions and Acquisitions of Assets.    In any single
transaction or series of related transactions, directly or indirectly: 



        (a)   Wind
up its affairs, liquidate or dissolve; 


        (b)   Be
a party to any merger or consolidation (other than the Merger) and except as permitted under Section 6.4(e); 


        (c)   Sell,
convey, lease or otherwise dispose of all or any material part of the assets (except for the sale of inventory in the ordinary course of business) of the Company
and/or its Subsidiaries, or agree to take any such action, if such sale, lease or conveyance of assets is not otherwise permitted for the applicable fiscal year by Section 6.4(z) hereof; 



        (d)   Sell,
assign, pledge, transfer or otherwise dispose of, or in any way part with control of, any Stock of any of its Subsidiaries or any Indebtedness or obligations of
any character of any of its Subsidiaries, or permit any such Subsidiary so to do with respect to any Stock of any other Subsidiary or any Indebtedness or obligations of any character of the Company or
any of its other Subsidiaries, or permit any of its Subsidiaries to issue any additional Stock other than (i) to the Company or any of its Subsidiaries or (ii) to purchase or acquire for
a consideration any Stock of the Company or any of its other Subsidiaries to the extent permitted under Section 6.11(a) hereof; or 


        (e)   Take
any action with a view toward dissolution, liquidation or termination; 




provided, however, that: 



        (x)   Any
of the Company's Subsidiaries may merge or consolidate with any one or more of the Company's other Subsidiaries, or with any other Business Entity or Business
Entities; provided



38







 

that
each surviving Business Entity after any such merger or consolidation shall be a wholly-owned Subsidiary of the Company or of a wholly-owned Subsidiary of the Company, and,  provided, further, that the surviving Business Entity shall simultaneously with such merger, execute and
deliver to the Agent a Notice of Assumption, appropriately completed; 


        (y)   Any
of the Company's Subsidiaries may (i) sell, transfer or otherwise dispose of any Stock of the Company or any of its Subsidiaries to the Company or another
Subsidiary of the Company or (ii) sell, lease, transfer or otherwise dispose of any of its assets to another Subsidiary of the Company; provided that if all or substantially all of the
transferring Subsidiary's assets are being sold, leased, transferred or otherwise disposed of, then the Subsidiary to whom the sale, lease, transfer or disposition was made must, unless it is already
a Guarantor, simultaneously execute and deliver to the Agent a Notice of Assumption. If such transferring Subsidiary is a wholly-owned Subsidiary of the Company, it may wind up its affairs, liquidate
or dissolve following the consummation of any such sale, lease, transfer or disposal of all or substantially all of its assets; and 


        (z)   Subject
to the limitations set forth below, (i) (A) a proposed sale, lease or conveyance of assets of one or more of the Subsidiaries of the Company (a
"Permitted Asset Disposition") or (B) a proposed sale of the Stock of one or more Subsidiaries of the Company (a
"Permitted Stock Disposition"), in a single transaction or series of related transactions, to a Person or Persons which is not or are not an Affiliate
or Affiliates of the Company or any of its Subsidiaries, on an arms-length basis, may occur in any fiscal year of the Company so long as the aggregate consideration paid by such acquiring
Person or Persons (inclusive of the fair value of any non-cash Property received as consideration) from all Permitted Asset Dispositions and all Permitted Stock Dispositions which occur
during such fiscal year does not exceed five percent (5%) of Consolidated Net Worth and (ii) the Company may consummate the Disclosed Divestitures;  provided, however, that no Permitted Asset Disposition (other than a Disclosed Divestiture) or Permitted
Stock Disposition may occur if a Default shall have then occurred and is then continuing or would be caused by such proposed Permitted Asset Disposition or Permitted Stock Disposition, in each case if
consummated; provided further that the ability to consummate such Disclosed Divestiture shall not constitute a waiver of any such Default. 




        Section 6.5    Nature of Business.    Materially change the nature of its business or enter into any business
which is substantially different from the business in which it is presently engaged; provided, however,
that vertical integration within the natural foods industry shall not be deemed to be a violation of this Section 6.5. 


        Section 6.6    Transactions with Related Parties.    Enter into any transaction, contract or agreement of any
kind with any officer, director or holder of any of the outstanding Stock of the Company or any of its Subsidiaries (or any Affiliate of such Person), unless such transaction, contract or agreement is
made upon terms and conditions not less favorable to such Person than those which could have been obtained from wholly independent and unrelated sources. Other than pursuant to agreements of the
Target in effect on the date hereof, the Company will not permit the compensation of any officer, stockholder, director, partner or proprietor of the Company or any of its Subsidiaries to be
excessive, taking into consideration the financial circumstances of the Company or such Subsidiary and the position and qualifications of such Person. 



        Section 6.7    Loans and Investments.    Make, directly or indirectly, any loan or advance to or have any
Investment in any Person, or make any commitment to make such loan, advance or Investment, except: 



        (a)   Stock
of any Subsidiary, subject to the terms of Section 6.7(h) as to Investments in internet strategy lines of business; 



39







 

        (b)   Permitted
Investment Securities; 


        (c)   Stock
received in the settlement of debts (created in the ordinary course of business); 


        (d)   travel
advances in the ordinary course of business to officers and employees; 



        (e)   customer
obligations and receivables owing to the Company and arising out of sales or leases made or the rendering of services by the Company in the ordinary course of
business; 


        (f)    so
long as no Default shall have occurred and is then continuing, and subject to the terms of Section 6.1 hereof, loans by the Company or any Guarantor to any
Subsidiary of the Company; 


        (g)   so
long as no Default has occurred and is then continuing, or would result therefrom, loans to any Person which is not a Subsidiary of the Company or of any of the
Company's Subsidiaries, provided, that the aggregate of all of such loans does not exceed at any time five percent (5%) of Consolidated Net Worth; and 


        (h)   so
long as no Default shall have occurred and is then continuing, or would result therefrom, Investments by the Company and/or any Guarantor in internet strategy lines
of business. 




        Section 6.8    ERISA Compliance.    At any time permit any Plan to engage in any "prohibited transaction" as
defined in ERISA; incur any "accumulated funding deficiency" as defined in ERISA; or be terminated in a manner which could result in the imposition of a Lien on any Property of the Company or any of
its Subsidiaries pursuant to ERISA. 


        Section 6.9    Credit Extensions.    Extend credit other than normal and prudent extensions of credit to
customers for goods and services in the ordinary course of business. 


        Section 6.10    Change in Accounting Method.    Make any material change in accounting method except as may be
required by Generally Accepted Accounting Principles as they are from time to time in effect. 



        Section 6.11    Redemption, Dividends and Distributions.    At any time (1) each of the Company's
Moody's and S&P rating have been downgraded below Investment Grade, or (2) either of the Company's Moody's or S&P rating has been downgraded by at least two categories below Investment Grade: 



        (a)   Redeem,
retire or otherwise acquire, directly or indirectly, any shares of its Stock if such redemption or repurchase would cause the sum of (A) and
(B) below to exceed the sum of (i) $150,000,000, plus (ii) fifty percent (50%) of the aggregate of Net Income, depreciation,
amortization and non-cash stock compensation expense of the Company and its Subsidiaries, on a consolidated basis, for each fiscal quarter of the Company ending after August 28,
2007 (said amount to not be adjusted or changed for a particular fiscal quarter if the aggregate Net Income, depreciation, amortization and non-cash stock compensation expense of the
Company and its Subsidiaries, on a consolidated basis, for such fiscal quarter is negative): (A) the aggregate cost paid by the Company for such Stock so redeemed or repurchased on or after
July 1, 2007, as shown on the consolidated financial statements of the Company and its Subsidiaries to be delivered pursuant to Sections 5.2(a) and (b) hereof; and (B) the
aggregate cash dividends paid by the Company to owners of Stock in the Company on or after July 1, 2007; 



        (b)   Pay
any dividend except (i) dividends paid to the Company or any Subsidiary of the Company which is a direct parent of the Subsidiary paying a dividend,
(ii) dividends payable in Stock or in rights or warrants to purchase Stock, or (iii) cash dividends paid by the Company to owners of Stock in the Company if the aggregate amount of such
cash dividends payable by the Company to owners of Stock in the Company on or after August 28, 2007, together with the aggregate cost paid by the Company for Stock redeemed or repurchased on or
after July 1, 2007 



40







 




(as
shown on the consolidated financial statements of the Company and its Subsidiaries to be delivered pursuant to Sections 5.2(a) and (b) hereof), does not exceed (i) $150,000,000,  plus
(ii) fifty percent (50%) of the aggregate of Net Income, depreciation, amortization and non-cash stock compensation expense of
the Company and its Subsidiaries, on a consolidated basis, for each fiscal quarter of the Company ending after July 1, 2007 (said amount to not be adjusted or changed for a particular fiscal
quarter if the aggregate Net Income, depreciation, amortization and non-cash stock compensation expense of the Company and its Subsidiaries, on a consolidated basis, for such fiscal
quarter is negative); or 


        (c)   Make
any other distribution of any Property or cash to stockholders as such, except as permitted under Section 6.4(e)(y). 



ARTICLE VII—EVENTS OF DEFAULT AND REMEDIES  


        Section 7.1    Events of Default.    If any of the following events shall occur, then the Agent may, unless
directed to the contrary by the Required Lenders in writing actually received by the Agent prior to the Agent doing so (and, if directed by the Required Lenders, shall), do any or all of the
following: (1) without notice to the Company or any other Person, declare the Loans and the Notes then outstanding to be, and thereupon the Loans and the Notes shall forthwith become,
immediately due
and payable, together with all accrued interest thereon, the Commitment Fees and all other amounts then payable hereunder, without notice of any kind, notice of acceleration or of intention to
accelerate, presentment and demand or protest, or other notice of any kind all of which are hereby expressly WAIVED by the Company; (2) without notice to the Company, terminate the Commitments
and thereupon all of the Lenders shall be relieved of any obligation to make any additional Loans; (3) by notice in writing to the Company, accelerate the Maturity Date to a date as early as
the date of the notice, and (4) exercise any and all other rights pursuant to the Loan Documents: 



        (a)   The
Company shall fail to pay or prepay any principal of or interest of any Loan, the Commitment Fees or any other obligation hereunder as and when due and, solely in
respect of interest, fees and obligations other than principal, such failure remains uncured after three (3) Business Days, in the case of interest, and five (5) Business Days, in the
case of fees and such other obligations, in each case from such due date; or 



        (b)   The
Company or any of its Subsidiaries (i) shall fail to pay at maturity, or within any applicable period of grace, any principal of or interest on any other
borrowed money obligation in excess of $20,000,000 in principal amount (unless such payment is being contested in good faith by appropriate proceedings and adequate reserves have been provided
therefor), (ii) shall otherwise be in default under the provisions of any instrument or document evidencing, securing or guaranteeing any other borrowed money obligation of the Company or any
of its Subsidiaries, including, without limitation, in respect of the Revolving Credit Facility, in excess of $20,000,000 in principal amount if such default continues beyond any applicable grace or
curative period, if any, and such default would entitle the holder of such borrowed money obligation to declare such obligation to be due prior to its stated maturity, or (iii) is in default
under or in violation of any Legal Requirement, which failure could or does have a Material Adverse Effect; or 


        (c)   Any
representation or warranty made in connection with any Loan Document shall prove to have been materially incorrect, false or misleading when made or deemed to have
been made; or 


        (d)   Default
shall occur in the punctual and complete performance of (i) any of the affirmative covenants contained in Section 5 (other than Section 5.3)
and such default shall not be cured within ten (10) days after the Agent has given written notice to the Company that such default has occurred, (or immediately in the case of Sections 5.14,
5.16, or 5.17) (ii) any of the 



41







 




negative
covenants contained in Section 6, or (iii) any covenant contained in Section 5.3 or any other covenant of the Company or any other Person contained in any Loan Document;
or 


        (e)   Any
judgments or orders in the aggregate for the payment of money in excess of $20,000,000 shall be rendered against the Company or any of its Subsidiaries at any time,
regardless of whether the same is being appealed or reserves established therefor or paid in full; provided,  however, that any such
judgment or order shall not give rise to an Event of Default under this Section 7.1(e) if and for so long as the amount of such judgment or order is covered by a valid and binding policy of
insurance in favor of the Company or any of its Subsidiaries as to which coverage in respect of such claim has not been disputed; or 


        (f)    The
Company or any Subsidiary of the Company shall claim, or any court shall find or rule, that the Agent for the benefit of the Lenders does not have a valid Lien on
any Collateral or Additional Collateral, as the case may be, having a value in the aggregate in excess of $5,000,000 which may have been provided to secure the Indebtedness arising pursuant hereto
from time to time by the Company or any of its Subsidiaries; or 


        (g)   Any
order shall be entered in any proceeding against the Company or any of its Subsidiaries decreeing the dissolution, liquidation or split-up thereof, and
such order shall remain in effect for thirty (30) days; provided, however, the provisions of this
subparagraph (g) shall not apply to any divestiture by the Company or any of its Subsidiaries of any Subsidiary acquired after the effective date of this Agreement as a result of
anti-trust issues or concerns; or 


        (h)   The
occurrence of an event of default or default under any Loan Document other than this Agreement; or 


        (i)    The
Company or any of its Subsidiaries shall have concealed, removed, or permitted to be concealed or removed, any part of its Property, with intent to hinder, delay or
defraud its creditors or any of them, or made or suffered a transfer of any of its Property which may be fraudulent under any bankruptcy, fraudulent conveyance or similar law; or shall have made any
transfer of its Property to or for the benefit of a creditor at a time when other creditors similarly situated have not been paid; or 



        (j)    A
change shall occur in the assets, liabilities, financial condition, business or affairs of the Company or any of its Subsidiaries which, in the reasonable opinion of
the Required Lenders, would or does have a Material Adverse Effect; provided, however, the occurrence of
any such Material Adverse Effect shall not be deemed to be an Event of Default hereunder until the Agent shall have provided the Company with written notice that the Required Lenders have determined
that such a Material Adverse Effect has occurred; or 


        (k)   A
Change of Control shall occur. 




In
addition to the actions permitted to be taken by the Agent under the terms of the initial paragraph of this Section 7.1, if any of the following events shall occur, then the Loans and the
Notes together with all accrued interest thereon, the Commitment Fees and all other amounts then payable hereunder shall automatically, without demand, presentment, protest, notice of intent to
accelerate, notice of acceleration or other notice to any Person of any kind, all of which are hereby expressly WAIVED by
the Company, become immediately due and payable and all Commitments shall be immediately and automatically terminated and the Maturity Date shall immediately and automatically be accelerated to the
date of such occurrence: 



        (x)   The
Company or any of its Subsidiaries shall make a general assignment for the benefit of creditors or shall petition or apply to any tribunal for the appointment of a
trustee, custodian, receiver or liquidator of all or any substantial part of its business, estate or assets or shall commence any proceeding under any bankruptcy, reorganization, arrangement,
insolvency, 



42







 

readjustment
of debt, dissolution or liquidation law of any jurisdiction, whether now or hereafter in effect; or 



        (y)   Any
such petition or application shall be filed or any such proceeding shall be commenced against the Company or any of its Subsidiaries and the Company or such
Subsidiary by any act or omission shall indicate approval thereof, consent thereto or acquiescence therein which shall not have been dismissed within 60 days, or an order shall be entered
appointing a trustee, custodian, receiver or liquidator of all or any substantial part of the assets of the Company or any of its Subsidiaries or granting relief to the Company or any of its
Subsidiaries or approving the petition in any such proceeding, and such order shall remain in effect for more than sixty (60) days; or 



        (z)   The
Company or any of its Subsidiaries shall admit in writing its inability to pay its debts as they become due or fail generally to pay its debts as they become due or
suffer any writ of attachment or execution or any similar process to be issued or levied against it or any substantial part of its Property which is not released, stayed, bonded or vacated within
thirty (30) days after its issue or levy. 




        Section 7.2    Remedies Cumulative.    No remedy, right or power conferred upon the Agent or any Lender is
intended to be exclusive of any other remedy, right or power given hereunder or now or hereafter existing at law, in equity, or otherwise, and all such remedies, rights and powers shall be cumulative. 


ARTICLE VIII—THE AGENT  


        Section 8.1    Authorization and Action.    (a) Each Lender hereby irrevocably appoints and authorizes
the Agent to take such action as agent on its behalf and to exercise such powers and discretion under this Agreement and the other Loan Documents as are delegated to the Agent by the terms hereof and
thereof, together with such powers and discretion as are reasonably incidental thereto. As to any
matters not expressly provided for by the Loan Documents (including, without limitation, enforcement or collection of the obligations of the Company or any Guarantor), no Agent shall be required to
exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the
Required Lenders, and such instructions shall be binding upon all Lenders, and all holders of Notes, and the Agent agrees to request from the Company any information that is reasonably requested by
any Lender; provided, however, that no Agent shall be required to take any action that exposes the Agent
to personal liability or that is contrary to this Agreement or applicable law. 



        (b)   The
Agent and/or the Collateral Agent may execute any of its duties under this Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel and other consultants or experts concerning all matters pertaining to such duties. 


        (c)   Each
of the Lenders hereby appoints and authorizes the Collateral Agent to take such action as collateral agent on its behalf and to exercise such powers under the
Security Agreement A and Security Agreement B as are specifically delegated to the Collateral Agent by the terms of such Loan Documents, together with such other powers as are reasonably incidental
thereto. 




        Section 8.2    Agents' Reliance, Etc.    Neither the Agent nor the Collateral Agent nor any of their respective
directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with the Loan Documents, except for its or their own gross
negligence or willful misconduct. Without limitation of the generality of the foregoing, the Agent: (a) may consult with legal counsel (including counsel for any Loan Party), independent public
accountants and other experts selected by it and shall not be liable for any action taken or omitted to 


43







 

be
taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (b) makes no warranty or representation to any Lender and shall not be responsible to any
Lender for any statements, warranties or representations (whether written or oral) made in or in connection with the Loan Documents; (c) shall not have any duty to ascertain or to inquire as to
the performance, observance or satisfaction of any of the terms, covenants or conditions of any Loan Document on the part of any Loan Party or the existence at any time of any Default under the Loan
Documents or to inspect the property (including the books and records) of any Loan Party; (d) shall not be responsible to any Lender for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of, or the perfection or priority of any lien or security interest created or purported to be created under or in connection with, any Loan Document or any other
instrument or document furnished pursuant thereto; and (e) shall incur no liability under or in respect of any Loan Document by acting upon any notice, consent, certificate or other instrument
or writing (which may be by telegram, telecopy or electronic communication) believed by it to be genuine and signed or sent by the proper party or parties. 



        Section 8.3    Royal Bank and Affiliates.    With respect to its Commitments, the Loan made by it and any Note
issued to it, Royal Bank shall have the same rights and powers under the Loan Documents as any other Lender and may exercise the same as though each were not an Agent; and the term "Lender" or
"Lenders" shall, unless otherwise expressly indicated, include Royal Bank in its individual capacity. Royal Bank and its affiliates may accept deposits from, lend money to, act as trustee under
indentures of, accept investment banking engagements from, act as a counterparty to any Hedging Agreements and generally engage in any kind of business with, any Loan Party, any of its Subsidiaries
and any Person that may do business with or own securities of any Loan Party or any such Subsidiary, all as if Royal Bank were not the Agent and without any duty to account therefor to the Lenders. No
Agent shall have any duty to disclose any information obtained or received by it or any of its Affiliates relating to any Loan Party or any of its Subsidiaries to the extent such information was
obtained or received in any capacity other than as the Agent. 


        Section 8.4    Lender Credit Decision.    Each Lender acknowledges that it has, independently and without
reliance upon the Agent or any other Lender and based on the financial statements referred to in Section 4.01 and such other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Agent or any other Lender and based on such documents
and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement. 


        Section 8.5    Indemnification.    Each Lender severally agrees to indemnify the Agent (to the extent not
promptly reimbursed by the Company) from and against such Lender's ratable share (determined as provided below) of any and all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or asserted against the Agent in any way relating to or arising out of the Loan Documents
or any action taken or omitted by the Agent under the Loan Documents (collectively, the "Indemnified Costs");  provided, however, that no Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Agent's gross negligence or willful misconduct as found in a final,
non-appealable judgment by a court of competent jurisdiction. Without limitation of the foregoing, each Lender agrees to reimburse the Agent promptly upon demand for its ratable share of
any costs and expenses (including, without limitation, fees and expenses of counsel) payable by the Company under Section 9.8, to the extent that the Agent is not promptly reimbursed for such
costs and expenses by the Company. In the case of any investigation, litigation or proceeding giving rise to any Indemnified Costs, this Section 8.5 applies whether any such investigation,
litigation or proceeding is brought by any Lender or any other Person. 


44







 



For
purposes of this Section 8.5, each Lender's ratable share of any amount shall be determined, at any time, according to the sum of (i) the aggregate principal amount of the Loans
outstanding at such time and owing to such Lender and (ii) the aggregate Unused Commitments at such time. The failure of any Lender to reimburse the Agent promptly upon demand for its ratable
share of any amount required to be paid by the Lenders to the Agent as provided herein shall not relieve any other Lender of its
obligation hereunder to reimburse the Agent for its ratable share of such amount, but no Lender shall be responsible for the failure of any other Lender to reimburse the Agent for such other Lender's
ratable share of such amount. Without prejudice to the survival of any other agreement of any Lender hereunder, the agreement and obligations of each Lender contained in this Section 8.6 shall
survive the payment in full of principal, interest and all other amounts payable hereunder and under the other Loan Documents. 



        Section 8.6    Successor Agents.    The Agent may resign at any time by giving written notice thereof to the
Lenders and the Company. Upon any such resignation, the Lenders (in consultation with the Company) shall have the right to appoint a successor Agent. If no successor Agent shall have been so appointed
by the Lenders, and shall have accepted such appointment, within 30 days after the retiring Agent's giving of notice of resignation, then the retiring Agent may, on behalf of the Lenders,
appoint a successor Agent, which shall be a commercial bank organized under the laws of the United States or of any State thereof and having a combined capital and surplus of at least $250,000,000.
Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall succeed to and become vested with all the rights, powers, discretion, privileges and duties
of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations under the Loan Documents. If within 30 days after written notice is given of the retiring
Agent's resignation under this Section 8.6 no successor Agent shall have been appointed and shall have accepted such appointment, then on such 30th day (a) the retiring
Agent's resignation or removal shall become effective, (b) the retiring Agent shall thereupon be discharged from its duties and obligations under the Loan Documents and (c) the Lenders
shall thereafter perform all duties of the retiring Agent under the Loan Documents until such time, if any, as the Lenders appoint a successor Agent as provided above. After any retiring Agent's
resignation or removal hereunder as Agent as to the Facility shall have become effective, the provisions of this Article VIII shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement. 


        Section 8.7    Other Agents; Arrangers and Managers.    None of the Lenders or other Persons identified on the
facing page or signature pages of this Agreement as a "syndication agent," "documentation agent," "bookrunner," or "lead arranger" shall have any right, power, obligation, liability, responsibility or
duty under this Agreement other than to the extent expressly set forth herein and, in the case of such Lenders, those applicable to all Lenders as such. Without limiting the foregoing, none of the
Lenders or other Persons so identified shall have or be deemed to have any fiduciary relationship with any Lender. Each Lender acknowledges that it has not relied, and will not rely, on any of the
Lenders or other Persons so identified in deciding to enter into this Agreement or in taking or not taking action hereunder. 


ARTICLE IX—MISCELLANEOUS  


        Section 9.1    No Waiver.    No waiver of any Default shall be deemed to be a waiver of any other Default. No
failure to exercise and no delay on the part of the Agent or any Lender in exercising any right or power under any Loan Document or at law or in equity shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power, or the abandonment or discontinuance of steps to enforce any such right or power, preclude any further or other exercise thereof or the exercise
of any other right or power. No course of dealing between the Company and the Agent or any Lender shall operate as a waiver of any right or power of the Agent or any Lender. No amendment, modification
or waiver of any provision of this Agreement or any other Loan Document nor any 


45







 

consent
to any departure therefrom shall be effective unless the same is in writing and signed by the Person against whom it is sought to be enforced, and then it shall be effective only in the
specific instance and for the purpose for which given. No notice to or demand on the Company or any other Person shall entitle the Company or any other Person to any other or further notice or demand
in similar or other circumstances. 


        Section 9.2    Notices.    



        (a)   All
notices and other communications provided for hereunder shall be either (x) in writing (including facsimile or electronic communication) and mailed, faxed or
delivered or (y) as and to the extent set forth in Section 9.2(b) and in the proviso to this Section 9.2(a), in an electronic medium and delivered as set forth in
Section 9.2(b), if to any Loan Party, to the Company at its address at 550 Bowie Street, Austin, Texas 78703, Attention: Glenda Chamberlain, Chief Financial Officer, and Faxed to: 512 482 7205,
with copy to the General Counsel's Office at the same address and faxed to: 512 482 7217; if to any initial Lender party to this Agreement on date hereof, at the address specified for such Lender on
Schedule 2.1(a) hereto; if to any other Lender, at the address specified in the Assignment and Acceptance pursuant to which it became a Lender; if to the Agent, at its address at 200 Bay
Street, 12th Floor, South Tower, Royal Bank Plaza, Toronto, Ontario M5J 2W7, Attention: Manager, Agency, Fax: 416-842-4023; or, as to any Party, at such other address as
shall be designated by such party in a written notice to the other parties; provided, however, that
materials and information described in Section 9.2(b) shall be delivered to the Agent in accordance with the provisions thereof or as otherwise specified to the Company by the Agent. Except as
otherwise provided herein, all notices, consents, certificates, waivers, documents and other communications required or permitted to be delivered to any party under the terms of any Loan Document
(a) must be in writing, (b) must be personally delivered, transmitted by a recognized courier service or transmitted by facsimile, and (c) must be directed to such party at its
address or facsimile number set forth above or on Schedule 2.1(a) hereto. Except as provided in subsection (b) below, all notices will be deemed to have been duly given and received on
the date of delivery if delivered personally, three (3) days after delivery to the courier if transmitted by courier, or the date of transmission during normal business hours with confirmation
if transmitted by facsimile, whichever occurs first, except that notices and communications to the Agent or the Collateral Agent pursuant to Article II, III or VII shall not be effective until
received by such Agent. Any party may change its address or facsimile number for purposes hereof by notice to all other parties. Delivery by telecopier of an executed counterpart of a signature page
to any amendment or waiver of any provision of this Agreement or the Notes shall be effective as delivery of an original executed counterpart thereof. 



        (b)   The
Company hereby agrees that it will provide to the Agent all information, documents and other materials that it is obligated to furnish to the Agent pursuant to the
Loan Documents, including, without limitation, 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 (including any election of an interest rate or LIBOR 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 or Event of Default under
this Agreement or (iv) comprises original executed counterparts, original governmental certificates, in each case, required to be delivered to satisfy any condition precedent to the
effectiveness of this Agreement and/or any Borrowing thereunder (all such non-excluded communications being referred to herein collectively as
"Communications"), by transmitting the Communications in an electronic/soft medium in a format reasonably acceptable to the Agent to an electronic mail
address specified by the Agent to the Company. In addition, the Company agrees to continue to provide the Communications to the Agent in the manner specified in the Loan Documents but only to the
extent requested by the 



46







 

Agent.
The Company further agrees that the Agent may make the Communications available to the Lenders by posting the Communications on IntraLinks or a substantially similar electronic transmission
system (the "Platform"); provided that, unless otherwise indicated by the Company, all such information
so made available to the Lender Parties shall be treated by the Agent as confidential information. 



        (c)   THE
PLATFORM IS PROVIDED "AS IS" AND "AS AVAILABLE." THE AGENT PARTIES (AS DEFINED BELOW) 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 THE AGENT PARTIES IN
CONNECTION WITH THE COMMUNICATIONS OR THE PLATFORM. IN NO EVENT SHALL THE AGENT OR ANY OF ITS AFFILIATES OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ADVISORS OR REPRESENTATIVES
(COLLECTIVELY, "AGENT PARTIES") HAVE ANY LIABILITY TO THE COMPANY, ANY LENDER OR ANY OTHER PERSON OR ENTITY FOR DAMAGES OF ANY KIND, INCLUDING, WITHOUT LIMITATION, DIRECT OR INDIRECT, SPECIAL,
INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF THE COMPANY'S OR THE AGENT'S TRANSMISSION OF COMMUNICATIONS THROUGH THE INTERNET, EXCEPT
TO THE EXTENT THE LIABILITY OF THE AGENT OR THE COLLATERAL AGENT PARTY IS FOUND IN A FINAL NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED PRIMARILY FROM SUCH
AGENT PARTY'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. 


        (d)   The
Agent agrees that the receipt of the Communications by the Agent at its e-mail address set forth above shall constitute effective delivery of the
Communications to the Agent for
purposes of the Loan Documents. Each Lender agrees that notice to it (as provided in the next sentence) specifying that the Communications have been posted to the Platform shall constitute effective
delivery of the Communications to such Lender for purposes of the Loan Documents. Each Lender agrees to notify the Agent in writing (including by electronic communication) from time to time of such
Lender's e-mail address to which the foregoing notice may be sent by electronic transmission and (ii) that the foregoing notice may be sent to such e-mail address.
Nothing herein shall prejudice the right of the Agent or any Lender to give any notice or other communication pursuant to any Loan Document in any other manner specified in such Loan Document. 




        Section 9.3    Jurisdiction; Governing Law; Etc.    



        (a)   Each
of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or any of the
other Loan Documents to which it is a party, 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 any such New York State court or, to the fullest extent permitted by 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 



47







 

Agreement
shall affect any right that any party may otherwise have to bring any action or proceeding relating to this Agreement or any of the other Loan Documents in the courts of any jurisdiction. 



        (b)   EACH
OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION THAT 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 OF THE OTHER LOAN DOCUMENTS TO WHICH IT IS A PARTY IN ANY NEW YORK STATE OR FEDERAL
COURT. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH
COURT. 


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



        (d)   EACH
OF THE COMPANY, THE AGENT AND THE LENDERS IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT
OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS, THE LOANS OR THE ACTIONS OF THE AGENT OR ANY LENDER IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF. 




        Section 9.4    Survival; Parties Bound.    All representations, warranties, covenants and agreements made by or
on behalf of the Company in connection herewith shall survive the execution and delivery of the Loan Documents, shall not be affected by any investigation made by any Person, and shall bind the
Company and its successors, trustees, receivers and assigns and inure to the benefit of the successors and assigns of the Agent and the Lenders, provided that the undertaking of the Lenders hereunder
to make Loans to the Company shall not inure to the benefit of any successor or assign of the Company. The term of this Agreement shall be until the final maturity of each Note and the payment of all
amounts due under the Loan Documents. 


        Section 9.5    Counterparts.    This Agreement may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an
executed signature page of this Agreement by facsimile transmission or electronic transmission (i.e., a "pdf" or "tif") shall be effective as delivery of an original executed counterpart of this
Agreement. 


        Section 9.6    Survival.    The obligations of the Company under Sections 2.15(d), 2.6, 2.10(b), 2.10(d), 9.8,
9.9, 9.16 and 9.17 hereof shall survive the repayment of the Loans and the termination of the Commitments. 


        Section 9.7    Captions.    The headings and captions appearing in the Loan Documents have been included solely
for convenience and shall not be considered in construing the Loan Documents. 



        Section 9.8    Expenses, Etc.    Whether or not any Loan is ever made, the Company shall pay or reimburse on
demand each of the Lenders and the Agent for paying: (a) the reasonable fees and expenses of Shearman & Sterling LLP, counsel to the Agent or any other legal counsel engaged by the
Agent, in connection with (i) the preparation, execution and delivery of this Agreement (including the exhibits and schedules hereto) and the Loan Documents and the making of the Loans
hereunder and (ii) any modification, supplement or waiver of any of the terms of this Agreement or any other Loan Document made as a result of any request by the Company; (b) all
reasonable costs and expenses (including reasonable attorneys' fees) of the Lenders and the Agent in connection with the 


48







 



enforcement
of this Agreement or any other Loan Document; (c) all transfer, stamp, documentary or other similar taxes, assessments or charges levied by any governmental or revenue authority
after the effective date hereof in respect of this Agreement or any other Loan Document or any other document referred to herein or therein; (d) all costs, expenses, taxes, assessments and
other charges incurred after the effective date hereof in connection with any filing, registration, recording or perfection of any security interest contemplated by Section 5.10 of this
Agreement; and (e) expenses of mutually agreed due diligence and syndication. 


        Section 9.9    Indemnification.    The Company shall indemnify the Agent, the Lenders and each Affiliate
thereof and their respective directors, officers, employees, counsel and agents from, and hold each of them harmless against, any and all losses, liabilities (including Environmental Liabilities),
claims (including Environmental Claims) or damages to which any of them may become subject, insofar as such losses, liabilities, claims or damages arise out of or result from any (a) actual or
proposed use by the Company of the proceeds of any extension of credit by any Lender hereunder, (b) breach by the Company of this Agreement or any other Loan Document, (c) violation by
the Company or any of its Subsidiaries of any law, rule, regulation or order including any Requirements of Environmental Law, (d) Liens or security interests granted on any Property pursuant to
or under the Loan Documents, to the extent resulting from any Hazardous Substance, petroleum, petroleum product or petroleum waste located in, on or under any such property, (e) ownership by
the Lenders or the Agent of any Property following foreclosure under the Loan Documents, to the extent such losses, liabilities, claims or damages arise out of or result from any Hazardous Substance,
petroleum, petroleum product or petroleum waste located in, on or under such Property, including losses, liabilities, claims or damages which are imposed upon Persons under laws relating to or
regulating Hazardous Substances, petroleum, petroleum products or petroleum wastes solely by virtue of ownership, (f) any Lender or the Agent being deemed an operator of any such Property by a
court or other regulatory or administrative agency or tribunal or other third party, to the extent such losses, liabilities, claims or damages arise out of or result from any Hazardous Substance,
petroleum, petroleum product or petroleum waste located in on or under such Property, (g) the making of the extensions of credit hereunder and the consummation of any of the transactions
contemplated in the Loan Documents or (h) investigation, litigation or other proceeding (including any threatened investigation or proceeding) relating to any of the foregoing, and the Company
shall reimburse the Agent and each Lender, and each Affiliate thereof and their respective directors, officers, employees, counsel and agents, upon demand for any expenses (including legal fees)
incurred in connection with any such investigation or proceeding, AND WHETHER ANY SUCH LOSS, LIABILITY, CLAIM OR DAMAGE RESULTS FROM THE NEGLIGENCE OF ANY SUCH INDEMNIFIED
PERSON; but excluding any such losses, liabilities, claims, damages or expenses incurred by a Person or any Affiliate thereof or their respective directors, officers,
employees, counsel or agents by reason of the gross negligence or willful misconduct of such Person, affiliate, director, officer, employee or agent. Promptly after receipt by an indemnified person of
notice of any claim or the commencement of any action, such indemnified person shall, if any claim in respect thereof is to be
made against the Company under this Section 9.10, notify the Company in writing of the claim or the commencement of that action. The Company shall not be liable for any settlement of any such
claim or action involving the payment of monetary damages effected without its written consent not to be unreasonably withheld. If any such claim or action shall be brought against an indemnified
person and it shall notify the Company thereof, the Company shall be entitled to participate in the joint defense thereof. 


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        Section 9.10    Amendments, Etc.    No amendment or waiver of any provision of this Agreement, the Notes or
any
other Loan Document (except for the Credit Facility Hedging Agreements), nor any consent to any departure by the Company therefrom, shall in any event be effective unless the same shall be agreed or
consented to by the Required Lenders and the Company, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, that no
amendment, waiver or consent shall, unless in writing and signed by each Lender, do any of the following: (a) increase any Commitment of any of the Lenders or subject the Agent or any of the
Lenders to any additional obligations; (b) reduce the principal of, or interest on, any Loan, or any fee hereunder; (c) waive or postpone any scheduled date fixed for any payment of
principal of, or interest on, any Loan, or any fee or other sum to be paid hereunder; (d) change the percentage of any of the Commitments or of the aggregate unpaid principal amount of any of
the Loans, or the number of Lenders, which shall be required for the Lenders or any of them to take any action under this Agreement; (e) change any provision contained in Sections 2.4, 2.7, 9.8
or 9.9 hereof or this Section 9.10 or Sections 9.15 or 9.18 hereof; (f) release all or any substantial part of the security for the obligations of the Company under this Agreement, any
Application or any Note; (g) release any Guarantor from any Guaranty (except for Guarantors sold by the Company or any of its Subsidiaries pursuant to the terms of Section 6.4(y)
hereof); (h) change the definition of "Required Lenders" contained herein; (i) modify the requirement of unanimous written approval by the Lenders of any unilateral reduction by the
Lenders of the Aggregate Commitment as provided for in Section 2.2; or (j) waive or postpone any prepayment required by Section 2.3 hereof. Anything in this Section 9.10 to
the contrary, no amendment, waiver or consent shall be made with respect to Section 8 without the consent of the Agent. 


        Section 9.11    Successors and Assigns.    



        (a)   This
Agreement shall be binding upon and inure to the benefit of the Company, the Agent and the Lenders and their respective successors and assigns. The Company may not
assign or transfer any of its rights or obligations hereunder without the prior written consent of all of the Lenders. 


        (b)   Each
Lender may sell participations to any Person in all or part of any Loan, or all or part of its Notes or Commitments, to another bank or other entity, in which
event, without limiting the foregoing, the provisions of Sections 2.12, 9.09, 9.15 and 9.16 shall inure to the benefit of each purchaser of a participation and the pro rata treatment of payments, as
described in Section 2.9, shall be determined as if such Lender had not sold such participation. In the event any Lender shall sell any participation, (i) the Company, the Agent and the
other Lenders shall continue to deal solely and directly with such selling Lender in connection with such selling Lender's rights and obligations under the Loan Documents (including the Note held by
such selling Lender), (ii) such Lender shall retain the sole right and responsibility to enforce the obligations of the Company relating to the Loans, including the right to approve any
amendment, modification or waiver of any provision of this Agreement other than (and then only if expressly permitted by the applicable participation agreement) amendments, modifications or waivers
with respect to (A) any fees payable hereunder to the Lenders and (B) the amount of principal or the rate of interest payable on, or the dates fixed for the scheduled repayment of
principal of, the Loans and other sums to be paid to the Lenders hereunder, and (iii) the Company agrees, to the fullest extent it may effectively do so under applicable law, that any
participant of a Lender may exercise all rights of set-off, bankers' lien, counterclaim or similar rights with respect to such participation as fully as if such participant were a direct
holder of Loans if such Lender has previously given notice of such participation to the Company and such participant agrees to be bound by Section 2.12 as if it were a Lender. 


        (c)   Each
Lender may assign to one or more Lenders or Eligible Assignees all or a portion of its interests, rights and obligations under this Agreement (including all or a
portion of its Commitment and the same portion of the related Loan at the time owing to it) (a "Ratable Assignment");  provided, however, that, (i) the aggregate amount of the Commitment and Loan of the assigning
Lender subject 


50







 



to
each such assignment (determined as of the date the Assignment and Acceptance (as defined below) with respect to such assignment is delivered to the Agent) shall in no event be less than $5,000,000
(unless all of the assigning Lender's Commitment and Loan is being assigned); and (ii) the parties to each such assignment shall execute and deliver to the Agent, for its acceptance and
recording in its records, an Assignment and Acceptance in the form of Exhibit F attached hereto (each an "Assignment and Acceptance") with blanks
appropriately completed, together with any Note or Notes subject to such assignment and a processing and recordation fee of $3,500 (for which the Company shall have no liability, and provided that
only one such fee shall be required in the case of simultaneous assignments to related entities). Upon such execution, delivery, acceptance and recording, from and after the effective date specified
in each Assignment and Acceptance, which effective date shall be at least five Business Days after the execution thereof, unless a shorter period of time may be agreed to by the Agent in its sole and
absolute discretion, (A) the assignee thereunder shall be a party hereto and, to the extent provided in such Assignment and Acceptance, have the rights and obligations of a Lender hereunder and
(B) the Lender thereunder shall, to the extent provided in such assignment, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all
or the remaining portion of an assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto). 


        (d)   By
executing and delivering an Assignment and Acceptance, the Lender assignor thereunder and the assignee thereunder confirm to and agree with each other and the other
parties hereto as follows: (i) other than the representation and warranty that it is the legal and beneficial owner of the interest being assigned thereby free and clear of any adverse claim,
such Lender assignor makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with any Loan Document or
the execution, legality, validity, enforceability, genuineness, sufficiency or value of any Loan Document or any other instrument or document furnished pursuant thereto; (ii) such assignor
Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Company or any of its Subsidiaries or the performance or observance by the
Company of any of its obligations hereunder; (iii) such assignee confirms that it has received a copy of this Agreement and the other Loan Documents, together with copies of the financial
statements of the Company previously delivered in accordance herewith and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance; (iv) such assignee will, independently and without reliance upon the Agent, such assignor Lender or any other Lender and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents; (v) such assignee appoints and authorizes the Agent
to take such action as agent on its behalf and to exercise such powers under the Loan Documents as are delegated to the Agent by the terms hereof, together with such powers as are reasonably
incidental thereto; and (vi) such assignee agrees that it will perform in accordance with their terms all obligations that by the terms of the Loan Documents are required to be performed by it
as a Lender. 


        (e)   The
Agent shall maintain at its office a copy of each Assignment and Acceptance delivered to it and a record of the names and addresses of the Lenders and the
Commitments of, and principal amount of the Loans owing to each Lender from time to time (the "Register"). The entries in the register shall be
conclusive, in the absence of manifest error, and the Company, the Agent and the Lenders may treat each person the name of which is recorded therein as a Lender hereunder for all purposes of the Loan
Documents. Such records shall be available for inspection by the Company or any Lender at any reasonable time and from time to time upon reasonable prior notice. 


        (f)    Upon
its receipt of an Assignment and Acceptance executed by an assigning Lender and the assignee thereunder together with the Note, if any, subject to such assignment,
the written consent to such assignment and the fee payable in respect thereto, the Agent shall, if such Assignment and 


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Acceptance
has been completed with blanks appropriately filled, (i) accept such Assignment and Acceptance, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Company and the Lenders. Contemporaneously with the receipt by the Company of such Assignment and Acceptance, the Company, at its own expense, shall
execute and deliver to the Agent in exchange for the surrendered Note a new Note payable to the order of such assignee in an amount equal to the Commitment and Loan assumed by it pursuant to
such Assignment and Acceptance and, if the assigning Lender has retained a Commitment and Loan hereunder, a new Note to the order of the assigning Lender in an amount equal to the Commitment and Loan
retained by it hereunder. Such new Notes shall be in an aggregate principal amount equal to the aggregate principal amount of such surrendered Note, shall be dated the effective date of such
Assignment and Acceptance and shall otherwise be in substantially the form of the surrendered Note. Thereafter, such surrendered Note shall be marked canceled and returned to the Company. 


        (g)   Any
Lender may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 9.11, disclose to the assignee
or participant or proposed assignee or participant, any information relating to the Company furnished to such Lender by or on behalf of the Company. 



        (h)   Each
Lender agrees that, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 9.11, the Company
will not be responsible for the accuracy and completeness of any written materials furnished by such Lender to any actual or prospective assignee or participant, other than copies of
(i) documents furnished to such Lender pursuant to clause (a), (b), (c) or (d) of Section 5.2 hereof, and (ii) any other documents which are prepared by the
Company for use in such connection and which contain a statement to such effect. 



        (i)    Notwithstanding
anything herein to the contrary, each Lender may pledge and assign all or any portion of its rights and interests under the Loan Documents to any Federal
Reserve Bank. 


        (j)    Notwithstanding
anything to the contrary contained herein, any Lender (a "Granting Lender") may grant to a special
purpose funding vehicle identified as such in writing from time to time by the Granting Lender to the Agent and the Company (an "SPC") the option to
provide all or any part of any Loan that such Granting Lender would otherwise be obligated to make pursuant to this Agreement; provided,  however, that
(i) nothing herein shall constitute a commitment by any SPC to fund any Loan, and (ii) if an SPC elects not to exercise such
option or otherwise fails to make all or any part of such Loan, the Granting Lender shall be obligated to make such Loan pursuant to the terms hereof. The making of an Loan by an SPC hereunder shall
utilize the Commitment of the Granting Lender to the same extent, and as if, such Loan were made by such Granting Lender. Each party hereto hereby agrees that (i) no SPC shall be liable for any
indemnity or similar payment obligation under this Agreement for which a Lender would be liable, (ii) no SPC shall be entitled to the benefits of Sections 2.10 and 9.15 (or any other increased
costs protection provision) and (iii) the Granting Lender shall for all purposes, including, without limitation, the approval of any amendment or waiver of any provision of any Loan Document,
remain the Lender of record hereunder. In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that
is one year and one day after the payment in full of all outstanding commercial paper or other senior Debt of any SPC, it will not institute against, or join any other person in instituting against,
such SPC any bankruptcy, reorganization, arrangement, insolvency, or liquidation proceeding under the laws of the United States or any State thereof. Notwithstanding anything to the contrary contained
in this Agreement, any SPC may (i) with notice to, but without prior consent of, the Company and the Agent, assign all or any portion of its interest in any Loan to the Granting Lender and
(ii) disclose on a confidential basis any non-public information relating to its funding of Loans to any rating agency, commercial paper dealer or provider of any surety or
guarantee or credit or liquidity enhancement to such SPC. This subsection (j) may not be amended without the 


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prior
written consent of each Granting Lender, all or any part of whose Loans are being funded by the SPC at the time of such amendment. 


        Section 9.12    Release of Collateral.    Upon the sale, lease, transfer or other disposition of any item of
Collateral or Additional Collateral of any Loan Party (including, without limitation, as a result of the sale, in accordance with the terms of the Loan Documents, of the Loan Party that owns such
Collateral or Additional Collateral) in accordance with the terms of the Loan Documents, the Collateral Agent will, at the Borrower's expense, execute and deliver to such Loan Party such documents as
such Loan Party may reasonably request to evidence the release of such item of Collateral or Additional Collateral from the assignment and security interest granted under the Security Agreements A or
B, as applicable in accordance with the terms of the Loan Documents. 


        Section 9.13    Entire Agreement.    This Agreement embodies the entire agreement and understanding among the
Company, the Agent and the Lenders relating to the subject matter hereof and supersedes all prior proposals, agreements and understandings relating to the subject matter hereof. The Company certifies
that it is relying on no representation, warranty, covenant or agreement except for those set forth in this Agreement and the other Loan Documents of even date herewith. 


        Section 9.14    Severability.    If any provision of any Loan Documents shall be invalid, illegal or
unenforceable in any respect under any applicable law, the validity, legality and enforceability of the remaining provisions shall not be affected or impaired thereby. 


        Section 9.15    Disclosures.    Every reference in the Loan Documents to disclosures of the Company to the
Agent and the Lenders in writing, to the extent that such references refer to disclosures at or prior to the execution of this Agreement, shall be deemed strictly to refer only to written disclosures
delivered to the Agent and the Lenders in an orderly manner concurrently with the execution hereof. 


        Section 9.16    Capital Adequacy.    


        (a)   If
after the date of this Agreement, any Lender shall have determined that the adoption or effectiveness (regardless of whether previously announced) of any applicable
Legal Requirement or treaty regarding capital adequacy, or any change therein, or any change in the interpretation or administration thereof by any Governmental Authority or comparable agency charged
with the interpretation or administration thereof, or compliance by any Lender with any request or directive regarding capital adequacy (whether or not having the force of law) of any such
Governmental Authority, has or would have the effect of increasing the cost of, or reducing the rate of return on the capital of such Lender (or any holding company of which such Lender is a part) as
a consequence of its obligations hereunder or under any Note to a level below that which such Lender or holding company could have achieved but for such adoption, change or compliance by an amount
deemed by such Lender to be material, then from time to time, upon written demand to the Company by such Lender (with a copy to the Agent), the Company shall pay to such Lender, but only with respect
to periods arising after such demand by such Lender and applicable periods prior to such demand by such Lender if such adoption, change or compliance is retroactive in application, such additional
amount or amounts as will compensate such Lender or holding company for such reduction. 


        (b)   The
certificate of any Lender setting forth such amount or amounts as shall be necessary to compensate such Lender or its holding company as specified in Subsection
9.15(a) above (and setting forth the calculation thereof in reasonable detail) shall be delivered as soon as practicable to the Company and shall be conclusive and binding, absent manifest error. The
Company shall pay such Lender the amount shown as due on any such certificate within five days after such Lender delivers such certificate. In preparing such certificate, such Lender may employ such
assumptions and allocations of costs and expenses as it shall in good faith deem reasonable and may use any reasonable averaging and attribution method. 


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        Section 9.17    Withholding Tax.    


        (a)   As
used in this Section 9.17, the following terms shall have the following meanings: 



            i.  "Indemnifiable Tax" means any Tax, but excluding, in any case, any Tax that (a) would not be imposed in respect of
a payment to a Lender under this Agreement, under the Notes held by such Lender or under any of the other Loan Documents except for a present or former connection between the jurisdiction of the
Governmental Authority imposing such Tax and such holder (or a shareholder or other Person with an interest in such holder), including a connection arising from such holder's (or shareholder of such
holder or such other Person) being or having been a citizen or resident of such jurisdiction, or being or having been organized, present or engaged in a trade or business in such jurisdiction, or
having or having had a permanent establishment or fixed place of business in such jurisdiction, but excluding a connection arising solely from such holder having executed, delivered, performed its
obligations or received a payment under, or enforced, this Agreement, the Notes or any other Loan Documents, or (b) is imposed under United States federal income tax law. 


           ii.  "Tax" means any present or future tax, levy, impost, duty, charge, assessment or fee of any nature (including interest
thereon and penalties and additions thereto) that is imposed by any Governmental Authority in respect of a payment to a Lender under this Agreement or under any of the other Loan Documents. 




        (b)   If
the Company is required by any applicable Legal Requirement to make any deduction or withholding for or on account of any Tax from any payment to be made by it under
this Agreement in respect of the Loans or under any other Loan Documents, then the Company shall (i) promptly notify the applicable Lender hereunder that is entitled to such payment of such
requirement to so deduct or withhold such Tax, (ii) pay to the relevant authorities the full amount required to be so deducted or withheld, (iii) promptly forward to such Lender an
official receipt (or certified copies thereof), or other documentation reasonably acceptable to such Lender, evidencing such payment to such Governmental Authorities and (iv) if such Tax is an
Indemnifiable Tax, pay, to the extent permitted by law, to such holder, in addition to whatever net amount of such payment is paid to such Lender, such additional amount as is necessary to ensure that
the total amount actually received by such Lender (free and clear of Indemnifiable Tax) will equal the full amount of the payment such Lender would have received had no such deduction or withholding
been required. If the Company pays any additional amount to a Lender pursuant to the preceding sentence and such Lender shall receive a refund of an Indemnifiable Tax with respect to which, in the
good faith opinion of such Lender, such payment was made, such Lender shall pay to the Company the amount of such refund promptly upon receipt thereof. 



        (c)   In
the event that any Governmental Authority notifies the Company that it has improperly failed to withhold or deduct any Tax from a payment received by any Lender under
this Agreement, the Company shall timely and fully pay such Tax to such Governmental Authority and such Lender shall, upon receipt of written notice of such payment, immediately pay to the Company, an
amount necessary in order that the amount of such payment to the Company after payment of all Taxes with respect to such payment, shall equal the amount that the Company paid to such Governmental
Authority pursuant to this clause (c). 


        (d)   Each
Lender shall, upon request by the Company, take requested measures to mitigate the amount of Indemnifiable Tax required to be deducted or withheld from any payment
made by the Company under this Agreement or under any other Loan Documents if such measures can, in the sole and absolute opinion of such Lender, be taken without such Lender suffering any economic,
legal, regulatory or other disadvantage (provided, however, that no such Lender shall be required to
designate a funding office that is not located in the United States of America). 


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        Section 9.18    Waiver of Claims.    The Company hereby waives and releases the Agent and all Lenders from any
and all claims or causes of action which the Company may own, hold or claim in respect of any of them as of the date hereof. 


        Section 9.19    Right of Setoff.    Upon the occurrence and during the continuance of any Event of Default, the
Lenders each are hereby authorized at any time and from time to time, without notice to the Company or any of the Guarantors (any such notice being expressly waived by the Company and by the
Guarantors by their execution of a Guaranty or a Joinder Agreement), to setoff and apply any and all deposits (general or special, time or demand, provisional or final, whether or not such setoff
results in any loss of interest or other penalty, and including without limitation all certificates of deposit) at any time held, and any other funds or property at any time held, and other
Indebtedness at any time owing by such Lender to or for the credit or the account of the Company or any such Guarantor against any and all of the Indebtedness arising in connection with this Agreement
irrespective of whether or not such Lender will have made any demand under this Agreement, the Notes or any other Loan Document. Each of the Company and the Guarantors (by their execution of a
Guaranty or a Joinder Agreement) also hereby grants to each of the Lenders a security interest in and hereby transfers, assigns, sets over, and conveys to each of the Lenders, as security for payment
of all Loans, all such deposits, funds or property of the Company or any such Guarantor or Indebtedness of any Lender to the Company or any such Guarantor. Should the right of any Lender to realize
funds in any manner set forth hereinabove be challenged and any application of such funds be reversed, whether by court order or otherwise, the Lenders shall make restitution or refund to the Company
pro rata in accordance with their respective Commitment Percentages. Each Lender agrees to promptly notify the Company and the Agent after any such setoff and application, provided that the failure to
give such notice will not affect the validity of such setoff and application. The rights of the Agent and the Lenders under this Section are in addition to other rights and remedies (including without
limitation other rights of setoff) which the Agent or the Lenders may have. This Section is subject to the terms and provisions of Section 2.12 hereof. 



        Section 9.20    USA PATRIOT Act.    Each Lender that is subject to the requirements of the USA PATRIOT Act
(Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the "Act") hereby notifies the Company that pursuant to the
requirements of the Act, it is required to obtain, verify and record information that identifies the Company, which information includes the name and address of the Company and other information that
will allow such Lender to identify the Company in accordance with the Act, and such notice is sufficient as to each such Lender. The Company shall, and shall cause each of its Subsidiaries to, provide
to the extent commercially reasonable, such information and take
such actions as are reasonably requested by the Agent or any Lender in order to assist the Agent and the Lenders in maintaining compliance with the Act. 


        Section 9.21    Non-Consenting Lenders; Other Lenders.    If at any time, any Lender becomes a
Non-Consenting Lender or makes a demand for increased costs or a withholding tax gross-up under Section 2.10 or Section 9.17, then the Company may, at its sole
cost and expense, on five Business Days' prior written notice to the Agent and such Lender, replace such Lender by causing such Lender to (and such Lender shall be obligated to) assign pursuant to
Section 9.11 all of its rights and obligations under this Agreement to one or more Eligible Assignees; provided that neither the Agent nor any
Lender shall have any obligation to the Company to find a replacement Lender or other such Person; provided,  further, that such Non-Consenting Lender or
other Lender shall be entitled to receive the full outstanding principal amount of Loans so
assigned, together with accrued interest and fees payable in respect of such Loans as of the date of such assignment and any other costs payable to such Lender under this Agreement. 


        Section 9.22    Confidentiality.    Neither the Agent nor any Lender shall disclose any Confidential
Information to any Person without the prior written consent of the Company, other than (a) to such Agent's or such Lender's Affiliates and their officers, directors, employees, agents and
advisors and to 


55







 



actual
or prospective Eligible Assignees and participants, and then only on a confidential basis, (b) as required by any law, rule or regulation or judicial process,  provided that to the extent
practicable and permitted by applicable law, the party requested to disclose any information will provide prompt written
notice of such request to the Company, will allow the Company a reasonable opportunity to seek appropriate protective measures prior to disclosure (at the Company's sole cost and expense),
(c) as requested or required by any state, federal or foreign authority or examiner (including the National Association of Insurance Commissioners or any similar organization or
quasi-regulatory authority) regulating such Lender, (d) to any rating agency when required by it, provided that, prior to any such disclosure,
such rating agency shall undertake to preserve the confidentiality of any Confidential Information relating to the Loan Parties received by it from such Lender, (e) to the extent reasonably
necessary after consultation with counsel, in connection with any litigation or proceeding to which the Agent or such Lender or any of its Affiliates may be a party,  provided that, to the extent
reasonably practicable, the party requested to disclose any such information will provide prompt written notice of such
request to the Company and will allow the Company a reasonable opportunity to seek appropriate protective measures prior to such disclosure) or (f) in connection with the exercise of any right
or remedy under this Agreement or any other Loan Document. 


[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]


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IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date set forth above. 



	 	 	WHOLE FOODS MARKET, INC., as the Company
	

 	
 	

By:	

    
 Name:

Title:
	

 	
 	

ROYAL BANK OF CANADA, as the Agent
	

 	
 	

By:	

    
 Name:

Title:
	

 	
 	

ROYAL BANK OF CANADA, as Lender
	

 	
 	

By:	

    
 Name:

Title:
	

 	
 	

JPMORGAN CHASE BANK, N.A., as Lender
	

 	
 	

By:	

    
 Name:

Title:




57











QuickLinks


$700 MILLION TERM LOAN AGREEMENT



TABLE OF CONTENTS


ARTICLE III—CONDITIONS

ARTICLE IV—REPRESENTATIONS AND WARRANTIES

ARTICLE V—AFFIRMATIVE COVENANTS

ARTICLE VI—NEGATIVE COVENANTS