Document:

Exhibit 10.16

 

THE PEP BOYS -
MANNY, MOE & JACK

ACCOUNT PLAN

 

(formerly part
of The Pep Boys - Manny, Moe & Jack

Executive Supplemental Retirement Plan)

 

 

RECITALS

 

WHEREAS, The Pep Boys - Manny, Moe &
Jack, a Pennsylvania corporation (the “Company”), established an Executive
Supplemental Pension Plan (hereinafter referred to as the “Supplemental Plan”)
effective January 1, 1982;

 

WHEREAS, the Company previously amended and
completely restated the Supplemental Plan effective January 1, 1988, and
further amended and restated the Supplemental Plan effective on February 13,
1992, March 31, 1995, and March 26, 2002;

 

WHEREAS,
pursuant to resolutions adopted March 3, 2004, the Board changed the name
of the Supplemental Plan to the “Executive Supplemental Retirement Plan” (the “Executive
Plan”) and amended and restated the Executive Plan with respect to certain of
those individuals who were Eligible Employees (as defined in the Executive
Plan) on such date, altered the method of delivering benefits for certain specified
Participants and gave others an election as to the manner in which they were
credited with a benefit;

 

WHEREAS, the foregoing changes were
incorporated into an amendment and restatement of the Executive Plan, effective
as of January 31, 2004;

 

WHEREAS, effective January 1, 2009, the
Executive Plan was split to create the Legacy Plan and this Account Plan to,
among other things  implement changes
required pursuant to and consistent with section 409A of the Internal Revenue
Code;  

 

WHEREAS, the Account Plan provides for
Retirement Contributions to made hereunder;

 

WHEREAS, the Board desires to reserve the
ability to make future Retirement Contributions discretionary; and

 

WHEREAS, Section 9.1 of the Executive
Plan authorizes the Board to amend the Executive Plan.

 

NOW, THEREFORE, the Account Plan is hereby
amended and restated, effective as of January 31, 2009, as follows:

 

 

ARTICLE I

Definitions

 

1.1           “Administrator”
or “Plan Administrator” shall mean a committee composed of three or more
persons designated from time to time by the Board.

 

1.2           “Board”
shall mean the Board of Directors of the Company.

 

1.3           “Code”
shall mean the Internal Revenue Code of 1986, as amended from time to time and
includes any regulations issued thereunder.

 

1.4           “Company”
shall mean The Pep Boys - Manny, Moe & Jack, a Pennsylvania
corporation.

 

1.5           “Compensation”
shall mean, for each Plan Year, 100% of an Eligible Employee’s annual base
salary for such Plan Year and annual bonus paid under the Employer’s Annual
Incentive Bonus Plan, or any other bonus plan that replaces such plan or is in
addition to such plan for the Plan Year, before taking into account amounts
which an Eligible Employee elects to forego to provide benefits under a plan
which satisfies the provisions of section 401(k) or 125 of the Code or to
provide benefits under the Company’s Deferred Compensation Plan; provided,
further, that any bonus that was payable under the Employer’s Annual Incentive
Bonus Plan, or any other bonus plan that replaces or is in addition to such
plan, prior to the date Compensation hereunder is determined but which is
unpaid for any reason as of the calculation date shall be included as
Compensation for purposes hereof.

 

1.6           “Disability”
shall mean that a Participant ceases employment with the Employer when he or
she is entitled to receive benefits under the Long Term Disability Salary
Continuation Plan sponsored by the Employer.

 

1.7           “Effective
Date” shall mean January 1, 2009.

 

1.8           “Eligible
Employee” shall mean an employee of the Employer who is a key employee,
including officers and directors who are key employees, and is designated by
the Board to participate in this Plan. 
Any individual who is actively participating in the Legacy Plan shall
not qualify as an Eligible Employee for purposes of this Plan.

 

1.9           “Employer”
shall mean the Company or any of its subsidiaries.

 

1.10         “ERISA”
shall mean the Employee Retirement Income Security Act of 1974, as amended from
time to time and includes any regulations issued thereunder.

 

1.11         “Executive
Plan” shall mean such term as is defined in the Recitals of this Plan.

 

1.12         “Investment
Election Form” shall mean the form prescribed by the Administrator, filed by a
Participant with the Administrator, to designate the investment vehicles for
which the amounts credited to the Participant’s Plan Account shall be deemed to
be invested under Section 3.2 of the Plan.

 

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1.13         “Legacy
Plan” shall mean The Pep Boys — Manny, Moe & Jack Legacy Plan.

 

1.14         “Legacy
Plan Participant” shall mean such term as is defined in the Legacy Plan.

 

1.15         “Non-Legacy
Plan Participant” shall mean any participant in the Executive Plan who was not
a Legacy Plan Participant.

 

1.16         “Participant”
shall mean each Non-Legacy Plan Participant who is entitled to receive a
benefit from the Executive Plan immediately prior to the Effective Date and did
not commence receipt of his or her benefit under the Executive Plan immediately
prior to the Effective Date, and each Eligible Employee who first becomes
eligible to participate in the Plan pursuant to Sections 2.1 and 2.2 on or
after the Effective Date and is entitled to receive a benefit under the Plan.

 

1.17         “Plan”
shall mean The Pep Boys — Manny, Moe & Jack Account Plan as set forth
herein as of the Effective Date, and the same as may be further amended from
time to time.

 

1.18         “Plan
Account” shall mean for each Participant his or her Retirement Contribution
Account and the Prior Executive Plan Account, if applicable.

 

1.19         “Plan
Year” shall mean the calendar year.

 

1.20         “Prior
Executive Plan Account” shall mean the individual account maintained on the
books of the Company for each Non-Legacy Plan Participant under the Executive
Plan and all sums accounted for therein immediately prior to the Effective
Date.

 

1.21         “Retirement
Contribution” shall mean a credit to a Participant’s Retirement Contribution
Account pursuant to Section 4.1 of the Plan.  For periods prior to the Effective Date, the
term “Retirement Contribution” shall have the meaning in the Executive Plan.

 

1.22         “Retirement
Contribution Account” shall mean the individual account maintained on the books
of the Company for each Participant to record the crediting of all Retirement
Contributions, and all earnings related to such Retirement Contributions, on
and after the Effective Date, and the debiting of all distributions to the
Participant or to his or her beneficiary on and after the Effective Date with
respect to such Retirement Contributions.

 

1.23         “Separation
Date” shall mean the last day on which a Participant is employed by an Employer
on account of a Separation From Service.

 

1.24         “Separation
From Service” shall mean a Participant’s separation from service with the
Employer within the meaning of section 409A of the Code and the regulations
issued thereunder.

 

3

 

1.25         “Specified
Employee” shall mean any Participant who, at any time during the twelve month
period ending on the identification date (as determined by the Company or its delegate),
is a specified employee under section 409A of the Code, as determined by the
Company (or its delegate).  The
determination of “specified employees,” including the number and identity of
persons considered “specified employees” and identification date, shall be made
by the Company (or its delegate) in accordance with the provisions of sections
416(i) and 409A of the Code and the regulations issued thereunder.

 

1.26         “Year
of Service” shall mean a consecutive twelve-month period during which an individual
is continuously employed by the Employer as an Eligible Employee.  Each Year of Service earned prior to the
Effective Date under the Executive Plan shall count as a Year of Service under
this Plan.  For purposes of this Plan,
any partial Years of Service shall not be included in the calculation of
benefits or for any other purpose hereunder and Years of Service for which the
individual did not qualify as an Eligible Employee shall not count.  If a terminated employee is rehired and is
designated as an Eligible Employee, his or her Years of Service shall not
include his or her pre-termination employment. 
If a Legacy Plan Participant after ceasing to participate in the Legacy
Plan is subsequently designated as an Eligible Employee for purposes of this Plan
and such Legacy Plan Participant was continuously employed during such
subsequent period, such Legacy Plan Participant shall receive credit for his or
her Years of Service prior to being so designated.

 

ARTICLE II

Participation

 

2.1           Eligibility
to Participate.  Each Non-Legacy
Participant who was entitled to receive a benefit under the Executive Plan on December 31,
2008, but did not receive payment of his or her benefit prior to the Effective
Date, shall be a Participant in the Plan as of the Effective Date and such
Participant’s benefit paid on or after the Effective Date shall be governed by
the terms of the Plan as set forth herein. 
Each individual who becomes an Eligible Employee on or after the
Effective Date shall commence participation in the Plan on the date he or she
is designated as an Eligible Employee by the Administrator and for as long as
such individual is entitled to receive a benefit from the Plan such individual
shall be deemed a Participant.

 

2.2           Procedure
for and Effect of Admission.  On and
after the Effective Date, each individual who first becomes an Eligible
Employee for a Plan Year shall become a Participant in the Plan for such Plan
Year at the time designated by the Administrator.  Prior to active participation in the Plan
such Participant shall be provided with such forms as the Administrator
determines necessary to effectuate the participation of such Eligible Employee
in the Plan, including an Investment Election Form and beneficiary
designation form in the event of the death of the Eligible Employee.

 

2.3           Termination.  An individual shall continue as a Participant
in the Plan for as long as he or she is entitled to receive a benefit from the
Plan; provided, however, that a Participant’s active participation in the Plan
for purposes of eligibility to receive Retirement Contributions shall terminate
on the earliest of the date (a) his or her designation as an Eligible 

 

4

 

Employee is terminated by the Board, (b) he or
she has a Separation From Service from the Employer for any reason, or (c) the
Plan is terminated.

 

2.4           Reemployment.  If an Eligible Employee ceases being eligible
to participate in the Plan and subsequently becomes eligible to participate in
the Plan on or after the Effective Date, such Eligible Employee’s participation
in the Plan shall commence for the Plan Year designated by the
Administrator.  Such Eligible Employee
shall be required to execute such forms as required by the Administrator,
including an Investment Election Form and beneficiary designation form in
the event of the death of the Eligible Employee.

 

ARTICLE III

Plan Accounts

 

3.1           Establishment
of Accounts.  The Plan Administrator
shall maintain a Plan Account on behalf of each Participant in the Plan.  Such Plan Account shall consist of a Prior
Executive Plan Account for each Participant who had such under the Executive
Plan and a Retirement Contribution Account to reflect Retirement Contributions
credited on behalf of such Participant on and after the Effective Date.

 

3.2           Investment
Funds.  Amounts credited to a
Participant’s Plan Account shall be credited with earnings, at periodic
intervals determined by the Plan Administrator, at a rate equal to the actual
rate of return for such period of an investment fund or funds or index or
indices selected by that Participant on his or her Investment Election Form from
a range of investment vehicles authorized by the Plan Administrator.  The rate of return on investment vehicles
shall be tracked solely for the purpose of computing the amount of benefits
payable to Participants under the Plan. 
Neither the Company nor any other Employer shall be obligated to make
any actual investment.  A Participant may
change the investment allocations for existing amounts credited to his or her
Plan Account or for future amounts credited to his or her Plan Account by
completing a new Investment Election Form and submitting such to the Plan
Administrator.  Amended Investment
Election Forms may be submitted by the Participant to the Plan Administrator at
such times as permitted by the Plan Administrator in or her sole discretion.

 

3.3           Bookkeeping
Entries.  The maintenance of an
individual Plan Account on behalf of each Participant is for bookkeeping
purposes only.  Neither the Company nor
any other Employer shall be obligated to acquire or set aside any particular
assets for the discharge of their obligations under the Plan, nor shall any
Participant to have any property rights in any particular assets that may be
held by the Company or any other Employer with respect to the Plan.

 

3.4           Statements.  Statements shall be sent to each Participant
no less frequently than quarterly setting forth the value of the Participant’s
Plan Accounts.

 

ARTICLE IV

Retirement Contributions

 

4.1           Amount.
 The Retirement Contribution Account of
each Participant shall be credited with a Retirement Contribution, if any,
based on a percentage of his or her Compensation for a Plan Year provided that
the Participant is an Eligible Employee on the last 

 

5

 

day of such Plan Year. 
The applicable percentage for any Plan Year shall be determined in
accordance with the following schedule:

 

	
  If the Participant is

  	
   

  	
  Retirement

  Contribution

  Percentage

  	
   

  
	
  At least 55 years of age

  	
   

  	
  19

  	
  %

  
	
  At least 45 years of age but not more than
  54 years of age

  	
   

  	
  16

  	
  %

  
	
  At least 40 years of age but not more than
  44 years of age

  	
   

  	
  13

  	
  %

  
	
  Not more than 39 years of age

  	
   

  	
  10

  	
  %

  

 

For purposes of this Section 4.1, a
Participant’s age shall be determined at the end of each Plan Year to which the
particular Retirement Contribution relates. 
Notwithstanding the foregoing, (i) for the first four Plan Years
that a Participant is an Eligible Employee, including Plan Years under the
Executive Plan, but only with respect to Eligible Employees who were eligible
to participate in the Plan on the Effective Date, the Retirement Contribution
shall be limited to 10% of Compensation irrespective of the Participant’s age,
and (ii) in the case of a Participant who ceases to be an Eligible
Employee during a Plan Year by reason of death or a Disability, a pro rata
portion of the Retirement Contribution shall be credited based on the number of
months during the Plan Year in which the Eligible Employee was employed by the
Employer prior to death or Disability. 
If an Eligible Employee is rehired by the Employer after the Effective
Date, such Eligible Employee will not receive any credit for Years of Service
earned prior to such rehire date and such Eligible Employee will be subject to
satisfying the requirements of clause (i) above for his first four Plan
Years after his rehire date.

 

Notwithstanding
the foregoing, for all periods after March 8, 2009, the Board, by
resolution duly adopted prior to applicable period, may condition the making of
the Retirement Contribution for the applicable period upon the Company’s
achievement of certain specified objectives; provided, however, that any such
resolution and the resulting conditionality shall be of no force and effect
hereunder following a change in control of the Company.

 

4.2           Crediting.  Retirement Contributions shall be credited to
an Eligible Employee’s Retirement Contribution Account for a Plan Year as soon
as administratively practicable following the completion of the Plan Year for
which the Retirement Contribution relates or such earlier date as is designated
by the Company provided that such credit shall be tentative until the end of
the Plan Year in order that the requirements of Section 4.1 be determined
to be satisfied.

 

6

 

ARTICLE V

Vesting

 

5.1          Vesting.  Each Participant will vest in the amounts
credited to his or her Plan Account, and the related earnings thereon (if any),
upon such individual’s completion of four Years of Service.

 

ARTICLE VI

Distributions

 

6.1          Separation
From Service.  Each Participant’s
Plan Account shall be distributed to him on account of his Separation from
Service.  Such distribution shall be paid
in a single lump sum in cash to the Participant within sixty (60) days
following the six month anniversary of his Separation Date.  The lump sum payment shall be equal to the
value of such Plan Account as of the last business day immediately preceding
the date of payment.

 

6.2          Death.

 

(a)           In
the event of a Participant’s death prior to his or her Separation From Service,
distribution of the Participant’s Plan Account shall be made to the Participant’s
beneficiary in a lump sum within sixty (60) days following the date of the
Participant’s death.  The amount of any
lump sum benefit payable in accordance with this subsection shall equal the
value of the Participant’s Plan Account as of the last business day immediately
preceding the date on which such benefit is paid.

 

(b)           In
the event a Participant dies after the Participant’s Separation From Service,
and prior to the full distribution of the amounts credited to the Participant’s
Plan Account, the Participant’s Plan Account shall be paid to the Participant’s
beneficiary at such times and in such amounts as they would have been paid to
the Participant had the Participant survived.

 

6.3          Beneficiary
Designation.  Each Participant shall
have the right to designate one or more beneficiaries and contingent
beneficiaries to receive any vested amount in such individual’s Plan Account at
the time of his or her death by filing a written designation with the Plan
Administrator on the form prescribed by it for such purpose.  Participants may thereafter designate
different beneficiaries at any time by filing a new written designation.  The consent of the beneficiary is not
required for any revocation or change of election of beneficiary.  Any written designation shall become
effective only upon its receipt by the Plan Administrator.  If all of the designated beneficiaries should
die on or before the commencement of distribution of death benefits and the
Participant fails to make a new designation, his or her beneficiary shall be
determined pursuant to Section 6.4. 
If the beneficiary (or last contingent beneficiary) determined pursuant
to this Section 6.3 or the initial beneficiary determined pursuant to Section 6.4
dies before all payments are made, then the balance of the payments shall be
made to such beneficiary’s estate unless such beneficiary (or last contingent
beneficiary) designates a second-level beneficiary by filing a written
designation with the Administrator on the form prescribed by it for such
purpose, in which case such second-level beneficiary shall be treated as a
beneficiary hereunder.

 

7

 

6.4          Beneficiary
List.  If a Participant omits or
fails to designate a beneficiary or if no designated beneficiary survives such
individual, the vested amount in such individual’s Plan Account at the time of
his or her death shall be paid to the beneficiary determined from the following
priority list: (a) surviving spouse, or if none, then (b) the
Participant’s estate.

 

ARTICLE VII

Loss of Benefits

 

7.1          Loss
of Benefits.  Notwithstanding any
provision of the Plan, a person who has a vested benefit in his or her Plan
Account shall cease to have any right to receive any payment hereunder and all
obligations of the Company to make payments to or on account of such
Participant shall cease and terminate should the Administrator find, after full
consideration of the facts presented on behalf of the Company and the
Participant, that:

 

(a)           such
Participant, during his or her employment with the Employer and during the one
year thereafter, unless the Participant was terminated by the Employer without
Cause (as defined in the Non-Competition Agreement between the Employer and the
Participant), directly or indirectly, engaged in (as a principal, partner,
director, officer, agent, employee, consultant or otherwise) or was financially
interested in any business operating within the United States of America, if (i) such
business’ primary business is the retail and/or commercial sale of automotive
parts, accessories, tires and/or automotive repair/maintenance services
including, without limitation, the entities (including their franchisees and
affiliates) listed on Schedule 7.1(a)(i) hereto, or (ii) such
business is a general retailer which generates revenues from the retail and/or
commercial sale of automotive parts, accessories, tires and/or automotive
repair/maintenance services in an aggregate amount in excess of $1 billion,
including, without limitation, the entities (including their franchisees and
affiliates) listed on Schedule 7.1(a)(ii) hereto.  However, nothing contained in this Section 7.1(a) shall
prevent the Participant from holding for investment up to two percent (2%) of
any class of equity securities of a company whose securities are traded on a
national or foreign securities exchange;

 

(b)           such
Participant, during his or her employment with the Employer or during the one
year thereafter, directly or indirectly, induced or attempted to influence any
employee of the Employer to terminate his or her employment with the Employer
or hired or solicited for hire on behalf of another employer any person then
employed or who had been employed by the Employer during the immediately
preceding six months; or

 

(c)           such
Participant’s employment by the Employer was terminated (other than in
connection with or following a Change of Control) in connection with any act of
disloyalty to the Employer including, without limitation, fraud, embezzlement,
theft, breach of the Company’s Conflict of Interest or, Ethics Policies,
commission of a felony or proven dishonesty in the course of his or her
employment or service or unauthorized disclosure of trade secrets or
confidential information of the Employer.

 

8

 

ARTICLE VIII

Termination and
Amendments

 

8.1          Amendments.  The Company may amend this Plan in whole or
in part by appropriate resolution of the Board; provided, however, that, no
amendment shall (i) decrease or limit any benefits or rights accrued under
the Plan prior to the date of the amendment, or (ii) modify any provision
of this Article VIII without the consent of a majority of the Participants
affected by such amendment. 
Notwithstanding the foregoing, the Board, without the consent of a
Participant, may make all technical, administrative, regulatory and compliance
amendments to the Plan that the Board deems necessary and appropriate so that
the Plan meets the requirements of section 409A of the Code.

 

8.2          Termination.  The Company reserves the right to terminate
this Plan in its entirety at any time by an appropriate resolution of the
Board; provided, however, that any termination of the Plan shall not (i) terminate
or diminish any benefits then payable under the Plan, (ii) terminate or
diminish any benefits payable in the future under the Plan with respect to
benefits accrued as of the date of termination of the Plan, or (iii) decrease
or limit any benefits or rights accrued under the Plan prior to the date of
termination without the consent of a majority of the Participants affected by
such termination.  Any termination of the Plan shall be done in a manner
that complies with the requirements of Treas. Reg. §1.409A-3(j)(4)(ix) (or
any successor regulation thereto).

 

ARTICLE IX

Plan Administration

 

9.1          Named
Fiduciary and Plan Administrator. 
The committee designated by the Board shall be the Administrator and “named
fiduciary” (within the meaning of ERISA) of this Plan.  The Administrator shall have the authority to
control and manage the operation and, administration of the Plan.  The Administrator shall act by majority vote
of the committee members.  No Participant
who is a member of the committee shall participate in committee decisions
affecting him.

 

9.2          Delegation
of Duties.  The Administrator may (a) delegate
all or a portion of the responsibilities of controlling and managing the
operation and administration of the Plan to one or more persons; and (b) appoint
such agents, advisors, counsel, or other representatives to render advice with
regard to any of its responsibilities under the Plan.  Wherever the term “Administrator” is used
herein in connection with the operation or administration of the Plan, such
term shall include all delegates appointed by the Administrator.

 

9.3          Powers
and Duties.  The authority and
responsibility to control and manage the operation and administration of the
Plan shall include, but shall not be limited to, the performance of the
following acts:

 

(a)           The
filing of all reports required of the Plan.

 

(b)           The
distribution to Participants and beneficiaries of all reports and other
information required of the Plan.

 

9

 

(c)           The
keeping of complete records of the administration of the Plan.

 

(d)           Developing
rules and regulations for administration and interpretation of the Plan
consistent with the terms and provisions of the Plan.

 

(e)           The
interpretation of the Plan including the determination of any questions of fact
arising under the Plan and the making of all decisions required by the
Plan.  The construction of the Plan and
any actions and decision taken thereon in good faith by the Administrator shall
be final and conclusive.  The
Administrator may correct any defect, or supply any omission, or reconcile any
inconsistency in the Plan in such manner and to such extent as shall be
expedient to carry the Plan into effect and shall be the sole judge of such
expediency.

 

The Administrator’s determinations (including
those made by any person or persons to whom the Administrator’s power has been
delegated hereunder) on all matters relating to the Plan shall be final,
binding and conclusive for all purposes, upon all persons, including without
limitation, the Company and any other Employer and all Participants and their
respective beneficiaries, and successors hereunder.  Each Participant, by accepting status as a
Participant in the Plan agrees that (i) all benefits shall be paid
strictly in accordance with the terms of the Plan, and (ii) that the
Administrator shall have the discretion and authority set forth in this Article IX
and in the Plan generally.

 

9.4          Payment
of Expenses.  All expenses of the
Administrator shall be paid by the Company.

 

9.5          Indemnity
of Plan Administrator.  The Company
shall indemnify the Plan Administrator or any individual who is a delegate
against any and all claims, loss, damage, expense or liability arising from any
action or failure to act, except when due to gross negligence or willful
misconduct.

 

9.6          Agent
for Service of Process.  The Company
shall be the agent for the Plan for service of legal process.

 

ARTICLE X

Claims Procedure

 

10.1        Claim.  A Participant or his or her beneficiary or
authorized representative (each one being hereinafter referred to as a “Claimant”)
who expects a benefit under the Plan which he has not received may file a
formal claim for benefits under the Plan with the Administrator.  The Administrator shall review the claim and
render a determination relating to the claim based on this Plan document
(including the Administrator’s power and authority to interpret and construe
the Plan and to make rules relating to the administration of the Plan) and
consistent with prior determinations rendered with respect to similarly
situated claims.  The Administrator shall
notify the Claimant within ninety (90) days of the receipt of the claim of the
Administrator’s determination relating to the claim, unless the Administrator
determines that special circumstances require an extension of time for
processing a claim, in which case the Administrator shall notify the Claimant
of the extension within ninety (90) days of receipt of the claim, specifying
the special circumstances requiring an extension and the date by which it 

 

10

 

expects to render a determination on the claim, which
determination must be rendered and notice given to the Claimant no later than
the 180th day following the receipt of the claim.  If an extension is required because the
Claimant failed to submit the information necessary to decide a claim, the time
period for making a benefit determination set forth in the prior sentence shall
be tolled from the date on which the notification of the extension is sent to
the claimant until the date on which the Claimant responds to the request for additional
information.  The determination notice
shall be in writing, sent by regular mail to the address specified by the
Claimant or if none is specified to the Claimant’s last known address, and must
contain the following information:

 

(a)           The
specific reasons for a determination adverse to the Claimant, if applicable;

 

(b)           The
specific reference to the pertinent Plan provision(s) on which the
determination is based;

 

(c)           If
applicable, a description of any additional information or material necessary
to perfect the claim, and an explanation of why such information or material is
necessary; and

 

(d)           An
explanation of the claims review procedure and the time limitations of the
review procedure applicable thereto, including a statement of the Claimant’s
right to bring a civil action under section 502(a) of ERISA following an
appeal of any adverse benefit determination.

 

For purposes of this Article X, claims,
notifications and determinations shall be deemed to be received when actually
received and parties shall be deemed to be notified and a notification shall be
deemed to be sent or submitted on the date that such notification is postmarked
or actually delivered by courier if not mailed.

 

10.2        Appeal
Procedure.  A Claimant is entitled to
request an appeal of any adverse determination of his or her claim by the
Administrator.  The request for appeal
must be submitted in writing within 60 days of the receipt by the Claimant of
the notification of an adverse claim determination.  Absent a request for appeal within the 60-day
period, the determination of the Administrator regarding the claim will be
deemed to be final and conclusive. 
During the appeal process, the Claimant shall have a reasonable
opportunity to submit written comments, documents, records and other
information relating to the claim and shall be entitled, free of charge, to
reasonable access to and copies of all documents, records and other information
relevant to the claim.  The Administrator
shall review the appeal of the initial claim determination (including all
comments, documents, records and other information submitted by the Claimant,
regardless of whether such information was submitted with the original claim)
and render a final determination.

 

10.3        Final
Determination.  Within sixty (60) days
following receipt by the Administrator of the Claimant’s request for appeal,
the Administrator shall render a final determination relating to the claim,
unless the Administrator determines that special circumstances (such as the
need to hold a hearing) require an extension of time for processing the 

 

11

 

appeal, in which case the Administrator shall notify
the Claimant of such extension within sixty (60) days following receipt by the
Administrator of the request for appeal, specifying the special circumstances
requiring an extension and the date by which it expects to render a final
determination on the appeal, which determination must be rendered and notice
given to the Claimant no later than the 120th day following the receipt by the
Administrator of the request for appeal. 
If an extension is required because the Claimant failed to submit the
information necessary to decide a claim, the time period for making a benefit
determination set forth in the prior sentence shall be tolled from the date on
which the extension notification is sent to the Claimant until the date on
which the Claimant responds to the request for additional information.  The final determination shall be made in
writing to the Claimant.  The final
determination shall (i) recite the specific reasons for a determination
adverse to the Claimant, if applicable, with specific reference to the
pertinent Plan provision(s) on which the determination is based, (ii) state
that the Claimant is entitled to receive, upon request and free of charge,
reasonable access to and copies of all documents, records and other information
relevant to the claim and (iii) state that the Claimant has a right to
bring an action under section 502(a) of ERISA.

 

ARTICLE XI

Source of Benefits and
Payments

 

11.1        Unfunded
Plan.  The Plan is intended to
constitute an “unfunded” plan of deferred compensation for Participants.  Benefits payable hereunder shall be payable
out of the general assets of the Company, and no segregation or any assets
whatsoever for such benefits shall be made. 
Nothing contained herein shall give any Participant or beneficiary any
rights to assets that are greater than those of a general creditor of the
Employer.

 

11.2        Non-Alienation.  None of the payments, benefits or rights of
Participant or beneficiary thereof shall be subject to any claim of any
creditor of such person and, in particular, to the fullest extent permitted by
law, shall be free from attachment, garnishment, trustee’s process, or any other
legal or equitable process available to any creditor of such person.  No Participant or beneficiary thereof shall
have the right to alienate, anticipate, commute, pledge, encumber or assign any
of the benefits or payments which he may expect to receive, contingently or
otherwise, under this Plan, except the right to designate a beneficiary or
beneficiaries as hereinabove provided.

 

11.3        Incapacity.  If the Company determines that a person
entitled to receive any benefit payment is under a legal disability or is
incapacitated in any way so as to be unable to manage his or her financial
affairs, the Company may make payments to such person’s legal representative or
to a relative or other person for his or her benefit, or apply the payment for
the benefit of such person in such manner as the Company considers
advisable.  Any payment of a benefit in
accordance with the provisions of this Section 11.3 shall be a complete
discharge of any liability to make such payment.

 

ARTICLE XII

Miscellaneous

 

12.1        Effective
Date.  This Plan is effective as of
the Effective Date and shall be applicable to each Non-Legacy Plan Participant
who did not receive payment of his or her 

 

12

 

benefit from the Executive Plan prior to the Effective
Date and each individual who becomes an Eligible Employee on or after the
Effective Date and is entitled to receive a benefit under the Plan.  The rights and benefits of any Non-Legacy
Plan Participant who commenced benefit payments prior to January 1, 2009
are governed by the terms of the Executive Plan as it existed prior to the
Effective Date and are either grandfathered from the requirements of section
409A of the Code or payable pursuant to a fixed schedule as required by, and in
compliance with, section 409A of the Code, with payments made between January 1,
2005 and December 31, 2008, the Executive Plan has been operated in
accordance with transition relief established by the Treasury Department and
Internal Revenue Service pursuant to section 409A of the Plan.  The rights and benefits of a Legacy Plan
Participant shall not be governed by the terms of this Plan.

 

12.2        Employment
Obligations.  The establishment of
this Plan shall not be construed as creating any contract of employment between
the Employer and any Participant. 
Nothing in this Plan shall be construed as conferring upon any
Participant any right to continue in the employment of the Employer, nor shall
it interfere with the rights of the Employer to terminate the employment of any
Participant and/or to take any personnel action affecting any Participant
without regard to the effect that such action may have upon such Participant as
a recipient or prospective recipient of benefits under the Plan.  Any amount payable hereunder shall not be
deemed salary or other compensation to a Participant for the purposes of
computing benefits to which the Participant may be entitled under any qualified
retirement arrangement established by the Employer for the benefit of its
employees.  Nothing herein contained
shall give any Participant the right to inspect the books of the Company or to
interfere with the right of the Employer to discharge any Participant from
employment at any time for any reason whatsoever, with or without cause.

 

12.3        No
Limitation of Employer Action. 
Nothing contained in the Plan shall be construed to prevent the Employer
from taking any action that is deemed by it to be appropriate or in its best
interest.  No Participant, beneficiary,
or other person shall have any claim against the Employer as a result of such
action.

 

12.4        Conflicts
of Law.  All matters respecting the
validity, effect, interpretation and administration of this Plan shall be
determined in accordance with the laws of the Commonwealth of Pennsylvania, except
to the extent superseded by ERISA.

 

12.5        References.  The masculine pronoun shall include the
feminine and the singular form shall include the plural, as necessary for
proper interpretation of this Plan.

 

12.6        Withholding
Taxes.  The Employer may make such
provisions and take such actions as it may deem necessary or appropriate for
the withholding of any taxes that the Employer is required to withhold by any
law or regulation of any governmental authority, whether Federal, state or
local, to withhold in connection with any amounts credited and benefits
distributed under the Plan.  Each
Participant (or his or her beneficiary); however, shall be responsible for the
payment of all individual tax liabilities resulting from any such benefits.

 

12.7        Severability.  If any provision of this Plan is held
unenforceable, the remainder of the Plan shall continue in full force and
effect without regard to such unenforceable 

 

13

 

provision
and shall be applied as though the unenforceable provision were not contained
in the Plan.

 

12.8        Successors.  The provisions of this Plan shall bind and
inure to the benefit of the Employer and its successors and assigns.  The term, “successors,” as used herein, shall
include any corporate or other business entity which shall, whether by merger,
consolidation, purchase or otherwise acquire all or substantially all of the
business and assets of the Employer, and successor of any such corporation or
other business entity.

 

12.9        Headings.  Headings are inserted in this Plan for
convenience of reference only and are to be ignored in the construction of the
provisions of the Plan.

 

12.10      Notice.  Any notice required or permitted under the
Plan shall be sufficient if in writing and hand delivered or sent by registered
or certified mail.  Such notice shall be
deemed given as of the date of delivery or, if delivery is made by mail, as of
the date shown on the postmark on the receipt for registration or certification.  Mailed notice to the Administrator shall be
directed to the Company’s corporate headquarters.  Mailed notice to a Participant or beneficiary
shall be directed to the individual’s last known address on the Employer’s
records.

 

12.11      Section
409A of the Code.  The Plan is
intended to comply with the applicable requirements of section 409A of the Code
and related guidance, and shall be administered in accordance with such.  Notwithstanding anything in the Plan to the
contrary, elections as to form and distributions from the Plan may only be made
under the Plan upon an event and in a manner permitted by section 409A of the
Code.  To the extent that any provision
of the Plan would cause a conflict with the requirements of section 409A of the
Code, or would cause the administration of the Plan to fail to satisfy the
requirements of section 409A, such provision shall be deemed null and
void.  In no event shall a Participant,
directly or indirectly, designate the calendar year of payment.  Notwithstanding anything in the Plan to the
contrary, in no event may a Specified Employee commence receipt of his benefit
under the Plan on account of a Separation From Service prior to the date that
is six months from his Separation Date.

 

IN WITNESS WHEREOF, this The Pep Boys —
Manny, Moe & Jack Account Plan is hereby executed effective as of the
29th day of January, 2009.

 

	
   

  	
  THE PEP BOYS — MANNY, MOE & JACK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Michael R. Odell, Chief Executive Officer

  

 

14Exhibit 10.19

 

CREDIT AGREEMENT

 

Dated
as of January 16, 2009

 

among

 

THE PEP
BOYS — MANNY, MOE & JACK,

as the Lead Borrower

 

For

 

The
Borrowers Named Herein

 

BANK OF
AMERICA, N.A.,

as Administrative Agent, Collateral Agent, Swing Line Lender

and L/C Issuer,

 

and

 

The
Other Lenders Party Hereto

 

WELLS
FARGO RETAIL FINANCE, LLC and

REGIONS BANK

as

Co-Syndication Agents

 

BANC OF
AMERICA SECURITIES LLC,

WELLS FARGO RETAIL FINANCE, LLC and

REGIONS BANK

as

Joint Lead Arrangers and Joint Bookrunners

 

	
  SCHEDULES

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  1.01

  	
   

  	
  Borrowers

  
	
   

  	
  1.02

  	
   

  	
  Guarantors

  
	
   

  	
  1.03

  	
   

  	
  Existing
  Letters of Credit

  
	
   

  	
  2.01

  	
   

  	
  Commitments
  and Applicable Percentages

  
	
   

  	
  5.01

  	
   

  	
  Loan
  Parties Organizational Information

  
	
   

  	
  5.05

  	
   

  	
  Internal
  Control Event Disclosure

  
	
   

  	
  5.06

  	
   

  	
  Litigation

  
	
   

  	
  5.08(b)(1)

  	
   

  	
  Owned
  Real Estate

  
	
   

  	
  5.08(b)(2)

  	
   

  	
  Leased
  Real Estate

  
	
   

  	
  5.09

  	
   

  	
  Environmental
  Matters

  
	
   

  	
  5.10

  	
   

  	
  Insurance

  
	
   

  	
  5.13

  	
   

  	
  Subsidiaries;
  Equity Interests

  
	
   

  	
  5.21(a)

  	
   

  	
  DDAs

  
	
   

  	
  5.21(b)

  	
   

  	
  Credit
  Card Arrangements

  
	
   

  	
  5.24

  	
   

  	
  Material
  Contracts

  

 

 

	
   

  	
  6.02

  	
   

  	
  Financial
  and Collateral Reporting

  
	
   

  	
  7.01

  	
   

  	
  Existing
  Liens

  
	
   

  	
  7.02

  	
   

  	
  Existing
  Investments

  
	
   

  	
  7.03

  	
   

  	
  Existing
  Indebtedness

  
	
   

  	
  10.02

  	
   

  	
  Administrative Agent’s Office; Certain Addresses for Notices

  

 

 

	
  EXHIBITS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Form of

  
	
   

  	
   

  	
   

  
	
   

  	
  A-1

  	
   

  	
  Committed
  Loan Notice

  
	
   

  	
  A-2

  	
   

  	
  Conversion/Continuation
  Notice

  
	
   

  	
  B

  	
   

  	
  Swing
  Line Loan Notice

  
	
   

  	
  C-1

  	
   

  	
  Committed
  Loan Note

  
	
   

  	
  C-2

  	
   

  	
  Swing
  Line Note

  
	
   

  	
  D

  	
   

  	
  Compliance
  Certificate

  
	
   

  	
  E

  	
   

  	
  Assignment
  and Assumption

  
	
   

  	
  F

  	
   

  	
  Borrowing
  Base Certificate

  

 

 

CREDIT
AGREEMENT

 

This CREDIT AGREEMENT (“Agreement”) is entered into as of January 16,
2009, among:

 

THE PEP BOYS — MANNY, MOE & JACK, a Pennsylvania corporation
(the “Lead Borrower”);

 

the Persons named on Schedule 1.01 hereto (each a “Borrower”
and collectively, the “Borrowers”);

 

the Guarantors named on Schedule 1.02 hereto;

 

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

 

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

 

WELLS FARGO RETAIL FINANCE, LLC and REGIONS BANK, as Co-Syndication
Agents.

 

The Borrowers have requested that the Lenders provide a revolving
credit facility, and the Lenders have indicated their willingness to lend and
the L/C Issuer has indicated its willingness to issue Letters of Credit, in
each case on the terms and conditions set forth herein.

 

In consideration of the mutual covenants and agreements herein
contained, the parties hereto covenant and agree as follows:

 

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

 

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

 

“34 Act Reports” means the reports filed by the Lead Borrower
with the Securities and Exchange Commission under the Securities Exchange Act
of 1934.

 

“ACH” means automated clearing house transfers.

 

“Accelerated Borrowing Base Delivery Event” means either (i) the
occurrence and continuance of any Event of Default, or (ii) the failure of
the Borrowers to maintain (at any time) Availability (calculated, for purposes of this definition, without giving effect to
the Availability Block) at least equal to seventeen and one-half percent (17.5%) of the lesser of (i) the
Aggregate Commitments and (ii) the Borrowing Base.  For purposes of this Agreement, the
occurrence of an Accelerated Borrowing Base Delivery Event shall be deemed
continuing (A) so long as such Event of Default has not been waived, or (ii) if
the Accelerated Borrowing Base Delivery Event arises as a result of the
Borrowers’ failure to achieve Availability as required hereunder, until Availability
(calculated, for purposes of this
definition, without giving effect to the Availability Block) has
exceeded seventeen and one-half percent
(17.5%) of the lesser of (i) the Aggregate Commitments and (ii) the
Borrowing Base for sixty consecutive calendar days, in which case an
Accelerated Borrowing Base Delivery Event shall no longer be deemed to be
continuing.

 

 

“Accommodation Payment” as defined in Section 10.21(d).

 

“Account” means “accounts” as defined in the UCC, and also
means, without limitation, a right to payment of a monetary obligation, whether
or not earned by performance, (a) for Inventory and other Collateral
(including the proceeds thereof) that has been or is to be sold, leased,
licensed, assigned, or otherwise disposed of, (b) for services rendered or
to be rendered, or (c) arising out of the use of a credit or charge card
or information contained on or for use with the card.

 

“Acquisition” means, with respect to any Person (a) an
Investment in, or a purchase of a Controlling interest in, the Equity Interests
of any other Person, (b) a purchase or other acquisition of all or
substantially all of the assets or properties of, another Person or of any
business unit of another Person, (c) any merger or consolidation of such
Person with any other Person or other transaction or series of transactions
resulting in the acquisition of all or substantially all of the assets, or a
Controlling interest in the Equity Interests, of any Person, or (d) any
acquisition of any Store locations of any Person, in each case in any
transaction or group of transactions which are part of a common plan.

 

“Act” shall have the meaning provided in Section 10.18.

 

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

 

“Adjusted LIBO Rate” means, with respect to any LIBO Borrowing
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of one percent (1%)) equal to (a) the LIBO
Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate.  The Adjusted LIBO Rate will be adjusted
automatically as to all LIBO Borrowings then outstanding as of the effective
date of any change in the Statutory Reserve Rate.

 

“Adjustment Date” means the first day of each Fiscal Quarter of
the Lead Borrower commencing with the third full Fiscal Quarter after the
Closing Date.

 

“Administrative Agent” means Bank of America in its capacity as
administrative agent under any of the Loan Documents, or any successor
administrative agent.

 

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

 

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

 

“Affiliate” means, with respect to any Person, (i) another
Person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the Person
specified, (ii) any director, officer, managing member, partner, trustee,
or beneficiary of that Person, (iii) any other Person directly or
indirectly holding 10% or more of any class of the Equity Interests of that
Person, and (iv) any other Person 10% or more of any class of whose Equity
Interests is held directly or indirectly by that Person.

 

“Agent(s)” means, individually, the Administrative Agent or the
Collateral Agent, and collectively means both of them.

 

“Agent Parties” shall have the meaning specified in Section 10.02(c).

 

 

“Aggregate Commitments” means the Commitments of all the
Lenders.  The Aggregate Commitments as of
the Closing Date total $300,000,000.

 

“Agreement” means this Credit Agreement.

 

“Allocable Amount” has the meaning specified in Section 10.21(d).

 

“Applicable Commitment
Fee Percentage” means the applicable percentage set forth in the grid
below:

 

	
  Average daily balance of the Credit Extensions in any Fiscal Quarter

  	
   

  	
  Applicable Commitment

  Fee Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Less than 33% of the Total Commitments

  	
   

  	
  0.75

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Equal to or greater than 33% but less than
  66% of the Total Commitments

  	
   

  	
  0.50

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Equal to or greater than 66% of the Total
  Commitments

  	
   

  	
  0.375

  	
  %

  

 

“Applicable Margin” means (a) from and after the Closing
Date until the first Adjustment Date, the Applicable Margin shall be no less
than the percentages set forth in Level II of the pricing grid below (even if
the Average Daily Availability requirements for Level I have been met prior to
the first Adjustment Date); and (b) from and after the first Adjustment
Date, the Applicable Margin shall be determined from the following pricing grid
based upon the Average Daily Availability for the three months ending the day
immediately preceding such Adjustment Date; provided, however, that (i) if
the Loan Parties’ financial statements or any Borrowing Base Certificates are
at any time restated or otherwise revised (including as a result of an audit)
or (ii) if the information set forth in such financial statements or any
Borrowing Base Certificates otherwise proves to be false or incorrect such that
the Applicable Margin would have been higher than was otherwise in effect
during any period, without constituting a waiver of any Default or Event of
Default arising as a result thereof, interest due under this Agreement shall be
immediately recalculated at such higher rate for any applicable periods and
shall be due and payable on demand.

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

	
  Level

  	
   

  	
  Average Daily Availability

  	
   

  	
  LIBO Rate Margin

  	
   

  	
  Prime Rate Margin

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  I

  	
   

  	
  Greater than
  $225,000,000

  	
   

  	
  2.75

  	
  %

  	
  2.75

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  II

  	
   

  	
  Greater than
  $75,000,000 but less than or equal to $225,000,000

  	
   

  	
  3.00

  	
  %

  	
  3.00

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  III

  	
   

  	
  Less than or
  equal to $75,000,000

  	
   

  	
  3.25

  	
  %

  	
  3.25

  	
  %

  

 

“Applicable Percentage” means with respect to any Lender at any
time, the percentage (carried out to the ninth decimal place) of the Aggregate
Commitments represented by such Lender’s Commitment at such time.  If the commitment of each Lender to make
Loans and the obligation of the L/C Issuer to make L/C Credit Extensions have
been terminated pursuant to Section 8.02 or if the 

 

 

Aggregate Commitments have expired, then the Applicable Percentage of
each Lender shall be determined based on the Applicable Percentage of such
Lender most recently in effect, giving effect to any subsequent
assignments.  The initial Applicable
Percentage of each Lender is set forth opposite the name of such Lender on
Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender
becomes a party hereto, as applicable.

 

“Applicable Rate” means, at any time of calculation, a per annum
rate equal to the Applicable Margin for Loans which are LIBOR Rate Loans.

 

“Appraisal Percentage” means eighty-five percent (85%).

 

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

 

“Arranger” means Banc of America Securities LLC, Wells Fargo
Retail Finance, LLC and Regions Bank, in their capacity as Joint Lead Arrangers
and Joint Book Managers.

 

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

 

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

 

“Attributable Indebtedness” means, on any date, (a) in
respect of any Capital Lease Obligation of any Person, the capitalized amount
thereof that would appear on a balance sheet of such Person prepared as of such
date in accordance with GAAP, and (b) in respect of any Synthetic Lease
Obligation, the capitalized amount of the remaining lease or similar payments
under the relevant lease or other applicable agreement or instrument that would
appear on a balance sheet of such Person prepared as of such date in accordance
with GAAP if such lease, agreement or instrument were accounted for as a
capital lease.

 

“Audited Financial Statements” means the audited consolidated
balance sheet of the Lead Borrower and its Subsidiaries for the fiscal year
ended February 2, 2008, and the related consolidated statements of income
or operations, Shareholders’ Equity and cash flows for such fiscal year of the
Lead Borrower and its Subsidiaries, including the notes thereto.

 

“Auto-Extension Letter of Credit” shall have the meaning
specified in Section 2.03(b)(iii).

 

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

 

(a)           The lesser of (i) the Aggregate Commitments and (ii) the Borrowing Base,

 

Minus

 

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

 

 

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

 

“Availability Block” means, as of any date of determination
thereof by the Administrative Agent, an amount equal to five percent (5%) of
the Borrowing Base (without giving effect to clause (f) or clause (g) in
the definition of the term Borrowing Base).

 

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

 

“Availability Reserves” means, without duplication of any other
Reserves or items that are otherwise addressed or excluded through eligibility
criteria, such reserves as the Administrative Agent from time to time
determines in its Permitted Discretion as being appropriate (a) to reflect
the impediments to the Agents’ ability to realize upon the Collateral, (b) to
reflect claims and liabilities that the Administrative Agent determines will
need to be satisfied in connection with the realization upon the Collateral, (c) to
reflect criteria, events, conditions, contingencies or risks which adversely
affect any component of the Borrowing Base, or the assets, business, financial
performance or financial condition of the Loan Parties taken as a whole, or (d) to
reflect that a Default or an Event of Default then exists. Without limiting the
generality of the foregoing, Availability Reserves may include, in the
Administrative Agent’s Permitted Discretion, (but are not limited to) reserves
based on: (i) rent; (ii) customs duties, and other costs to release
Inventory which is being imported into the United States; (iii) outstanding
Taxes and other governmental charges, including, without limitation, ad
valorem, real estate, personal property, sales, and other Taxes which may have
priority over the interests of the Collateral Agent in the Collateral; (iv) salaries,
wages and benefits due to employees of any Borrower, (v) Customer Credit
Liabilities, (vi) warehousemen’s or bailee’s charges and other Permitted
Encumbrances which may have priority over the interests of the Collateral Agent
in the Collateral, (vii) Cash Management Reserves, and (viii) Bank
Products Reserves.

 

“Average Daily Availability” means, as of any date of
determination, the average daily Availability for the immediately preceding
Fiscal Quarter.

 

“Balance Sheet Date” means November 1, 2008.

 

“Bank of America” means Bank of America, N.A. and its
successors.

 

“Bank Products” means any services of facilities provided to any
Loan Party by a Lender or any of its Affiliates, including, without limitation,
on account of (a) Swap Contracts, (b) purchase cards, and (c) leasing,
but excluding Cash Management Services.

 

“Bank Product Reserves” means such reserves as the
Administrative Agent from time to time determines in its Permitted Discretion
as being appropriate to reflect the liabilities and obligations of the Loan
Parties with respect to Bank Products then provided or outstanding.

 

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

 

 

“Blocked Account Agreement” means with respect to an account
established by a Loan Party, an agreement, in form and substance satisfactory
to the Collateral Agent, establishing Control (as defined in the Security
Agreement) of such account by the Collateral Agent and whereby the bank
maintaining such account agrees, upon the occurrence and during the continuance
of a Liquidity Event, to comply only with the instructions originated by the
Collateral Agent without the further consent of any Loan Party.

 

“Blocked Account Bank” means each bank with whom deposit
accounts are maintained in which any funds of any of the Loan Parties from one
or more DDAs are concentrated and with whom a Blocked Account Agreement has
been, or is required to be, executed in accordance with the terms hereof.

 

“Borrower Materials” has the meaning specified in Section 6.02.

 

“Borrower” and “Borrowers” have the meaning specified in
the introductory paragraph hereto.

 

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

 

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

 

(a)           the face amount of Eligible Credit
Card Receivables multiplied by eighty-five percent (85%);

 

plus

 

(b)           the lesser of (i) the Cost of
the Borrower’s Eligible Inventory (other than Eligible Display Unit Inventory
and Eligible Pepsi Inventory), net of Inventory Reserves, multiplied by
the Appraisal Percentage multiplied by the Net Orderly Liquidation Value
of the Borrower’s Eligible Inventory (other than Eligible Display Unit
Inventory and Eligible Pepsi Inventory), or (ii) the Cost of the Borrower’s
Eligible Inventory (other than Eligible Display Unit Inventory and Eligible
Pepsi Inventory), net of Inventory Reserves, multiplied by seventy-five
percent (75%);

 

plus

 

(c)           the lesser of (i) the Cost of
the Borrower’s Eligible Display Unit Inventory, net of Inventory Reserves, multiplied
by the Display Unit Appraisal Percentage multiplied by the Net
Orderly Liquidation Value of the Borrower’s Eligible Inventory, or (ii) the
Cost of the Borrower’s Eligible Display Unit Inventory, net of Inventory
Reserves, multiplied by seventy-five percent (75%);

 

plus

 

(d)           the lesser of (i) the Cost of
the Borrower’s Eligible Pepsi Inventory, net of Inventory Reserves, multiplied
by fifty percent (50%), multiplied by the Net Orderly Liquidation
Value of the Borrower’s Eligible Inventory, or (ii) the Cost of the
Borrower’s Eligible Pepsi Inventory, net of Inventory Reserves, multiplied
by seventy-five percent (75%);

 

plus

 

(e)           the face amount of Eligible Accounts
Receivables (net of Receivables Reserves applicable thereto) multiplied by
eighty-five percent (85%);

 

 

minus

 

(f)            the then amount of the Availability
Block;

 

minus

 

(g)           the then amount of all Availability
Reserves.

 

“Borrowing Base Certificate” means a certificate substantially
in the form of Exhibit F hereto (with such changes therein as may be
required by the Administrative Agent to reflect the components of and reserves
against the Borrowing Base as provided for hereunder from time to time),
executed and certified as accurate and complete by a Responsible Officer of the
Lead Borrower which shall include appropriate exhibits, schedules, supporting
documentation, and additional reports as reasonably requested by the
Administrative Agent.

 

“Business” means the retail and wholesale sale of (i) automotive
parts, tires, accessories and equipment, (ii) automotive repair and
maintenance services and (iii) complimentary products and services that
relate to the foregoing or otherwise appeal to the Lead Borrower’s customer
base.

 

“Business Day” means any day other than a Saturday, Sunday or
other day on which commercial banks are authorized to close under the Laws of,
or are in fact closed in, the state where the Administrative Agent’s Office is
located and, if such day relates to any LIBO Rate Loan, means any such day on
which dealings in Dollar deposits are conducted by and between banks in the London
interbank market.

 

“Capital Expenditures” means, with respect to any Person for any
period, all expenditures made (whether made in the form of cash or other
property) or costs incurred for the acquisition or improvement of fixed or
capital assets of such Person (excluding normal replacements and maintenance
which are properly charged to current operations), in each case that are (or
should be) set forth as capital expenditures in a Consolidated statement of
cash flows of such Person for such period, in each case prepared in accordance
with GAAP.

 

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

 

“Cash Collateral Account” means a non-interest bearing account
established by one or more of the Loan Parties with Bank of America, and in the
name of the Lead Borrower (as the Collateral Agent shall otherwise direct) and under
the sole and exclusive dominion and control of the Collateral Agent, in which
deposits are required to be made in accordance with Section 2.03(g) or
Section 8.02(c).

 

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

 

“Cash Management Reserves” 
means such reserves as the Administrative Agent, from time to time,
determines in its Permitted Discretion as being appropriate to reflect the
reasonably anticipated liabilities and obligations of the Loan Parties with
respect to Cash Management Services then provided or outstanding.

 

 

 “Cash Management Services”
means any one or more of the following types or services or facilities provided
to any Loan Party by a Lender or any of its Affiliates: (a) ACH
transactions, (b) cash management services, including, without limitation,
controlled disbursement services, treasury, depository, overdraft, and
electronic funds transfer services, (c) foreign exchange facilities, and (d) credit
or debit cards.

 

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

 

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

 

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

 

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

 

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

 

(a)           any “person” or “group” (as such
terms are used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, but excluding any employee benefit plan of such person or its
subsidiaries, and any person or entity acting in its capacity as trustee, agent
or other fiduciary or administrator of any such plan) becomes the “beneficial
owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange
Act of 1934, except that a person or group shall be deemed to have “beneficial
ownership” of all securities that such person or group has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time (such right, an “option right”)), directly or
indirectly, of 50% or more of the Equity Interests of the Lead Borrower
entitled to vote for members of the board of directors or equivalent governing
body of the Lead Borrower on a fully-diluted basis (and taking into account all
such Equity Interests that such “person” or “group” has the right to acquire
pursuant to any option right); or

 

(b)           during any period of twelve (12)
consecutive months, a majority of the members of the board of directors or
other equivalent governing body of the Lead Borrower cease to be composed of individuals
(i) who were members of that board or equivalent governing body on the
first day of such period, (ii) whose election or nomination to that board
or equivalent governing body was approved by individuals referred to in clause (i) above
constituting at the time of such election or nomination at least a majority of
that board or equivalent governing body or (iii) whose election or
nomination to that board or other equivalent governing body was approved by
individuals referred to in clauses (i) and (ii) above constituting at
the time of such election or nomination at least a majority of that board or
equivalent governing body (excluding, in the case of both clause (ii) and
clause (iii), any individual whose initial nomination for, or assumption of office
as, a member of that board or equivalent governing body occurs as a result of
an actual or threatened solicitation of proxies or consents for the election or
removal of one or more directors by any person or group other than a
solicitation for the election of one or more directors by or on behalf of the
board of directors); or

 

 

(c)           any “change in control” or similar
event as defined in any Organizational Document of any Loan Party or in any
Material Contract, or any document governing Material Indebtedness of any Loan
Party; or

 

(d)           the Lead Borrower fails at any time
to own, directly or indirectly, 100% of the Equity Interests of each other Loan
Party free and clear of all Liens (other than the Liens in favor of the
Collateral Agent), except where such failure is as a result of a transaction
permitted by the Loan Documents.

 

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

 

“Code” means the Internal Revenue Code of 1986, and the
regulations promulgated thereunder, as amended and in effect.

 

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

 

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

 

“Collateral Agent” means Bank of America, acting in such
capacity for its own benefit and the ratable benefit of the other Credit
Parties.

 

“Commercial Letter of Credit” means any letter of credit or
similar instrument (including, without limitation, bankers’ acceptances) issued
for the purpose of providing the primary payment mechanism in connection with
the purchase of any materials, goods or services by a Borrower in the ordinary
course of business of such Borrower.

 

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

 

“Commitment Termination Event” means any termination or
reduction of the Aggregate Commitments in whole or in part, for any reason
(whether voluntarily or as a result of acceleration of the Obligations), prior
to the Maturity Date.

 

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

 

 

“Committed Loan” has the meaning specified in Section 2.01.

 

“Committed Loan Notice” means a notice of (a) a Committed
Borrowing, (b) a conversion of Committed Loans from one Type to the other,
or (c) a continuation of LIBO Rate Loans, pursuant to Section 2.01(a),
which, if in writing, shall be substantially in the form of Exhibit A-1.

 

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

 

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

 

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

 

“Consolidated EBITDA” means, at any date of determination, an
amount equal to Consolidated Net Income of the Lead Borrower and its
Subsidiaries on a Consolidated basis for the most recently completed
Measurement Period, plus (a) the following to the extent deducted
in calculating such Consolidated Net Income: (i) Consolidated Interest
Charges, (ii) the provision for Federal, state, local and foreign income
Taxes, (iii) depreciation and amortization expense, (iv) non-cash
stock compensation expenses and (v) other non-recurring expenses or losses
reducing such Consolidated Net Income which do not represent a cash item in
such period or any future period (in each case of or by the Lead Borrower and
its Subsidiaries for such Measurement Period), minus (b) the
following to the extent included in calculating such Consolidated Net Income: (i) Federal,
state, local and foreign income tax credits and (ii) all non-cash items
increasing Consolidated Net Income (in each case of or by the Lead Borrower and
its Subsidiaries for such Measurement Period), all as determined on a
Consolidated basis in accordance with GAAP.

 

“Consolidated Fixed Charge Coverage Ratio” means, at any date of
determination, the ratio of (a) (i) Consolidated EBITDA for such
period minus (ii) Capital Expenditures made during such period, minus (iii) the
aggregate amount of Federal, state, local and foreign income taxes paid in cash
during such period to (b) the sum of (i) Debt Service Charges plus (ii) the
aggregate amount of all Restricted Payments, in each case, of or by the Lead
Borrower and its Subsidiaries for the most recently completed Measurement
Period, all as determined on a Consolidated basis in accordance with GAAP.

 

“Consolidated Interest Charges” means, for any Measurement
Period, the sum of (a) all interest, premium payments, debt discount,
fees, charges and related expenses in connection with borrowed money (including
capitalized interest) or in connection with the deferred purchase price of
assets, in each case to the extent treated as interest in accordance with GAAP,
including, without limitation, all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers’ acceptance
financing and net costs under Swap Contracts, but excluding any non-cash or
deferred interest financing costs, (b) all interest paid or payable with
respect to discontinued operations and (c) the portion of rent expense
with respect to such period under Capital Lease Obligations that is treated as
interest in accordance with GAAP, in each case of or by the Lead Borrower and
its Subsidiaries for the most recently completed Measurement Period, all as
determined on a Consolidated basis in accordance with GAAP.

 

“Consolidated Net Income” means, as of any date of
determination, the net income of the Lead Borrower and its Subsidiaries for the
most recently completed Measurement Period, all as determined on a Consolidated
basis in accordance with GAAP, provided, however, that there shall be excluded

 

 

(a) extraordinary gains for such Measurement Period, (b) the
income (or loss) of such Person during such Measurement Period in which any
other Person has a joint interest, except to the extent of the amount of cash
dividends or other distributions actually paid in cash to such Person during
such period, (c) the income (or loss) of such Person during such
Measurement Period and accrued prior to the date it becomes a Subsidiary of a
Person or any of such Person’s Subsidiaries or is merged into or consolidated
with a Person or any of its Subsidiaries or that Person’s assets are acquired
by such Person or any of its Subsidiaries, and (d) the income of any
direct or indirect Subsidiary of a Person to the extent that the declaration or
payment of dividends or similar distributions by that Subsidiary of that income
is not at the time permitted by operation of the terms of its Organization
Documents or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Subsidiary, except that the Lead
Borrower’s equity in any net loss of any such Subsidiary for such Measurement
Period shall be included in determining Consolidated Net Income.

 

“Contractual Obligation” means, as to any Person, any provision
of any agreement, instrument or other undertaking to which such Person is a
party or by which it or any of its property is bound.

 

“Control” means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ability to exercise voting power, by contract or
otherwise.  “Controlling” and “Controlled”
have meanings correlative thereto.

 

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

 

 “Cost” means the lower of
cost or market value of Inventory, based upon the Borrowers’ accounting
practices, known to the Administrative Agent, which practices are in effect on
the Closing Date as such calculated cost is determined from invoices received
by the Borrowers and reported on the Borrowers’ stock ledger or, solely with
respect to Inventory consisting of “FOB inventory,” “store in-transit to DC”, “display
units”, “DC in-transit to Puerto Rico” and “Pepsi inventory” (each as described
on the Borrowers general ledger), as reported on the Borrowers’ general
ledger.  “Cost” does not include
inventory capitalization costs, other non-purchase price charges (such as
freight) or the costs associated with “cores” included in Inventory, used in
the Borrowers’ calculation of cost of goods sold.

 

“Covenant Compliance Event” means either (i) the occurrence
and continuance of any Event of Default, or (ii) the failure of the
Borrowers to maintain (at any time) Availability (calculated, for purposes of this definition, without giving effect to
the Availability Block) at least equal to the greater of (A) $50,000,000
or (B) seventeen and one-half percent
(17.5%) of the Borrowing Base.  For purposes hereof, the occurrence of a
Covenant Compliance Event shall be deemed continuing (i) so long as such
Event of Default has not been waived, and/or (ii) if the Covenant
Compliance Event arises as a result of the Borrowers’ failure to achieve
Availability as required hereunder, until Availability (calculated, for purposes of this definition, without giving effect to
the Availability Block) has exceeded the greater of (A) $50,000,000
or (B) seventeen and one-half percent
(17.5%) of the Borrowing Base, for sixty (60) consecutive Business Days,
in which case a Covenant Compliance Event shall no longer be deemed to be
continuing for purposes of this Agreement.

 

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

 

“Credit Card Receivables” means each “Account” (as defined in
the UCC) together with all income, payments and proceeds thereof, owed by a
major credit card issuer (including, but not limited to, Visa, MasterCard,
Discovercard and American Express and such other issuers approved by the 

 

 

Administrative Agent) or, with respect to Lead Borrower’s private label
credit card, General Electric Financial Services, to a Loan Party resulting
from charges by a customer of a Loan Party on credit cards issued by such
issuer in connection with the sale of goods by a Loan Party, or services
performed by a Loan Party, in each case in the ordinary course of its business.

 

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

 

“Credit Party” or “Credit Parties” means (a) individually,
(i) each Lender and its Affiliates, (ii) each Agent, (iii) each
L/C Issuer, (iv) the Arranger, (v) each beneficiary of each
indemnification obligation undertaken by any Loan Party under any Loan
Document, (vi) any other Person to whom Obligations under this Agreement
and other Loan Documents are owing, and (vii) the successors and assigns
of each of the foregoing, and (b) collectively, all of the foregoing.

 

“Credit Party Expenses” means, without limitation, (a) all
reasonable out-of-pocket expenses incurred by the Administrative Agent, the
Collateral Agent and their respective Affiliates, in connection with this
Agreement and the other Loan Documents, including without limitation (i) the
reasonable fees, charges and disbursements of (A) counsel for the
Administrative Agent and the Collateral Agent, (B) outside consultants for
the Administrative Agent and the Collateral Agent, (C) appraisers, (D) commercial
finance examiners, and (E) all such out-of-pocket expenses incurred during
any workout, restructuring or negotiations in respect of the Obligations, (ii) in
connection with (A) the syndication of the credit facilities provided for
herein, (B) the administration and management of this Agreement and the
other Loan Documents or the preparation, negotiation, execution and delivery
the Loan Documents or of any amendments, modifications or waivers of the
provisions thereof (whether or not the transactions contemplated thereby shall
be consummated), (C) the enforcement or protection of their rights in
connection with this Agreement or the Loan Documents or efforts to preserve,
protect, collect, or enforce the Collateral or in connection with any
proceeding under any Debtor Relief Laws, or (D) any workout, restructuring
or negotiations in respect of any Obligations, and (b) with respect to the
L/C Issuer, and its Affiliates, all reasonable out-of-pocket expenses incurred
in connection with the issuance, amendment, renewal or extension of any Letter
of Credit or any demand for payment thereunder; and (c) all reasonable
out-of-pocket expenses incurred by the Credit Parties who are not the
Administrative Agent or the Collateral Agent, the L/C Issuer or any Affiliate
of any of them, after the occurrence and during the continuance of an Event of
Default, provided that such Credit Parties shall be entitled to reimbursement
for no more than one counsel representing all such Credit Parties (absent a
conflict of interest in which case the Credit Parties may engage and be
reimbursed for additional counsel).

 

“Customer Credit Liabilities” means at any time, the aggregate
remaining value at such time of (a) outstanding merchandise credits, gift
certificates and gift cards of the Borrowers entitling the holder thereof to
use all or a portion of the credit, certificate or gift card to pay all or a
portion of the purchase price for any Inventory, and (b) outstanding
customer deposits of the Borrowers.

 

“Customs Broker Agreement” means an agreement in form and
substance satisfactory to the Agents among a Borrower, a customs broker or
other carrier, and the Collateral Agent, in which the customs broker, freight
forwarder or other carrier acknowledges that it has control over and holds the
documents evidencing ownership of the subject Inventory for the benefit of the
Collateral Agent and agrees, upon notice from the Collateral Agent, to hold and
dispose of the subject Inventory solely as directed by the Collateral Agent.

 

“DDA” means each checking, savings or other demand deposit
account maintained by any of the Loan Parties, other than any such account
which does not include Collateral or the proceeds thereof and 

 

 

identified to the Agents as such by the Lead Borrower.  All funds in each DDA shall be conclusively
presumed to be Collateral and proceeds of Collateral and the Agents and the
Lenders shall have no duty to inquire as to the source of the amounts on
deposit in any DDA.

 

“DDA Notification” has the meaning provided therefor in Section 6.13(a)(i).

 

“Debt Service Charges” means for any Measurement Period, the sum
of (a) Consolidated Interest Charges paid or required to be paid for such
Measurement Period, plus (b) principal payments made or required to be
made on account of Indebtedness (excluding the Obligations but including,
without limitation, Capital Lease Obligations) for such Measurement Period, in
each case determined on a Consolidated basis in accordance with GAAP.

 

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

 

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

 

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

 

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

 

“Deteriorating Lender” means any Defaulting Lender or any Lender
as to which (a) the L/C Issuer has a good faith belief that such Lender
has defaulted in fulfilling its obligations under one or more other syndicated
credit facilities, or (b) a Person that Controls such Lender has been
deemed insolvent or become the subject of a bankruptcy, insolvency or similar
proceeding.

 

“Display Unit Appraisal Percentage” means (a) prior to the
inclusion of Inventory consisting of “display units” in the appraisal received
by the Administrative Agent from an independent appraiser engaged by the
Administrative Agent, sixty percent (60%) and (b) following the
Administrative Agent’s receipt of the appraisal referred to in the foregoing
clause (a), eighty-five percent (85%).

 

“Disposition” or “Dispose” means the sale, transfer,
license, lease or other disposition (including any sale and leaseback
transaction and any sale, transfer, license or other disposition of (whether in
one transaction or in a series of transactions) of any property (including,
without limitation, any Equity Interests) by any Person (or the granting of any
option or other right to do any of the foregoing), including 

 

 

any sale, assignment, transfer or other disposal, with or without
recourse, of any notes or accounts receivable or any rights and claims
associated therewith .

 

“Disqualified Stock”
means any Equity Interest that, by its terms (or by the terms of any security
into which it is convertible, or for which it is exchangeable, in each case at
the option of the holder thereof), or upon the happening of any event, matures
or is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or redeemable at the option of the holder thereof, in whole or in
part, on or prior to the date that is ninety-one (91) days after the date on
which the Loans mature; provided, however, that (i) only the
portion of such Equity Interests which so matures or is mandatorily redeemable,
is so convertible or exchangeable or is so redeemable at the option of the
holder thereof prior to such date shall be deemed to be Disqualified Stock and (ii) with
respect to any Equity Interests issued to any employee or to any plan for the
benefit of employees of the Lead Borrower or its Subsidiaries or by any such
plan to such employees, such Equity Interest 
shall not constitute Disqualified Stock solely because it may be
required to be repurchased by the Lead Borrower or one of its Subsidiaries in
order to satisfy applicable statutory or regulatory obligations or as a result
of such employee’s termination, resignation, death or disability and if any
class of Equity Interest  of such Person
that by its terms authorizes such Person to satisfy its obligations thereunder
by delivery of an Equity Interest that is not Disqualified Stock, such Equity
Interests shall not be deemed to be Disqualified Stock. Notwithstanding the
preceding sentence, any Equity Interest that would constitute Disqualified
Stock solely because the holders thereof have the right to require a Loan Party
to repurchase such Equity Interest  upon
the occurrence of a change of control or an asset sale shall not constitute
Disqualified Stock.  The amount of Disqualified
Stock deemed to be outstanding at any time for purposes of this Agreement will
be the maximum amount that the Lead Borrower and its Subsidiaries may become
obligated to pay upon maturity of, or pursuant to any mandatory redemption
provisions of, such Disqualified Stock or portion thereof, plus accrued
dividends.

 

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

 

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

 

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

 

“Eligible Assignee” means (a) a Credit Party or any of its
Affiliates; (b) a bank, insurance company, or company engaged in the
business of making commercial loans, which Person, together with its
Affiliates, has a combined capital and surplus in excess of $250,000,000.00; (c) an
Approved Fund; (d) any Person to whom a Credit Party assigns its rights
and obligations under this Agreement as part of an assignment and transfer of
such Credit Party’s rights in and to a material portion of such Credit Party’s
portfolio of asset based credit facilities, and (e) any other Person
(other than a natural person) approved by (i) the Administrative Agent,
the L/C Issuer and the Swing Line Lender, and (ii) unless an Event of
Default has occurred and is continuing, the Lead Borrower (each such approval
not to be unreasonably withheld or delayed); provided that notwithstanding the
foregoing, “Eligible Assignee” shall not include a Loan Party or any of the
Loan Parties’ Affiliates or Subsidiaries.

 

“Eligible Accounts Receivables” means Accounts arising from the
sale of a Borrower’s Inventory (other than those consisting of Credit Card
Receivables) that satisfies the following criteria at the time of creation and
continues to meet the same at the time of such determination: such Account (i) has
been earned by performance and represents the bona fide amounts due to a
Borrower from an account debtor, and in each case originated in the ordinary
course of business of such Borrower, and (ii) in each case is acceptable
to the Administrative Agent in its Permitted Discretion, and is not ineligible
for inclusion in the calculation of the Borrowing Base pursuant to any of
clauses (a) through (u) below. 
Without limiting 

 

 

the foregoing, to qualify as an Eligible Accounts Receivable, an Account
shall indicate no Person other than a Borrower as payee or remittance
party.  In determining the amount to be
so included, the face amount of an Account shall be reduced by, without
duplication, to the extent not reflected in such face amount, (i) the amount
of all accrued and actual discounts, claims, credits or credits pending,
promotional program allowances, price adjustments, finance charges or other
allowances (including any amount that a Borrower may be obligated to rebate to
a customer pursuant to the terms of any agreement or understanding (written or
oral)) and (ii) the aggregate amount of all cash received in respect of
such Account but not yet applied by the Borrowers to reduce the amount of such
Eligible Accounts Receivable.  Any
Accounts meeting the foregoing criteria shall be deemed Eligible Accounts
Receivables but only as long as such Account is not included within any of the
following categories, in which case such Account shall not constitute an
Eligible Accounts Receivable:

 

(a)           Accounts that are not evidenced by an
invoice;

 

(b)           Accounts that have been outstanding
for more than ninety (90) days from the date of sale or more than sixty (60)
days past the due date;

 

(c)           Accounts due from any account debtor,
fifty percent (50%) or more of whose Accounts are ineligible under the
provisions of clause (b), above.

 

(d)           Accounts with respect to which a
Borrower does not have good, valid and marketable title thereto, free and clear
of any Lien (other than Liens granted to the Collateral Agent pursuant to the
Security Documents);

 

(e)           Accounts which are disputed or with
respect to which a claim, counterclaim, offset or chargeback has been asserted,
but only to the extent of such dispute, counterclaim, offset or chargeback;

 

(f)            Accounts which arise out of any sale
made not in the ordinary course of business, made on a basis other than upon
credit terms usual to the business of the Borrowers or are not payable in
Dollars;

 

(g)           Accounts which are owed by any
account debtor whose principal place of business is not within the continental
United States;

 

(h)           Accounts which are owed by any
Affiliate or any employee of a Loan Party;

 

(i)            Accounts for which all consents,
approvals or authorizations of, or registrations or declarations with any
Governmental Authority required to be obtained, effected or given in connection
with the performance of such Account by the account debtor or in connection
with the enforcement of such Account by the Agents have been duly obtained,
effected or given and are in full force and effect;

 

(j)            Accounts due from an account debtor
which is the subject of any bankruptcy or insolvency proceeding, has had a
trustee or receiver appointed for all or a substantial part of its property,
has made an assignment for the benefit of creditors or has suspended its
business;

 

(k)           Accounts due from any Governmental
Authority except to the extent that the subject account debtor is the United
States of America or any State or political subdivision 

 

 

thereof,
and has complied with the Federal Assignment of Claims Act of 1940 and any
similar state legislation (if any);

 

(l)            Accounts (i) owing from any
Person that is also a supplier to or creditor of a Loan Party or any of its
Subsidiaries unless such Person has waived any right of setoff in a manner
acceptable to the Administrative Agent or (ii) representing any
manufacturer’s or supplier’s credits, discounts, incentive plans or similar
arrangements entitling a Loan Party or any of its Subsidiaries to discounts on
future purchase therefrom;

 

(m)          Accounts arising out of sales on a
bill-and-hold, guaranteed sale, sale-or-return, sale on approval or consignment
basis or subject to any right of return, setoff or charge back;

 

(n)           Accounts arising out of sales to
account debtors outside the United States unless such Accounts are fully backed
by an irrevocable letter of credit on terms, and issued by a financial
institution, acceptable to the Administrative Agent and such irrevocable letter
of credit is in the possession of the Administrative Agent;

 

(o)           Accounts payable other than in
Dollars or that are otherwise on terms other than those normal and customary in
the Borrowers’ business;

 

(p)           Accounts evidenced by a promissory
note or other instrument;

 

(q)           Accounts consisting of amounts due
from vendors as rebates or allowances;

 

(r)            Accounts which are in excess of the
credit limit for such account debtor established by the Loan Parties in the
ordinary course of business and consistent with past practices;

 

(s)           Accounts which include extended
payment terms (datings) beyond those generally furnished to other account
debtors in the ordinary course of business;

 

(t)            Accounts that are not subject to a
first priority security interest in favor of the Collateral Agent; or

 

(u)           Accounts which the Administrative
Agent determines in its Permitted Discretion to be unacceptable for borrowing.

 

“Eligible Credit Card Receivables” means at the time of any
determination thereof, each Credit Card Receivable that satisfies the following
criteria at the time of creation and continues to meet the same at the time of
such determination: such Credit Card Receivable (i) has been earned by
performance and represents the bona fide amounts due to a Borrower from a
credit card payment processor and/or credit card issuer, and in each case
originated in the ordinary course of business of such Borrower, and (ii) in
each case is acceptable to the Administrative Agent in its Permitted
Discretion, and is not ineligible for inclusion in the calculation of the
Borrowing Base pursuant to any of clauses (a) through (k) below.  Without limiting the foregoing, to qualify as
an Eligible Credit Card Receivable, an Account shall indicate no Person other
than a Borrower as payee or remittance party. 
In determining the amount to be so included, the face amount of an
Account shall be reduced by, without duplication, to the extent not reflected
in such face amount, (i) the amount of all accrued and actual discounts,
claims, credits or credits pending, promotional program allowances, price
adjustments, finance charges or other allowances (including any amount that a
Borrower may be obligated to rebate to a customer, a credit card payment 

 

 

processor, or credit card issuer pursuant to the terms of any agreement
or understanding (written or oral)) and (ii) the aggregate amount of all
cash received in respect of such Account but not yet applied by the Loan
Parties to reduce the amount of such Credit Card Receivable.  Any Credit Card Receivables meeting the
foregoing criteria shall be deemed Eligible Credit Card Receivables but only as
long as such Credit Card Receivable is not included within any of the following
categories, in which case such Credit Card Receivable shall not constitute an
Eligible Credit Card Receivable:

 

(a)           Credit Card Receivables which do not
constitute an “Account” (as defined in the UCC);

 

(b)           Credit Card Receivables that have
been outstanding for more than five (5) Business Days from the date of
sale;

 

(c)           Credit Card Receivables with respect
to which a Loan Party does not have good, valid and marketable title, free and
clear of any Lien (other than Liens granted to the Collateral Agent);

 

(d)           Credit Card Receivables that are not
subject to a first priority security interest in favor of the Collateral Agent
(it being the intent that chargebacks in the ordinary course by such processors
shall not be deemed violative of this clause);

 

(e)           Credit Card Receivables which are
disputed, are with recourse, or with respect to which a claim, counterclaim,
offset or chargeback has been asserted (to the extent of such claim,
counterclaim, offset or chargeback);

 

(f)            Credit Card Receivables as to which
the processor has the right under certain circumstances to require a Loan Party
to repurchase the Accounts from such credit card processor;

 

(g)           Credit Card Receivables due from an
issuer or payment processor of the applicable credit card which is the subject
of any bankruptcy, insolvency or similar proceedings;

 

(h)           Credit Card Receivables which are not
a valid, legally enforceable obligation of the applicable issuer with respect
thereto;

 

(i)            Credit Card Receivables which do not
conform to all representations, warranties or other provisions in the Loan
Documents relating to Credit Card Receivables;

 

(j)            Credit Card Receivables which are
evidenced by “chattel paper” or an “instrument” of any kind unless such “chattel
paper” or “instrument” is in the possession of the Collateral Agent, and to the
extent necessary or appropriate, endorsed to the Collateral Agent; or

 

(k)           Credit Card Receivables which the
Administrative Agent determines in its Permitted Discretion to be uncertain of
collection.

 

“Eligible Display Unit Inventory” means, as of any date of
determination thereof, without duplication of other Eligible Inventory,
Inventory:

 

(a)           Which is reflected as “display units”
on Borrower’s general ledger (consistent with practices existing on the Closing
Date); and

 

 

(b)           Which otherwise would constitute
Eligible Inventory.

 

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

 

(a)           Which has been shipped from a foreign
location for receipt by a Borrower within sixty (60) days of the date of
determination, but which has not yet been delivered to such Borrower;

 

(b)           For which the purchase order is in
the name of a Borrower and title has passed to such Borrower;

 

(c)           For which the document of title
reflects a Borrower as consignee or, if requested by the Collateral Agent,
names the Collateral Agent as consignee, and in each case as to which the
Collateral Agent has control over the documents of title which evidence
ownership of the subject Inventory (such as, if requested by the Collateral
Agent, by the delivery of a Customs Broker Agreement);

 

(d)           Which is insured to the reasonable
satisfaction of the Collateral Agent; and

 

(e)           Which otherwise would constitute
Eligible Inventory.

 

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

 

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

 

(b)           Inventory that is leased by or is on
consignment to a Borrower or which is consigned by a Borrower to a Person that
is not a Loan Party;

 

(c)           Inventory (other than Eligible In
Transit Inventory) that is not located in the United States of America
(excluding territories or possessions of the United States);

 

(d)           Inventory at a location that is not
owned or leased by a Borrower, except to the extent that the Borrowers have
furnished the Administrative Agent with (i) any UCC financing statements
or other documents that the Administrative Agent may determine to be necessary
to perfect its security interest in such Inventory at such location, and (ii) a
Collateral Access Agreement executed by the Person owning or operating any such
location on terms reasonably acceptable to the Administrative Agent;

 

(e)           Inventory that is comprised of goods
which (i) are damaged, defective, “seconds,” or otherwise unmerchantable, (ii) are
to be returned to the vendor, (iii) are obsolete or 

 

 

custom
items, work-in-process, raw materials, or that constitute spare parts,
promotional, marketing, packaging and shipping materials or supplies used or
consumed in a Borrower’s business, (iv) are seasonal in nature and which
have been packed away for sale in the subsequent season, (v) are not in
compliance with all standards imposed by any Governmental Authority having regulatory
authority over such Inventory, its use or sale, or (vi) are bill and hold
goods;

 

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

 

(g)           Inventory that consists of samples
(other than Eligible Display Unit Inventory), labels, bags, packaging, and
other similar non-merchandise categories;

 

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

 

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

 

(j)            Inventory that is subject to any
licensing, patent, royalty, trademark, trade name or copyright agreement with
any third party from which any Borrower or any of its Subsidiaries has received
notice of a dispute in respect of any such agreement;

 

(k)           Inventory consisting of (i) recyclable
parts or “cores” held for sale, (ii) “loaner tools” and (iii) EPA
Settlement Inventory (until such time as the inquiry from the EPA has been
resolved to the reasonable satisfaction of the Administrative Agent); or

 

(l)            Inventory acquired in a Permitted
Acquisition, unless and until the Collateral Agent has completed or received (A) an
appraisal of such Inventory from appraisers satisfactory to the Collateral
Agent, establishes an advance rate and Inventory Reserves (if applicable)
therefor, and otherwise agrees that such Inventory shall be deemed Eligible
Inventory, and (B) such other due diligence as the Agents may reasonably
require, all of the results of the foregoing to be reasonably satisfactory to
the Agents.

 

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

 

(a)           Which is reflected as “Pepsi
inventory” on Borrower’s general ledger (consistent with practices existing on
the Closing Date); and

 

(b)           Which otherwise would constitute
Eligible Inventory.

 

“Environmental Laws” means any and all Federal, state, local,
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including
those related to hazardous substances or wastes, air emissions and discharges
to waste or public systems.

 

“Environmental Liability” means any liability, obligation,
damage, loss, claim, action, suit, judgment, order, fine, penalty, fee,
expense, or cost, contingent or otherwise (including any liability for damages,
costs of environmental remediation, fines, penalties or indemnities), of any
Borrower, any other 

 

 

Loan Party or any of their respective Subsidiaries directly or
indirectly resulting from or based upon (a) violation of any Environmental
Law, (b) the generation, use, handling, transportation, storage, treatment
or disposal or presence of any Hazardous Materials, (c) exposure to any
Hazardous Materials, (d) the release or threatened release of any
Hazardous Materials into the environment or (e) any contract, agreement or
other consensual arrangement pursuant to which liability is assumed or imposed
with respect to any of the foregoing.

 

“EPA Settlement Inventory” means all Inventory of Borrowers
which, at the time of determination, is suspended for resale as a result of the
inquiry made by the Environmental Protection Agency identified on Schedule
5.06 hereto.

 

“Equipment” has the meaning set forth in the Security Agreement.

 

“Equity Interests” means, with respect to any Person, all of the
shares of capital stock of (or other ownership or profit interests in) such
Person, all of the warrants, options or other rights for the purchase or
acquisition from such Person of shares of capital stock of (or other ownership
or profit interests in) such Person, all of the securities convertible into or
exchangeable for shares of capital stock of (or other ownership or profit
interests in) such Person or warrants, rights or options for the purchase or
acquisition from such Person of such shares (or such other interests), and all
of the other ownership or profit interests in such Person (including
partnership, member or trust interests therein), whether voting or nonvoting,
and whether or not such shares, warrants, options, rights or other interests
are outstanding on any date of determination.

 

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

 

“ERISA Affiliate” means any trade or business (whether or not
incorporated) under common control with a Loan Party within the meaning of Section 414(b) or
(c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code).

 

“ERISA Event” means (a) a Reportable Event with respect to
a Pension Plan; (b) a withdrawal by a Loan Party or any ERISA Affiliate
from a Pension Plan subject to Section 4063 of ERISA during a plan year in
which it was a substantial employer (as defined in Section 4001(a)(2) of
ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by a Loan Party or any ERISA
Affiliate from a Multiemployer Plan or notification to a Loan Party that a
Multiemployer Plan is in reorganization; (d) the filing of a notice of
intent to terminate, the treatment of a Plan amendment as a termination under
Sections 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC
to terminate a Pension Plan or Multiemployer Plan; (e) an event or
condition which constitutes grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Pension Plan
or Multiemployer Plan; or (f) the imposition of any liability under Title
IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007
of ERISA, upon a Loan Party or any ERISA Affiliate.

 

“Event of Default” has the meaning specified in Section 8.01.  An Event of Default shall be deemed to be
continuing unless and until that Event of Default has been duly waived as
provided in Section 10.03 hereof.

 

“Excluded Taxes” means, with respect to the Administrative
Agent, any Lender, the L/C Issuer or any other recipient of any payment to be
made by or on account of any obligation of the Borrowers hereunder, (a) taxes
imposed on or measured by its overall net income (however denominated), and
franchise taxes imposed on it (in lieu of net income taxes), by the
jurisdiction (or any political subdivision 

 

 

thereof) under the laws of which such recipient is organized or in
which its principal office is located or, in the case of any Lender, in which
its applicable Lending Office is located, (b) any branch profits taxes
imposed by the United States or any similar tax imposed by any other
jurisdiction in which any Loan Party is located and (c) in the case of a
Foreign Lender (other than an assignee pursuant to a request by the Lead
Borrower under Section 10.13), any withholding tax that is imposed
on amounts payable to such Foreign Lender at the time such Foreign Lender
becomes a party hereto (or designates a new Lending Office) or is attributable
to such Foreign Lender’s failure or inability (other than as a result of a
Change in Law) to comply with Section 3.01(e), except to the extent
that such Foreign Lender (or its assignor, if any) was entitled, at the time of
designation of a new Lending Office (or assignment), to receive additional
amounts from the Borrowers with respect to such withholding tax pursuant to Section 3.01(a).

 

“Executive Order” has the meaning set forth in Section 10.18.

 

“Existing Credit Agreement” means that certain Second Amended
and Restated Loan and Security Agreement dated as of June 29, 2007 among
the Borrowers, the Guarantors, Wachovia Bank, National Association, as agent,
and a syndicate of lenders.

 

“Existing Letters of Credit” means each of the Letters of Credit
listed on Schedule 1.03.

 

“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 tax refunds,
pension plan reversions, proceeds of insurance (other than proceeds of business
interruption insurance to the extent such proceeds constitute compensation for
lost earnings), condemnation awards (and payments in lieu thereof), indemnity
payments and any purchase price adjustments.

 

“Facility Guaranty” means the Guaranty made by the Guarantors in
favor of the Agents and the Lenders, in form reasonably satisfactory to the
Administrative Agent.

 

“Federal Funds Rate”  means, for any day, the rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published by the Federal Reserve Bank of New York
on the Business Day next succeeding such day; provided that (a) if such
day is not a Business Day, the Federal Funds Rate for such day shall be such
rate on such transactions on the next preceding Business Day as so published on
the next succeeding Business Day, and (b) if no such rate is so published
on such next succeeding Business Day, the Federal Funds Rate for such day shall
be the average rate (rounded upward, if necessary, to a whole multiple of 1/100
of 1%) charged to Bank of America on such day on such transactions as
determined by the Administrative Agent.

 

“Fee Letter” means the letter agreement, dated October 17,
2008, among the Lead Borrower, the Administrative Agent and the Arranger.

 

“Fiscal Month”  means any
fiscal month of any Fiscal Year determined in accordance with the fiscal
accounting calendar of the Loan Parties.

 

“Fiscal Quarter” means any fiscal quarter of any Fiscal Year
determined in accordance with the fiscal accounting calendar of the Loan
Parties.

 

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

 

 

“Foreign Assets Control Regulations” has the meaning set forth
in Section 10.18.

 

“Foreign Lender” means any Lender that is organized under the
laws of a jurisdiction other than that in which the Lead Borrower is resident
for tax purposes.  For purposes of this
definition, the United States, each State thereof and the District of Columbia
shall be deemed to constitute a single jurisdiction.

 

“Fronting Fee” has the meaning assigned to such term in Section 2.03(j).

 

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

 

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

 

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

 

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

 

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

 

“Guarantor” means each wholly-owned Subsidiary of the Lead
Borrower (other than any Borrower (without limiting the joint and several
liability of each Borrower for all Obligations), any CFC 

 

 

and Colchester Insurance Corporation) and each other Subsidiary of the
Lead Borrower that shall be required to execute and deliver a Facility Guaranty
pursuant to Section 6.12.

 

“Hazardous Materials” means all explosive or radioactive
substances or wastes and all hazardous or toxic substances, wastes or other
pollutants, including petroleum or petroleum distillates, asbestos or
asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious
or medical wastes and all other substances or wastes of any nature regulated
pursuant to any Environmental Law.

 

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

 

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

 

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

 

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

 

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

 

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

 

(d)           all obligations of such Person to pay
the deferred purchase price of property or services (other than trade accounts
payable in the ordinary course of business) and, in each case, paid in
accordance with the payment terms thereof and otherwise not past due for more
than thirty (30) days, but excluding those being contested in good faith for
which such Person has set aside on its books adequate reserves with respect
thereto in accordance with GAAP

 

 (e)          indebtedness
(excluding prepaid interest thereon) secured by a Lien on property owned or
being purchased by such Person (including indebtedness arising under
conditional sales or other title retention agreements), whether or not such
indebtedness shall have been assumed by such Person or is limited in recourse;

 

(f)            all Attributable Indebtedness of
such Person;

 

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

 

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

 

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

 

 

“Indemnified Taxes” means Taxes other than Excluded Taxes.

 

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

 

“Indenture” means that certain Indenture between the Lead
Borrower as issuer and Wachovia Bank National Association, as trustee dated as
of December 14, 2004.

 

“Information” has the meaning specified in Section 10.07.

 

“Intellectual Property” means all present and future:  trade secrets, know-how and other proprietary
information; trademarks, trademark applications, internet domain names, service
marks, trade dress, trade names, business names, designs, logos, slogans (and
all translations, adaptations, derivations and combinations of the foregoing)
indicia and other source and/or business identifiers, and all registrations or
applications for registrations which have heretofore been or may hereafter be
issued thereon throughout the world; copyrights and copyright applications;
(including copyrights for computer programs) and all tangible and intangible
property embodying the copyrights, unpatented inventions (whether or not patentable);
patents and patent applications; industrial design applications and registered
industrial designs; license agreements related to any of the foregoing and
income therefrom; books, records, writings, computer tapes or disks, flow
diagrams, specification sheets, computer software, source codes, object codes,
executable code, data, databases and other physical manifestations, embodiments
or incorporations of any of the foregoing; all other intellectual property; and
all common law and other rights throughout the world in and to all of the
foregoing.

 

“Interest Payment Date” means, (a) as to any Loan other
than a Prime Rate Loan, the last day of each Interest Period applicable to such
Loan and the Maturity Date; provided, however, that if any Interest Period for
a LIBO Rate Loan exceeds three months, the respective dates that fall every
three months after the beginning of such Interest Period shall also be Interest
Payment Dates; and (b) as to any Prime Rate Loan (including a Swing Line
Loan), the first Business Day of each month and the Maturity Date.

 

“Interest Period” means, as to each LIBO Rate Loan, the period
commencing on the date such LIBO Rate Loan is disbursed or converted to or
continued as a LIBO Rate Loan and ending on the date one (1), two (2), three (3) or
six (6) months thereafter, as selected by the Lead Borrower in its
Committed Loan Notice; provided that:

 

(i)            any Interest Period that would
otherwise end on a day that is not a Business Day shall be extended to the next
succeeding Business Day unless such Business Day falls in another calendar
month, in which case such Interest Period shall end on the next preceding
Business Day;

 

(ii)           any Interest Period that begins on
the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month at the end of
such Interest Period;

 

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

 

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

 

 

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

 

“Internal Control Event” means a material weakness in, or actual
fraud that involves management or other employees who have a significant role
in, the Lead Borrower’s internal
controls over financial reporting.

 

“Inventory” has the meaning given that term in the UCC, and
shall also
include, without limitation, all: (a) goods which (i) are
leased by a Person as lessor, (ii) are held by a Person for sale or lease
or to be furnished under a contract of service, (iii) are furnished by a
Person under a contract of service, or (iv) consist of raw materials, work
in process, or materials used or consumed in a business; (b) goods of said
description in transit; (c) goods of said description which are returned,
repossessed or rejected; and (d) packaging, advertising, and shipping
materials related to any of the foregoing.

 

 “Inventory Reserves”
means, without duplication of any other Reserves or items that are otherwise
addressed or excluded through eligibility criteria, such reserves as may be
established from time to time by the Administrative Agent in its Permitted
Discretion with respect to the determination of the saleability, at retail, of
the Eligible Inventory or which reflect such other factors as affect the market
value of the Eligible Inventory. Without limiting the generality of the foregoing,
Inventory Reserves may, in the Administrative Agent’s Permitted Discretion,
include (but are not limited to) reserves based on:

 

(a)           Obsolescence;

 

(b)           Seasonality;

 

(c)           Shrink;

 

(d)           Imbalance;

 

(e)           Change in Inventory character;

 

(f)            Change in Inventory composition;

 

(g)           Change in Inventory mix;

 

(h)           Mark-downs (both permanent and point
of sale);

 

(i)            Retail mark-ons and mark-ups
inconsistent with prior period practice and performance, industry standards,
current business plans or advertising calendar and planned advertising events;

 

(j)            reasonably anticipated changes in
appraised value of Inventory between appraisals; and

 

(k)           Out-of-date and/or expired Inventory.

 

“Investment” means, as to any Person, any direct or indirect
acquisition or investment by such Person, whether by means of (a) the
purchase or other acquisition Equity Interests of another Person, (b) a
loan, advance or capital contribution to, Guarantee or assumption of debt of,
or purchase or other acquisition of any other debt or interest in, another
Person, or (c) any Acquisition.  For
purposes of 

 

 

covenant compliance, the amount of any Investment shall be the amount
actually invested, without adjustment for subsequent increases or decreases in
the value of such Investment.

 

“IRS” means the United States Internal Revenue Service.

 

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

 

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

 

“Joinder Agreement” means an agreement, in form satisfactory to
the Administrative Agent pursuant to which, among other things, a Person
becomes a party to, and bound by the terms of, this Agreement and/or the other
Loan Documents in the same capacity and to the same extent as either a Borrower
or a Guarantor, as the Administrative Agent may determine.

 

“Landlord Lien State” means such state(s) in which a
landlord’s claim for rent may have priority over the lien of the Collateral
Agent in any of the Collateral.

 

“Laws” means each international, foreign, Federal, state and
local statute, treaty, rule, guideline, regulation, ordinance, code and
administrative or judicial precedent or authority, including the interpretation
or administration thereof by any Governmental Authority charged with the
enforcement, interpretation or administration thereof, and each applicable
administrative order, directed duty, request, license, authorization and permit
of, and agreement with, any Governmental Authority, in each case whether or not
having the force of law.

 

“L/C Advance” means, with respect to each Lender, such Lender’s
funding of its participation in any L/C Borrowing in accordance with its
Applicable Percentage.

 

“L/C Borrowing” means an extension of credit resulting from a
drawing under any Letter of Credit which has not been reimbursed on the date
when made or refinanced as a Committed Borrowing.

 

“L/C Credit Extension” means, with respect to any Letter of
Credit, the issuance thereof or extension of the expiry date thereof, or the
increase of the amount thereof.

 

“L/C Issuer” means (a) Bank of America in its capacity as
issuer of Letters of Credit hereunder, or any successor issuer of Letters of
Credit hereunder (which successor may only be a Lender selected by the
Administrative Agent in its discretion), (b) Wells Fargo Retail Finance,
LLC in its capacity as issuer of Letters of Credit hereunder, (c) with
respect to the Existing Letters of Credit and until such Existing Letters of
Credit expire or are return undrawn, Wachovia Bank, National Association and (d) any
other Lender reasonably acceptable to the Administrative Agent.  The L/C Issuer may, in its discretion,
arrange for one or more Letters of Credit to be issued by Affiliates of the L/C
Issuer, in which case the term “L/C Issuer” shall include any such Affiliate
with respect to Letters of Credit issued by such Affiliate (it being understood
that Wachovia Bank, National Association is an Affiliate of Wells Fargo Retail
Finance, LLC).

 

“L/C Obligations” mean, as at any date of determination, the
aggregate undrawn amount available to be drawn under all outstanding Letters of
Credit plus the aggregate of all Unreimbursed 

 

 

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

 

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

 

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

 

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

 

“Letter of Credit” means each Standby Letter of Credit and each
Commercial Letter of Credit issued hereunder and shall include the Existing
Letters of Credit and bankers’ acceptances.

 

“Letter of Credit Application” means an application and
agreement for the issuance or amendment of a Letter of Credit in the form from
time to time in use by the L/C Issuer.

 

“Letter of Credit Expiration Date” means the day that is seven
days prior to the Maturity Date then in effect (or, if such day is not a
Business Day, the next preceding Business Day).

 

“Letter of Credit Fee” has the meaning specified in Section 2.03(i).

 

“Letter of Credit Sublimit” means an amount equal to $125,000,000.  The Letter of Credit Sublimit is part of, and
not in addition to, the Aggregate Commitments. 
A permanent reduction of the Aggregate Commitments shall not require a
corresponding pro rata reduction in the Letter of Credit Sublimit; provided,
however, that if the Aggregate Commitments are reduced to an amount less than
the Letter of Credit Sublimit, then the Letter of Credit Sublimit shall be
reduced to an amount equal to (or, at Lead Borrower’s option, less than) the
Aggregate Commitments.

 

“LIBO Borrowing” means a Borrowing comprised of LIBO Loans.

 

“LIBO Rate” means for any Interest Period with respect to a LIBO
Rate Loan, the rate per annum equal to the British Bankers Association LIBOR
Rate (“BBA LIBOR”), as published by Reuters (or other commercially available
source providing quotations of BBA LIBOR as designated by the Administrative
Agent from time to time) at approximately 11:00 a.m., London time, two
Business Days prior to the commencement of such Interest Period, for Dollar
deposits (for delivery on the first day of such Interest Period) with a term
equivalent to such Interest Period.  If
such rate is not available at such time for any reason, then the “LIBO Rate”
for such Interest Period shall be the rate per annum determined by the Administrative
Agent to be the rate at which deposits in Dollars for delivery on the first day
of such Interest Period in same day funds in the approximate amount of the LIBO
Rate Loan being made, continued or converted by Bank of America and with a term
equivalent to such Interest Period would be offered by Bank of America’s London
Branch to major banks in the London interbank eurodollar market 

 

 

at their request at approximately 11:00 a.m. (London time) two
Business Days prior to the commencement of such Interest Period.

 

“LIBO Rate Loan” means a Committed Loan that bears interest at a
rate based on the Adjusted LIBO Rate.

 

“Lien” means (a) any mortgage, deed of trust, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), charge, or preference, priority or other security interest or
preferential arrangement in the nature of a security interest of any kind or
nature whatsoever (including any conditional sale, Capital Lease Obligation,
Synthetic Lease Obligation, or other title retention agreement, any easement,
right of way or other encumbrance on title to real property, and any financing
lease having substantially the same economic effect as any of the foregoing)
and (b) in the case of securities, any purchase option, call or similar
right of a third party with respect to such securities.

 

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

 

“Liquidity Event” means either (a) the occurrence and
continuance of any Event of Default, or (ii) the failure of the Borrowers
to maintain (at any time) Availability (calculated,
for purposes of this definition, without giving effect to the Availability
Block) equal to or greater than seventeen and one-half percent (17.5%) of the
lesser of (i) the Aggregate Commitments and (ii) the Borrowing Base.  For purposes of this Agreement, the
occurrence of a Liquidity Event shall be deemed continuing (i) so long as
such Event of Default has not been waived, and/or (ii) if the Liquidity
Event arises as a result of the Borrowers’ failure to achieve Availability as
required hereunder, until Availability (calculated,
for purposes of this definition, without giving effect to the Availability
Block) has exceeded seventeen and
one-half percent (17.5%) of the lesser of (i) the Aggregate Commitments
and (ii) the Borrowing Base for sixty (60) consecutive calendar
days, in which case an Liquidity Event shall no longer be deemed to be
continuing for purposes of this Agreement; provided, that
a Liquidity Event shall be deemed continuing (even if an Event of Default is no
longer continuing and/or Availability exceeds the required amount for sixty
(60) consecutive Business Days) at all times after a Liquidity Event has
occurred and been discontinued on two (2) occasions in any consecutive
twelve (12) month period.

 

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

 

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

 

“Loan Documents” means this Agreement, each Note, each Issuer
Document, the Fee Letter, all Borrowing Base Certificates, the Blocked Account
Agreements, the DDA Notifications, the Credit Card Notifications, the Security
Documents, the Facility Guaranty, and any other instrument or agreement now or
hereafter executed and delivered in connection herewith, or in connection with
any transaction arising out of any Cash Management Services and Bank Products,
each as amended and in effect from time to time.

 

“Loan Party” means the Borrowers and each Guarantor.

 

 

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

 

“Material Contract” means, with respect to any Person, each contract
to which such Person is a party to which the breach, cancellation or failure to
renew, or any adverse material change thereto, would result in a Material
Adverse Affect.

 

“Material Indebtedness” means Indebtedness (other than the
Obligations) of the Loan Parties in an aggregate principal amount exceeding
$20,000,000.  Without limitation of the
foregoing, the Term Loan and the obligations under the Indenture, each as
amended and in effect on the Closing Date, shall be deemed Material
Indebtedness. For purposes of determining the amount of Material Indebtedness
at any time, the amount of the obligations in respect of any Swap Contract at
such time shall be calculated at the Swap Termination Value thereof.

 

“Maturity Date” means January 16, 2014.

 

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

 

“Measurement Period” means, at any date of determination, the
most recently completed twelve (12) Fiscal Months of the Lead Borrower.

 

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

 

“Multiemployer Plan” means any employee benefit plan of the type
described in Section 4001(a)(3) of ERISA, to which a Loan Party or
any ERISA Affiliate makes or is obligated to make contributions, or during the
preceding five plan years, has made or been obligated to make contributions.

 

“Net Orderly Liquidation Value” means the appraised orderly
liquidation value of the Borrowers’ Eligible Inventory, net of costs and
expenses to be incurred in connection with any such liquidation, which value is
expressed as a percentage of Cost of the Borrowers’ Eligible Inventory as set
forth in the Borrowers’ inventory stock ledger, which value shall be determined
from time to time by the most recent appraisal undertaken by an independent
appraiser engaged by the Administrative Agent.

 

“Net Proceeds” means (a) with respect to any Disposition by
any Loan Party or any of its
Subsidiaries, or any Extraordinary Receipt received or paid to the account of any Loan Party or any of its
Subsidiaries, the excess, if any, of (i) the sum of cash and cash
equivalents received in connection with such transaction (including any cash or
cash equivalents received by way of deferred payment pursuant to, or by
monetization of, a note receivable or otherwise, but only as and when so
received) over (ii) the sum of (A) the principal amount of any
Indebtedness that is secured by the applicable asset by a Lien permitted
hereunder which is senior to the Collateral Agent’s Lien on such asset and that
is required to be repaid (or to establish an escrow for the future repayment
thereof) in connection with such transaction 

 

 

(other than Indebtedness under the Loan Documents), (B) the
reasonable and customary out-of-pocket expenses incurred by such Loan Party or such Subsidiary in
connection with such transaction (including, without limitation, appraisals,
and brokerage, legal, title and recording or transfer tax expenses and
commissions) paid by any Loan Party to third parties (other than Affiliates));
and

 

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

 

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

 

“Non-Extension Notice Date” has the meaning specified in Section 2.03(b)(iii).

 

“Note” means (a) a promissory note made by the Borrower in
favor of a Lender evidencing Loans made by such Lender, substantially in the
form of Exhibit C-1, and (b) the Swing Line Note, as each may be
amended, supplemented or modified from time to time.

 

“NPL” means the
National Priorities List under CERCLA.

 

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

 

“Organization Documents” means, (a) with respect to any
corporation, the certificate or articles of incorporation and the bylaws (or
equivalent or comparable constitutive documents with respect to any non-U.S.
jurisdiction); (b) with respect to any limited liability company, the
certificate or articles of formation or organization and operating agreement; (c) with
respect to any partnership, joint venture, trust or other form of business
entity, the partnership, joint venture or other applicable agreement of
formation or organization and any agreement, instrument, filing or notice with
respect thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity, and (d) in each case, all shareholder or
other equity holder agreements, voting trusts and similar arrangements to which
such Person is a party or which is applicable to its Equity Interests and all
other arrangements relating to the Control or management of such Person.

 

“Other Liabilities” means any obligation on account of (a) any
Cash Management Services and/or (b) any Bank Product.

 

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

 

 

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

 

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

 

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

 

“Payment Conditions” means, at the time of determination with
respect to any specified transaction or payment, that (a) no Default or
Event of Default then exists or would arise as a result of entering into such
transaction or the making such payment and (b) after giving effect to such
transaction or payment, either (i) the Pro Forma Availability Condition
has been satisfied and the Consolidated Fixed Charge Coverage Ratio, on a
pro-forma basis for the Measurement Period immediately prior to such
transaction or payment, will be equal to or greater than 1.1:1.0, or (ii) the
Pro Forma Availability Condition has been satisfied and the Loan Parties shall
have provided the Administrative Agent with a solvency opinion (including an
analysis of future Availability demonstrating that the Pro Forma Availability
Condition will be satisfied) from an unaffiliated third party valuation firm
reasonably acceptable to the Administrative Agent.  Prior to undertaking any transaction or
payment which is subject to the Payment Conditions, the Loan Parties shall deliver
to the Administrative Agent evidence of satisfaction of the conditions
contained in clause (b) above on a basis (including, without limitation,
giving due consideration to results for prior periods) reasonably satisfactory
to the Administrative Agent.

 

“PBGC” means the Pension Benefit Guaranty Corporation.

 

“PCAOB” means the Public Company Accounting Oversight Board.

 

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

 

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

 

(a)           No Default then exists or would arise
from the consummation of such Acquisition;

 

(b)           Such Acquisition shall have been
approved by the Board of Directors of the Person (or similar governing body if
such Person is not a corporation) which is the subject of such Acquisition and
such Person shall not have announced that it will oppose such Acquisition or
shall not have commenced any action which alleges that such Acquisition shall
violate applicable Law;

 

 

(c)           With respect to any such Acquisition
(in a single or series of related transactions) 
involving aggregate consideration (whether in cash, tangible property,
notes or other property) equal to or greater than the aggregate sum of
$50,000,000, the Lead Borrower shall have furnished the Administrative Agent
with thirty (30) days’ prior written notice of such intended Acquisition and
shall have furnished the Administrative Agent with a current draft of the
documents, agreements and instruments contemplated to be executed in connection
therewith (and final copies thereof as and when executed), a summary of any due
diligence undertaken by the Loan Parties in connection with such Acquisition,
appropriate financial statements of the Person which is the subject of such
Acquisition, pro forma projected financial statements for the twelve (12) month
period following such Acquisition after giving effect to such Acquisition
(including balance sheets, cash flows and income statements by month for the
acquired Person, individually, and on a Consolidated basis with all Loan
Parties), and such other information as the Administrative Agent may reasonably
require, all of which shall be reasonably satisfactory to the Administrative
Agent;

 

(d)           After giving effect to the
Acquisition, if the Acquisition is an Acquisition of the Equity Interests, a
Loan Party shall acquire and own, directly or indirectly, a majority of the
Equity Interests in the Person being acquired and shall Control a majority of
any voting interests or shall otherwise Control the governance of the Person
being acquired;

 

(e)           Any assets acquired shall be utilized
in, and if the Acquisition involves a merger, consolidation or stock
acquisition, the Person which is the subject of such Acquisition shall be
engaged in, a business otherwise permitted to be engaged in by a Borrower under
this Agreement;

 

(f)            If the Person which is the subject
of such Acquisition will be maintained as a Subsidiary of a Loan Party, or if
the assets acquired in an Acquisition will be transferred to a Subsidiary which
is not then a Loan Party, such Subsidiary shall have been joined as a “Borrower”
hereunder or as a Facility Guarantor, as the Administrative Agent shall
determine, and the Collateral Agent shall have received a first priority
security interest in such Subsidiary’s Equity Interests, Inventory, Accounts,
and other property of the same nature as constitutes Collateral under the
Security Documents; and

 

(g)           Either (i) the aggregate
consideration (whether in cash, tangible property, notes or other property)
paid by any Loan Party for all Acquisitions during any Fiscal Year is not more
than $100,000,000 and, following and after giving effect to each such
transaction, Pro Forma Availability Condition will be satisfied, or (ii) the
Loan Parties shall have satisfied the Payment Conditions, or (iii) the
aggregate consideration (whether in cash, tangible property, notes or other
property) paid by any Loan Party for such Acquisition is either (A) funded
entirely through the use of Net Proceeds from the sales of Real Estate in
accordance with clause (h) of the definition of Permitted Dispositions or (B) consists
entirely of Equity Interests in the Lead Borrower.

 

“Permitted Discretion” means the Administrative Agent’s good
faith credit judgment based upon any factor or circumstance which it reasonably
believes in good faith: (i) will or could reasonably be expected to
adversely affect the value of the Collateral, the enforceability or priority of
the Collateral Agent’s Liens thereon in favor of the Credit Parties or the
amount which the Collateral Agent and the Credit Parties would likely receive
(after giving consideration to delays in payment and costs of enforcement) in
the liquidation of such Collateral; (ii) suggests that any collateral
report or financial information delivered to the Administrative Agent by or on
behalf of the Loan Parties is incomplete, inaccurate or misleading in any
material respect; (iii) could reasonably be expected to materially
increase the likelihood of a bankruptcy, reorganization or other insolvency
proceeding involving any Loan Party; 

 

 

or (iv) creates or reasonably could be expected to create a
Default or Event of Default.  In
exercising such judgment, the Administrative Agent may consider, without
limitation, such factors or circumstances already addressed in or tested by the
definition of Eligible in-Transit Inventory, Eligible Inventory, or Eligible
L/C Inventory, as well as any of the following: (A) the financial and
business climate and prospects of any Loan Party’s industry and general
macroeconomic conditions; (B) changes in demand for and pricing of
Inventory; (C) changes in any concentration of risk with respect to
Inventory; (D) any other factors or circumstances that will or could
reasonably be expected to have a Material Adverse Effect or the occurrence of
any Material Adverse Effect; (E) audits of books and records by third
parties, history of chargebacks or other credit adjustments; and (F) any
other factors that change or could reasonably be expected to change the credit
risk of lending to the Borrowers on the security of the Collateral.  Notwithstanding the foregoing, it shall not
be within Permitted Discretion for the Administrative Agent to establish
Reserves which are duplicative of each other regardless of whether such
Reserves fall under more than one Reserve category.

 

“Permitted Disposition” means any of the following:

 

(a)           dispositions of inventory in the
ordinary course of business;

 

(b)           bulk sales or other dispositions of
the Inventory of a Loan Party not in the ordinary course of business in
connection with Store closings, at arm’s length, provided, that such
Store closures and related Inventory dispositions shall not exceed (i) in
any Fiscal Year of the Lead Borrower and its Subsidiaries, fifteen percent
(15%) of the number of the Loan Parties’ Stores as of the beginning of such
Fiscal Year (net of new Store openings) and (ii) in the aggregate from and
after the Closing Date, twenty-five percent (25%) of the number of the Loan
Parties’ Stores in existence as of the Closing Date (net of new Store
openings), provided that, in all events, all sales of Inventory in
connection with any Store closings (in a single or series of related
transactions) of five percent (5%) or more of the number of the Loan Parties’
Stores then in existence, shall be in accordance with liquidation agreements
and with professional liquidators reasonably acceptable to the Agents; provided
further, that all Net Proceeds received in connection therewith are applied
to the Obligations if then required in accordance with Section 2.05
hereof;

 

(c)           to the extent not made in conjunction
with any Store closings, bulk sales or other dispositions not in the ordinary
course of business of Inventory of a Loan Party which has been discontinued or,
in the judgment of such Loan Party, is no longer attractive to such Loan Party’s
customer base, provided that, if the aggregate Cost of such Inventory
included in any sale or group of related sales in any Fiscal Year is in excess
of five percent (5%) of the Cost of Eligible Inventory (measured as of the
beginning of any applicable Fiscal Year), all sales of such Inventory shall be
in accordance with liquidation agreements and with professional liquidators
reasonably acceptable to the Agents; provided further, that all Net
Proceeds received in connection therewith are applied to the Obligations if
then required in accordance with Section 2.05 hereof;

 

(d)           non-exclusive licenses of
Intellectual Property of a Loan Party or any of its Subsidiaries in the
ordinary course of business;

 

(e)           dispositions of Equipment or other
assets not constituting Collateral in the ordinary course of business that is
substantially worn, damaged, obsolete or, in the judgment of a Loan Party, no
longer useful or necessary in its business or that of any Subsidiary and is not
replaced with similar property having at least equivalent value;

 

 

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

 

(g)           Sales, transfers and dispositions by
any Subsidiary which is not a Loan Party to another Subsidiary that is not a
Loan Party; and

 

(h)           as long as no Default then exists or
would arise therefrom, sales of Real Estate of any Loan Party (or sales of any
Person or Persons created to hold such Real Estate or the equity interests in
such Person or Persons), including sale-leaseback transactions involving any
such Real Estate pursuant to leases on market terms, as long as, (i) such
sale is made for fair market value, (ii) the Net Proceeds of such sale are
utilized to either (A) within 180 days from any such transaction, repay
Permitted Indebtedness, acquire replacement assets or make a Permitted
Acquisition, or (B) repay the Obligations (but, except as provided for in Section 2.06,
such repayments shall not reduce the Aggregate Commitments), and (iii) in the case of any
sale-leaseback transaction permitted hereunder, the Loan Parties shall have
used commercially reasonable efforts to obtain a Collateral Access Agreement from each such purchaser or transferee in
favor of, and on terms and conditions reasonably satisfactory to, the Agents.

 

“Permitted Encumbrances” means:

 

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

 

(b)           Carriers’, warehousemen’s, mechanics’,
materialmen’s, repairmen’s and other like Liens imposed by applicable Law,
arising in the ordinary course of business and securing obligations that are
not overdue by more than thirty (30) days or are being contested in compliance
with Section 6.04;

 

(c)           Pledges and deposits made in the
ordinary course of business in compliance with workers’ compensation,
unemployment insurance and other social security laws or regulations, other
than any Lien imposed by ERISA;

 

(d)           Deposits to secure the performance of
bids, trade contracts and leases (other than Indebtedness), statutory
obligations, surety and appeal bonds, performance bonds and other obligations
of a like nature incurred in the ordinary course of business;

 

(e)           Liens in respect of judgments that
would not constitute an Event of Default hereunder;

 

(f)            Easements, covenants, conditions,
restrictions, building code laws, zoning restrictions, rights-of-way and
similar encumbrances on real property imposed by law or arising in the ordinary
course of business that do not secure any Indebtedness and do not materially
detract from the value of the affected property or materially interfere with
the ordinary conduct of business of a Loan Party and such other minor title
defects or survey matters that are disclosed by current surveys that, in each
case, do not materially interfere with the current use of the real property;

 

(g)           Liens existing on the date hereof and
listed on Schedule 7.01 and any renewals or extensions thereof, provided
that (i) the property covered thereby is not changed, (ii) the amount
secured or benefited thereby is not increased, (iii) the direct or any
contingent obligor with 

 

 

respect
thereto is not changed, and (iv) any renewal or extension of the
obligations secured or benefited thereby is otherwise permitted hereunder;

 

(h)           Liens on fixed or capital assets
acquired by any Loan Party which are permitted under clause (c) of the
definition of Permitted Indebtedness so long as (i) such Liens and the
Indebtedness secured thereby are incurred prior to or within ninety (90) days
after such acquisition, (ii) the Indebtedness secured thereby does not
exceed the cost of acquisition of such fixed or capital assets and (iii) such
Liens shall not extend to any other property or assets of the Loan Parties;

 

(i)            Liens in favor of the Collateral
Agent;

 

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

 

(k)           Possessory Liens in favor of brokers
and dealers arising in connection with the acquisition or disposition of
Investments owned as of the date hereof and Permitted Investments, provided
that such liens (a) attach only to such Investments and (b) secure
only obligations incurred in the ordinary course and arising in connection with
the acquisition or disposition of such Investments and not any obligation in
connection with margin financing;

 

(l)            Liens arising solely by virtue of
any statutory or common law provisions relating to banker’s liens, liens in
favor of securities intermediaries, rights of setoff or similar rights and
remedies as to deposit accounts or securities accounts or other funds
maintained with depository institutions or securities intermediaries;

 

(m)          Liens arising from precautionary UCC
filings regarding “true” operating leases or, to the extent permitted under the
Loan Documents, the consignment of goods to a Loan Party;

 

(n)           voluntary Liens on property (other
than property of the type included in the Borrowing Base) in existence at the
time such property is acquired pursuant to a Permitted Acquisition or on such
property of a Subsidiary of a Loan Party in existence at the time such
Subsidiary is acquired pursuant to a Permitted Acquisition; provided,
that such Liens are not incurred in connection with or in anticipation of such
Permitted Acquisition and do not attach to any other assets of any Loan Party
or any Subsidiary;

 

(o)           Liens on Real Estate and other assets
to secure Permitted Indebtedness, solely to the extent that (i) such
assets do not constitute Collateral and (ii) the Loan Parties shall have
used commercially reasonable efforts to obtain a Collateral Access Agreement with respect to
all Real Estate subject to such Liens.

 

(p)           Liens in favor of customs and
revenues authorities imposed by applicable Law arising in the ordinary course
of business in connection with the importation of goods and securing
obligations (i) that are not overdue by more than thirty (30) days, or
(ii)(A) that are being contested in good faith by appropriate proceedings,
(B) the applicable Loan Party or Subsidiary has set aside on its books
adequate reserves with respect thereto in accordance with GAAP and (C) such
contest effectively suspends collection of the contested obligation and
enforcement of any Lien securing such obligation.

 

“Permitted Indebtedness” means each of the following as long as
no Default or Event of Default exists or would arise from the incurrence thereof:

 

 

(a)           Indebtedness outstanding on the date
hereof and listed on Schedule 7.03 and any refinancings, refundings,
renewals or extensions thereof; provided that (i) the amount of
such Indebtedness is not increased at the time of such refinancing, refunding,
renewal or extension except by an amount equal to a reasonable premium or other
reasonable amount paid, and fees and expenses reasonably incurred, in
connection with such refinancing and by an amount equal to any existing
commitments unutilized thereunder, and the direct or contingent obligor with
respect thereto is not changed as a result of or in connection with such
refinancing, refunding, renewal or extension, (ii) the result of such
extension, renewal or replacement shall not be an earlier maturity date or
decreased weighted average life of such Indebtedness, and (iii) the terms
relating to principal amount, amortization, maturity, collateral (if any) and
subordination (if any), and other material terms taken as a whole, of any such
refinancing, refunding, renewing or extending Indebtedness, and of any
agreement entered into and of any instrument issued in connection therewith,
are no less favorable in any material respect to the Loan Parties or the
Lenders than the terms of any agreement or instrument governing the
Indebtedness being refinanced, refunded, renewed or extended and the interest
rate applicable to any such refinancing, refunding, renewing or extending
Indebtedness does not exceed the then applicable market interest rate;

 

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

 

(c)           Without duplication of Indebtedness
described in clause (f) of this definition, purchase money Indebtedness of
any Loan Party to finance the acquisition of any fixed or capital assets,
including Capital Lease Obligations, and any Indebtedness assumed in connection
with the acquisition of any such assets or secured by a Lien on any such assets
prior to the acquisition thereof, and extensions, renewals and replacements of
any such Indebtedness that do not increase the outstanding principal amount
thereof or result in an earlier maturity date or decreased weighted average
life thereof provided that the terms relating to principal amount,
amortization, maturity, collateral (if any) and subordination (if any), and
other material terms taken as a whole, of any such refinancing, refunding,
renewing or extending Indebtedness, and of any agreement entered into and of
any instrument issued in connection therewith, are no less favorable in any
material respect to the Loan Parties or the Lenders than the terms of any
agreement or instrument governing the Indebtedness being refinanced, refunded,
renewed or extended and the interest rate applicable to any such refinancing,
refunding, renewing or extending Indebtedness does not exceed the then
applicable market interest rate, provided, however, that the
aggregate principal amount of Indebtedness permitted by this clause (c) shall
not exceed $10,000,000 at any time outstanding and provided, further,
that, if requested by the Collateral Agent, the Loan Parties shall cause the
holders of such Indebtedness to enter into a Collateral Access Agreement on
terms reasonably satisfactory to the Collateral Agent;

 

(d)           obligations (contingent or otherwise)
of any Loan Party or any Subsidiary thereof existing or arising under any Swap
Contract, provided that such obligations are (or were) entered into by
such Person in the ordinary course of business for the purpose of directly
mitigating risks associated with fluctuations in interest rates or foreign
exchange rates, and not for purposes of speculation or taking a “market view;” provided
that the aggregate Swap Termination Value thereof shall not exceed $20,000,000
at any time outstanding;

 

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

 

(f)            Indebtedness with respect to the
deferred purchase price for any Permitted Acquisition, provided that
such Indebtedness does not require the payment in cash of principal 

 

 

(other
than in respect of working capital adjustments) prior to the Maturity Date, has
a maturity which extends beyond the Maturity Date, and is subordinated to the
Obligations on terms reasonably acceptable to the Agents;

 

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

 

(i)            The Obligations; and

 

(j)            Other Indebtedness in an aggregate
principal amount not to exceed $250,000,000 at any time outstanding.

 

“Permitted Investments” means each of the following as long as
no Default or Event of Default exists or would arise from the making of such
Investment:

 

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

 

(b)           commercial paper issued by any Person
organized under the laws of any state of the United States of America and rated
at least “Prime-1” (or the then equivalent grade) by Moody’s or at least “A-1”
(or the then equivalent grade) by S&P, in each case with maturities of
not more than 180 days from the date of acquisition thereof;

 

(c)           time deposits with, or insured
certificates of deposit or bankers’ acceptances of, any commercial bank that (i) (A) is
a Lender or (B) is organized under the laws of the United States of
America, any state thereof or the District of Columbia or is the principal
banking subsidiary of a bank holding company organized under the laws of the
United States of America, any state thereof or the District of Columbia, and is
a member of the Federal Reserve System, (ii) issues (or the parent of which
issues) commercial paper rated as described in clause (b) of this
definition and (iii) has combined capital and surplus of at least
$1,000,000,000, in each case with maturities of not more than 180 days from the
date of acquisition thereof;

 

(d)           Fully collateralized repurchase
agreements with a term of not more than thirty (30) days for securities
described in clause (a) above (without regard to the limitation on
maturity contained in such clause) and entered into with a financial
institution satisfying the criteria described in clause (c) above or with
any primary dealer and having a market value at the time that such repurchase
agreement is entered into of not less than 100% of the repurchase obligation of
such counterparty entity with whom such repurchase agreement has been entered
into;

 

(e)           Investments, classified in accordance
with GAAP as current assets of the Loan Parties, in any money market fund,
mutual fund, or other investment companies that are registered under the
Investment Company Act of 1940, as amended, which are administered by financial
institutions that have the highest rating obtainable from either Moody’s or
S&P, and which invest solely in one or more of the types of securities
described in clauses (a) through (d) above;

 

 

(f)                                    Investments existing on the Closing Date, and
set forth on Schedule 7.02, but not any increase in the amount thereof
or any other modification of the terms thereof;

 

(g)                                 (i) Investments by any Loan Party and
its Subsidiaries in their respective Subsidiaries outstanding on the date
hereof, (ii) additional Investments by any Loan Party and its Subsidiaries
in Loan Parties;

 

(h)                                 Investments consisting of extensions of
credit in the nature of accounts receivable or notes receivable arising from
the grant of trade credit in the ordinary course of business, and Investments
received in satisfaction or partial satisfaction thereof from financially
troubled account debtors to the extent reasonably necessary in order to prevent
or limit loss;

 

(i)                                     Guarantees constituting Permitted
Indebtedness;

 

(j)                                     Investments by any Loan Party in Swap
Contracts permitted hereunder;

 

(k)                                  Investments received in connection with the
bankruptcy or reorganization of, or settlement of delinquent accounts and
disputes with, customers and suppliers, in each case in the ordinary course of
business; and

 

(l)                                     Investments constituting Permitted
Acquisitions,

 

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

 

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

 

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

 

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

 

(c)                                  Is made to pay any other amount chargeable to
any Loan Party hereunder; and

 

(d)                                 Together with all other Permitted
Overadvances then outstanding, shall not (i) exceed five percent (5%) of
the Borrowing Base at any time and (ii) unless a Liquidation is occurring,
remain outstanding for more than thirty (30) consecutive Business Days, unless
in each case, the Required Lenders otherwise agree.

 

provided however,
that the foregoing shall not (i) modify or abrogate any of the provisions
of Section 2.03 regarding the Lender’s obligations with respect to
Letters of Credit, or (ii) result in any claim or liability against the
Administrative Agent (regardless of the amount of any Overadvance) for “inadvertent
Overadvances” (i.e. where an Overadvance results from changed circumstances
beyond the control of the 

 

 

Administrative Agent (such as a reduction
in the collateral value)), and such “inadvertent Overadvances” shall not reduce
the amount of Permitted Overadvances allowed hereunder, and further provided
that in no event shall the Administrative Agent make an Overadvance if
after giving effect thereto, the principal amount of the Credit Extensions
would exceed the Aggregate Commitments (as in effect prior to any termination
of the Commitments pursuant to Section 2.06 hereof).

 

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

 

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

 

“Platform” has the meaning specified in Section 6.02.

 

“Prepayment Event” means:

 

(a)                                  Any Disposition of any property or asset of a
Loan Party; other than, prior to the occurrence of a Liquidity Event, sales of
Inventory in the ordinary course of business, and other than as provided in
clause (h) of the definition of Permitted Disposition;

 

(b)                                 Any casualty or other insured damage to, or
any taking under power of eminent domain or by condemnation or similar
proceeding of, any property or asset of a Loan Party, unless (x) the
proceeds therefrom are required to be paid to the holder of a Lien on such
property or asset having priority over the Lien of the Collateral Agent; or (y) prior
to the occurrence of a Liquidity Event, the proceeds therefrom are utilized for
purposes of replacing or repairing the assets in respect of which such
proceeds, awards or payments were received within 180 days of the occurrence of
the damage to or loss of the assets being repaired or replaced;

 

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

 

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

 

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

 

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

 

“Pro Forma Availability Condition”
means, for any date of calculation with respect to any transaction or payment,
Pro Forma Excess Availability following and after giving effect to such
transaction or payment will be equal to or greater than twenty-five percent
(25%) of the lesser of (a) the Aggregate Commitments and (b) the
Borrowing Base.

 

 

“Pro Forma Excess Availability” means,
for any date of calculation, the projected average Availability for each Fiscal
Month during any projected twelve (12) Fiscal Months.

 

“Public
Lender” has the meaning specified in Section 6.02.

 

“Real Estate” means all Leases and all land, together with the
buildings, structures, parking areas, and other improvements thereon, now or
hereafter owned by any Loan Party, including all easements, rights-of-way, and
similar rights of a Loan Party or in favor of a Loan Party relating thereto and
all leases, tenancies, and occupancies thereof.

 

“Receivables Advance Rate” means 85%.

 

“Receivables Reserves” mean such Reserves as may be established
from time to time by the Administrative Agent in its Permitted Discretion with
respect to the determination of the collectability in the ordinary course of
Eligible Accounts Receivables, including, without limitation, Reserves for
dilution.

 

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

 

“Registered Public Accounting Firm” has the meaning specified by
the Securities Laws and shall be independent of the Lead Borrower and its
Subsidiaries as prescribed by the Securities Laws.

 

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

 

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

 

“Reports” has the meaning provided in Section 9.12(a).

 

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

 

“Required Lenders” means, as of any date of determination,
Lenders holding more than 50% of the Aggregate Commitments or, if the
commitment of each Lender to make Loans and the obligation of the L/C Issuer to
make L/C Credit Extensions have been terminated pursuant to Section 8.02,
Lenders holding in the aggregate more than 50% of the Total Outstandings (with
the aggregate amount of each Lender’s risk participation and funded
participation in L/C Obligations and Swing Line Loans being deemed “held” by
such Lender for purposes of this definition); provided that the
Commitment of, and the portion of the Total Outstandings held or deemed held
by, any Defaulting Lender shall be excluded for purposes of making a
determination of Required Lenders; provided further that, in no event
shall Required Lenders be less than two (2) Lenders.

 

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

 

“Responsible Officer” means the chief executive officer,
president, chief financial officer, controller, treasurer or assistant
treasurer of a Loan Party or any of the other individuals designated in writing
to the Administrative Agent by an existing Responsible Officer of a Loan Party
as an authorized signatory of any certificate or other document to be delivered
hereunder.  Any document delivered 

 

 

hereunder that is signed by a Responsible Officer of a Loan Party shall
be conclusively presumed to have been authorized by all necessary corporate,
partnership and/or other action on the part of such Loan Party and such
Responsible Officer shall be conclusively presumed to have acted on behalf of
such Loan Party.

 

“Restricted Payment” means any dividend or other distribution
(whether in cash, securities or other property) with respect to any capital
stock or other Equity Interest of any Person or any of its Subsidiaries, or any
payment (whether in cash, securities or other property), including any sinking
fund or similar deposit, on account of the purchase, redemption, retirement,
defeasance, acquisition, cancellation or termination of any such capital stock
or other Equity Interest, or on account of any return of capital to such Person’s
stockholders, partners or members (or the equivalent of any thereof), or any
option, warrant or other right to acquire any such dividend or other
distribution or payment.  Without
limiting the foregoing, “Restricted Payments” with respect to any Person shall
also include all payments made by such Person with any proceeds of a
dissolution or liquidation of such Person.

 

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

 

“Sarbanes-Oxley” means the Sarbanes-Oxley Act of 2002.

 

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

 

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

 

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

 

“Security Documents” means the Security Agreement, the Blocked
Account Agreements, the DDA Notifications, the Credit Card Notifications, and
each other security agreement or other instrument or document executed and
delivered to the Collateral Agent pursuant to this Agreement or any other Loan
Document granting a Lien to secure any of the Obligations.

 

“Settlement Date” has the meaning provided in Section 2.14(a).

 

“Shareholders’ Equity” means, as of any date of determination,
consolidated shareholders’ equity of the Lead Borrower and its Subsidiaries as
of that date determined in accordance with GAAP.

 

“Shrink” means Inventory which has been lost, misplaced, stolen,
or is otherwise unaccounted for.

 

“Solvent” and “Solvency” means, with respect to any
Person on a particular date, that on such date (a) at fair valuation, all
of the properties and assets of such Person are greater than the sum of the
debts, including contingent liabilities, of such Person, (b) the present
fair saleable value of the properties and assets of such Person is not less
than the amount that would be required to pay the probable liability of such
Person on its debts as they become absolute and matured, (c) such Person
is able to realize upon its properties and assets and pay its debts and other
liabilities, contingent obligations and other commitments as they mature in the
normal course of business, (d) such Person does not intend to, and does
not believe that it will, incur debts beyond such Person’s ability to pay as
such debts mature, and 

 

 

(e) such Person is not engaged in a business or a transaction, and
is not about to engage in a business or transaction, for which such Person’s
properties and assets would constitute unreasonably small capital after giving
due consideration to the prevailing practices in the industry in which such
Person is engaged.  The amount of all
guarantees at any time shall be computed as the amount that, in light of all
the facts and circumstances existing at the time, can reasonably be expected to
become an actual or matured liability.

 

“Standby Letter of Credit” means any Letter of Credit that is
not a Commercial Letter of Credit and that (a) is used in lieu or in
support of performance guaranties or performance, surety or similar bonds
(excluding appeal bonds) arising in the ordinary course of business, (b) is
used in lieu or in support of stay or appeal bonds, (c) supports the
payment of insurance premiums for reasonably necessary casualty insurance
carried by any of the Loan Parties, or (d) supports payment or performance
for identified purchases or exchanges of products or services in the ordinary
course of business, excluding any Inventory covered by a Commercial Letter of
Credit.

 

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

 

“Statutory Reserve Rate” means a fraction (expressed as a
decimal), the numerator of which is the number one and the denominator of which
is the number one minus the aggregate of the maximum reserve percentages
(including any marginal, special, emergency or supplemental reserves) expressed
as a decimal established by the FRB to which the Administrative Agent is
subject with respect to the Adjusted LIBO Rate, for eurocurrency funding
(currently referred to as “Eurocurrency Liabilities” in Regulation D of
the Board). Such reserve percentages shall include those imposed pursuant to
such Regulation D.  LIBO Rate Loans
shall be deemed to constitute eurocurrency funding and to be subject to such
reserve requirements without benefit of or credit for proration, exemptions or
offsets that may be available from time to time to any Lender under such
Regulation D or any comparable regulation. The Statutory Reserve Rate
shall be adjusted automatically on and as of the effective date of any change
in any reserve percentage.

 

“Store” means any retail store (which may include any real
property, fixtures, equipment, inventory and other property related thereto)
operated, or to be operated, by any Loan Party.

 

“Subordinated Indebtedness” means Indebtedness which is
expressly subordinated in right of payment to the prior payment in full of the
Obligations and which is in form and on terms approved in writing by the
Administrative Agent.

 

“Subsidiary” of a Person means a corporation, partnership, joint
venture, limited liability company or other business entity of which a majority
of the shares Equity Interests having ordinary voting power for the election of
directors or other governing body are at the time beneficially owned, or the
management of which is otherwise Controlled, directly, or indirectly through
one or more intermediaries, or both, by such Person.  Unless otherwise specified, all references
herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or
Subsidiaries of a Loan Party.

 

“Super-Majority Required Lenders” means, as of any date of
determination, Lenders holding more than 66.67% of the Aggregate Commitments
or, if the commitment of each Lender to make Loans and the obligation of the
L/C Issuer to make L/C Credit Extensions have been terminated pursuant to Section 8.02,
Lenders holding in the aggregate more than 66.67% of the Total Outstandings
(with the aggregate amount of each Lender’s risk participation and funded
participation in L/C Obligations and Swing Line Loans being deemed “held” by
such Lender for purposes of this definition); provided that, the
Commitment of, and the portion of the Total Outstandings held or deemed held
by, any Defaulting Lender 

 

 

shall be excluded for purposes of making a determination of
Super-Majority Required Lenders; provided further that, in
no event shall Super-Majority Required Lenders be less than two (2) Lenders.

 

“Swap Contract” means (a) any and all rate swap
transactions, basis swaps, credit derivative transactions, forward rate
transactions, commodity swaps, commodity options, forward commodity contracts,
equity or equity index swaps or options, bond or bond price or bond index swaps
or options or forward bond or forward bond price or forward bond index
transactions, interest rate options, forward foreign exchange transactions, cap
transactions, floor transactions, collar transactions, currency swap
transactions, cross-currency rate swap transactions, currency options, spot
contracts, or any other similar transactions or any combination of any of the
foregoing (including any options to enter into any of the foregoing), whether
or not any such transaction is governed by or subject to any master agreement,
and (b) any and all transactions of any kind, and the related
confirmations, which are subject to the terms and conditions of, or governed
by, any form of master agreement published by the International Swaps and
Derivatives Association, Inc., any International Foreign Exchange Master
Agreement, or any other master agreement (any such master agreement, together
with any related schedules, a “Master Agreement”), including any such
obligations or liabilities under any Master Agreement.

 

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

 

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

 

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

 

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

 

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

 

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

 

“Swing Line Note” means the promissory note of the Borrowers
substantially in the form of Exhibit C-2, payable to the order of
the Swing Line Lender, evidencing the Swing Line Loans made by the Swing Line
Lender.

 

“Swing Line Sublimit” means an amount equal to the lesser of (a) $35,000,000
and (b) the Aggregate Commitments. 
The Swing Line Sublimit is part of, and not in addition to, the
Aggregate Commitments.

 

“Synthetic Lease Obligation” means the monetary obligation of a
Person under (a) a so-called synthetic, off-balance sheet or tax retention
lease, or (b) an agreement for the use or possession of property
(including sale and leaseback transactions), in each case, creating obligations
that do not appear 

 

 

on the balance sheet of such Person but which, upon the application of
any Debtor Relief Laws to such Person, would be characterized as the
indebtedness of such Person (without regard to accounting treatment).

 

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

 

“Term Loan” means the term loan in the original principal amount
of $320,000,000 made pursuant to that certain Amended and Restated Credit
Agreement dated October 27, 2006 among the Lead Borrower, certain domestic
subsidiaries of the Lead Borrower as guarantors, the lenders party thereto and
the Term Loan Agent.

 

“Term Loan Agent” means Wachovia Bank, National Association, in
its capacity as Administrative Agent under the Term Loan.

 

“Termination Date” means the earliest to occur of (i) the
Maturity Date, (ii) the date on which the maturity of the Obligations is
accelerated (or deemed accelerated) and the Commitments are irrevocably
terminated (or deemed terminated) in accordance with Article VII,
or (iii) the termination of the Commitments in accordance with Section 2.06
hereof.

 

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

 

“Trading with the Enemy Act” has the meaning set forth in Section 10.18.

 

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

 

“UCC” or “Uniform Commercial Code” means the Uniform
Commercial Code as in effect from time to time in the State of New York;
provided, however, that if a term is defined in Article 9 of the Uniform
Commercial Code differently than in another Article thereof, the term
shall have the meaning set forth in Article 9; provided further that, if
by reason of mandatory provisions of law, perfection, or the effect of
perfection or non-perfection, of a security interest in any Collateral or the
availability of any remedy hereunder is governed by the Uniform Commercial Code
as in effect in a jurisdiction other than the State of New York, “Uniform
Commercial Code” means the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions hereof relating to such perfection
or effect of perfection or non-perfection or availability of such remedy, as
the case may be.

 

“UFCA”
has the meaning specified in Section 10.21(d).

 

“UFTA” has the meaning specified in Section 10.21(d).

 

“Unfunded Pension Liability” means the excess of a Pension Plan’s
benefit liabilities under Section 4001(a)(16) of ERISA, over the current
value of that Pension Plan’s assets, determined in accordance with the
assumptions used for funding the Pension Plan pursuant to Section 412 of
the Code for the applicable plan year.

 

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

 

 

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

 

1.02                                                Other Interpretive Provisions.  With
reference to this Agreement and each other Loan Document, unless otherwise
specified herein or in such other Loan Document:

 

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

 

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

 

(c)                            Section headings herein
and in the other Loan Documents are included for convenience of reference only
and shall not affect the interpretation of this Agreement or any other Loan
Document.

 

1.03                                                Accounting Terms

 

(a)                            Generally.  All accounting terms not specifically or
completely defined herein shall be construed in conformity with, and all
financial data (including financial ratios and other financial calculations)
required to be submitted pursuant to this Agreement shall be prepared in
conformity with, GAAP applied on a consistent basis, as in effect from time to
time, applied in a manner consistent with that used in preparing the Audited
Financial Statements, except as otherwise specifically prescribed
herein.

 

(b)                           Changes in GAAP.  If at any time any change in GAAP would
affect the computation of any financial ratio or requirement set forth in any
Loan Document, and either the Lead Borrower or the Required Lenders shall so
request, the Administrative Agent, the Lenders and the Lead Borrower shall
negotiate in good faith to amend such ratio or requirement to preserve the
original intent thereof in light of such change in GAAP (subject to the
approval of

 

 

the Required Lenders); provided  that, until so amended, (i) such
ratio or requirement shall continue to be computed in accordance with GAAP
prior to such change therein and (ii) the Lead Borrower shall provide to
the Administrative Agent and the Lenders financial statements and other
documents required under this Agreement or as reasonably requested hereunder
setting forth a reconciliation between calculations of such ratio or
requirement made before and after giving effect to such change in GAAP.

 

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

 

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

 

1.06                                                Letter of Credit Amounts.  Unless
otherwise specified, all references herein to the amount of a Letter of Credit
at any time shall be deemed to be the Stated Amount of such Letter of Credit in
effect at such time; provided, however, that with respect to any Letter of
Credit that, by its terms or by the terms of any Issuer Documents related
thereto, provides for one or more automatic increases in the Stated Amount
thereof, the amount of such Letter of Credit shall be deemed to be the maximum
Stated Amount of such Letter of Credit after giving effect to all such
increases, whether or not such maximum Stated Amount is in effect at such time.

 

ARTICLE II

THE COMMITMENTS AND CREDIT EXTENSIONS

 

2.01                                                Committed Loans; Reserves.  (a) Subject
to the terms and conditions set forth herein, each Lender severally agrees to
make loans (each such loan, a “Committed Loan”) to the Borrowers from
time to time, on any Business Day during the Availability Period, in an
aggregate amount not to exceed at any time outstanding the lesser of (x) the
amount of such Lender’s Commitment, or (y) such Lender’s Applicable
Percentage of the Borrowing Base; subject in each case to the following
limitations:

 

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

 

(ii)                                  after giving effect to any
Committed Borrowing, the aggregate Outstanding Amount of the Committed Loans of
any Lender, plus such Lender’s Applicable Percentage of the Outstanding
Amount of all L/C Obligations, plus such Lender’s Applicable Percentage
of the Outstanding Amount of all Swing Line Loans shall not exceed such Lender’s
Commitment,

 

(iii)                               The Outstanding Amount of
all L/C Obligations shall not at any time exceed the Letter of Credit Sublimit

 

Within the limits of each Lender’s
Commitment, and subject to the other terms and conditions hereof, the Borrowers
may borrow under this Section 2.01, prepay under Section 2.05,
and reborrow under this Section 2.01.  Committed Loans may be Prime Rate Loans or
LIBO Rate Loans, as further provided herein.

 

 

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

 

(i)                                     Shrink (an Inventory
Reserve): An amount equal to the amount accrued for shrink as reflected on the
Lead Borrower’s general ledger at any time of determination;

 

(ii)                                  “QOH Adjustment” (an
Inventory Reserve): An amount equal to the amount accrued for such adjustment,
as reflected on the Lead Borrower’s general ledger at any time of
determination, to the extent such amount represents a reduction to Inventory;

 

(iii)                               Customer Credit Liabilities
(an Availability Reserve): An amount equal to fifty percent (50%) of the
Customer Credit Liabilities as reflected in the Borrowers’ books and records;
and

 

(iv)                              Dilution (a Receivables
Reserve): An amount equal to twenty percent (20%) of all Eligible Accounts
Receivables.

 

(c)                                  The
Administrative Agent shall have the right, at any time and from time to time
after the Closing Date in its Permitted Discretion to establish, modify or
eliminate Reserves.  Without limiting the
generality of the foregoing, the Loan Parties acknowledge that it shall be
within the Administrative Agent’s Permitted Discretion to establish an
Availability Reserve in an amount equal to two (2) months’ rent for all of
the Borrowers’ leased locations in each Landlord Lien State, other than leased
locations with respect to which the Collateral Agent has received a Collateral
Access Agreement in form reasonably satisfactory to the Collateral Agent, upon
the earlier to occur of (A) any failure by a Loan Party to pay any rent as
and when due, (B) any Default or Event of Default and (C) the first
occurrence of an Accelerated Borrowing Base Delivery Event.

 

2.02                                                Borrowings,
Conversions and Continuations of Committed Loans.

 

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

 

(b)                                 Each Committed
Borrowing shall be made upon the Lead Borrower’s irrevocable (except as
otherwise provided in Section 3.03) notice to the Administrative
Agent, which may be given by telephone. 
Each such notice must be received by the Administrative Agent not later
than 11:00 a.m. (i) three (3) Business Days prior to the
requested date of any Borrowing of LIBO Rate Loans, and (ii) one (1) Business
Day prior to the requested date of any Borrowing of Prime Rate Loans.  Each telephonic notice by the Lead Borrower
pursuant to this Section 2.02(b) must be confirmed promptly by
delivery to the Administrative Agent of a written Committed Loan Notice,
appropriately completed and signed by a Responsible Officer of the Lead
Borrower.  Each Borrowing of LIBO Rate
Loans shall be in a principal amount of $5,000,000.00 or a whole multiple of
$1,000,000.00 in excess thereof.  Except
as provided in Sections 2.03(c) and 2.04(c), each Borrowing of
Prime Rate Loans shall be in a principal amount of not less than
$100,000.00.  Each Committed Loan Notice
(whether telephonic or written) shall specify (i) the requested date of
the Borrowing (which shall be a Business Day), (ii) the principal amount
of Committed Loans to be borrowed, (iii) the Type of Committed Loans to be
borrowed, and (iv) if applicable, the duration of the Interest Period with
respect thereto.  If the Lead Borrower
fails to specify a Type of Committed Loan in a Committed Loan Notice, then the
applicable Committed Loans shall be made as Prime Rate Loans.  If the Lead Borrower requests a Borrowing of
LIBO Rate Loans in any such

 

 

Committed Loan Notice, but
fails to specify an Interest Period, it will be deemed to have specified an Interest
Period of one month.  Following receipt
of a Committed Loan Notice, the Administrative Agent shall promptly notify each
Lender of the amount of its Applicable Percentage of the applicable Committed
Loans, and each Lender shall make the amount of its Committed Loan available to
the Administrative Agent in immediately available funds at the Administrative
Agent’s Office not later than 1:00 p.m. on the Business Day specified in
the applicable Committed Loan Notice. 
Upon satisfaction of the applicable conditions set forth in Section 4.02
(and, if such Borrowing is the initial Credit Extension, Section 4.01),
the Administrative Agent shall use reasonable efforts to make all funds so
received available to the Borrowers in like funds by no later than 4:00 p.m.
on the day of receipt by the Administrative Agent either by (i) crediting
the account of the Lead Borrower on the books of Bank of America with the
amount of such funds or (ii) wire transfer of such funds, in each case in
accordance with instructions provided to (and reasonably acceptable to) the
Administrative Agent by the Lead Borrower; provided, however,
that if, on the date the Committed Loan Notice with respect to such Borrowing
is given by the Lead Borrower, there are L/C Borrowings outstanding, then the
proceeds of such Borrowing, first, shall be applied to the payment in
full of any such L/C Borrowings, and second, shall be made available to
the Borrowers as provided above.

 

(c)                                  Each conversion
of Committed Loans from one Type to the other and each continuation of LIBO
Rate Loans shall be made upon the Lead Borrower’s irrevocable notice to the
Administrative Agent, which may be given by telephone.  Each such notice must be received by the
Administrative Agent not later than 11:00 a.m. three (3) Business
Days prior to the requested date of any conversion to or continuation of LIBO
Rate Loans or of any conversion of LIBO Rate Loans to Prime Rate Loans.  Each telephonic notice by the Lead Borrower
pursuant to this Section 2.02(c) must be confirmed promptly by
delivery to the Administrative Agent of a written Conversion/Continuation
Notice, appropriately completed and signed by a Responsible Officer of the Lead
Borrower.  Each conversion to or
continuation of LIBO Rate Loans shall be in a principal amount of $5,000,000.00
or a whole multiple of $1,000,000.00 in excess thereof.  Except as provided in Sections 2.03(c) and
2.04(c), each conversion to Prime Rate Loans shall be in a principal
amount of not less than $100,000.00. 
Each Conversion/Continuation Notice (whether telephonic or written)
shall specify (i) whether the Borrowers are requesting a conversion of
Committed Loans from one Type to the other or a continuation of LIBO Rate
Loans, (ii) the requested date of the conversion or continuation, as the case
may be (which shall be a Business Day), (iii) the principal amount of
Committed Loans to be converted or continued, (iv) the Type of Committed
Loans to which existing Committed Loans are to be converted, and (v) if
applicable, the duration of the Interest Period with respect thereto.  If the Lead Borrower fails to give a timely
notice of a conversion or continuation in a Conversion/Continuation Notice,
then the applicable Committed Loans shall be converted to Prime Rate
Loans.  Any such automatic conversion to
Prime Rate Loans shall be effective as of the last day of the Interest Period
then in effect with respect to the applicable LIBO Rate Loans.  If the Lead Borrower requests a conversion to
or continuation of LIBO Rate Loans in a Conversion/Continuation Notice, but
fails to specify an Interest Period, it will be deemed to have specified an
Interest Period of one month. 
Notwithstanding anything to the contrary herein, a Swing Line Loan may
not be converted to a LIBO Rate Loan.  If
no timely notice of a conversion or continuation in a Conversion/Continuation
Notice is provided by the Lead Borrower, the Administrative Agent shall notify
each Lender of the details of any automatic conversion to Prime Rate Loans
described in this Section 2.02(c).

 

(d)                                 The
Administrative Agent, without the request of the Lead Borrower, may advance any
interest, fee, service charge, Credit Party Expenses, or other payment to which
any Credit Party is entitled from the Loan Parties pursuant hereto or any other
Loan Document and may charge the same to the Loan Account notwithstanding that
an Overadvance may result thereby.  The
Administrative Agent shall advise the Lead Borrower of any such advance or
charge promptly after the making thereof.

 

 

Such action on the part of
the Administrative Agent shall not constitute a waiver of the Administrative
Agent’s rights and the Borrowers’ obligations under Sections 2.05(c), 2.05(d) or
2.05(e).  Any amount which is added
to the principal balance of the Loan Account as provided in this Section 2.02(b) shall
bear interest at the interest rate then and thereafter applicable to Prime Rate
Loans.

 

(e)                                  Except as
otherwise provided herein, a LIBO Rate Loan may be continued or converted only
on the last day of an Interest Period for such LIBO Rate Loan.  During the existence of a Default, no Loans
may be requested as, converted to or continued as LIBO Rate Loans without the
consent of the Required Lenders.

 

(f)                                    The
Administrative Agent shall promptly notify the Lead Borrower and the Lenders of
the interest rate applicable to any Interest Period for LIBO Rate Loans upon
determination of such interest rate.  At
any time that Prime Rate Loans are outstanding, the Administrative Agent shall
notify the Lead Borrower and the Lenders of any change in Bank of America’s
prime rate used in determining the Prime Rate promptly following the public
announcement of such change.

 

(g)                                 After giving
effect to all Committed Borrowings, all conversions of Committed Loans from one
Type to the other, and all continuations of Committed Loans as the same Type,
there shall not be more than six (6) Interest Periods in effect with
respect to Committed Loans.

 

(h)                                 The
Administrative Agent, the Lenders, the Swing Line Lender and the L/C Issuer
shall have no obligation to make any Loan or to provide any Letter of Credit if
an Overadvance would result.  The
Administrative Agent may, in its discretion, make Permitted Overadvances
without the consent of the Lenders, the Swing Line Lender and the L/C Issuer
and each Lender shall be bound thereby. 
Any Permitted Overadvance may constitute a Swing Line Loan. A Permitted
Overadvance is for the account of the Borrowers and shall constitute a Loan and
an Obligation and shall be repaid by the Borrowers in accordance with the
provisions of Sections 2.05(c), 2.05(d) and 2.05(e).  The making of any such Permitted Overadvance
on any one occasion shall not obligate the Administrative Agent or any Lender
to make or permit any Permitted Overadvance on any other occasion or to permit
such Permitted Overadvances to remain outstanding. The making by the
Administrative Agent of a Permitted Overadvance shall not modify or abrogate
any of the provisions of Section 2.03 regarding the Lenders’
obligations to purchase participations with respect to Letter of Credits or of Section 2.04
regarding the Lenders’ obligations to purchase participations with respect to
Swing Line Loans.  The Administrative
Agent shall have no liability for, and no Loan Party or Credit Party shall have
the right to, or shall, bring any claim of any kind whatsoever against the
Administrative Agent with respect to “inadvertent Overadvances” (i.e. where an
Overadvance results from changed circumstances beyond the control of the
Administrative Agent (such as a reduction in the collateral value)) regardless
of the amount of any such Overadvance(s).

 

2.03                                                Letters of Credit.

 

(a)                                  The Letter of
Credit Commitment.

 

(i)                                     Subject to the terms and conditions set forth
herein, (A) the L/C Issuer agrees, in reliance upon the agreements of the
Lenders set forth in this Section 2.03, (1) from time to time
on any Business Day during the period from the Closing Date until the Letter of
Credit Expiration Date, to issue Letters of Credit for the account of the
Borrowers, and to amend Letters of Credit previously issued by it, in
accordance with Section 2.03(b) below, and (2) to honor
drawings under the Letters of Credit; and (B) the Lenders severally agree
to participate in Letters of Credit issued for the account of the Borrowers and
any drawings thereunder; provided that after giving effect to any L/C
Credit Extension

 

 

with
respect to any Letter of Credit, (x) the Total Outstandings shall not
exceed the lesser of (1) the Aggregate
Commitments and (2) the
Borrowing Base, (y) the aggregate Outstanding Amount of the Committed
Loans of any Lender, plus such Lender’s Applicable Percentage of the
Outstanding Amount of all L/C Obligations, plus such Lender’s Applicable
Percentage of the Outstanding Amount of all Swing Line Loans shall not exceed
such Lender’s Commitment, and (z) the Outstanding Amount of the L/C
Obligations shall not exceed the Letter of Credit Sublimit.  Each request by the Lead Borrower for the
issuance or amendment of a Letter of Credit shall be deemed to be a representation
by the Borrowers that the L/C Credit Extension so requested complies with the
conditions set forth in the proviso to the preceding sentence.  Within the foregoing limits, and subject to
the terms and conditions hereof, the Borrowers’ ability to obtain Letters of
Credit shall be fully revolving, and accordingly the Borrowers may, during the
foregoing period, obtain Letters of Credit to replace Letters of Credit that
have expired or that have been drawn upon and reimbursed.  Any L/C Issuer (other than Bank of America or
any of its Affiliates) shall notify the Administrative Agent in writing on each
Business Day of all Letters of Credit issued on the prior Business Day by such
L/C Issuer, provided that (A) until the Administrative Agent
advises any such Issuing Bank that the provisions of Section 4.02
are not satisfied, or (B) the aggregate amount of the Letters of Credit
issued in any such week exceeds such amount as shall be agreed by the
Administrative Agent and the L/C Issuer, such L/C Issuer shall be required to
so notify the Administrative Agent in writing only once each week of the
Letters of Credit issued by such L/C Issuer during the immediately preceding
week as well as the daily amounts outstanding for the prior week, such notice
to be furnished on such day of the week as the Administrative Agent and such
L/C Issuer may agree.  All Existing
Letters of Credit shall be deemed to have been issued pursuant hereto, and from
and after the Closing Date shall be subject to and governed by the terms and
conditions hereof.

 

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

 

(A)                              subject to Section 2.03(b)(iii),
the expiry date of such requested Standby Letter of Credit would occur more
than twelve months after the date of issuance or last extension, unless the
Issuing Bank and the Administrative Agent each consent, in their sole
discretion, to a later expiry date; or

 

(B)                                subject to Section 2.03(b)(iii),
the expiry date of such requested Commercial Letter of Credit would occur more
than 180 days after the date of issuance or last extension, unless the Issuing
Bank and the Administrative Agent each consent, in their sole discretion, to a
later expiry date; or

 

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

 

(iii)                               The L/C Issuer shall not issue any Letter of Credit without the prior
consent of the Administrative Agent if:

 

(A)                              any order, judgment or decree of any
Governmental Authority or arbitrator shall by its terms purport to enjoin or
restrain the L/C Issuer from issuing such Letter of Credit, or any Law
applicable to the L/C Issuer or any request or directive (whether or not having
the force of law) from any Governmental Authority with jurisdiction over the
L/C Issuer shall prohibit, or request that the L/C Issuer refrain from, the
issuance of letters of credit generally or such Letter of Credit in particular
or shall impose upon the L/C Issuer with respect to such Letter of Credit any
restriction, reserve or capital requirement (for which the L/C Issuer is not
otherwise

 

 

compensated hereunder) not in effect on the Closing Date, or shall
impose upon the L/C Issuer any unreimbursed loss, cost or expense which was not
applicable on the Closing Date and which the L/C Issuer in good faith deems
material to it;

 

(B)                                the issuance of such Letter of Credit would
violate one or more policies of the L/C Issuer applicable to letters of credit
generally;

 

(C)                                such Letter of Credit is to be denominated in
a currency other than Dollars; provided that if the L/C Issuer, in its
discretion, issues a Letter of Credit denominated in a currency other than
Dollars, all reimbursements by the Borrowers of the honoring of any drawing
under such Letter of Credit shall be paid in the currency in which such Letter
of Credit was denominated;

 

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

 

(E)                                 a default of any Lender’s obligations to fund
under Section 2.03(c) exists or any Lender is at such time a
Defaulting Lender or Deteriorating Lender hereunder, unless the L/C Issuer has
entered into arrangements satisfactory to the L/C Issuer with the Borrowers or
such Lender to eliminate the L/C Issuer’s risk with respect to such Lender.

 

(iv)                              The L/C Issuer shall not amend any Letter of Credit if the L/C Issuer
would not be permitted at such time to issue such Letter of Credit in its
amended form under the terms hereof or if the beneficiary of such Letter of
Credit does not accept the proposed amendment to such Letter of Credit.

 

(v)                                 The L/C Issuer shall act on behalf of the
Lenders with respect to any Letters of Credit issued by it and the documents
associated therewith, and the L/C Issuer shall have all of the benefits and
immunities (A) provided to the Administrative Agent in Article IX
with respect to any acts taken or omissions suffered by the L/C Issuer in
connection with Letters of Credit issued by it or proposed to be issued by it
and Issuer Documents pertaining to such Letters of Credit as fully as if the
term “Administrative Agent” as used in Article IX included the L/C
Issuer with respect to such acts or omissions, and (B) as additionally
provided herein with respect to the L/C Issuer.

 

(b)                                 Procedures for
Issuance and Amendment of Letters of Credit; Auto-Extension Letters of Credit.

 

(i)                                     Each Letter of Credit shall be issued or
amended, as the case may be, upon the request of the Lead Borrower delivered to
the L/C Issuer (with a copy to the Administrative Agent) in the form of a
Letter of Credit Application, appropriately completed and signed by a
Responsible Officer of the Lead Borrower. 
Such Letter of Credit Application must be received by the L/C Issuer and
the Administrative Agent not later than 11:00 a.m. at least three (3) Business
Days (or such other date and time as the Administrative Agent and the L/C
Issuer may agree in a particular instance in their sole discretion) prior to
the proposed issuance date or date of amendment, as the case may be.  In the case of a request for an initial
issuance of a Letter of Credit, such Letter of Credit Application shall specify
in form and detail satisfactory to the L/C Issuer: (A) the proposed
issuance date of the requested Letter of Credit (which shall be a Business
Day); (B) the amount thereof; (C) the expiry date thereof; (D) the
name and address of the beneficiary thereof; (E) the documents to be
presented by such beneficiary in case of any drawing thereunder; (F) the
full text of any certificate to be presented by such beneficiary in case of any
drawing thereunder; and (G) such other matters as the L/C Issuer may

 

 

reasonably
require.  In the case of a request for an
amendment of any outstanding Letter of Credit, such Letter of Credit
Application shall specify in form and detail satisfactory to the L/C Issuer (A) the
Letter of Credit to be amended; (B) the proposed date of amendment thereof
(which shall be a Business Day); (C) the nature of the proposed amendment;
and (D) such other matters as the L/C Issuer may reasonably require.  Additionally, the Lead Borrower shall furnish
to the L/C Issuer and the Administrative Agent such other documents and
information pertaining to such requested Letter of Credit issuance or
amendment, including any Issuer Documents, as the L/C Issuer or the
Administrative Agent may reasonably require.

 

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

 

(iii)                               If the Lead Borrower so requests in any applicable Letter of Credit
Application, the L/C Issuer may, in its sole and absolute discretion, agree to
issue a Standby Letter of Credit that has automatic extension provisions (each,
an “Auto-Extension Letter of Credit”); provided that any such
Auto-Extension Letter of Credit must permit the L/C Issuer to prevent any such
extension at least once in each twelve-month period (commencing with the date
of issuance of such Standby Letter of Credit) by giving prior notice to the
beneficiary thereof not later than a day (the “Non-Extension Notice Date”)
in each such twelve-month period to be agreed upon at the time such Standby
Letter of Credit is issued.  Unless otherwise
directed by the L/C Issuer, the Lead Borrower shall not be required to make a
specific request to the L/C Issuer for any such extension.  Once an Auto-Extension Letter of Credit has
been issued, the Lenders shall be deemed to have authorized (but may not
require) the L/C Issuer to permit the extension of such Standby Letter of
Credit at any time to an expiry date not later than the Letter of Credit
Expiration Date; provided, however, that the L/C Issuer shall not
permit any such extension if (A) the L/C Issuer has determined that it
would not be permitted, or would have no obligation, at such time to issue such
Standby Letter of Credit in its revised form (as extended) under the terms
hereof (by reason of the provisions of clauses (ii) or (iii) of Section 2.03(a) or
otherwise), or (B) it has received notice (which may be by telephone or in
writing) on or before the day that is five Business Days before the
Non-Extension Notice Date (1) from the Administrative Agent that the
Required Lenders have elected not to permit such extension or (2) from the
Administrative Agent, any Lender or the Lead Borrower that one or more of the
applicable conditions specified in Section 4.02 is not then
satisfied, and in each such case directing the L/C Issuer not to permit such
extension.

 

(iv)                              Promptly after its delivery of any Letter of Credit or any amendment to
a Letter of Credit to an advising bank with respect thereto or to the
beneficiary thereof, the L/C Issuer will

 

 

also
deliver to the Lead Borrower and the Administrative Agent a true and complete
copy of such Letter of Credit or amendment.

 

(c)                                  Drawings and
Reimbursements; Funding of Participations.

 

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

 

(ii)                                  Each Lender shall upon any notice pursuant to
Section 2.03(c)(i) make funds available to the Administrative
Agent for the account of the L/C Issuer at the Administrative Agent’s Office in
an amount equal to its Applicable Percentage of the Unreimbursed Amount not
later than 1:00 p.m. on the Business Day specified in such notice by the
Administrative Agent, whereupon, subject to the provisions of Section 2.03(c)(iii),
each Lender that so makes funds available shall be deemed to have made a Prime
Rate Loan to the Borrowers in such amount. 
The Administrative Agent shall remit the funds so received to the L/C
Issuer.

 

(iii)                               With respect to any Unreimbursed Amount that is not fully refinanced by
a Committed Borrowing of Prime Rate Loans because the conditions set forth in Section 4.02
cannot be satisfied, the Borrowers shall be deemed to have incurred from the
L/C Issuer an L/C Borrowing in the amount of the Unreimbursed Amount that is
not so refinanced, which L/C Borrowing shall be due and payable on demand
(together with interest) and shall bear interest at the Default Rate.  In such event, each Lender’s payment to the
Administrative Agent for the account of the L/C Issuer pursuant to Section 2.03(c)(ii) shall
be deemed payment in respect of its participation in such L/C Borrowing and
shall constitute an L/C Advance from such Lender in satisfaction of its
participation obligation under this Section 2.03.

 

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

 

(v)                                 Each Lender’s obligation to make Committed
Loans or L/C Advances to reimburse the L/C Issuer for amounts drawn under
Letters of Credit, as contemplated by this Section 2.03(c), shall
be absolute and unconditional and shall not be affected by any circumstance,
including 

 

 

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

 

(vi)                              If any Lender fails to make available to the Administrative Agent for
the account of the L/C Issuer any amount required to be paid by such Lender
pursuant to the foregoing provisions of this Section 2.03(c) by
the time specified in Section 2.03(c)(ii), the L/C Issuer shall be
entitled to recover from such Lender (acting through the Administrative Agent),
on demand, such amount with interest thereon for the period from the date such
payment is required to the date on which such payment is immediately available
to the L/C Issuer at a rate per annum equal to the greater of the Federal Funds
Rate and a rate determined by the L/C Issuer in accordance with banking
industry rules on interbank compensation plus any administrative,
processing or similar fees customarily charged by the L/C Issuer in connection
with the foregoing.  If such Lender pays
such amount (with interest and fees as aforesaid), the amount so paid shall
constitute such Lender’s Committed Loan included in the relevant Committed
Borrowing or L/C Advance in respect of the relevant L/C Borrowing, as the case
may be.  A certificate of the L/C Issuer
submitted to any Lender (through the Administrative Agent) with respect to any
amounts owing under this clause (vi) shall be conclusive absent manifest
error.

 

(d)                                 Repayment of
Participations.

 

(i)                                     At any time after the L/C Issuer has made a
payment under any Letter of Credit and has received from any Lender such Lender’s
L/C Advance in respect of such payment in accordance with Section 2.03(c),
if the Administrative Agent receives for the account of the L/C Issuer any
payment in respect of the related Unreimbursed Amount or interest thereon
(whether directly from the Borrowers or otherwise, including proceeds of Cash
Collateral applied thereto by the Administrative Agent), the Administrative
Agent will distribute to such Lender its Applicable Percentage thereof
(appropriately adjusted, in the case of interest payments, to reflect the
period of time during which such Lender’s L/C Advance was outstanding) in the
same funds as those received by the Administrative Agent.

 

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

 

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

 

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

 

 

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

 

(iii)                               any draft, demand, certificate or other document presented under such
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect;
or any loss or delay in the transmission or otherwise of any document required
in order to make a drawing under such Letter of Credit;

 

(iv)                              any payment by the L/C Issuer under such Letter of Credit against
presentation of a draft or certificate that does not strictly comply with the
terms of such Letter of Credit; or any payment made by the L/C Issuer under
such Letter of Credit to any Person purporting to be a trustee in bankruptcy,
debtor-in-possession, assignee for the benefit of creditors, liquidator,
receiver or other representative of or successor to any beneficiary or any
transferee of such Letter of Credit, including any arising in connection with
any proceeding under any Debtor Relief Law;

 

(v)                                 any other circumstance or happening
whatsoever, whether or not similar to any of the foregoing, including any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, the Borrowers or any of their Subsidiaries; or

 

(vi)                              the fact that any Event of Default shall have occurred and be
continuing.

 

The Lead Borrower shall promptly examine a copy of each Letter of
Credit and each amendment thereto that is delivered to it and, in the event of
any claim of noncompliance with the Lead Borrower’s instructions or other
irregularity, the Lead Borrower will immediately notify the L/C Issuer.  The Borrowers shall be conclusively deemed to
have waived any such claim against the L/C Issuer and its correspondents unless
such notice is given as aforesaid.

 

(f)                                    Role of L/C
Issuer.  Each Lender and the Borrowers
agree that, in paying any drawing under a Letter of Credit, the L/C Issuer
shall not have any responsibility to obtain any document (other than any sight
draft, certificates and documents expressly required by the Letter of Credit)
or to ascertain or inquire as to the validity or accuracy of any such document
or the authority of the Person executing or delivering any such document.  None of the L/C Issuer, the Administrative
Agent, any of their respective Related Parties nor any correspondent,
participant or assignee of the L/C Issuer shall be liable to any Lender for (i) any
action taken or omitted in connection herewith at the request or with the
approval of the Lenders or the Required Lenders, as applicable; (ii) any
action taken or omitted in the absence of gross negligence or willful
misconduct; (iii) any error, omission, interruption, loss or delay in
transmission or delivery of any draft, notice or other communication under or
relating to any Letter of Credit or any error in interpretation of technical terms;
or (iv) the due execution, effectiveness, validity or enforceability of
any document or instrument related to any Letter of Credit or Issuer
Document.  The Borrowers hereby assume
all risks of the acts or omissions of any beneficiary or transferee with
respect to its use of any Letter of Credit; provided, however,
that this assumption is not intended to, and shall not, preclude the Borrowers’
pursuing such rights and remedies as it may have against the beneficiary or
transferee at law or under any other agreement. 
None of the L/C Issuer, the Administrative Agent, any of their
respective Related Parties nor any correspondent, participant or assignee of
the L/C Issuer shall be liable or responsible for any of the matters described
in clauses (i) through (v) of Section 2.03(e); provided,
however, that anything in such clauses to the contrary notwithstanding,
the Borrowers may 

 

 

have a claim against the L/C
Issuer, and the L/C Issuer may be liable to the Borrowers, to the extent, but
only to the extent, of any direct, as opposed to consequential or exemplary,
damages suffered by the Borrowers which the Borrowers prove were caused by the
L/C Issuer’s willful misconduct or gross negligence or the L/C Issuer’s willful
failure to pay under any Letter of Credit after the presentation to it by the
beneficiary of a sight draft and certificate(s) strictly complying with
the terms and conditions of a Letter of Credit. 
In furtherance and not in limitation of the foregoing, the L/C Issuer
may accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary (or the L/C Issuer may refuse to accept and make
payment upon such documents if such documents are not in strict compliance with
the terms of such Letter of Credit).

 

(g)                                 Cash Collateral.  Upon the request of the Administrative Agent,
(i) if the L/C Issuer has honored any full or partial drawing request
under any Letter of Credit and such drawing has resulted in an L/C Borrowing,
or (ii) if, as of the Letter of Credit Expiration Date, any L/C Obligation
for any reason remains outstanding, the Borrowers shall, in each case,
immediately Cash Collateralize the then Outstanding Amount of all L/C
Obligations.  Sections 2.05 and 8.02(c) set
forth certain additional requirements to deliver Cash Collateral
hereunder.  For purposes of this Section 2.03,
Section 2.05 and Section 8.02(c), “Cash
Collateralize” means to pledge and deposit with or deliver to the
Administrative Agent, for the benefit of the L/C Issuer and the Lenders, as
collateral for the L/C Obligations, cash or deposit account balances in an
amount equal to 103% of the Outstanding Amount of all L/C Obligations, pursuant
to documentation in form and substance satisfactory to the Administrative Agent
and the L/C Issuer (which documents are hereby consented to by the
Lenders).  Derivatives of such term have
corresponding meanings.  The Borrowers
hereby grant to the Collateral Agent a security interest in all such cash, deposit
accounts and all balances therein and all proceeds of the foregoing.  Cash Collateral shall be maintained in
blocked, non-interest bearing deposit accounts at Bank of America except that
Permitted Investments of the type listed in clauses (a) through (f) of
the definition thereof may be made at the request of the Lead Borrower at the
option and in the sole discretion of the Collateral Agent (and at the Borrowers’
risk and expense); interest or profits, if any, on such investments shall
accumulate in such account.  If at any
time the Administrative Agent determines that any funds held as Cash Collateral
are subject to any right or claim of any Person other than the Administrative
Agent or that the total amount of such funds is less than the aggregate Outstanding
Amount of all L/C Obligations, the Borrowers will, forthwith upon demand by the
Administrative Agent, pay to the Administrative Agent, as additional funds to
be deposited as Cash Collateral, an amount equal to the excess of (x) such
aggregate Outstanding Amount over (y) the total amount of funds, if any,
then held as Cash Collateral that the Administrative Agent determines to be
free and clear of any such right and claim. 
Upon the drawing of any Letter of Credit for which funds are on deposit
as Cash Collateral, such funds shall be applied, to the extent permitted under
applicable Laws, to reimburse the L/C Issuer and, to the extent not so applied,
shall thereafter be applied to satisfy other Obligations.

 

(h)                                 Applicability
of ISP and UCP.  Unless
otherwise expressly agreed by the L/C Issuer and the Lead Borrower when a
Letter of Credit is issued (including any such agreement applicable to an
Existing Letter of Credit), (i) the rules of the ISP shall apply to
each Standby Letter of Credit, and (ii) the rules of the Uniform
Customs and Practice for Documentary Credits, as most recently published by the
International Chamber of Commerce at the time of issuance shall apply to each
Commercial Letter of Credit.

 

(i)                                     Letter of
Credit Fees.  The
Borrowers shall pay to the Administrative Agent for the account of each Lender
in accordance with its Applicable Percentage a Letter of Credit fee (the “Letter
of Credit Fee”) for each Letter of Credit equal to the Applicable Rate times
the daily Stated Amount under each such Letter of Credit (whether or not such
maximum amount is then in effect under 

 

 

such Letter of Credit).  For purposes of computing the daily amount
available to be drawn under any Letter of Credit, the amount of the Letter of
Credit shall be determined in accordance with Section 1.06.  Letter of Credit Fees shall be (i) due
and payable on the tenth Business Day after the end of each March, June, September and
December, commencing with the first such date to occur after the issuance of
such Letter of Credit, on the Letter of Credit Expiration Date and thereafter
on demand, and (ii) computed on a quarterly basis in arrears.  If there is any change in the Applicable Rate
during any quarter, the daily amount available to be drawn under each Letter of
Credit shall be computed and multiplied by the Applicable Rate separately for
each period during such quarter that such Applicable Rate was in effect.  Notwithstanding anything to the contrary
contained herein, while any Event of Default exists, the Administrative Agent
may, and upon the request of the Required Lenders shall, notify the Lead
Borrower that all Letter of Credit Fees shall accrue at the Default Rate and
thereafter such Letter of Credit Fees shall accrue at the Default Rate to the
fullest extent permitted by applicable Laws.

 

(j)                                     Fronting Fee
and Documentary and Processing Charges Payable to L/C Issuer.  The Borrowers shall pay directly to the L/C
Issuer for its own account a fronting fee with respect to each Letter of
Credit, at a rate equal to 0.125% per annum, computed on the daily amount
available to be drawn under such Letter of Credit and payable on a quarterly
basis in arrears.  Such fronting fees
shall be due and payable on the tenth Business Day after the end of each March,
June, September and December, commencing with the first such date to occur
after the issuance of such Letter of Credit, on the Letter of Credit Expiration
Date and thereafter on demand.   For
purposes of computing the daily amount available to be drawn under any Letter
of Credit, the amount of the Letter of Credit shall be determined in accordance
with Section 1.06.  In
addition, the Borrowers shall pay directly to the L/C Issuer for its own
account the customary issuance, presentation, amendment and other processing
fees, and other standard costs and charges, of the L/C Issuer relating to
letters of credit as from time to time in effect.  Such customary fees and standard costs and
charges are due and payable on demand and are nonrefundable.

 

(k)                                  Conflict with
Issuer Documents.  In the
event of any conflict between the terms hereof and the terms of any Issuer
Document, the terms hereof shall control.

 

2.04                                                Swing Line Loans.

 

(a)                                  The Swing Line.  Subject to the terms and conditions set forth
herein, the Swing Line Lender agrees, in reliance upon the agreements of the
other Lenders set forth in this Section 2.04, to make loans (each
such loan, a “Swing Line Loan”) to the Lead Borrower from time to time
on any Business Day during the Availability Period in an aggregate amount not
to exceed at any time outstanding the amount of the Swing Line Sublimit,
notwithstanding the fact that such Swing Line Loans, when aggregated with the
Applicable Percentage of the Outstanding Amount of Committed Loans and L/C
Obligations of the Lender acting as Swing Line Lender, may exceed the amount of
such Lender’s Commitment; provided, however, that after giving
effect to any Swing Line Loan, (i) the Total Outstandings shall not exceed
the lesser of (A) the Aggregate Commitments, or (B) the Borrowing
Base, and (ii) the aggregate Outstanding Amount of the Committed Loans of
any Lender at such time, plus such Lender’s Applicable Percentage of the
Outstanding Amount of all L/C Obligations at such time, plus such Lender’s
Applicable Percentage of the Outstanding Amount of all Swing Line Loans at such
time shall not exceed such Lender’s Commitment, and provided, further,
that the Borrowers shall not use the proceeds of any Swing Line Loan to
refinance any outstanding Swing Line Loan. 
Within the foregoing limits, and subject to the other terms and
conditions hereof, the Borrowers may borrow under this Section 2.04,
prepay under Section 2.05, and reborrow under this Section 2.04.  Each Swing Line Loan shall bear interest only
at a rate based on the Prime Rate. 
Immediately upon the making of a Swing Line Loan, each Lender shall be
deemed to, and hereby irrevocably and unconditionally agrees to, purchase from
the 

 

 

Swing Line Lender a risk
participation in such Swing Line Loan in an amount equal to the product of such
Lender’s Applicable Percentage times the amount of such Swing Line Loan.

 

(b)                                 Borrowing
Procedures.  Each Swing
Line Borrowing shall be made upon the Lead Borrower’s irrevocable notice to the
Swing Line Lender and the Administrative Agent, which may be given by
telephone. Each such notice must be received by the Swing Line Lender and the
Administrative Agent not later than 1:00 p.m. on the requested borrowing
date, and shall specify (i) the amount to be borrowed, which shall be a
minimum of $100,000, and (ii) the requested borrowing date, which shall be
a Business Day.  Each such telephonic
notice must be confirmed promptly by delivery to the Swing Line Lender and the
Administrative Agent of a written Swing Line Loan Notice, appropriately completed
and signed by a Responsible Officer of the Lead Borrower.  Promptly after receipt by the Swing Line
Lender of any telephonic Swing Line Loan Notice, the Swing Line Lender will
confirm with the Administrative Agent (by telephone or in writing) that the
Administrative Agent has also received such Swing Line Loan Notice and, if not,
the Swing Line Lender will notify the Administrative Agent (by telephone or in
writing) of the contents thereof.  Unless
the Swing Line Lender has received notice (by telephone or in writing) from the
Administrative Agent at the request of the Required Lenders prior to 2:00 p.m.
on the date of the proposed Swing Line Borrowing (A) directing the Swing
Line Lender not to make such Swing Line Loan as a result of the limitations set
forth in the proviso to the first sentence of Section 2.04(a), or (B) that
one or more of the applicable conditions specified in Article IV is
not then satisfied, then, subject to the terms and conditions hereof, the Swing
Line Lender may in its discretion, not later than 3:00 p.m. on the
borrowing date specified in such Swing Line Loan Notice, make the amount of its
Swing Line Loan available to the Lead Borrower at its office by crediting the
account of the Lead Borrower on the books of the Swing Line Lender in
immediately available funds.

 

(c)                                  Refinancing of
Swing Line Loans.

 

(i)                                     Subject to the provisions of Section 2.14,
the Swing Line Lender at any time in its sole and absolute discretion may
request, on behalf of the Borrowers (which hereby irrevocably authorize the
Swing Line Lender to so request on their behalf), that each Lender make a Prime
Rate Loan in an amount equal to such Lender’s Applicable Percentage of the
amount of Swing Line Loans then outstanding. 
Such request shall be made in writing (which written request shall be
deemed to be a Committed Loan Notice for purposes hereof) and in accordance
with the requirements of Section 2.02, without regard to the
minimum and multiples specified therein for the principal amount of Prime Rate
Loans, but subject to the unutilized portion of the Aggregate Commitments and
the conditions set forth in Section 4.02.  The Swing Line Lender shall furnish the Lead
Borrower with a copy of the applicable Committed Loan Notice promptly after
delivering such notice to the Administrative Agent.  Each Lender shall make an amount equal to its
Applicable Percentage of the amount specified in such Committed Loan Notice
available to the Administrative Agent in immediately available funds for the
account of the Swing Line Lender at the Administrative Agent’s Office not later
than 1:00 p.m. on the day specified in such Committed Loan Notice,
whereupon, subject to Section 2.04(c)(ii), each Lender that so
makes funds available shall be deemed to have made a Prime Rate Loan to the
Borrowers in such amount.  The
Administrative Agent shall remit the funds so received to the Swing Line
Lender.

 

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

 

 

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

 

(iv)                              Each Lender’s obligation to make Committed Loans or to purchase and
fund risk participations in Swing Line Loans pursuant to this Section 2.04(c) shall
be absolute and unconditional and shall not be affected by any circumstance,
including (A) any setoff, counterclaim, recoupment, defense or other right
which such Lender may have against the Swing Line Lender, the Borrowers or any
other Person for any reason whatsoever, (B) the occurrence or continuance
of a Default or an Event of Default, or (C) any other occurrence, event or
condition, whether or not similar to any of the foregoing; provided, however,
that each Lender’s obligation to make Committed Loans pursuant to this Section 2.04(c) is
subject to the conditions set forth in Section 4.02.  No such funding of risk participations shall
relieve or otherwise impair the obligation of the Borrowers to repay Swing Line
Loans, together with interest as provided herein.

 

(d)                                 Repayment of
Participations.

 

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

 

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

 

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

 

 

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

 

2.05                                                Prepayments.

 

(a)                                  The Borrowers
may, upon irrevocable notice from the Lead Borrower to the Administrative
Agent, at any time or from time to time voluntarily prepay Committed Loans in
whole or in part without premium or penalty; provided that (i) such
notice must be received by the Administrative Agent not later than 11:00 a.m.
(A) three (3) Business Days prior to any date of prepayment of LIBO
Rate Loans and (B) on the date of prepayment of Prime Rate Loans; and (ii) any
prepayment of LIBO Rate Loans shall be in a principal amount of $1,000,000 or a
whole multiple of $1,000,000 in excess thereof; or, if less, the entire
principal amount thereof then outstanding. 
Each such notice shall specify the date and amount of such prepayment
and the Type(s) of Loans to be prepaid and, if LIBO Rate Loans, the
Interest Period(s) of such Loans. 
The Administrative Agent will promptly notify each Lender of its receipt
of each such notice, and of the amount of such Lender’s Applicable Percentage
of such prepayment.  If such notice is
given by the Lead Borrower, the Borrowers shall make such prepayment and the
payment amount specified in such notice shall be due and payable on the date
specified therein.  Any prepayment of a
LIBO Rate Loan shall be accompanied by all accrued interest on the amount
prepaid, together with any additional amounts required pursuant to Section 3.05.  Each such prepayment shall be applied to the
Committed Loans of the Lenders in accordance with their respective Applicable
Percentages.

 

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

 

(c)                                  If for any
reason the Total Outstandings at any time exceed the lesser of the Aggregate
Commitments or the Borrowing Base, each as then in effect, the Borrowers shall
immediately prepay Loans, Swing Line Loans and L/C Borrowings and/or Cash
Collateralize the L/C Obligations (other than L/C Borrowings) in an aggregate
amount equal to such excess; provided, however, that the
Borrowers shall not be required to Cash Collateralize the L/C Obligations
pursuant to this Section 2.05(c) unless after the prepayment
in full of the Loans the Total Outstandings exceed the lesser of the Aggregate
Commitments or the Borrowing Base, each as then in effect.  Nothing in this clause (c) shall limit
the ability of the Administrative Agent to make Permitted Overadvances as set
forth elsewhere in this Agreement.

 

(d)                                 The Borrower
shall prepay the Loans and Cash Collateralize the L/C Obligations in accordance
with the provisions of Section 6.13 hereof.

 

(e)                                  The Borrowers
shall prepay the Loans and Cash Collateralize the L/C Obligations in an amount
equal to the Net Proceeds received by a Loan Party on account of a Prepayment
Event, irrespective of whether a Liquidity Event then exists and is continuing;
provided that, except as provided for in Section 2.06 below, such prepayments shall not reduce the
Aggregate Commitments.

 

 

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

 

2.06                                                            Termination or Reduction of Commitments.

 

(a)                                  The Borrowers may, upon
irrevocable notice from the Lead Borrower to the Administrative Agent,
terminate the Aggregate Commitments, the Letter of Credit Sublimit or the Swing
Line Sublimit or from time to time permanently reduce the Aggregate
Commitments, the Letter of Credit Sublimit or the Swing Line Sublimit; provided
that (i) any such notice shall be received by the Administrative Agent not
later than 11:00 a.m. five Business Days prior to the date of termination
or reduction, (ii) any such partial reduction shall be in an aggregate
amount of $10,000,000 or any whole multiple of $1,000,000 in excess thereof, (iii) the
Borrowers shall not terminate or reduce (A) the Aggregate Commitments if,
after giving effect thereto and to any concurrent prepayments hereunder, the
Total Outstandings would exceed the Aggregate Commitments, (B) the Letter
of Credit Sublimit if, after giving effect thereto, the Outstanding Amount of
L/C Obligations not fully Cash Collateralized hereunder would exceed the Letter
of Credit Sublimit, and (C) the Swing Line Sublimit if, after giving
effect thereto, and to any concurrent payments hereunder, the Outstanding
Amount of Swing Line Loans hereunder would exceed the Swing Line Sublimit.

 

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

 

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

 

2.07                                                Repayment of Loans.

 

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

 

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

 

 

2.08                                                Interest.

 

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

 

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

 

(ii)                                  If any other Event of Default exists, then
the Administrative Agent may, and upon the request of the Required Lenders
shall, notify the Lead Borrower that all outstanding Obligations shall
thereafter bear interest at a fluctuating interest rate per annum at all times
equal to the Default Rate and thereafter such Obligations shall bear interest
at the Default Rate to the fullest extent permitted by applicable Laws.

 

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

 

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

 

2.09                                                Fees.  In addition to certain fees described in subsections (i) and
(j) of Section 2.03:

 

(a)                                  Commitment Fee.  The Borrowers shall pay to the Administrative
Agent for the account of each Lender, in accordance with its Applicable Percentage,
a commitment fee, payable quarterly in arrears on the first Business Day of
each Fiscal Quarter, commencing with the first such date to occur after the
Closing Date, and on the last day of the Availability Period equal to the
Applicable Commitment Fee Percentage times the average daily amount by
which the Aggregate Commitments exceeded the sum of the Total Outstandings, in
each case calculated on a per annum basis for the actual number of days elapsed
in the Fiscal Quarter ending on the day immediately preceding the related
payment date (or, if applicable, the actual number of days in the Fiscal
Quarter to and including last day of the Availability Period).  The commitment fee shall accrue at all times
during the Availability Period, including at any time during which one or more
of the conditions in Article IV is not met.

 

(b)                                 Early
Termination Fee.  In the
event that any
Commitment Termination Event occurs, the Borrowers shall pay to the
Administrative Agent, for the ratable benefit of the Lenders, a fee  (the “Early Termination Fee”), equal to the amount of any such
termination or reduction of the Aggregate Commitments multiplied by (i) 1.0%
if such Commitment Termination Event occurs prior to the second anniversary of
the Closing Date and (ii) 0.5% if such Commitment Termination Event occurs
on or after the second but prior to the third anniversary of the Closing Date.  All parties to this Agreement agree and
acknowledge that the Lenders will have suffered damages on account of the early
termination or reduction of the Aggregate Commitments and that, in view of the
difficulty in ascertaining the amount of

 

 

such
damages, the Early Termination Fee constitutes reasonable compensation and
liquidated damages to compensate the Lenders on account thereof.

 

(c)                                  Other Fees.  The Borrowers shall pay to the Arranger and
the Administrative Agent for their own respective accounts fees in the amounts
and at the times specified in the Fee Letter. 
Such fees shall be fully earned when paid and shall not be refundable
for any reason whatsoever.

 

2.10                                                Computation of Interest and Fees. All computations of interest for Prime Rate Loans when the
Prime Rate is determined by Bank of America’s “prime rate” shall be made on the
basis of a year of 365 or 366 days, as the case may be, and actual days
elapsed.  All other computations of fees
and interest shall be made on the basis of a 360-day year and actual days
elapsed (which results in more fees or interest, as applicable, being paid than
if computed on the basis of a 365-day year). 
Interest shall accrue on each Loan for the day on which the Loan is
made, and shall not accrue on a Loan, or any portion thereof, for the day on
which the Loan or such portion is paid, provided that any Loan that is
repaid on the same day on which it is made shall, subject to Section 2.12(a),
bear interest for one day.  Each
determination by the Administrative Agent of an interest rate or fee hereunder
shall be conclusive and binding for all purposes, absent manifest error.

 

2.11                                                Evidence of Debt.

 

(a)                                  The Credit
Extensions made by each Lender shall be evidenced by one or more accounts or
records maintained by the Administrative Agent (the “Loan Account”) in
the ordinary course of business.  In
addition, each Lender may record in such Lender’s internal records, an
appropriate notation evidencing the date and amount of each Loan from such
Lender, each payment and prepayment of principal of any such Loan, and each
payment of interest, fees and other amounts due in connection with the
Obligations due to such Lender.  The
accounts or records maintained by the Administrative Agent and each Lender
shall be conclusive absent manifest error of the amount of the Credit
Extensions made by the Lenders to the Borrowers and the interest and payments
thereon.  Any failure to so record or any
error in doing so shall not, however, limit or otherwise affect the obligation
of the Borrowers hereunder to pay any amount owing with respect to the
Obligations.  In the event of any
conflict between the accounts and records maintained by any Lender and the
accounts and records of the Administrative Agent in respect of such matters,
the accounts and records of the Administrative Agent shall control in the
absence of manifest error.  Upon the
request of any Lender made through the Administrative Agent, the Borrowers
shall execute and deliver to such Lender (through the Administrative Agent) a
Note, which shall evidence such Lender’s Loans in addition to such accounts or
records.  Each Lender may attach
schedules to its Note and endorse thereon the date, Type (if applicable),
amount and maturity of its Loans and payments with respect thereto.  Any failure to so attach or endorse, or any
error in doing so, shall not, however, limit or otherwise affect the obligation
of the Borrowers hereunder to pay any amount owing with respect to the
Obligations.  Upon receipt of an
affidavit of a Lender as to the loss, theft, destruction or mutilation of such
Lender’s Note and upon cancellation of such Note, the Borrowers will issue, in
lieu thereof, a replacement Note in favor of such Lender, in the same principal
amount thereof and otherwise of like tenor.

 

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

 

 

2.12                                                Payments Generally; Administrative Agent’s
Clawback.

 

(a)                                  General.  All payments to be made by the Borrowers
shall be made without condition or deduction for any counterclaim, defense,
recoupment or setoff.  Except as
otherwise expressly provided herein, all payments by the Borrowers hereunder
shall be made to the Administrative Agent, for the account of the respective
Lenders to which such payment is owed, at the Administrative Agent’s Office in
Dollars and in immediately available funds not later than 2:30 p.m. on the
date specified herein.  The
Administrative Agent will promptly distribute to each Lender its Applicable
Percentage (or other applicable share as provided herein) of such payment in
like funds as received by wire transfer to such Lender’s Lending Office.  All payments received by the Administrative
Agent after 2:30 p.m. shall, at the option of the Administrative Agent, be
deemed received on the next succeeding Business Day and any applicable interest
or fee shall continue to accrue.  If any
payment to be made by the Borrowers shall come due on a day other than a
Business Day, payment shall be made on the next following Business Day, and
such extension of time shall be reflected in computing interest or fees, as the
case may be.

 

(b)                                 (i)                                     Funding by
Lenders; Presumption by Administrative Agent.  Unless the Administrative Agent shall have
received notice from a Lender prior to the proposed date of any Borrowing of
LIBO Rate Loans (or in the case of any Borrowing of Prime Rate Loans, prior to
12:00 noon on the date of such Borrowing) that such Lender will not make
available to the Administrative Agent such Lender’s share of such Borrowing,
the Administrative Agent may assume that such Lender has made such share
available on such date in accordance with Section 2.02 (or in the
case of a Borrowing of Prime Rate Loans, that such Lender has made such share
available in accordance with and at the time required by Section 2.02)
and may, in reliance upon such assumption, make available to the Borrowers a
corresponding amount.  In such event, if
a Lender has not in fact made its share of the applicable Committed Borrowing
available to the Administrative Agent, then the applicable Lender and the
Borrowers severally agree to pay to the Administrative Agent forthwith on
demand such corresponding amount in immediately available funds with interest
thereon, for each day from and including the date such amount is made available
to the Borrowers to but excluding the date of payment to the Administrative
Agent, at (A) in the case of a payment to be made by such Lender, the
greater of the Federal Funds Rate and a rate determined by the Administrative
Agent in accordance with banking industry rules on interbank compensation
plus any administrative processing or similar fees customarily charged by the
Administrative Agent in connection with the foregoing, and (B) in the case
of a payment to be made by the Borrowers, the interest rate applicable to Prime
Rate Loans.  If the Borrowers and such
Lender shall pay such interest to the Administrative Agent for the same or an
overlapping period, the Administrative Agent shall promptly remit to the
Borrowers the amount of such interest paid by the Borrowers for such
period.  If such Lender pays its share of
the applicable Committed Borrowing to the Administrative Agent, then the amount
so paid shall constitute such Lender’s Committed Loan included in such
Committed Borrowing.  Any payment by the
Borrowers shall be without prejudice to any claim the Borrowers may have
against a Lender that shall have failed to make such payment to the
Administrative Agent.

 

(ii)                                  Payments by
Borrowers; Presumptions by Administrative Agent.  Unless the Administrative Agent shall have
received notice from the Lead Borrower prior to the time at which any payment
is due to the Administrative Agent for the account of the Lenders or the L/C
Issuer hereunder that the Borrowers will not make such payment, the
Administrative Agent may assume that the Borrowers have made such payment on
such date in accordance herewith and may, in reliance upon such assumption,
distribute to the Lenders or the L/C Issuer, as the case may be, the amount
due.  In such event, if the Borrowers
have not in fact made such payment, 

 

 

then
each of the Lenders or the L/C Issuer, as the case may be, severally agrees to
repay to the Administrative Agent forthwith on demand the amount so distributed
to such Lender or the L/C Issuer, in immediately available funds with interest
thereon, for each day from and including the date such amount is distributed to
it to but excluding the date of payment to the Administrative Agent, at the
greater of the Federal Funds Rate and a rate determined by the Administrative
Agent in accordance with banking industry rules on interbank compensation.

 

A notice of the Administrative Agent to any Lender or the Lead Borrower
with respect to any amount owing under this subsection (b) shall be
conclusive, absent manifest error.

 

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

 

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

 

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

 

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

 

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

 

(ii)                                  the provisions of this Section 2.13
shall not be construed to apply to (x) any payment made by the Loan
Parties pursuant to and in accordance with the express terms of this Agreement
or (y) any payment obtained by a Lender as consideration for the
assignment of or

 

 

sale
of a participation in any of its Committed Loans or subparticipations in L/C
Obligations or Swing Line Loans to any assignee or participant, other than to
the Borrowers or any Subsidiary thereof (as to which the provisions of this Section 2.13
shall apply).

 

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

 

2.14                                                Settlement Amongst Lenders.

 

(a)                                  The amount of
each Lender’s Applicable Percentage of outstanding Loans (including outstanding
Swing Line Loans, shall be computed weekly (or more frequently in the
Administrative Agent’s discretion) and shall be adjusted upward or downward
based on all Loans (including Swing Line Loans) and repayments of Loans
(including Swingline Loans) received by the Administrative Agent as of 3:00 p.m.
on the first Business Day (such date, the “Settlement Date”) following
the end of the period specified by the Administrative Agent.

 

(b)                                 The
Administrative Agent shall deliver to each of the Lenders promptly after a
Settlement Date a summary statement of the amount of outstanding Loans for the
period and the amount of repayments received for the period.  As reflected on the summary statement, (i) the
Administrative Agent shall transfer to each Lender its Applicable Percentage of
repayments, and (ii) each Lender shall transfer to the Administrative
Agent (as provided below) or the Administrative Agent shall transfer to each
Lender, such amounts as are necessary to insure that, after giving effect to
all such transfers, the amount of Loans made by each Lender shall be equal to
such Lender’s Applicable Percentage of all Loans outstanding as of such
Settlement Date.  If the summary
statement requires transfers to be made to the Administrative Agent by the
Lenders and is received prior to 1:00 p.m. on a Business Day, such
transfers shall be made in immediately available funds no later than 3:00 p.m.
that day; and, if received after 1:00 p.m., then no later than 3:00 p.m.
on the next Business Day. The obligation of each Lender to transfer such funds
is irrevocable, unconditional and without recourse to or warranty by the
Administrative Agent.  If and to the extent
any Lender shall not have so made its transfer to the Administrative Agent,
such Lender agrees to pay to the Administrative Agent, forthwith on demand such
amount, together with interest thereon, for each day from such date until the
date such amount is paid to the Administrative Agent, equal to the greater of
the Federal Funds Rate and a rate determined by the Administrative Agent in
accordance with banking industry rules on interbank compensation plus any
administrative, processing, or similar fees customarily charged by the
Administrative Agent in connection with the foregoing.

 

2.15                                                Increase in Commitments.

 

(a)                                  Request for
Increase.  Provided no
Default or Event of Default then exists or would arise therefrom, upon notice
to the Administrative Agent (which shall promptly notify the Lenders), the Lead
Borrower may from time to time request an increase in the Aggregate Commitments
by an amount (for all such requests) not exceeding $100,000,000 in the
aggregate; provided that (i) any such request for an increase shall
be in a minimum amount of $25,000,000, and (ii) the Lead Borrower may make
a maximum of four such requests.  At the
time of sending such notice, the Lead Borrower (in consultation with the
Administrative Agent) shall specify the time period within which each Lender is
requested to respond (which shall in no event be less than ten Business Days
from the date of delivery of such notice to the Lenders).

 

 

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

 

(c)                                  Notification by
Administrative Agent; Additional Lenders.  The Administrative Agent shall notify the
Lead Borrower and each Lender of the Lenders’ responses to each request made in
this Section 2.15.  To
achieve the full amount of a requested increase and subject to the approval of
the Administrative Agent, the L/C Issuer and the Swing Line Lender (which
approvals shall not be unreasonably withheld), to the extent that the existing
Lenders decline to increase their Commitments, or decline to increase their
Commitments to the amount requested by the Lead Borrower, the Administrative
Agent or its Affiliates, in consultation with the Lead Borrower, will use its
reasonable efforts to arrange for other Eligible Assignees to become a Lender
hereunder and to issue commitments in an amount equal to the amount of the
increase in the Aggregate Commitments requested by the Lead Borrower and not
accepted by the existing Lenders (and the Lead Borrower may also invite
additional Eligible Assignees to become Lenders) (each such Eligible Assignee
issuing a commitment and becoming a Lender, an “Additional Commitment Lender”),
provided, however, that without the consent of the Administrative Agent, at no
time shall the Commitment of any Additional Commitment Lender be less than
$10,000,000.

 

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

 

(e)                                  Conditions to
Effectiveness of Increase.  As a
condition precedent to such increase, (i) the Lead Borrower shall deliver
to the Administrative Agent a certificate of each Loan Party dated as of the
Increase Effective Date (in sufficient copies for each Lender) signed by a
Responsible Officer of such Loan Party (A) certifying and attaching the
resolutions, if necessary, adopted by such Loan Party approving or consenting
to such Commitment Increase, and (B) in the case of the Borrowers,
certifying that, before and after giving effect to such Commitment Increase, (1) the
representations and warranties contained in Article V and the other
Loan Documents are true and correct on and as of the Increase Effective Date,
except to the extent that such representations and warranties specifically
refer to an earlier date, in which case they are true and correct as of such
earlier date, and except that for purposes of this Section 2.15,
the representations and warranties contained in subsections (a) and (b) of
Section 5.05 shall be deemed to refer to the most recent statements
furnished pursuant to clauses (a) and (b), respectively, of Section 6.01,
(ii) the Borrowers, the Administrative Agent, and any Additional
Commitment Lender shall have executed and delivered a joinder to the Loan
Documents in such form as the Administrative Agent shall reasonably require; (iii) the
Borrowers shall have paid such fees and other compensation to the Additional
Commitment Lenders as the Administrative Agent, the Lead Borrower and such
Additional Commitment Lenders shall agree; (iv) the Borrowers shall have
paid such arrangement fees to the Administrative Agent (or one or more of its
Affiliates, as applicable) as the Lead Borrower and the Administrative Agent or
such Affiliate may agree; (v) the Borrowers shall deliver to the
Administrative Agent and the Lenders an opinion or opinions, in form and
substance reasonably satisfactory to the Administrative Agent, from counsel to
the Borrowers reasonably satisfactory to the Administrative Agent and dated
such date with respect to the Loan Documents and the other documents,

 

 

agreements and instruments
then executed and the transactions contemplated thereby; (vi) the
Borrowers and the Additional Commitment Lender shall have delivered such other
instruments, documents and agreements as the Administrative Agent may
reasonably have requested; and (vii) no Default or Event of Default
exists.  The Borrowers shall prepay any
Committed Loans outstanding on the Increase Effective Date (and pay any
additional amounts required pursuant to Section 3.05) to the extent
necessary to keep the outstanding Committed Loans ratable with any revised
Applicable Percentages arising from any nonratable increase in the Commitments
under this Section 2.15.

 

(f)                                    Terms of
Commitment Increase.  Any
Commitment Increase contemplated by the provisions of this Section 2.15
shall, except as provided in Section 2.15(e)(iii) and (e)(iv),
bear interest and be entitled to fees and other compensation on the same basis
as all other Commitments.

 

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

 

ARTICLE III

TAXES, YIELD PROTECTION AND ILLEGALITY;

APPOINTMENT OF LEAD BORROWER

 

3.01                                                Taxes.

 

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

 

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

 

(c)                                  Indemnification
by the Loan Parties.  The Loan
Parties shall indemnify the Administrative Agent, each Lender and the L/C
Issuer, upon  demand therefor, for the
full amount of any Indemnified Taxes or Other Taxes (including Indemnified
Taxes or Other Taxes imposed or asserted on or attributable to amounts payable
under this Section 3.01) paid by the Administrative Agent, such
Lender or the L/C Issuer, as the case may be, and any penalties, interest and
reasonable expenses arising therefrom or with respect thereto, whether or not
such Indemnified Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority.  A certificate as to the amount of such
payment or liability delivered to the Lead Borrower by a Lender or the L/C
Issuer (with a copy to the Administrative Agent), or by the Administrative
Agent on its own behalf or on behalf of a Lender or the L/C Issuer, shall be
conclusive absent manifest error.

 

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

 

 

Authority evidencing such
payment, a copy of the return reporting such payment or other evidence of such
payment reasonably satisfactory to the Administrative Agent.

 

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

 

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

 

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

 

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

 

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

 

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

 

(f)                                    Treatment of
Certain Refunds.  If the
Administrative Agent, any Lender or the L/C Issuer determines, in its sole
discretion, that it has received a refund of any Taxes or Other Taxes as to
which it has been indemnified by the Borrowers or with respect to which the
Borrowers have paid additional amounts pursuant to this Section 3.01,
it shall pay to the Borrowers an amount equal to such refund (but only to the
extent of indemnity payments made, or additional amounts paid, by the Borrowers
under this Section 3.01 with respect to the Taxes or Other Taxes
giving rise to such refund), net of all out-of-pocket expenses of the
Administrative Agent, such Lender or the L/C Issuer, as the case may be, and
without interest (other than any interest paid by the relevant Governmental
Authority with respect to such refund), provided that the Borrowers,
upon the request of the Administrative Agent, such Lender or the L/C Issuer,
agree to repay the amount paid over to the Borrowers (plus any penalties,
interest or other charges imposed by the relevant Governmental Authority) to
the Administrative Agent, such Lender or 

 

 

the L/C Issuer in the event
the Administrative Agent, such Lender or the L/C Issuer is required to repay
such refund to such Governmental Authority. 
This subsection shall not be construed to require the Administrative
Agent, any Lender or the L/C Issuer to make available its tax returns (or any
other information relating to its taxes that it deems confidential) to the
Borrowers or any other Person.

 

3.02                                                Illegality. 
If any Lender determines that
any Law has made it unlawful, or that any Governmental Authority has asserted
that it is unlawful, for any Lender or its applicable Lending Office to make,
maintain or fund LIBO Rate Loans, or to determine or charge interest rates
based upon the LIBO Rate, or any Governmental Authority has imposed material restrictions
on the authority of such Lender to purchase or sell, or to take deposits of,
Dollars in the London interbank market, then, on notice thereof by such Lender
to the Lead Borrower through the Administrative Agent, any obligation of such
Lender to make or continue LIBO Rate Loans or to convert Prime Rate Loans to
LIBO Rate Loans shall be suspended until such Lender notifies the
Administrative Agent and the Lead Borrower that the circumstances giving rise
to such determination no longer exist. 
Upon receipt of such notice, the Borrowers shall, upon demand from such
Lender (with a copy to the Administrative Agent), prepay or, if applicable,
convert all LIBO Rate Loans of such Lender to Prime Rate Loans, either on the
last day of the Interest Period therefor, if such Lender may lawfully continue
to maintain such LIBO Rate Loans to such day, or immediately, if such Lender
may not lawfully continue to maintain such LIBO Rate Loans.  Upon any such prepayment or conversion, the
Borrowers shall also pay accrued interest on the amount so prepaid or
converted.

 

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

 

3.04                                                Increased Costs; Reserves on LIBO Rate
Loans.

 

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

 

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

 

(ii)                                  subject any Lender or the
L/C Issuer to any tax of any kind whatsoever with respect to this Agreement,
any Letter of Credit, any participation in a Letter of Credit or any LIBO Rate
Loan made by it, or change the basis of taxation of payments to such Lender or
the L/C Issuer in respect thereof (except for Indemnified Taxes or Other Taxes
covered by 

 

 

Section 3.01 and the imposition of, or any change in the
rate of, any Excluded Tax payable by such Lender or the L/C Issuer); or

 

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

 

and the result of any of the foregoing
shall be to increase the cost to such Lender of making or maintaining any LIBO
Rate Loan (or of maintaining its obligation to make any such Loan), or to
increase the cost to such Lender or the L/C Issuer of participating in, issuing
or maintaining any Letter of Credit (or of maintaining its obligation to
participate in or to issue any Letter of Credit), or to reduce the amount of
any sum received or receivable by such Lender or the L/C Issuer hereunder
(whether of principal, interest or any other amount) then, upon request of such
Lender or the L/C Issuer, the Borrowers will pay to such Lender or the L/C
Issuer, as the case may be, such additional amount or amounts as will
compensate such Lender or the L/C Issuer, as the case may be, for such
additional costs incurred or reduction suffered.

 

(b)                                 Capital Requirements.  If any Lender or the L/C Issuer determines
that any Change in Law affecting such Lender or the L/C Issuer or any Lending
Office of such Lender or such Lender’s or the L/C Issuer’s holding company, if
any, regarding capital requirements has or would have the effect of reducing
the rate of return on such Lender’s or the L/C Issuer’s capital or on the
capital of such Lender’s or the L/C Issuer’s holding company, if any, as a
consequence of this Agreement, the Commitments of such Lender or the Loans made
by, or participations in Letters of Credit held by, such Lender, or the Letters
of Credit issued by the L/C Issuer, to a level below that which such Lender or
the L/C Issuer or such Lender’s or the L/C Issuer’s holding company could have
achieved but for such Change in Law (taking into consideration such Lender’s or
the L/C Issuer’s policies and the policies of such Lender’s or the L/C Issuer’s
holding company with respect to capital adequacy), then from time to time the
Borrowers will pay to such Lender or the L/C Issuer, as the case may be, such
additional amount or amounts as will compensate such Lender or the L/C Issuer
or such Lender’s or the L/C Issuer’s holding company for any such reduction
suffered.

 

(c)                                  Certificates
for Reimbursement.  A certificate
of a Lender or the L/C Issuer setting forth the amount or amounts necessary to
compensate such Lender or the L/C Issuer or its holding company, as the case
may be, as specified in subsection (a) or (b) of this Section 3.04
and delivered to the Lead Borrower shall be conclusive absent manifest
error.  The Borrowers shall pay such
Lender or the L/C Issuer, as the case may be, the amount shown as due on any
such certificate within 10 days after receipt thereof.

 

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

 

 

(e)                                  Reserves on
LIBO Rate Loans.  The
Borrowers shall pay to each Lender, as long as such Lender shall be required to
maintain reserves with respect to liabilities or assets consisting of or
including Eurocurrency funds or deposits (currently known as “Eurocurrency
liabilities”), additional interest on the unpaid principal amount of each LIBO
Rate Loan equal to the actual costs of such reserves allocated to such Loan by
such Lender (as determined by such Lender in good faith, which determination
shall be conclusive), which shall be due and payable on each date on which
interest is payable on such Loan, provided the Lead Borrower shall have
received at least 10 days’ prior notice (with a copy to the Administrative
Agent) of such additional interest from such Lender.  If a Lender fails to give notice 10 days
prior to the relevant Interest Payment Date, such additional interest shall be
due and payable 10 days from receipt of such notice.

 

3.05                                                Compensation for Losses.  Upon
demand of any Lender (with a copy to the Administrative Agent) from time to
time, the Borrowers shall promptly compensate such Lender for and hold such
Lender harmless from any loss, cost or expense incurred by it as a result of:

 

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

 

(b)                           any failure by the Borrowers
(for a reason other than the failure of such Lender to make a Loan) to prepay,
borrow, continue or convert any Loan other than a Prime Rate Loan on the date
or in the amount notified by the Lead Borrower; or

 

(c)                            any assignment of a LIBO
Rate Loan on a day other than the last day of the Interest Period therefor as a
result of a request by the Lead Borrower pursuant to Section 10.13;

 

including any loss of anticipated
profits and any loss or expense arising from the liquidation or reemployment of
funds obtained by it to maintain such Loan or from fees payable to terminate
the deposits from which such funds were obtained.  The Borrowers shall also pay any customary
administrative fees charged by such Lender in connection with the foregoing.

 

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

 

3.06                                                Mitigation Obligations; Replacement of
Lenders.

 

(a)                                  Designation of
a Different Lending Office.  If any Lender requests compensation under Section 3.04,
or the Borrowers are required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 3.01,
or if any Lender gives a notice pursuant to Section 3.02, then such
Lender shall use reasonable efforts to designate a different Lending Office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the
judgment of such Lender, such designation or assignment (i) would
eliminate or reduce amounts payable pursuant to Section 3.01 or 3.04,
as the case may be, in the future, or eliminate the need for the notice
pursuant to Section 3.02, as applicable, and (ii) in each
case, would not subject such Lender to any unreimbursed cost or expense and
would not otherwise be disadvantageous to such Lender.

 

 

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

 

3.07                                                Survival. 
All of the Borrowers’
obligations under this Article III shall survive termination of the
Aggregate Commitments and repayment of all other Obligations hereunder.

 

3.08                                                Designation of Lead Borrower as Borrowers’
Agent.

 

(a)                                  Each Borrower
hereby irrevocably designates and appoints the Lead  Borrower as such Borrower’s agent to obtain
Credit Extensions, the proceeds of which shall be available to each Borrower
for such uses as are permitted under this Agreement.  As the disclosed principal for its agent,
each Borrower shall be obligated to each Credit Party on account of Credit
Extensions so made as if made directly by the applicable Credit Party to such
Borrower, notwithstanding the manner by which such Credit Extensions are
recorded on the books and records of the Lead Borrower and of any other
Borrower.  In addition, each Loan Party
other than the Borrowers hereby irrevocably designates and appoints the Lead  Borrower as such Loan Party’s agent to
represent such Loan Party in all respects under this Agreement and the other
Loan Documents.

 

(b)                                 Each Borrower
recognizes that credit available to it hereunder is in excess of and on better
terms than it otherwise could obtain on and for its own account and that one of
the reasons therefor is its joining in the credit facility contemplated herein
with all other Borrowers.  Consequently,
each Borrower hereby assumes and agrees to discharge all Obligations of each of
the other Borrowers.

 

(c)                                  The Lead  Borrower shall act as a conduit for each
Borrower (including itself, as a “Borrower”) on whose behalf the Lead Borrower
has requested a Credit Extension. 
Neither the Administrative Agent nor any other Credit Party shall have
any obligation to see to the application of such proceeds therefrom.

 

ARTICLE IV

CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

 

4.01                                                Conditions of Initial Credit Extension.  The
obligation of the L/C Issuer and each Lender to make its initial Credit
Extension hereunder is subject to satisfaction of the following conditions
precedent:

 

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

 

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

 

(ii)                      a Note executed by the Borrowers in favor of
each Lender requesting a Note;

 

 

(iii)                   such certificates of resolutions or other
action, incumbency certificates and/or other certificates of Responsible
Officers of each Loan Party as the Administrative Agent may require evidencing (A) the
authority of each Loan Party to enter into this Agreement and the other Loan
Documents to which such Loan Party is a party or is to be a party and (B) the
identity, authority and capacity of each Responsible Officer thereof authorized
to act as a Responsible Officer in connection with this Agreement and the other
Loan Documents to which such Loan Party is a party or is to be a party;

 

(iv)                  copies of each Loan Party’s Organization
Documents and such other documents and certifications as the Administrative
Agent may reasonably require to evidence that each Loan Party is duly organized
or formed, and that each Loan Party is validly existing, in good standing and
qualified to engage in business in each jurisdiction where its ownership, lease
or operation of properties or the conduct of its business requires such
qualification, except to the extent that failure to do so could not reasonably
be expected to have a Material Adverse Effect;

 

(v)                     a favorable opinion of Morgan, Lewis &
Bockius LLP, counsel to the Loan Parties, addressed to the Administrative Agent
and each Lender, as to such matters concerning the Loan Parties and the Loan
Documents as the Administrative Agent may reasonably request (including,
without limitation, with respect to enforceability, due authorization,
perfection of the Liens in favor of the Collateral Agent and no lien creation
as a result of the financing);

 

(vi)                  a certificate signed by a Responsible Officer
of the Lead Borrower certifying (A) that the conditions specified in Sections
4.02(a) and (b) have been satisfied, (B) that there has
been no event or circumstance since the Balance Sheet Date that has had or
could be reasonably expected to have, either individually or in the aggregate,
a Material Adverse Effect and (C) either that (1) no consents,
licenses or approvals are required in connection with the execution, delivery
and performance by such Loan Party and the validity against such Loan Party of
the Loan Documents to which it is a party, or (2) that all such consents,
licenses and approvals have been obtained and are in full force and effect;

 

(vii)               evidence that all
insurance required to be maintained pursuant to the Loan Documents and all
endorsements in favor of the Agents required under the Loan Documents have been
obtained and are in effect;

 

(viii)            a payoff letter from
Wachovia Bank, National Association, as agent for the lenders under the
Existing Credit Agreement satisfactory in form and substance to the
Administrative Agent evidencing that the Existing Credit Agreement has been or
concurrently with the Closing Date is being terminated, all obligations
thereunder are being paid in full, and all Liens securing obligations under the
Existing Credit Agreement have been or concurrently with the Closing Date are
being released;

 

(ix)                    a certificate from the chief financial officer
of the Lead Borrower, satisfactory in form and substance to the Administrative
Agent, attesting to the Solvency of the Loan Parties as of the Closing Date
after giving effect to the transactions contemplated hereby;

 

 

(x)                       the Security Documents, each duly executed by
the applicable Loan Parties;

 

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

 

(xii)                 (A) an appraisal (based on net
liquidation value) by a third party appraiser acceptable to the Collateral
Agent of all Inventory of the Borrowers, the results of which are satisfactory
to the Collateral Agent, it being acknowledged that this condition has been
satisfied, (B) a written report prepared for the Collateral Agent
regarding the results of a commercial finance examination of the Loan Parties,
which shall be satisfactory to the Collateral Agent and (C) other due
diligence materials (including, without limitation, with respect to the Loan
Parties’ and certain of their Affiliates’ organizational structure) reasonably
requested by the Administrative Agent;

 

(xiii)              results of searches or other evidence
reasonably satisfactory to the Collateral Agent (in each case dated as of a
date reasonably satisfactory to the Collateral Agent) indicating the absence of
Liens on the assets of the Loan Parties, except for Permitted Encumbrances and
Liens for which termination statements and releases, satisfactions and
discharges of any mortgages, and releases or subordination agreements
satisfactory to the Collateral Agent are being tendered concurrently with such
extension of credit or other arrangements satisfactory to the Collateral Agent
for the delivery of such termination statements and releases, satisfactions and
discharges have been made;

 

(xiv)             duly executed Customs Broker Agreements with
each of the Loan Parties’ customs brokers, freight forwarders or carriers;

 

(xv)                (A) all documents and instruments,
including Uniform Commercial Code financing statements, required by law or
reasonably requested by the Collateral Agent to be filed, registered or
recorded to create or perfect the first priority Liens intended to be created
under the Loan Documents and all such documents and instruments shall have been
so filed, registered or recorded to the satisfaction of the Collateral Agent, (B) the
DDA Notifications, Credit Card Notifications, and Blocked Account Agreements
required pursuant to Section 6.13 hereof, and (C) control
agreements with respect to the Loan Parties’ securities and investment
accounts;

 

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

 

(b)                           After giving effect to (i) the
first funding under the Loans, (ii) any charges to the Loan Account made
in connection with the establishment of the credit facility contemplated hereby
and (iii) all Letters of Credit to be issued at, or immediately subsequent
to, such establishment, Availability shall be not less than $150,000,000.

 

(c)                            The Administrative Agent
shall have received a Borrowing Base Certificate dated the Closing Date,
relating to the month ended on November 2008, and executed by a
Responsible Officer of the Lead Borrower.

 

(d)                           The Administrative Agent
shall be reasonably satisfied that any financial statements delivered to it
fairly present the business and financial condition of the Loan Parties 

 

 

and that there has been no Material Adverse Effect since the date of
the most recent financial information delivered to the Administrative Agent.

 

(e)                            The Administrative Agent
shall have received and be satisfied with (i) a detailed forecast prepared
on a quarterly basis for the period commencing on the Closing Date and ending
in January, 2010, which shall include an Availability model, Consolidated
income statement, balance sheet, and statement of cash flow, by quarter, each
prepared in conformity with GAAP and consistent with the Loan Parties’ then
current practices, (ii) a detailed forecast prepared on annual basis for
the period from January, 2010 to the Maturity Date, which shall include an
Availability model, Consolidated income statement, balance sheet, and statement
of cash flow, by year, each prepared in conformity with GAAP and consistent
with the Loan Parties’ then current practices and (iii) such other
information (financial or otherwise) reasonably requested by the Administrative
Agent; it being acknowledged that the conditions in clauses (i) and (ii) above
have been satisfied.

 

(f)                              There shall not be pending
any litigation or other proceeding, the result of which, either individually or
in the aggregate, could reasonably be expected to have a Material Adverse
Effect, other than as set forth on Schedule 5.06.

 

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

 

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

 

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

 

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

 

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

 

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

 

(m)                         The Administrative Agent
shall have received all documentation and other information required by
regulatory authorities under applicable “know your customer” and anti-money
laundering rules and regulations, including without limitation the USA
PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)) (the “Patriot Act”).

 

 

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

 

(o)                           The Closing Date shall have
occurred on or before January 31, 2009. 
The Administrative Agent shall notify the Lead Borrower and the Lenders
of the Closing Date, and such notice shall be conclusive and binding on the
Loan Parties.

 

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

 

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

 

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

 

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

 

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

 

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

 

Each Request for Credit Extension
(other than a Conversion/Continuation Notice requesting only a conversion of
Committed Loans to the other Type or a continuation of LIBO Rate Loans)
submitted by the Lead Borrower shall be deemed to be a representation and
warranty by the Borrowers that the conditions specified in Sections 4.02(a) and
4.02(b) have been satisfied on and as of the date of the applicable
Credit Extension.  The conditions set
forth in this Section 4.02 are for the sole benefit of the Credit Parties
but until the Required Lenders otherwise direct the Administrative Agent to
cease making Committed Loans, the Lenders will fund their Applicable Percentage
of all Loans and L/C Advances and participate in all Swing Line Loans and
Letters of Credit whenever made or issued, which are requested by the Lead
Borrower and which, notwithstanding the failure of the Loan Parties to comply
with the provisions of this Article IV, agreed to by the Administrative
Agent, provided, however, the making of any such Loans or the issuance of any
Letters of Credit shall not be deemed a modification or waiver by 

 

 

any Credit Party of the provisions of
this Article IV on any future occasion or a waiver of any rights of the
Credit Parties as a result of any such failure to comply.

 

ARTICLE V

REPRESENTATIONS AND WARRANTIES

 

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

 

5.01                                                Existence, Qualification and Power.  Each
Loan Party and each Subsidiary thereof (a) is a corporation, limited
liability company, partnership or limited partnership, duly organized or
formed, validly existing and, where applicable, in good standing under the Laws
of the jurisdiction of its incorporation or organization, (b) has all
requisite power and authority and all requisite governmental licenses, permits,
authorizations, consents and approvals to (i) own or lease its assets and
carry on its business and (ii) execute, deliver and perform its
obligations under the Loan Documents to which it is a party, and (c) is
duly qualified and is licensed and, where applicable, in good standing under
the Laws of each jurisdiction where its ownership, lease or operation of
properties or the conduct of its business requires such qualification or
license; except in each case referred to in clause (b)(i) or (c), to the
extent that failure to do so could not reasonably be expected to have a
Material Adverse Effect.  Schedule 5.01
annexed hereto sets forth, as of the Closing Date, each Loan Party’s name as it
appears in official filings in its state of incorporation or organization, its
state of incorporation or organization, organization type, organization number,
if any, issued by its state of incorporation or organization, and its federal
employer identification number.

 

5.02                                                Authorization; No Contravention.  The
execution, delivery and performance by each Loan Party of each Loan Document to
which such Person is or is to be a party, has been duly authorized by all
necessary corporate or other organizational action, and does not and will not (a) contravene
the terms of any of such Person’s Organization Documents; (b) conflict
with or result in any breach, termination, or contravention of, or constitute a
default under, or require any payment to be made under (i) any Material
Contract or any Material Indebtedness to which such Person is a party or
affecting such Person or the properties of such Person or any of its
Subsidiaries or (ii) any order, injunction, writ or decree of any
Governmental Authority or any arbitral award to which such Person or its
property is subject; (c) result in or require the creation of any Lien
upon any asset of any Loan Party (other than Liens in favor of the Collateral
Agent under the Security Documents); or (d) violate any Law.

 

5.03                                                Governmental Authorization; Other
Consents.  No approval, consent, exemption, authorization, or other
action by, or notice to, or filing with, any Governmental Authority or any
other Person is necessary or required in connection with the execution,
delivery or performance by, or enforcement against, any Loan Party of this
Agreement or any other Loan Document, except for (a) the perfection or
maintenance of the Liens created under the Security Documents (including the
first priority nature thereof) or (b) such
as have been obtained or made and are in full force and effect.

 

5.04                                                Binding Effect.  This
Agreement has been, and each other Loan Document, when delivered, will have
been, duly executed and delivered by each Loan Party that is party
thereto.  This Agreement constitutes, and
each other Loan Document when so delivered will constitute, a legal, valid and
binding obligation of such Loan Party, enforceable against each Loan Party that
is party thereto in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, 

 

 

moratorium or other laws affecting
creditors’ rights generally and subject to general principles of equity,
regardless of whether considered in a proceeding in equity or at law.

 

5.05                                                Financial
Statements; No Material Adverse Effect.

 

(a)                                  The Audited
Financial Statements (i) were prepared in accordance with GAAP
consistently applied throughout the period covered thereby, except as otherwise
expressly noted therein; and (ii) fairly present the financial condition
of the Lead Borrower and its Subsidiaries as of the date thereof and their
results of operations for the period covered thereby in accordance with GAAP
consistently applied throughout the period covered thereby, except as otherwise
expressly noted therein.

 

(b)                                 The unaudited
Consolidated balance sheet of the Lead Borrower and its Subsidiaries dated as
of the Balance Sheet Date, and the related Consolidated statements of income or
operations, Shareholders’ Equity and cash flows for the fiscal quarter ended on
that date (i) were prepared in accordance with GAAP consistently applied
throughout the period covered thereby, except as otherwise expressly noted
therein, and (ii) fairly present the financial condition of the Lead
Borrower and its Subsidiaries as of the date thereof and their results of
operations for the period covered thereby, subject to normal year-end audit
adjustments.

 

(c)                                  Since the
Balance Sheet Date, there has been no event or circumstance, either
individually or in the aggregate, that has had or could reasonably be expected
to have a Material Adverse Effect.

 

(d)                                 To the best
knowledge of the Lead Borrower, except as disclosed on Schedule 5.05, no
Internal Control Event exists or has occurred since the date of the Audited
Financial Statements that has resulted in or could reasonably be expected to
result in a misstatement in any material respect, in any financial information
delivered or to be delivered to the Administrative Agent or the Lenders, of (i) covenant
compliance calculations provided hereunder or (ii) the assets, liabilities,
financial condition or results of operations of the Lead Borrower and its
Subsidiaries on a Consolidated basis.

 

(e)                                  The
Consolidated forecasted balance sheet and statements of income and cash flows
of the Lead Borrower and its Subsidiaries delivered pursuant to Section 4.01(e) and
Section 6.01(d) were prepared in good faith on the basis of
the assumptions stated therein, which assumptions were fair in light of the
conditions existing at the time of delivery of such forecasts, and represented,
at the time of delivery, the Loan Parties’ best estimate of its future
financial performance.

 

5.06                                                Litigation. 
There are no actions, suits,
proceedings, claims or disputes pending or, to the knowledge of the Loan
Parties after due and diligent investigation, threatened or contemplated, at
law, in equity, in arbitration or before any Governmental Authority, by or
against any Loan Party or any of its Subsidiaries or against any of its
properties or revenues that (a) purport to affect or pertain to this
Agreement or any other Loan Document, or any of the transactions contemplated
hereby, or (b) except as specifically disclosed in Schedule 5.06,
either individually or in the aggregate, if determined adversely, could
reasonably be expected to have a Material Adverse Effect.

 

5.07                                                No Default.  No Loan Party or any Subsidiary is in default
under or with respect to, or party to, any Material Contract or any Material
Indebtedness.  No Default has occurred
and is continuing or would result from the consummation of the transactions
contemplated by this Agreement or any other Loan Document.

 

 

5.08                                                Ownership
of Property; Liens.  

 

(a)                                  Each of the
Loan Parties and each Subsidiary thereof has good fee simple title to, or valid
leasehold interests in, all real property necessary or used in the ordinary
conduct of its business, subject to any Permitted Encumbrances and except for
such defects in title as could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.  Each of the Loan Parties and each Subsidiary
has good and marketable title to, valid leasehold interests in, or valid
licenses to use all personal property and assets material to the ordinary
conduct of its business, subject to any Permitted Encumbrances and except, as
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.

 

(b)                                 Schedule
5.08(b)(1) sets forth, as of the Closing Date, the
address (including street address, county and state) of all Real Estate that is
owned by the Loan Parties, together with a list of the holders of any mortgage
Lien thereon, the maximum principal amount secured thereby, and the maturity
date thereof.  Schedule 5.08(b)(2) sets
forth the address (including street address, county and state) of all Leases of
Real Estate of the Loan Parties, together with a list of the lessor and its
contact information with respect to each such Lease as of the Closing
Date.  Each of such Leases is in full
force and effect and the Loan Parties are not in default of the terms thereof,
except, in each case, as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

 

(c)                                  Schedule 7.01 sets forth a
complete and accurate list of all Liens on the property or assets of each Loan
Party and each of its Subsidiaries, showing as of the date hereof the
lienholder thereof, the principal amount of the obligations secured thereby and
the property or assets of such Loan Party or such Subsidiary subject
thereto.  The property of each Loan Party
and each of its Subsidiaries is subject to no Liens, other than Liens set forth
on Schedule 7.01.

 

(d)                                 Schedule 7.02 sets forth a
complete and accurate list of all Investments held by any Loan Party or any
Subsidiary of a Loan Party on the date hereof, showing as of the date hereof
the amount, obligor or issuer and maturity, if any, thereof.

 

(e)                                  Schedule 7.03 sets forth a
complete and accurate list of all Indebtedness of each Loan Party or any
Subsidiary of a Loan Party (other than intercompany Indebtedness) on the date
hereof, showing as of the date hereof the amount, obligor or issuer and
maturity thereof.

 

5.09                                                Environmental
Compliance.

 

(a)                            No Loan Party or any
Subsidiary thereof (i) has failed to comply with any Environmental Law or
to obtain, maintain or comply with any permit, license or other approval
required under any Environmental Law, (ii) has become subject to any
Environmental Liability, (iii) has received notice of any claim with
respect to any Environmental Liability or (iv) knows of any basis for any
Environmental Liability, except, in each case, as could not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(b)                           Except, in each case, as
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect (i) none of the real properties currently or
formerly owned or operated by any Loan Party or any Subsidiary thereof is
listed or proposed for listing on the NPL or on the CERCLIS or any analogous foreign,
state or local list or is adjacent to any such property; (ii) there are no
and never have been any underground or above-ground storage tanks or any
surface impoundments, septic tanks, pits, sumps or lagoons in which Hazardous
Materials are being or have been treated, stored or disposed on any property
currently owned or operated by any Loan Party or any Subsidiary thereof or, to
the best of the knowledge of the Loan Parties, on any property formerly owned
or operated by any Loan Party or Subsidiary thereof; (iii) there is no
asbestos or asbestos-containing material on any property 

 

 

currently owned or operated by any Loan Party or Subsidiary thereof;
and (iv) Hazardous Materials have not been released, discharged or
disposed of on any property currently or formerly owned or operated by any Loan
Party or any Subsidiary thereof.

 

(c)                            Except as otherwise set
forth on Schedule 5,09, no Loan Party or any Subsidiary thereof is
undertaking, either individually or together with other potentially responsible
parties, any investigation or assessment or remedial or response action
relating to any actual or threatened release, discharge or disposal of
Hazardous Materials at any site, location or operation, either voluntarily or
pursuant to the order of any Governmental Authority or the requirements of any
Environmental Law; and, except, in each case, as would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect, all
Hazardous Materials generated, used, treated, handled or stored at, or
transported to or from, any property currently or formerly owned or operated by
any Loan Party or any Subsidiary thereof have been disposed of in a manner not
reasonably expected to result in material liability to any Loan Party or any
Subsidiary thereof.

 

5.10                                                Insurance. 
The properties (including,
without limitation, all Collateral) of the Loan Parties and their Subsidiaries
are insured with financially sound and reputable insurance companies which are
not Affiliates of the Loan Parties (other than Colchester Insurance Company),
in such amounts, with such deductibles and covering such risks (including,
without limitation, workmen’s compensation, public liability, business
interruption and property damage insurance) as are customarily carried by
companies engaged in similar businesses and owning similar properties in
localities where the Loan Parties or the applicable Subsidiary operates.  Schedule 5.10 sets forth a description
of all insurance maintained by or on behalf of the Loan Parties as of the
Closing Date. Each insurance policy listed on Schedule 5.10 is in full
force and effect and all premiums in respect thereof that are due and payable
have been paid.

 

5.11                                                Taxes. 
The Loan Parties and their
Subsidiaries have filed all Federal, state and other material tax returns and
reports required to be filed, and have paid all Federal, state and other
material taxes, assessments, fees and other governmental charges levied or
imposed upon them or their properties, income or assets otherwise due and
payable, except those which are being contested in good faith by appropriate
proceedings being diligently conducted, for which adequate reserves have been
provided in accordance with GAAP, as to which Taxes no Lien has been filed and
which contest effectively suspends the collection of the contested obligation
and the enforcement of any Lien securing such obligation.  There is no proposed tax assessment against
any Loan Party or any Subsidiary that would, if made, have a Material Adverse
Effect.  No Loan Party or any Subsidiary
thereof is a party to any tax sharing agreement.

 

5.12                                                ERISA
Compliance.

 

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

 

 

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

 

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

 

5.13                                                Subsidiaries; Equity Interests.  The
Loan Parties have no Subsidiaries other than those specifically disclosed in Part (a) of
Schedule 5.13, which Schedule sets forth the legal name, jurisdiction of
incorporation or formation and authorized Equity Interests of each such
Subsidiary.  All of the outstanding
Equity Interests in such Subsidiaries have been validly issued, are fully paid
and non-assessable and are owned by a Loan Party (or a Subsidiary of a Loan
Party) in the amounts specified on Part (a) of Schedule 5.13
free and clear of all Liens except for those created under the Security
Documents.  There are no outstanding
rights to purchase any Equity Interests in any Subsidiary.  The Loan Parties have no equity investments
in any other corporation or entity other than Colchester Insurance
Company.  The copies of the Organization
Documents of each Loan Party and each amendment thereto provided pursuant to Section 4.01
are true and correct copies of each such document, each of which is valid and
in full force and effect.

 

5.14                                                Margin
Regulations; Investment Company Act.

 

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

 

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

 

5.15                                                Disclosure.  Each Loan Party has disclosed to the
Administrative Agent and the Lenders all agreements, instruments and corporate
or other restrictions to which it or any of its Subsidiaries is subject, and
all other matters known to it, that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect.  No report, financial statement, certificate
or other information furnished (whether in writing or orally) by or on behalf
of any Loan Party to the Administrative Agent or any Lender in connection with
the transactions contemplated hereby and the negotiation of this Agreement or
delivered hereunder or under any other Loan 

 

 

Document (in each case, as modified or
supplemented by other information so furnished) contains any material
misstatement of fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided that, with respect to projected financial
information, the Loan Parties represent only that such information was prepared
in good faith based upon assumptions believed to be reasonable at the time.

 

5.16                                                Compliance with Laws.  Each
of the Loan Parties and each Subsidiary is in compliance in all material
respects with the requirements of all Laws and all orders, writs, injunctions
and decrees applicable to it or to its properties, except in such instances in
which (a) such requirement of Law or order, writ, injunction or decree is
being contested in good faith by appropriate proceedings diligently conducted
or (b) the failure to comply therewith, either individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.

 

5.17                                                Intellectual Property; Licenses, Etc.  The
Loan Parties and their Subsidiaries own, or possess the right to use, all of
the Intellectual Property, licenses, permits and other authorizations that are
reasonably necessary for the operation of their respective businesses, without
conflict with the rights of any other Person. 
To the best knowledge of the Lead Borrower, (i) no slogan or other
advertising device, product, process, method, substance, part or other material
now employed, or now contemplated to be employed, by any Loan Party or any
Subsidiary infringes upon any rights held by any other Person, and (ii) 
no claim or litigation regarding any of the foregoing is pending or, to the
best knowledge of the Lead Borrower, threatened, which, either individually or
in the aggregate, could reasonably be expected to have a Material Adverse
Effect.

 

5.18                                                Labor
Matters.

 

There are no strikes, lockouts, slowdowns or other labor disputes
against any Loan Party or any Subsidiary thereof pending or, to the knowledge
of any Loan Party, threatened.  Except as
disclosed in Schedule 5.06, the hours worked by and payments made to
employees of the Loan Parties comply with the Fair Labor Standards Act and any
other applicable federal, state, local or foreign Law dealing with such matters
except to the extent that any such violation could not reasonably be expected
to have a Material Adverse Effect. No Loan Party or any of its Subsidiaries has
incurred any liability or obligation under the Worker Adjustment and Retraining
Act or similar state Law.  All payments
due from any Loan Party and its Subsidiaries, or for which any claim may be
made against any Loan Party, on account of wages and employee health and
welfare insurance and other benefits, have been paid or properly accrued in
accordance with GAAP as a liability on the books of such Loan Party.  No Loan Party or any Subsidiary is a party to
or bound by any collective bargaining agreement, management agreement or any
similar plan, agreement or arrangement. There are no representation proceedings
pending or, to any Loan Party’s knowledge, threatened to be filed with the
National Labor Relations Board, and no labor organization or group of employees
of any Loan Party or any Subsidiary has made a pending demand for recognition.
Except as disclosed in Schedule 5.06, there are no complaints, unfair
labor practice charges, grievances, arbitrations, unfair employment practices
charges or any other claims or complaints against any Loan Party or any
Subsidiary pending or, to the knowledge of any Loan Party, threatened to be
filed with any Governmental Authority or arbitrator based on, arising out of,
in connection with, or otherwise relating to the employment or termination of
employment of any employee of any Loan Party or any of its Subsidiaries, except
to the extent such complaints, unfair labor practice charges, grievances,
arbitrations, unfair employment practices charges or any other claims or
complaints would not reasonably be expected to have a Material Adverse
Effect.  The consummation of the
transactions contemplated by the Loan Documents will not give rise to any right
of termination or right of renegotiation on the part of any union under any
collective bargaining agreement to which any Loan Party or any of its
Subsidiaries is bound.

 

 

5.19                                                Security Documents.

 

(a)                                  The Security
Documents create in favor of the Collateral Agent, for the benefit of the
Secured Parties referred to therein, a legal, valid, continuing and enforceable
security interest in the Collateral (as defined in the Security Agreement), the
enforceability of which is subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors’ rights generally
and subject to general principles of equity, regardless of whether considered
in a proceeding in equity or at law.  The
financing statements, releases and other filings are in appropriate form and
have been or will be filed in the offices specified in the Perfection
Certificate.  Upon such filings and/or
the obtaining of “control,” the Collateral Agent will have a perfected Lien on,
and security interest in, to and under all right, title and interest of the
grantors thereunder in all Collateral that may be perfected by filing,
recording or registering a financing statement or analogous document (including
without limitation the proceeds of such Collateral subject to the limitations
relating to such proceeds in the UCC) or by obtaining control, under the UCC
(in effect on the date this representation is made) in each case prior and
superior in right to any other Person.

 

(b)                                 When the
Security Agreement is filed in the United States Patent and Trademark Office
and the United States Copyright Office and when financing statements, releases
and other filings in appropriate form are filed in the offices specified on the
Perfection Certificate, the Security Agreement shall constitute a fully
perfected Lien on, and security interest in, all right, title and interest of
the applicable Loan Parties in the Intellectual Property (as defined in the Security
Agreement) in which a security interest may be perfected by filing, recording
or registering a security agreement, financing statement or analogous document
in the United States Patent and Trademark Office or the United States Copyright
Office, as applicable, in each case prior and superior in right to any other
Person (it being understood that subsequent recordings in the United States
Patent and Trademark Office and the United States Copyright Office may be
necessary to perfect a Lien on registered trademarks, trademark applications
and copyrights acquired by the Loan Parties after the date hereof).

 

5.20                                                Solvency

 

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

 

5.21                                                Deposit Accounts; Credit Card
Arrangements.

 

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

 

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

 

5.22                                                Brokers.  No broker or finder brought about the
obtaining, making or closing of the Loans or transactions contemplated by the
Loan Documents, and no Loan Party or Affiliate 

 

 

thereof has any obligation to any Person in respect of any finder’s or
brokerage fees in connection therewith.

 

5.23                                                Customer and Trade Relations. 
There exists no actual or, to the knowledge of any Loan Party,
threatened, termination or cancellation of, or any material adverse
modification or change in the business relationship of any Loan Party with any
supplier material to its operations.

 

5.24                                                Material Contracts.  Schedule
5.24 sets forth all Material Contracts to which any Loan Party is a party
or is bound as of the Closing Date.  The
Loan Parties have delivered true, correct and complete copies of such Material
Contracts to the Administrative Agent on or before the date hereof.  The Loan Parties are not in breach or in
default in any material respect of or under any Material Contract and have not
received any notice of the intention of any other party thereto to terminate
any Material Contract.

 

5.25                                                Casualty. 
Neither the businesses nor the properties of any Loan Party or any of
its Subsidiaries are currently affected by any fire, explosion, accident,
strike, lockout or other labor dispute, drought, storm, hail, earthquake,
embargo, act of God or of the public enemy or other casualty (whether or not
covered by insurance) that, either individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.

 

ARTICLE VI

AFFIRMATIVE COVENANTS

 

So long as any Lender shall have any Commitment hereunder, any Loan or
other Obligation hereunder shall remain unpaid or unsatisfied, or any Letter of
Credit shall remain outstanding, the Loan Parties shall, and shall cause each
Subsidiary to:

 

6.01                                                Financial Statements.  Deliver to the Administrative Agent, in form and detail satisfactory to
the Administrative Agent:

 

(a)                            (i)   a copy of each of the Lead Borrower’s Annual
Reports on Form 10-K, as and when filed with the SEC, or (ii) if the
Lead Borrower is at such time no longer obligated to file 34 Act Reports, as
soon as available, but in any event within 90 days after the end of each Fiscal
Year of the Lead Borrower, a Consolidated balance sheet of the Lead Borrower
and its Subsidiaries as at the end of such Fiscal Year, and the related
consolidated statements of income or operations, Shareholders’ Equity and cash
flows for such Fiscal Year, setting forth in each case in comparative form the
figures for the previous Fiscal Year, all in reasonable detail and prepared in
accordance with GAAP, such consolidated statements to be audited and
accompanied by (A) a report and opinion of a Registered Public Accounting
Firm of recognized standing reasonably acceptable to the Administrative Agent,
which report and opinion shall be prepared in accordance with generally
accepted auditing standards and (B) a copy of management’s discussion and
analysis with respect to such financial statements;

 

(b)                           (i)   a copy of each of the Lead Borrower’s
Quarterly Reports on Form 10-Q, as and when filed with the SEC, or (ii) if
the Lead Borrower is at such time no longer obligated to file 34 Act Reports,
as soon as available, but in any event within 45 days after the end of each of
the Fiscal Quarters of each Fiscal Year of the Lead Borrower, a Consolidated
balance sheet of the Lead Borrower and its Subsidiaries as at the end of such
Fiscal Quarter, and the related consolidated statements of income or
operations, Shareholders’ Equity and cash flows for such Fiscal Quarter and for
the portion of the Lead Borrower’s Fiscal Year then ended, setting forth in 

 

 

each case in comparative form the figures for (A) the
corresponding Fiscal Quarter of the previous Fiscal Year and (B) the
corresponding portion of the previous Fiscal Year, all in reasonable detail,
such Consolidated statements to be certified by a Responsible Officer of the
Lead Borrower as fairly presenting the financial condition, results of
operations, Shareholders’ Equity and cash flows of the Lead Borrower and its
Subsidiaries as of the end of such Fiscal Quarter in accordance with GAAP,
subject only to normal year-end audit adjustments and accompanied by a copy of
management’s discussion and analysis with respect to such financial statements;

 

(c)                            as soon as available, but in
any event within 30 days after the end of each of the Fiscal Months of each
Fiscal Year (excluding the end of any Fiscal Month which is also the end of a
Fiscal Quarter), a consolidated balance sheet of the Lead Borrower and its
Subsidiaries as at the end of such Fiscal Month, and the related consolidated
statements of income or operations, Shareholders’ Equity and cash flows for
such Fiscal Month, and for the portion of the Lead Borrower’s Fiscal Year then
ended, setting forth in each case in comparative form the figures for (A) the
corresponding Fiscal Month of the previous Fiscal Year and (B) the
corresponding portion of the previous fiscal year, all in reasonable detail,
such consolidated statements to be certified by a Responsible Officer of the
Lead Borrower as fairly presenting the financial condition, results of
operations, Shareholders’ Equity and cash flows of the Lead Borrower and its
Subsidiaries as of the end of such Fiscal Month in accordance with GAAP,
subject only to normal year-end audit adjustments and the absence of footnotes;

 

(d)                           as soon as available, but in
any event at least 15 days after the end of each Fiscal Year of the Lead
Borrower, forecasts prepared by management of the Lead Borrower, in form
satisfactory to the Administrative Agent, of consolidated balance sheets and
statements of income or operations and cash flows of the Lead Borrower and its
Subsidiaries on a monthly basis for the immediately following Fiscal Year
(including the fiscal year in which the Maturity Date occurs), and as soon as
available, any significant revisions to such forecast with respect to such
Fiscal Year.

 

6.02                                                Certificates; Other
Information.  Deliver to the Administrative Agent and each
Lender, in form and detail satisfactory to the Administrative Agent and the
Required Lenders:

 

(a)                            concurrently with the
delivery of the financial statements referred to in Sections 6.01(a), (b) and
(c), a duly completed Compliance Certificate signed by a Responsible
Officer of the Lead Borrower which (among other things) includes (i) a
detailed calculation of the Consolidated Fixed Charge Coverage Ratio, provided
that, unless (x) a Covenant Compliance Event has occurred or (y) Availability
(calculated,
for purposes of this clause (i), without giving
effect to the Availability Block) is greater than or equal to twenty percent
(20%) of the lesser of (1) the Aggregate Commitments and (2) the
Borrowing Base, such calculation shall be required only with the delivery
of the financial statements referred to in Sections 6.01(a) and (b),
(ii) an explanation of any change
in generally accepted accounting principles used in the preparation of such
financial statements and (iii) a certification that no Default or
Event of Default exists or, if any such Default or Event of Default shall
exist, stating the nature and status of such event;

 

(b)                           on the 15th day of each Fiscal Month (or, if such day is
not a Business Day, on the next succeeding Business Day), a certificate in the
form of Exhibit F (a “Borrowing Base Certificate”) showing
the Borrowing Base as of the close of business as of the last day of the
immediately preceding Fiscal Month, each Borrowing Base Certificate to be certified
as complete and correct by a Responsible Officer of the Lead Borrower; provided
that at any time 

 

 

that an Accelerated Borrowing Base Delivery Event has occurred and is
continuing, such Borrowing Base Certificate shall be delivered no later than
the third Business Day of each week;

 

(c)                            promptly after the same are
available, copies of each proxy or other communication sent to the stockholders
of the Loan Parties, and copies of all reports and registration statements,
which any Loan Party may file or be required to file with the SEC under Section 13
or 15(d) of the Securities Exchange Act of 1934, and in any case not
otherwise required to be delivered to the Administrative Agent pursuant hereto;

 

(d)                           The financial and collateral
reports described on Schedule 6.02 hereto, at the times set forth in
such Schedule;

 

(e)                            promptly after the
furnishing thereof, copies of any statement or report furnished to any holder
of debt securities of any Loan Party or any Subsidiary thereof pursuant to the
terms of any indenture, loan or credit or similar agreement and not otherwise
required to be furnished to the Lenders pursuant to Section 6.01 or
any other clause of this Section 6.02;

 

(f)                              as soon as available, but in
any event within 30 days after the end of each fiscal year of the Loan Parties, a report summarizing
the insurance coverage (specifying type, amount and carrier) in effect for each
Loan Party and its Subsidiaries and containing such additional information as
the Administrative Agent, or any Lender through the Administrative Agent, may
reasonably specify;

 

(g)                           promptly, and in any event
within five Business Days after receipt thereof by any Loan Party or any
Subsidiary thereof, copies of each notice or other correspondence received from
any Governmental Authority (including, without limitation, the SEC (or
comparable agency in any applicable non-U.S. jurisdiction)) concerning any
proceeding with, or investigation or possible investigation or other inquiry by
such Governmental Authority regarding financial or other operational results of
any Loan Party or any Subsidiary thereof or any other matter which, if
adversely determined, could reasonably expected to have a Material Adverse
Effect; and

 

(h)                           promptly, such additional
information regarding the business affairs, financial condition or operations
of any Loan Party or any Subsidiary, or compliance with the terms of the Loan
Documents, as the Administrative Agent or any Lender may from time to time
reasonably request.

 

Documents required to be delivered pursuant
to Section 6.01(a), (b), or (c) or Section 6.02(d) (to
the extent any such documents are included in materials otherwise filed with
the SEC) may be delivered electronically and if so delivered, shall be deemed
to have been delivered on the date (i) on which the Lead Borrower posts
such documents, or provides a link thereto on the Lead Borrower’s website on
the Internet at the website address listed on Schedule 10.02; or (ii) on
which such documents are posted on the Lead Borrower’s behalf on an Internet or
intranet website, if any, to which each Lender and the Administrative Agent
have access (whether a commercial, third-party website or whether sponsored by
the Administrative Agent); provided that, the Lead Borrower shall notify
the Administrative Agent and each Lender (by telecopier or electronic mail) of
the posting of any such documents and provide to the Administrative Agent by
electronic mail electronic versions of such documents.  The Administrative Agent shall have no
obligation to request the delivery or to maintain copies of the documents
referred to above, and in any event shall have no responsibility to monitor
compliance by the Loan Parties with any 

 

 

such request for delivery, and each
Lender shall be solely responsible for requesting delivery to it or maintaining
its copies of such documents.

 

The Loan Parties hereby acknowledge
that (a) the Administrative Agent and/or the Arranger will make available
to the Lenders and the L/C Issuer materials and/or information provided by or
on behalf of the Loan Parties hereunder (collectively, “Borrower Materials”)
by posting the Borrower Materials on IntraLinks or another similar electronic
system (the “Platform”) and (b) certain of the Lenders may be “public-side”
Lenders (i.e., Lenders that do not wish to receive material non-public
information with respect to the Loan Parties or their securities) (each, a “Public
Lender”).  The Loan Parties hereby
agree that they will use commercially reasonable efforts to identify that
portion of the Borrower Materials that may be distributed to the Public Lenders
(all documents filed with the SEC shall be deemed PUBLIC) and that (w) all
such Borrower Materials shall be clearly and conspicuously marked “PUBLIC”
which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently
on the first page thereof; (x) by marking Borrower Materials “PUBLIC,”
the Loan Parties shall be deemed to have authorized the Administrative Agent,
the Arranger, the L/C Issuer and the Lenders to treat such Borrower Materials
as not containing any material non-public information (although it may be
sensitive and proprietary) with respect to the Loan Parties or their securities
for purposes of United States Federal and state securities laws (provided,
however, that to the extent such Borrower Materials constitute
Information, they shall be treated as set forth in Section 10.07); (y) all
Borrower Materials marked “PUBLIC” are permitted to be made available through a
portion of the Platform designated “Public Investor”; and (z) the Administrative
Agent and the Arranger shall be entitled to treat any Borrower Materials that
are not marked “PUBLIC” as being suitable only for posting on a portion of the
Platform not designated “Public Investor.”

 

6.03                                                Notices.  Promptly notify the Administrative Agent:

 

(a)                            of the occurrence of any
Default;

 

(b)                           of any matter that has
resulted or could reasonably be expected to result in a Material Adverse
Effect, including (i) breach or non-performance of, or any default under,
a Material Contract or with respect to Material Indebtedness of any Loan Party
or any Subsidiary thereof; (ii) any dispute, litigation, investigation,
proceeding or suspension between any Loan Party or any Subsidiary thereof and
any Governmental Authority; or (iii) the commencement of, or any material
development in, any litigation or proceeding affecting any Loan Party or any
Subsidiary thereof, including pursuant to any applicable Environmental Laws;

 

(c)                            of the occurrence of any
ERISA Event;

 

(d)                           of any material change in
accounting policies or financial reporting practices by any Loan Party or any
Subsidiary thereof;

 

(e)                            of any change in any Loan
Party’s senior executive officers;

 

(f)                              of the discharge by any Loan
Party of its present Registered Public Accounting Firm or any withdrawal or
resignation by such Registered Public Accounting Firm;

 

(g)                           of any collective bargaining
agreement or other labor contract to which a Loan Party becomes a party, or the
application for the certification of a collective bargaining agent;

 

(h)                           of the filing of any Lien
for unpaid Taxes against any Loan Party in an amount in excess of $1,000,000; and

 

 

(i)                               of any casualty or other
insured damage to any material portion of the Collateral or the commencement of
any action or proceeding for the taking of any interest in a material portion
of the Collateral under power of eminent domain or by condemnation or similar
proceeding or if any material portion of the Collateral is damaged or
destroyed; and

 

provided that, the
failure to deliver any notice required pursuant to clauses (d), (e) and (f) above
shall not constitute an Event of Default to the extent such notice was included
in any 34 Act Reports filed promptly after the occurrence of the event
requiring the delivery of such notice. 
Each notice pursuant to this Section 6.03 shall be
accompanied by a statement of a Responsible Officer of the Lead Borrower
setting forth details of the occurrence referred to therein and stating what
action the Lead Borrower has taken and proposes to take with respect thereto.  Each notice pursuant to Section 6.03(a) shall
describe with particularity any and all provisions of this Agreement and any
other Loan Document that have been breached.

 

6.04                                                Payment of Obligations.  Pay and discharge as the same shall become due and payable, all its
obligations and liabilities, including (a) all tax liabilities,
assessments and governmental charges or levies upon it or its properties or
assets, (b) all lawful claims (including, without limitation, claims of
landlords, warehousemen, customs brokers, and carriers) which, if unpaid, would
by law become a Lien upon its property; and (c) all Indebtedness, as and
when due and payable, but subject to any subordination provisions contained in
any instrument or agreement evidencing such Indebtedness, except, in each case,
where (a) such obligation is being disputed in good faith, (b) such
Loan Party has set aside on its books adequate reserves with respect thereto in
accordance with GAAP, (c) no Lien has been filed with respect thereto
(other than Permitted Encumbrances under clause (a) of the definition
thereof) and (d) the failure to make payment pending such contest could
not reasonably be expected to result in a Material Adverse Effect.  Nothing contained herein shall be deemed to
limit the rights of the Administrative Agent with respect to establishing
Reserves pursuant to this Agreement.

 

6.05                                                Preservation of Existence, Etc.  (a) Preserve,
renew and maintain in full force and effect its legal existence and good
standing under the Laws of the jurisdiction of its organization or formation
except in a transaction permitted by Section 7.04 or 7.05; (b) take
all reasonable action to maintain all rights, privileges, permits, licenses and
franchises necessary or desirable in the normal conduct of its business, except
to the extent that failure to do so could not reasonably be expected to have a
Material Adverse Effect; and (c) preserve or renew all of its Intellectual
Property, except to the extent such Intellectual Property is no longer used or
useful in the conduct of the business of the Loan Parties.

 

6.06                                                Maintenance of Properties  (a) Maintain,
preserve and protect all of its material properties and equipment necessary in
the operation of its business in good working order and condition, ordinary
wear and tear excepted; and (b) make all necessary repairs thereto and
renewals and replacements thereof except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect.

 

6.07                                                Maintenance
of Insurance.  Maintain with
financially sound and reputable insurance companies reasonably acceptable to
the Administrative Agent not Affiliates of the Loan Parties (other than
Colchester Insurance Company), insurance with respect to its properties and
business against loss or damage of the kinds customarily insured against by
Persons engaged in the same or similar business and operating in the same or
similar locations or as is required by applicable Law, of such types and in
such amounts as are customarily carried under similar circumstances by such
other Persons and as are reasonably acceptable to the Administrative Agent.

 

 

(a)                                  Fire and
extended coverage policies maintained with respect to any Collateral shall be
endorsed or otherwise amended to include (i) a lenders’ loss payable
clause (regarding personal property), in form and substance satisfactory to the
Collateral Agent, which provides that the insurer shall pay all proceeds
attributable to any Collateral (which proceeds are not used by the Loan Parties
as provided for in the definition of Prepayment Event) otherwise payable to the
Loan Parties under the policies directly to the Collateral Agent and (ii) a
provision to the effect that none of the Loan Parties, Credit Parties or any
other Person shall be a co-insurer. 
Commercial general liability policies shall be endorsed to name the
Collateral Agent as an additional insured. 
Each such policy referred to in this Section 6.07(a) shall
also provide that it shall not be canceled, modified or not renewed (i) by
reason of nonpayment of premium except upon not less than thirty (30) days’
prior written notice thereof by the insurer to the Collateral Agent (giving the
Collateral Agent the right to cure defaults in the payment of premiums) or (ii) for
any other reason except upon not less than thirty (30) days’ prior written
notice thereof by the insurer to the Collateral Agent.  The Lead Borrower shall deliver to the
Collateral Agent, prior to the cancellation, modification or non-renewal of any
such policy of insurance, a copy of a renewal or replacement policy (or other
evidence of renewal of a policy previously delivered to the Collateral Agent,
including an insurance binder) together with evidence satisfactory to the
Collateral Agent of payment of the premium therefor.

 

(b)                                 None of the
Credit Parties, or their agents or employees shall be liable for any loss or
damage insured by the insurance policies required to be maintained under this Section 6.07.  Each Loan Party shall look solely to its
insurance companies or any other parties other than the Credit Parties for the
recovery of such loss or damage and such insurance companies shall have no
rights of subrogation against any Credit Party or its agents or employees.  If, however, the insurance policies do not
provide waiver of subrogation rights against such parties, as required above,
then the Loan Parties hereby agree, to the extent permitted by law, to waive
their right of recovery, if any, against the Credit Parties and their agents
and employees.  The designation of any
form, type or amount of insurance coverage by the any Credit Party under this Section 6.07
shall in no event be deemed a representation, warranty or advice by such Credit
Party that such insurance is adequate for the purposes of the business of the
Loan Parties or the protection of their properties.

 

(c)                                  Maintain for themselves and their
Subsidiaries, a Directors and Officers insurance policy, and a “Blanket Crime”
policy including employee dishonesty, forgery or alteration, theft,
disappearance and destruction, robbery and safe burglary, property, and
computer fraud coverage with responsible companies in such amounts as are
customarily carried by business entities engaged in similar businesses
similarly situated, and will upon request by the Administrative Agent furnish
the Administrative Agent certificates evidencing renewal of each such policy.

 

(d)                                 Permit any
representatives that are designated by the Collateral Agent to inspect the
insurance policies maintained by or on behalf of the Loan Parties and to
inspect books and records related thereto and any properties covered thereby,
all at the Loan Parties’ expense.

 

6.08                                                Compliance with Laws.  Comply in all material respects with the requirements of all Laws and
all orders, writs, injunctions and decrees applicable to it or to its business
or property, except in such instances in which the failure to comply therewith
could not reasonably be expected to have a Material Adverse Effect.

 

6.09                                                Books and Records; Accountants.

 

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

 

 

with all applicable
requirements of any Governmental Authority having regulatory jurisdiction over
the Loan Parties or such Subsidiary, as the case may be.

 

(b)                                 At all times,
retain a Registered Public Accounting Firm which is reasonably satisfactory to
the Administrative Agent and instruct such Registered Public Accounting Firm to
cooperate with, and be available to, the Administrative Agent or its
representatives to discuss the Loan Parties’ financial performance, financial
condition, operating results, controls, and such other matters, within the
scope of the retention of such Registered Public Accounting Firm, as may be
raised by the Administrative Agent.

 

6.10                                                Inspection Rights.

 

(a)                                  Permit
representatives and independent contractors of the Administrative Agent to
visit and inspect any of its properties, to examine its corporate, financial
and operating records, and make copies thereof or abstracts therefrom, and to
discuss its affairs, finances and accounts with its directors, officers, and
Registered Public Accounting Firm, all at the expense of the Loan Parties and
at such reasonable times during normal business hours and as often as may be
reasonably desired, upon reasonable advance notice to the Lead Borrower;
provided, however, that when an Event of Default exists the Administrative
Agent (or any of its representatives or independent contractors) may do any of
the foregoing, and may be accompanied by the Arrangers, all at the expense (including
any expenses incurred by the Arrangers) of the Loan Parties at any time during
normal business hours and without advance notice.

 

(b)                                 The Loan
Parties acknowledge that (A) subject to clause (B) below, the
Administrative Agent shall undertake at the Loan Parties’ expense up to two (2) inventory
appraisals and two (2) commercial finance examinations each Fiscal Year
and (B) if Availability (calculated, for purposes of this Section 6.10(b), without giving
effect to the Availability Block) is at any time less than or
equal to twenty-five percent (25%) of the lesser of (x) the Aggregate Commitments and (y) the
Borrowing Base, the Administrative Agent shall undertake at the
Loan Parties’ expense up to three (3) inventory appraisals and three (3) commercial
finance examinations each Fiscal Year. 
Notwithstanding the foregoing, the Administrative Agent may cause
additional appraisals and commercial finance examinations to be undertaken (i) as
it in its discretion deems necessary or appropriate, at its own expense or, (ii) if
required by applicable Law or if an Event of Default shall have occurred and be
continuing, at the expense of the Loan Parties.

 

6.11                                                Use
of Proceeds. Use the proceeds of the Credit Extensions (a) to
refinance the Indebtedness of the Lead Borrower and its Subsidiaries under the
Existing Credit Agreement, (b) to finance the acquisition of working capital assets of the Borrowers,
including the purchase of inventory and equipment, in each case in the ordinary
course of business, (c) to finance Capital Expenditures of the Borrowers,
and (d) for general corporate purposes of the Loan Parties, in each case
to the extent permitted under applicable Law and the Loan Documents.

 

6.12                                                Additional Loan Parties.  Notify the Administrative Agent at the time that any Person becomes a
Subsidiary, and promptly thereafter (and in any event within fifteen (15)
days), cause any such Person (a) to become a Loan Party by executing and
delivering to the Administrative Agent a Joinder to this Agreement or a
counterpart of the Facility Guaranty or such other document as the
Administrative Agent shall deem appropriate for such purpose, (ii) grant a
Lien to the Collateral Agent on such Person’s assets to secure the Obligations,
and (iii) deliver to the Administrative Agent documents of the types
referred to in clauses (iii) and (iv) of Section 4.01(a) and
favorable opinions of counsel to such Person (which shall cover, among other
things, the legality, validity, binding effect and enforceability of the
documentation referred to in this Section 6.12, and (b) if any
Equity Interests or Indebtedness of such Person are owned by or on behalf of a
Loan Party, to pledge such Equity 

 

 

Interests
and promissory notes evidencing such Indebtedness, in each case, in form,
content and scope reasonably satisfactory to the Administrative Agent.  In no event shall compliance with this Section 6.12
waive or be deemed a waiver or consent to any transaction giving rise to the
need to comply with this Section 6.12 if such transaction was not
otherwise expressly permitted by this Agreement or constitute or be deemed to
constitute, with respect to any Subsidiary, an approval of such Person as a
Borrower or permit the inclusion of any acquired assets in the computation of
the Borrowing Base.

 

6.13                                                Cash Management.

 

(a)                                  On or prior to
the Closing Date (or such later date as the Administrative Agent, in its sole
discretion, may agree in writing prior to the Closing Date):

 

(i)                                     deliver to the
Administrative Agent copies of notifications (each, a “DDA Notification”)
substantially in the form attached hereto as Exhibit I which have
been executed on behalf of such Loan Party and delivered to each depository
institution listed on Schedule 5.21(a);

 

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

 

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

 

(b)                                 The Loan
Parties shall ACH or wire transfer no less frequently than daily (and whether
or not there are then any outstanding Obligations) to a Blocked Account all
amounts on deposit in each such DDA and all payments due from credit card
processors.

 

(c)                                  Each Blocked
Account Agreement shall require, after the occurrence and during the
continuance of a Liquidity Event, the ACH or wire transfer no less frequently
than daily (and whether or not there are then any outstanding Obligations) to
the concentration account maintained by the Administrative Agent at Bank of
America (the “Concentration Account”), of all cash receipts and
collections, including, without limitation, the following:

 

(i)                                     all available cash receipts
from the sale of Inventory and other assets;

 

(ii)                                  all proceeds of collections
of Accounts;

 

(iii)                               all Net Proceeds, and all
other cash payments received by a Loan Party from any Person or from any source
or on account of any sale or other transaction or event, including, without
limitation, any Prepayment Event;

 

(iv)                              the then contents of each
DDA (net of any minimum balance, not to exceed $2,500.00, as may be required to
be kept in the subject DDA by the depository institution at which such DDA is
maintained);

 

(v)                                 the then entire ledger
balance of each Blocked Account (net of any minimum balance, not to exceed
$2,500.00, as may be required to be kept in the subject Blocked Account by the
applicable Blocked Account Bank); and

 

 

(vi)                              the proceeds of all credit
card charges.

 

(d)                                 The
Concentration Account shall at all times be under the sole dominion and control
of the Collateral Agent.  The Loan
Parties hereby acknowledge and agree that (i) the Loan Parties have no
right of withdrawal from the Concentration Account, (ii) the funds on
deposit in the Concentration Account shall at all times be collateral security
for all of the Obligations and (iii) the funds on deposit in the
Concentration Account shall be applied as provided in this Agreement.  In the event that, notwithstanding the
provisions of this Section 6.13, any Loan Party receives or
otherwise has dominion and control of any such proceeds or collections, such
proceeds and collections shall be held in trust by such Loan Party for the
Administrative Agent, shall not be commingled with any of such Loan Party’s
other funds or deposited in any account of such Loan Party and shall, not later
than the Business Day after receipt thereof, be deposited into the
Concentration Account or dealt with in such other fashion as such Loan Party
may be instructed by the Administrative Agent.

 

(e)                                  Upon the
request of the Administrative Agent, the Loan Parties shall cause bank
statements and/or other reports to be delivered to the Administrative Agent not
less often than monthly, accurately setting forth all amounts deposited in each
Blocked Account to ensure the proper transfer of funds as set forth above.

 

6.14                                                Information Regarding the
Collateral.

 

(a)                                  Furnish to the
Administrative Agent at least thirty (30) days prior written notice of any
change in: (i) any Loan Party’s name or in any trade name used to identify
it in the conduct of its business or in the ownership of its properties; (ii) the
location of any Loan Party’s chief executive office, its principal place of
business, any office in which it maintains books or records relating to
Collateral owned by it or any office or facility at which Collateral owned by
it is located (including the establishment of any such new office or facility);
(iii) any Loan Party’s organizational structure or jurisdiction of
incorporation or formation; or (iv) any Loan Party’s Federal Taxpayer
Identification Number or organizational identification number assigned to it by
its state of organization.

 

(b)                                 Should any of
the information on any of the Schedules hereto become inaccurate or misleading
in any material respect as a result of changes after the Closing Date, unless
such changes are included in 34 Act Reports delivered to the Administrative
Agent, the Lead Borrower shall advise the Administrative Agent in writing of
such revisions or updates as may be necessary or appropriate to update or
correct the same.  From time to time as
may be reasonably requested by the Administrative Agent, the Lead Borrower
shall supplement each Schedule hereto, or any representation herein or in any
other Loan Document, with respect to any matter arising after the Closing Date
that, if existing or occurring on the Closing Date, would have been required to
be set forth or described in such Schedule or as an exception to such
representation or that is necessary to correct any information in such Schedule
or representation which has been rendered inaccurate thereby (and, in the case
of any supplements to any Schedule, such Schedule shall be appropriately marked
to show the changes made therein). 
Notwithstanding the foregoing, no supplement or revision to any Schedule
or representation shall be deemed the Credit Parties’ consent to the matters
reflected in such updated Schedules or revised representations nor permit the
Loan Parties to undertake any actions otherwise prohibited hereunder or fail to
undertake any action required hereunder from the restrictions and requirements
in existence prior to the delivery of such updated Schedules or such revision
of a representation; nor shall any such supplement or revision to any Schedule
or representation be deemed the Credit Parties’ waiver of any Default or Event
of Default resulting from the matters disclosed therein.

 

 

6.15                                                Physical
Inventories.

 

(a)                                  Cause at least
one (1) physical inventory to be undertaken in each twelve month period on
a rolling basis with respect to all Inventory locations, at the expense of the
Loan Parties, and periodic cycle counts, in each case consistent with past
practices, conducted by such inventory takers as are satisfactory to the
Collateral Agent and following such methodology as is consistent with the
methodology used in the immediately preceding inventory or as otherwise may be
satisfactory to the Collateral Agent. The Collateral Agent, at the expense of
the Loan Parties, may participate in and/or observe each scheduled physical
count of Inventory which is undertaken on behalf of any Loan Party.   The Lead Borrower, (i) within twenty
(20) days following the completion of such inventory (with respect to any
location, as and when completed at such location), shall post such results to
the Loan Parties’ stock ledgers and general ledgers, as applicable and (ii) on
a quarterly basis, concurrently with the delivery of the financial statements
referred to in Section 6.01(b), shall provide the Collateral Agent
with a reconciliation of the results of such inventory (as well as of any other
physical inventory or cycle counts undertaken by a Loan Party)

 

(b)                                 The Collateral
Agent, in its Permitted Discretion, if any Default or Event of Default exists,
may cause additional such inventories to be taken as the Collateral Agent
determines (each, at the expense of the Loan Parties).

 

6.16                                                Environmental Laws.  (a) Conduct
its operations and keep and maintain its Real Estate in material compliance
with all Environmental Laws and environmental permits; (b) obtain and
renew all environmental permits necessary for its operations and properties;
and (c) implement any and all investigation, remediation, removal and
response actions that are appropriate or necessary to maintain the value and
marketability of the Real Estate or to otherwise comply with Environmental Laws
pertaining to any of its Real Estate, provided, however, that
neither a Loan Party nor any of its Subsidiaries shall be required to undertake
any such cleanup, removal, remedial or other action to the extent that its
obligation to do so is being contested in good faith and by proper proceedings
and adequate reserves have been set aside and are being maintained by the Loan
Parties with respect to such circumstances in accordance with GAAP.

 

6.17                                                Further
Assurances.

 

(a)                                  Execute any and
all further documents, financing statements, agreements and instruments, and
take all such further actions (including the filing and recording of financing
statements and other documents), that may be required under any applicable Law,
or which any Agent may request, to effectuate the transactions contemplated by
the Loan Documents or to grant, preserve, protect or perfect the Liens created
or intended to be created by the Security Documents or the validity or priority
of any such Lien, all at the expense of the Loan Parties. The Loan Parties also
agree to provide to the Agents, from time to time upon request, evidence
satisfactory to the Agents as to the perfection and priority of the Liens
created or intended to be created by the Security Documents.

 

(b)                                 If any material
assets which would otherwise constitute Collateral are acquired by any Loan
Party after the Closing Date (other than assets constituting Collateral under
the applicable Security Agreement that become subject to the Lien of such
Security Agreement upon acquisition thereof), the Lead Borrower will notify the
Agents and the Lenders thereof, and will cause such assets to be subjected to a
Lien securing the Obligations and will take such actions as shall be necessary
or reasonably requested by any Agent to grant and perfect such Liens, including
actions described in paragraph (a) of this Section, all at the expense of
the Loan Parties.

 

 

6.18                                                Compliance
with Terms of Leaseholds.

 

Except as otherwise expressly permitted
hereunder, make all payments and otherwise perform all obligations in respect
of all Leases of real property to which any Loan Party or any of its
Subsidiaries is a party, keep such Leases in full force and effect and not
allow such Leases to lapse or be terminated or any rights to renew such Leases
to be forfeited or cancelled, notify the Administrative Agent of any default by
any party with respect to such Leases and cooperate with the Administrative
Agent in all respects to cure any such default, and cause each of its Subsidiaries
to do so, except, in any case, where the failure to do so, either individually
or in the aggregate, could not be reasonably likely to have a Material Adverse
Effect.

 

6.19                                                Material Contracts.  Perform and observe
all the terms and provisions of each Material Contract to be performed or
observed by it, maintain each such Material Contract in full force and effect,
enforce each such Material Contract in accordance with its terms, take all such
action to such end as may be from time to time requested by the Administrative
Agent and, upon request of the Administrative Agent, make to each other party
to each such Material Contract such demands and requests for information and
reports or for action as any Loan Party or any of its Subsidiaries is entitled
to make under such Material Contract, and cause each of its Subsidiaries to do
so, except, in any case, where the
failure to do so, either individually or in the aggregate, could not reasonably
be expected to have a Material Adverse Effect.

 

6.20                                                Term Loan Indebtedness.The Borrowers shall
either (i) repay or, subject to the restrictions set forth in clause (a) of
the definition of Permitted Indebtedness, refinance, the Indebtedness with
respect to the Term Loan at least sixty (60) days prior to the maturity
of such Indebtedness, or (ii) enter into an agreement with the holders of
such Indebtedness, at least sixty (60) days prior to the maturity of such
Indebtedness, extending the maturity of such obligations to a date that is
subsequent to the Maturity Date and otherwise acceptable to the Administrative
Agent.

 

ARTICLE VII

NEGATIVE COVENANTS

 

So long as any Lender shall have any Commitment hereunder, any Loan or
other Obligation hereunder shall remain unpaid or unsatisfied, or any Letter of
Credit shall remain outstanding, no Loan Party shall, nor shall it permit any
Subsidiary to, directly or indirectly:

 

7.01                                                Liens. 
Create, incur, assume or suffer
to exist any Lien upon any of its property, assets or revenues, whether now
owned or hereafter acquired or sign or file or suffer to exist under the UCC or
any similar Law or statute of any jurisdiction a financing statement that names
any Loan Party or any Subsidiary thereof as debtor; sign or suffer to exist any
security agreement authorizing any Person thereunder to file such financing
statement; sell any of its property or assets subject to an understanding or
agreement (contingent or otherwise) to repurchase such property or assets with
recourse to it or any of its Subsidiaries; or assign or otherwise transfer any
accounts or other rights to receive income, other than, as to all of the above,
Permitted Encumbrances.

 

7.02                                                Investments. 
Make any Investments, except
Permitted Investments.

 

7.03                                                Indebtedness; Disqualified Stock.   Issue Disqualified
Stock or create, incur, assume, guarantee, suffer to exist, issue or otherwise
become or remain liable with respect to, any Indebtedness, except Permitted
Indebtedness.

 

7.04                                                Fundamental Changes.  Merge,
dissolve, liquidate, consolidate with or into another Person, (or agree to do
any of the foregoing), except that, so long as no Default or Event of 

 

 

Default shall have occurred and be
continuing prior to or immediately after giving effect to any action described
below or would result therefrom:

 

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

 

(b)                           in connection with a Permitted
Acquisition, any Subsidiary of a Loan Party may merge with or into or
consolidate with any other Person or permit any other Person to merge with or
into or consolidate with it; provided that (i) the Person surviving
such merger shall be a wholly-owned Subsidiary of a Loan Party and (ii) in
the case of any such merger to which any Loan Party is a party, such Loan Party
is the surviving Person.

 

7.05                                                Dispositions.   Make any Disposition except Permitted
Dispositions.

 

7.06                                                Restricted Payments.   Declare or make,
directly or indirectly, any Restricted Payment, or incur any obligation
(contingent or otherwise) to do so, except that, so long as no Default or Event
of Default shall have occurred and be continuing prior to or immediately after
giving effect to any action described below or would result therefrom:

 

(a)                                  each Subsidiary
of a Loan Party may make Restricted Payments to any Loan Party;

 

(b)                                 the Loan
Parties and each Subsidiary may declare and make dividend payments or other
distributions payable solely in the common stock or other common Equity
Interests of such Person; and

 

(c)                                  the Lead
Borrower may repurchase, redeem or otherwise acquire Equity Interests issued by
it, or declare or pay cash dividends to its stockholders up to the aggregate
amount of $15,000,000 during any Fiscal Year if, after giving effect to such
transaction or payment, Pro Forma Excess Availability will be equal to or
greater than thirty-five percent (35%) of the lesser of (i) the Aggregate
Commitments and (ii) the Borrowing Base; provided that, the
Lead Borrower may repurchase, redeem or otherwise acquire Equity Interests
issued by it, or declare or pay cash dividends to its stockholders in excess of
the aggregate amount of $15,000,000 during any Fiscal Year if, after giving effect
to such transaction or payment, the Payment Conditions are satisfied.

 

7.07                                                Prepayments of Indebtedness.   Prepay, redeem,
purchase, defease or otherwise satisfy prior to the scheduled maturity thereof
in any manner any Indebtedness, or make any payment in violation of any
subordination terms of any Subordinated Indebtedness except:

 

(a)                                  as long as no
Default or Event of Default then exists or would arise therefrom,  regularly scheduled or mandatory repayments,
repurchases, redemptions or defeasances of Permitted Indebtedness (other than
on account of Subordinated Indebtedness);

 

(b)                                 as long as no
Default or Event of Default then exists or would arise therefrom,  voluntary prepayments, repurchases,
redemptions or defeasances of Permitted Indebtedness (including on account of
any Subordinated Indebtedness) solely to the extent made with the Net Proceeds
from sales of Real Estate in accordance with clause (h) of the definition
of Permitted Dispositions;

 

 

(c)                                  voluntary
prepayments, repurchases, redemptions or defeasances of Permitted Indebtedness
(including on account of any Subordinated Indebtedness) (i) as long as no
Default or Event of Default then exists or would arise therefrom, up to the
aggregate amount of $75,000,000 during any Fiscal Year if, after giving effect
to any such payment, Pro Forma Excess Availability will be equal to or greater
than thirty-five percent (35%) of the lesser of (A) the Aggregate
Commitments and (B) the Borrowing Base and (ii) in excess of the
aggregate amount of $75,000,000 during any Fiscal Year if, after giving effect
to any such payment, the Payment Conditions are satisfied; and

 

(d)                                 subject to the restrictions set forth in clause (a) of the
definition of Permitted Indebtedness, refinancings and refundings
of such Indebtedness.

 

7.08                                                Change
in Nature of Business

 

Engage
in any line of business substantially different from the Business conducted by
the Loan Parties and their Subsidiaries on the date hereof or any business
substantially related or incidental thereto.

 

7.09                                                Transactions with Affiliates.  Enter
into, renew, extend or be a party to any transaction of any kind with any
Affiliate of any Loan Party, whether or not in the ordinary course of business,
other than on fair and reasonable terms substantially as favorable to the Loan
Parties or such Subsidiary as would be obtainable by the Loan Parties or such
Subsidiary at the time in a comparable arm’s length transaction with a Person
other than an Affiliate, provided that the foregoing restriction shall
not apply to a transaction between or among the Loan Parties not prohibited
hereunder.

 

7.10                                                Burdensome Agreements.  Enter
into or permit to exist any Contractual Obligation (other than this Agreement
or any other Loan Document) that (a) limits the ability (i) of any Subsidiary
to make Restricted Payments or other distributions to any Loan Party or to
otherwise transfer property to or invest in a Loan Party, (ii) of any
Subsidiary to Guarantee the Obligations, (iii) of any Subsidiary to make
or repay loans to a Loan Party, or (iv) of the Loan Parties or any
Subsidiary to create, incur, assume or suffer to exist Liens on property of
such Person in favor of the Collateral Agent; provided, however,
that this clause (iv) shall not prohibit any negative pledge incurred or
provided in favor of any holder of Indebtedness permitted under clause (c) of
the definition of Permitted Indebtedness solely to the extent any such negative
pledge relates to the property financed by or the subject of such Indebtedness;
or (b) requires the grant of a Lien to secure an obligation of such Person
if a Lien is granted to secure another obligation of such Person.

 

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

 

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

 

 

7.13                                                Corporate
Name; Fiscal Year.

 

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

 

(b)                           Effect or permit any change
referred to in Section 6.14(a) unless (i) the Collateral
Agent’s written acknowledgement that all filings have been made under the UCC
or otherwise that are required in order for the Collateral Agent to continue at
all times following such change to have a valid, legal and perfected first
priority security interest in all the Collateral for its own benefit and the
benefit of the other Credit Parties, and (ii) after giving effect to any
change to the location of the Collateral, all Collateral shall be located
within the continental United States.

 

7.14                                                Deposit Accounts; Credit Card
Processors.  Open new DDAs or Blocked Accounts, or enter into agreements
with any credit card processors, unless the Loan Parties shall have delivered
to the Collateral Agent appropriate Blocked Account Agreements or Credit Card
Notifications, as appropriate, consistent with the provisions of Section 6.13
and otherwise reasonably satisfactory to the Administrative Agent.  Except as permitted hereby, no Loan Party
shall maintain any bank accounts or enter into any agreements with credit card
processors other than the ones expressly contemplated herein or in Section 6.13
hereof.

 

7.15                                                Consolidated Fixed Charge Coverage
Ratio.    During
the continuance of a Covenant Compliance Event, permit the Consolidated Fixed
Charge Coverage Ratio, calculated as of the last day of each month for any Measurement
Period, to be less than 1.1:1.0.

 

ARTICLE VIII

EVENTS OF DEFAULT AND REMEDIES

 

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

 

(a)                            Non-Payment.  The Borrowers or any other Loan Party fails
to pay when and as required to be paid herein, (i) any amount of principal
of any Loan or any L/C Obligation, or deposit any funds as Cash Collateral in
respect of L/C Obligations, or (ii) any interest on any Loan or on any L/C
Obligation, or any fee due hereunder, which failure continues for three (3) calendar
days, or (iii) any other amount payable hereunder or under any other Loan
Document, which failure continues for three (3) calendar days; or

 

(b)                           Specific Covenants.  (i) Any Loan Party fails to perform or
observe any term, covenant or agreement contained in any of Section 6.01,
6.02, 6.03, 6.05, 6.07, 6.10, 6.11,  6.12,
6.13 or 6.14 or Article VII; or

 

(c)                            Other Defaults.  Any Loan Party fails to perform or observe
any other covenant or agreement (not specified in subsection (a) or (b) above)
contained in any Loan Document on its part to be performed or observed and such
failure continues for twenty (20) days; or

 

(d)                           Representations and
Warranties.  Any
representation, warranty, certification or statement of fact made or deemed
made by or on behalf of any Borrower or any other Loan Party herein, in any
other Loan Document, or in any document delivered in connection herewith or
therewith (including, without limitation, any Borrowing Base Certificate) shall
be incorrect or misleading in any material respect when made or deemed made; or

 

(e)                            Cross-Default.  (i) Any Loan Party or any Subsidiary
thereof (A) fails to make any payment when due (whether by scheduled
maturity, required prepayment, acceleration, 

 

 

demand, or otherwise) in respect of any Material Indebtedness
(including undrawn committed or available amounts and including amounts owing
to all creditors under any combined or syndicated credit arrangement) or
Guarantee, or (B) fails to observe or perform any other agreement or
condition relating to any such Material Indebtedness or Guarantee or contained
in any instrument or agreement evidencing, securing or relating thereto, or any
other event occurs, the effect of which default or other event is to cause (or
to permit the holder or holders of such Material Indebtedness or the
beneficiary or beneficiaries of any Guarantee thereof (or a trustee or agent on
behalf of such holder or holders or beneficiary or beneficiaries) to cause,
with the giving of notice if required), such Material Indebtedness to be
demanded or to become due or to be repurchased, prepaid, defeased or redeemed
(automatically or otherwise), or an offer to repurchase, prepay, defease or
redeem such Material Indebtedness to be made, prior to its stated maturity, or
such Guarantee to become payable or cash collateral in respect thereof to be
demanded; or (ii) there occurs under any Swap Contract an Early
Termination Date (as defined in such Swap Contract) resulting from (A) any
event of default under such Swap Contract as to which a Loan Party or any
Subsidiary thereof is the Defaulting Party (as defined in such Swap Contract)
or (B) any Termination Event (as so defined) under such Swap Contract as
to which a Loan Party or any Subsidiary thereof is an Affected Party (as so
defined) and, in either event, the Swap Termination Value owed by the Loan
Party or such Subsidiary as a result thereof is greater than $10,000,000; or

 

(f)                              Insolvency Proceedings, Etc.  Any Loan Party or any of its Subsidiaries
institutes or consents to the institution of any proceeding under any Debtor
Relief Law, or makes an assignment for the benefit of creditors; or applies for
or consents to the appointment of any receiver, trustee, custodian,
conservator, liquidator, rehabilitator or similar officer for it or for all or
any material part of its property; or a proceeding shall be commenced or a
petition filed, without the application or consent of such Person, seeking or
requesting the appointment of any receiver, trustee, custodian, conservator,
liquidator, rehabilitator or similar officer is appointed and the appointment
continues undischarged, undismissed or unstayed for 45 calendar days or an
order or decree approving or ordering any of the foregoing shall be entered; or
any proceeding under any Debtor Relief Law relating to any such Person or to
all or any material part of its property is instituted without the consent of
such Person and continues undismissed or unstayed for forty-five (45) calendar
days, or an order for relief is entered in any such proceeding; or

 

(g)                           Inability to Pay Debts;
Attachment.  (i) Any
Loan Party or any Subsidiary thereof becomes unable or admits in writing its
inability or fails generally to pay its debts as they become due in the
ordinary course of business, or (ii) any writ or warrant of attachment or
execution or similar process is issued or levied against all or any material
part of the property of any such Person and is not released, vacated or fully
bonded within thirty (30) days after its issue or levy; or

 

(h)                           Judgments.  There is entered against any Loan Party or
any Subsidiary thereof (i) one or more judgments or orders for the payment
of money in an aggregate amount (as to all such judgments and orders) exceeding
$5,000,000 (to the extent not covered by independent third-party insurance as
to which the insurer is rated at least “A” by A.M. Best Company, has been
notified of the potential claim and does not dispute coverage), or (ii) any
one or more non-monetary judgments that have, or could reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect and, in
either case, (A) enforcement proceedings are commenced by any creditor
upon such judgment or order, or (B) there is a period of thirty (30)
consecutive days during which a stay of enforcement of such judgment or order,
by reason of a pending appeal or otherwise, is not in effect; or

 

 

(i)                               ERISA.  (i) An ERISA Event occurs with respect
to a Pension Plan or Multiemployer Plan which has resulted or could reasonably
be expected to result in liability of any Loan Party under Title IV of
ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate
amount in excess of $5,000,000 or which would reasonably likely result in a
Material Adverse Effect, or (ii) a Loan Party or any ERISA Affiliate fails
to pay when due, after the expiration of any applicable grace period, any
installment payment with respect to its withdrawal liability under Section 4201
of ERISA under a Multiemployer Plan in an aggregate amount in excess of
$5,000,000 or which would reasonably likely result in a Material Adverse
Effect; or

 

(j)                               Invalidity of Loan Documents.  (i)  Any provision of any Loan Document,
at any time after its execution and delivery and for any reason other than as
expressly permitted hereunder or thereunder or satisfaction in full of all the
Obligations, ceases to be in full force and effect; or any Loan Party or any
other Person contests in any manner the validity or enforceability of any
provision of any Loan Document; or any Loan Party denies that it has any or
further liability or obligation under any provision of any Loan Document, or
purports to revoke, terminate or rescind any provision of any Loan Document or
seeks to avoid, limit or otherwise adversely affect any Lien purported to be
created under any Security Document; or (ii) any Lien purported to be
created under any Security Document shall cease to be, or shall be asserted by
any Loan Party or any other Person not to be, a valid and perfected Lien on any
Collateral, with the priority required by the applicable Security Document; or

 

(k)                            Change of Control.  There occurs any Change of Control; or

 

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

 

(m)                         Loss of Collateral.  There occurs any uninsured loss to any
material portion of the Collateral; or

 

(n)                           Breach of Contractual
Obligation.  Any Loan
Party or any Subsidiary thereof fails to make any payment when due (whether by
scheduled maturity, required prepayment, acceleration, demand, or otherwise) in
respect of any Material Contract or fails to observe or perform any other
agreement or condition relating to any such Material Contract or contained in
any instrument or agreement evidencing, securing or relating thereto, or any
other event occurs, the effect of which default or other event is to cause, or
to permit the counterparty to such Material Contract to terminate such Material
Contract; or

 

(o)                           Indictment.  (i) Any Loan Party is (A) criminally
indicted or convicted of a felony for fraud or dishonesty in connection with
the Loan Parties’ business, or (B) charged by a Governmental Authority
under any law that would reasonably be expected to lead to forfeiture of any
material portion of Collateral, or (ii) any director or senior officer of
any Loan Party is (A) criminally indicted or convicted of a felony for
fraud or dishonesty in connection with the Loan Parties’ business, unless such
director or senior officer promptly resigns or is removed or replaced or (B) charged
by a Governmental Authority under any law that would reasonably be expected to
lead to forfeiture of any material portion of Collateral;

 

 

(p)                           Guaranty.  The termination or attempted termination of
any Facility Guaranty except as expressly permitted hereunder or under any
other Loan Document;

 

(q)                           Subordination.  (i)  The subordination provisions of the
documents evidencing or governing any Subordinated Indebtedness (the “Subordinated
Provisions”) shall, in whole or in part, terminate, cease to be effective
or cease to be legally valid, binding and enforceable against any holder of the
applicable Subordinated Indebtedness; or (ii) any Borrower or any other
Loan Party shall, directly or indirectly, disavow or contest in any manner (A) the
effectiveness, validity or enforceability of any of the Subordination
Provisions, (B) that the Subordination Provisions exist for the benefit of
the Credit Parties, or (C) that all payments of principal of or premium
and interest on the applicable Subordinated Indebtedness, or realized from the
liquidation of any property of any Loan Party, shall be subject to any of the
Subordination Provisions.

 

8.02                                                Remedies Upon Event of Default.  If
any Event of Default occurs and is continuing, the Administrative Agent may,
or, at the request of the Required Lenders shall, take any or all of the
following actions:

 

(a)                            declare the Commitments of
each Lender to make Loans and any obligation of the L/C Issuer to make L/C
Credit Extensions to be terminated, whereupon such Commitments and obligation
shall be terminated;

 

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

 

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

 

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

 

provided, however,
that upon the entry of an order for relief with respect to any Loan Party or
any Subsidiary thereof under the Bankruptcy Code of the United States of
America, the obligation of each Lender to make Loans and any obligation of the
L/C Issuer to make L/C Credit Extensions shall automatically terminate, the
unpaid principal amount of all outstanding Loans and all interest and other
amounts as aforesaid shall automatically become due and payable, and the
obligation of the Loan Parties to Cash Collateralize the L/C Obligations as aforesaid
shall automatically become effective, in each case without further act of the
Administrative Agent or any Lender.

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

ARTICLE IX

ADMINISTRATIVE AGENT

 

9.01                Appointment
and Authority.

 

(a)         Each of the
Lenders and the L/C Issuer hereby irrevocably appoints Bank of America to act
on its behalf as the Administrative Agent hereunder and under the other Loan
Documents and authorizes the Administrative Agent to take such actions on its
behalf and to exercise such powers as are delegated to the Administrative Agent
by the terms hereof or thereof, together with such actions and powers as are
reasonably incidental thereto.  The
provisions of this Article are solely for the benefit of the
Administrative Agent, the Lenders and the L/C Issuer, and no Loan Party or any
Subsidiary thereof shall have rights as a third party beneficiary of any of
such provisions.

 

(b)         Each of the
Lenders (in its capacities as a Lender), Swing Line Lender and the L/C Issuer
hereby irrevocably appoints Bank of America as Collateral Agent and authorizes
the Collateral Agent to act as the agent of such Lender and the L/C Issuer for
purposes of acquiring, holding and enforcing any and all Liens on Collateral
granted by any of the Loan Parties to secure any of the Obligations, together
with such powers and discretion as are reasonably incidental thereto.  In this connection, the Collateral Agent, as
“collateral agent” and any co-agents, sub-agents and attorneys-in-fact
appointed by the Collateral Agent pursuant to Section 9.05 for
purposes of holding or enforcing any Lien on the Collateral (or any portion
thereof) granted under the Security Documents, or for exercising any rights and
remedies thereunder at the direction of the Collateral Agent), shall be
entitled to the benefits of all provisions of this Article IX and Article X
(including Section 10.04(c)), as though such co-agents, sub-agents
and attorneys-in-fact were the “collateral agent” under the Loan Documents, as
if set forth in full herein with respect thereto.

 

9.02                Rights as a Lender.  The
Persons serving as the Agents hereunder shall have the same rights and powers
in their capacity as a Lender as any other Lender and may exercise the same as
though they were not the Administrative Agent or the Collateral Agent and the
term “Lender” or “Lenders” shall, unless otherwise expressly indicated or
unless the context otherwise requires, include the Person serving as the Administrative
Agent or the Collateral Agent hereunder in its individual 

 

 

capacity.  Such Person and its Affiliates may accept
deposits from, lend money to, act as the financial advisor or in any other
advisory capacity for and generally engage in any kind of business with the
Loan Parties or any Subsidiary or other Affiliate thereof as if such Person
were not the Administrative Agent or the Collateral Agent hereunder and without
any duty to account therefor to the Lenders.

 

9.03                Exculpatory Provisions.  The
Agents shall not have any duties or obligations except those expressly set
forth herein and in the other Loan Documents. 
Without limiting the generality of the foregoing, the Agents:

 

(a)         shall not be subject to any fiduciary or other
implied duties, regardless of whether a Default or an Event of Default has
occurred and is continuing;

 

(b)         shall not have any duty to take any discretionary
action or exercise any discretionary powers, except discretionary rights and
powers expressly contemplated hereby or by the other Loan Documents that the
Administrative Agent or the Collateral Agent, as applicable, is required to
exercise as directed in writing by the Required Lenders (or such other number
or percentage of the Lenders as shall be expressly provided for herein or in
the other Loan Documents), provided that no Agent shall be required to
take any action that, in its respective opinion or the opinion of its counsel,
may expose such Agent to liability or that is contrary to any Loan Document or
applicable Law; and

 

(c)         shall not, except as expressly set forth herein and
in the other Loan Documents, have any duty to disclose, and shall not be liable
for the failure to disclose, any information relating to the Loan Parties or
any of their Affiliates that is communicated to or obtained by the Person
serving as the Administrative Agent, the Collateral Agent or any of its
Affiliates in any capacity.

 

No Agent shall be liable for any action
taken or not taken by it (i) with the consent or at the request of the
Required Lenders (or such other number or percentage of the Lenders as shall be
necessary, or as such Agent shall believe in good faith shall be necessary,
under the circumstances as provided in Sections 10.01 and 8.02)
or (ii) in the absence of its own gross negligence or willful misconduct
as determined by a final and non-appealable judgment of a court of competent
jurisdiction.

 

The Agents shall not be deemed to have knowledge of any Default unless
and until notice describing such Default is given to such Agent by the Loan
Parties, a Lender or the L/C Issuer.  In
the event that the Agents obtain such actual knowledge or receive such a
notice, the Agents shall give prompt notice thereof to each of the other Credit
Parties.  Upon the occurrence of an Event
of Default, the Agents shall take such action with respect to such Event of
Default as shall be reasonably directed by the Required Lenders.  Unless and until the Agents shall have
received such direction, the Agents may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to any such  Event of Default as they, or either of them,
shall deem advisable in the best interest of the Credit Parties.  In no event shall the Agents be required to
comply with any such directions to the extent that any Agent believes that its
compliance with such directions would be unlawful.

 

The Agents shall not be responsible for or have any duty to ascertain
or inquire into (i) any statement, warranty or representation made in or
in connection with this Agreement or any other Loan Document, (ii) the
contents of any certificate, report or other document delivered hereunder or
thereunder or in connection herewith or therewith, (iii) the performance
or observance of any of the covenants, agreements or other terms or conditions
set forth herein or therein or the occurrence of any Default, (iv) the
validity, enforceability, effectiveness or genuineness of this Agreement, any
other Loan Document or

 

 

any other agreement, instrument or document or the creation, perfection
or priority of any Lien purported to be created by the Security Documents, (v) the
value or the sufficiency of any Collateral, or (vi) the satisfaction of
any condition set forth in Article IV or elsewhere herein, other than to
confirm receipt of items expressly required to be delivered to the Agents.

 

9.04                Reliance
by Agents.

 

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

 

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

 

9.06                Resignation of Agents.  Either
Agent may at any time give written notice of its resignation to the Lenders,
the L/C Issuer and the Lead Borrower. 
Upon receipt of any such notice of resignation, the Required Lenders
shall have the right, in consultation with the Lead Borrower, to appoint a
successor, which shall be a bank with an office in the United States, or an
Affiliate of any such bank with an office in the United States.  If no such successor shall have been so
appointed by the Required Lenders and shall have accepted such appointment
within 30 days after the retiring Agent gives notice of its resignation, then
the retiring Agent may on behalf of the Lenders and the L/C Issuer, appoint a
successor Administrative Agent or Collateral Agent, as applicable, meeting the
qualifications set forth above; provided that if the Administrative
Agent or the Collateral Agent shall notify the Lead Borrower and the Lenders
that no qualifying Person has accepted such appointment, then such resignation
shall nonetheless become effective in accordance with such notice and (a) the
retiring Agent shall be discharged from its duties and obligations hereunder
and under the other Loan Documents (except that in the case of any Collateral
held by the Collateral Agent on behalf of the Lenders or the L/C Issuer under
any of the Loan Documents, the retiring Collateral Agent shall continue to hold
such collateral security until such time as a successor Collateral Agent is
appointed) and (b) all payments, communications and determinations
provided to be made by, to or through the Administrative Agent shall instead be
made by or to each Lender and the L/C Issuer directly, until such time as the
Required Lenders appoint a successor Administrative Agent as provided for above
in this Section 9.06.  Upon
the acceptance of a successor’s appointment as Administrative Agent or
Collateral Agent, as applicable, hereunder, such successor shall succeed to and
become vested with

 

 

all of the rights, powers, privileges
and duties of the retiring (or retired) Agent, and the retiring Agent shall be
discharged from all of its duties and obligations hereunder or under the other
Loan Documents (if not already discharged therefrom as provided above in this Section 9.06).  The fees payable by the Borrowers to a
successor Administrative Agent shall be the same as those payable to its
predecessor unless otherwise agreed between the Lead Borrower and such
successor.  After the retiring Agent’s
resignation hereunder and under the other Loan Documents, the provisions of
this Article IX and Section 10.04 shall continue in effect for
the benefit of such retiring Agent, its sub-agents and their respective Related
Parties in respect of any actions taken or omitted to be taken by any of them
while the retiring Agent was acting as Administrative Agent or Collateral Agent
hereunder.

 

Any resignation by Bank of America as Administrative Agent pursuant to
this Section shall also constitute its resignation as L/C Issuer and Swing
Line Lender.  Upon the acceptance of a
successor’s appointment as Administrative Agent hereunder, (a) such
successor shall succeed to and become vested with all of the rights, powers,
privileges and duties of the retiring L/C Issuer and Swing Line Lender, (b) the
retiring L/C Issuer and Swing Line Lender shall be discharged from all of their
respective duties and obligations hereunder or under the other Loan Documents,
and (c) the successor L/C Issuer shall issue letters of credit in
substitution for the Letters of Credit, if any, outstanding at the time of such
succession or make other arrangements satisfactory to the retiring L/C Issuer
to effectively assume the obligations of the retiring L/C Issuer with respect
to such Letters of Credit.

 

9.07                Non-Reliance on Administrative Agent and
Other Lenders.  Each Lender and the L/C Issuer acknowledges that it has,
independently and without reliance upon the Agents or any other Lender or any
of their Related Parties and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into
this Agreement.  Each Lender and the L/C
Issuer also acknowledges that it will, independently and without reliance upon
the Agents or any other Lender or any of their Related Parties and based on
such documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or
based upon this Agreement, any other Loan Document or any related agreement or
any document furnished hereunder or thereunder. 
Except as provided in Section 9.12, the Agents shall not
have any duty or responsibility to provide any Credit Party with any other
credit or other information concerning the affairs, financial condition or
business of any Loan Party that may come into the possession of the Agents.

 

9.08                No Other Duties, Etc.  Anything
herein to the contrary notwithstanding, none of the Joint Lead Bookrunners,
Joint Lead Arrangers, or Co-Syndication Agents listed on the cover page hereof
shall have any powers, duties or responsibilities under this Agreement or any
of the other Loan Documents, except in its capacity, as applicable, as the
Administrative Agent, Collateral Agent, a Lender or the L/C Issuer hereunder.

 

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

 

(a)         to file and prove a claim for the whole amount of
the principal and interest owing and unpaid in respect of the Loans, L/C
Obligations and all other Obligations that are owing and unpaid and to file
such other documents as may be necessary or advisable in order to have the

 

 

claims of the Lenders, the L/C Issuer, the Administrative Agent and the
other Credit Parties (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Lenders, the L/C Issuer, the
Administrative Agent, such Credit Parties and their respective agents and
counsel and all other amounts due the Lenders, the L/C Issuer the
Administrative Agent and such Credit Parties under Sections 2.03(i), 2.03(j) and
2.03(k) as applicable, 2.09 and 10.04) allowed in
such judicial proceeding; and

 

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

 

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

 

Nothing contained herein shall be deemed to authorize the
Administrative Agent to authorize or consent to or accept or adopt on behalf of
any Lender or the L/C Issuer any plan of reorganization, arrangement,
adjustment or composition affecting the Obligations or the rights of any Lender
or the L/C Issuer or to authorize the Administrative Agent to vote in respect
of the claim of any Lender or the L/C Issuer in any such proceeding.

 

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

 

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

 

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

 

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

 

Upon request by any Agent at any time,
the Applicable Lenders will confirm in writing such Agent’s authority to
release or subordinate its interest in particular types or items of property,
or to release any Guarantor from its obligations under the Facility Guaranty
pursuant to this Section 9.10. 
In each case as specified in this Section 9.10, the Agents
will, at the Loan Parties’ expense, execute and deliver to the applicable Loan
Party such documents as such Loan Party may reasonably request to evidence the
release of such item of Collateral from the assignment and security interest
granted under the Security Documents or to subordinate its interest in such
item, or to release such Guarantor from its obligations under the Facility
Guaranty, in each case in accordance with the terms of the Loan Documents and
this Section 9.10.

 

 

9.11                Notice
of Transfer.

 

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

 

9.12                Reports
and Financial Statements.

 

By signing this Agreement, each Lender:

 

(a)         agrees to furnish the Administrative Agent upon the
occurrence and during the continuance of a Liquidity Event (and thereafter at
such frequency as the Administrative Agent may reasonably request) with a
summary of all Other Liabilities due or to become due to such Lender. In
connection with any distributions to be made hereunder, the Administrative
Agent shall be entitled to assume that no amounts are due to any Lender on
account of Other Liabilities unless the Administrative Agent has received
written notice thereof from such Lender;

 

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

 

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

 

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

 

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

 

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

 

9.13                Agency
for Perfection.

 

Each Lender hereby appoints each other Lender as agent for the purpose
of perfecting Liens for the benefit of the Agents and the Lenders, in assets
which, in accordance with Article 9 of the UCC or any

 

 

other applicable Law of the United States can be perfected only by
possession.  Should any Lender (other
than the Agents) obtain possession of any such Collateral, such Lender shall
notify the Agents thereof, and, promptly upon the Collateral Agent’s request
therefor shall deliver such Collateral to the Collateral Agent or otherwise
deal with such Collateral in accordance with the Collateral Agent’s instructions.

 

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

 

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

 

9.16                Defaulting
Lender.

 

(a)         If for any reason any Lender shall fail or refuse to
abide by its obligations under this Agreement, including without limitation its
obligation to make available to Administrative Agent its Applicable Percentage
of any Loans, expenses or setoff or purchase its Applicable Percentage of a
participation interest in the Swing Line Loans or L/C Borrowings and such
failure is not cured within two (2) days of receipt from the
Administrative Agent of written notice thereof, then, in addition to the rights
and remedies that may be available to the other Credit Parties, the Loan
Parties or any other party at law or in equity, and not in limitation thereof, (i) such
Defaulting Lender’s right to participate in the administration of, or
decision-making rights related to, the Obligations, this Agreement or the other
Loan Documents shall be suspended during the pendency of such failure or
refusal, (ii) at the Administrative Agent’s option, any and all payments
otherwise payable to a Defaulting Lender from the Loan Parties, whether on account
of outstanding Loans, interest, fees or otherwise, may be held by the
Administrative Agent and readvanced to the Borrowers, the Swing Line Lender or
any Issuing Bank  as the Defaulting
Lender’s Applicable Percentage of any Borrowing or required funding of a
participation in Swing Line Loans or Letters of Credit and (iii) without
limiting the provisions of clause (ii), a Defaulting Lender shall be deemed to
have assigned any and all payments due to it from the Loan Parties, whether on
account of outstanding Loans, interest, fees or otherwise, to the remaining
non-Defaulting Lenders for application to, and reduction of, their
proportionate shares of all outstanding Obligations until, as a result of
application of such assigned payments the Lenders’ respective Applicable
Percentages of all outstanding Obligations shall have returned to those in
effect immediately prior to such delinquency and without giving effect to the
nonpayment causing such delinquency.  The
Defaulting Lender’s decision-making and participation rights and rights to
payments as set forth in clauses (i), (ii) and (iii) hereinabove
shall be restored only upon the payment by the Defaulting Lender of its
Applicable Percentage of any Obligations, any participation obligation, or
expenses as to which it is delinquent, together with interest thereon at the
Default Rate from the date when originally due until the date upon which any
such amounts are actually paid.

 

 

(b)         The non-Defaulting Lenders shall also have the
right, but not the obligation, in their respective, sole and absolute
discretion, to cause the termination and assignment (pro rata, based on
the respective Commitments of those Lenders electing to exercise such right),
without any further action by the Defaulting Lender for no cash consideration
of the Defaulting Lender’s Commitment to fund future Loans; provided that
such Defaulting Lender shall be paid the Obligations then owing such Defaulting
Lender with respect to any funded portion of its Commitment which is the
subject of an assignment hereunder.  Upon
any such purchase of the Applicable Percentage of any Defaulting Lender, the
Defaulting Lender’s share in future Credit Extensions and its rights under the
Loan Documents with respect thereto shall terminate on the date of purchase,
and the Defaulting Lender shall promptly execute all documents reasonably
requested to surrender and transfer such interest, including, if so requested,
an Assignment and Acceptance.

 

(c)         Each Defaulting Lender shall indemnify the
Administrative Agent and each non-Defaulting Lender from and against any and
all loss, damage or expenses, including but not limited to reasonable attorneys’
fees and funds advanced by the Administrative Agent or by any non-Defaulting
Lender, on account of a Defaulting Lender’s failure to timely fund its
Applicable Percentage of a Loan or to otherwise perform its obligations under
the Loan Documents.

 

ARTICLE X

MISCELLANEOUS

 

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

 

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

 

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

 

(c)         reduce the principal of, or the rate of interest
specified herein on, any Loan or L/C Borrowing, or (subject to clause (iv) of
the second proviso to this Section 10.01) any fees or other amounts
payable hereunder or under any other Loan Document; provided, however,
that only the consent of the Required Lenders shall be necessary to amend the
definition of “Default Rate” or to waive any obligation of the Borrowers to pay
interest or Letter of Credit Fees at the Default Rate;

 

(d)         change Section 2.12(e) or Section 8.03
in a manner that would alter the pro rata sharing of payments required thereby
without the written consent of each Lender;

 

 

(e)         change any provision of this Section or the
definition of “Required Lenders”, or any other provision hereof specifying the
number or percentage of Lenders required to amend, waive or otherwise modify
any rights hereunder or make any determination or grant any consent hereunder,
without the written consent of each Lender;

 

(f)          except as expressly permitted hereunder or under any
other Loan Document, release, or limit the liability of, any Loan Party without
the written consent of each Lender;

 

(g)         except for Permitted Dispositions, release all or
substantially all of the Collateral from the Liens of the Security Documents
without the written consent of each Lender;

 

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

 

(i)          increase the advance rates set forth in the
definition of the term “Borrowing Base” without the written consent of each
Lender, provided that the
foregoing shall not limit (x) the ability of the Super-Majority Required
Lenders to modify any other component of the Borrowing Base or (y) the
discretion of the Administrative Agent to change, establish or eliminate any
Reserves;

 

(j)          modify the definition of Permitted Overadvance so as
to increase the amount thereof or, except as provided in such definition, the
time period for a Permitted Overadvance without the written consent of each
Lender;

 

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

 

(l)          increase the Swing Line Sublimit without the written
consent of each Lender;

 

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

 

If any Lender does not consent (a “Non-Consenting
Lender”) to a proposed amendment, waiver, consent or release with respect
to any Loan Document that requires the consent of each Lender and that has been
approved by the Required Lenders, the Lead Borrower may replace such
Non-Consenting Lender in accordance with Section 10.13; provided
that such amendment, waiver, consent or release can

 

 

be effected as a result of the
assignment contemplated by such Section (together with all other such
assignments required by the Lead Borrower to be made pursuant to this
paragraph).

 

10.02              Notices;
Effectiveness; Electronic Communications.

 

(a)         Notices Generally.  Except in the case of notices and other
communications expressly permitted to be given by telephone (and except as
provided in subsection (b) below), all notices and other communications
provided for herein shall be in writing and shall be delivered by hand or
overnight courier service, mailed by certified or registered mail or sent by
telecopier, or electronic communication (subject to clause (b) below) as
follows, and all notices and other communications expressly permitted hereunder
to be given by telephone shall be made to the applicable telephone number, as
follows:

 

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

 

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

 

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

 

(b)         Electronic Communications.  Notices and other communications to the
Lenders and the L/C Issuer hereunder may be delivered or furnished by
electronic communication (including e-mail and Internet or intranet websites)
pursuant to procedures approved by the Administrative Agent, provided
that the foregoing shall not apply to notices to any Lender or the L/C Issuer
pursuant to Article II if such Lender or the L/C Issuer, as
applicable, has notified the Administrative Agent that it is incapable of
receiving notices under such Article II by electronic communication.  The Administrative Agent or the Lead Borrower
may, in its discretion, agree to accept notices and other communications to it
hereunder by electronic communications pursuant to procedures approved by it, provided
that approval of such procedures may be limited to particular notices or
communications.

 

Unless the Administrative Agent otherwise prescribes, (i) notices
and other communications sent to an e-mail address shall be deemed received
upon the sender’s receipt of an acknowledgment from the intended recipient
(such as by the “return receipt requested” function, as available, return
e-mail or other written acknowledgment), provided that if such notice or other
communication is not sent during the normal business hours of the recipient,
such notice or communication shall be deemed to have been sent at the opening
of business on the next Business Day for the recipient, and (ii) notices
or communications posted to an Internet or intranet website shall be deemed
received upon the deemed receipt by the intended recipient at its e-mail
address as described in the foregoing clause (i) of notification that
such notice or communication is available and identifying the website address
therefor.

 

(c)         The Platform.  THE PLATFORM IS PROVIDED “AS IS” AND “AS
AVAILABLE.”  THE AGENT PARTIES (AS
DEFINED BELOW) DO NOT WARRANT THE

 

 

ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF
THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM
THE BORROWER MATERIALS.  NO WARRANTY OF
ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD
PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY
AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM.  In no event shall the Agents or any of their
Related Parties (collectively, the “Agent Parties”) have any liability
to any Loan Party, any Lender, the L/C Issuer or any other Person for losses,
claims, damages, liabilities or expenses of any kind (whether in tort, contract
or otherwise) arising out of the Loan Parties’ or the Administrative Agent’s
transmission of Borrower Materials through the Internet, except to the extent
that such losses, claims, damages, liabilities or expenses are determined by a
court of competent jurisdiction by a final and nonappealable judgment to have
resulted from the gross negligence or willful misconduct of such Agent Party; provided,
however, that in no event shall any Agent Party have any liability to any Loan Party, any Lender, the L/C
Issuer or any other Person for indirect, special, incidental, consequential or punitive
damages (as opposed to direct or actual damages).

 

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

 

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

 

10.03              No Waiver; Cumulative Remedies.  No
failure by any Credit Party to exercise, and no delay by any such Person in
exercising, any right, remedy, power or privilege hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder or under any other Loan Document preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege.  The rights,
remedies, powers and privileges provided herein and in the other Loan Documents
are cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.  Without limiting the
generality of the foregoing, the making of a Loan or issuance of a Letter of
Credit shall not be construed as a waiver of

 

 

any Default or Event of Default,
regardless of whether any Credit Party may have had notice or knowledge of such
Default or Event of Default at the time.

 

10.04              Expenses; Indemnity; Damage Waiver.

 

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

 

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

 

(c)     Reimbursement by Lenders.  Without limiting the Lenders’ obligations
under Section 9.14 hereof, to the extent that the Loan Parties for
any reason fail to indefeasibly pay any amount required under subsection (a) or (b) of
this Section 10.04 to be paid by it, each Lender severally agrees
to pay to the Agents (or any such sub-agent), the L/C Issuer or such Related
Party, as the case may be, such Lender’s Applicable Percentage (determined as
of the time that the applicable unreimbursed expense or indemnity payment is
sought) of such unpaid amount, provided that the unreimbursed expense or
indemnified loss, claim, damage, liability or related expense, as the case may
be, was incurred by or asserted against the Agents (or any such sub-agent) or
the L/C Issuer in its capacity as such, or against any Related Party of any of
the foregoing acting for the Agents (or any such sub-agent) or L/C Issuer in
connection with such capacity.  The
obligations of the Lenders under this subsection (c) are subject to
the provisions of Section 2.12(d).

 

 

(d)     Waiver of Consequential Damages, Etc.  To the fullest extent permitted by applicable
Law, no party hereto shall assert, and each party hereto hereby waives, any
claim against any other party hereto, on any theory of liability, for special,
indirect, consequential or punitive damages (as opposed to direct or actual
damages) arising out of, in connection with, or as a result of, this Agreement,
any other Loan Document or any agreement or instrument contemplated hereby, the
transactions contemplated hereby or thereby, any Loan or Letter of Credit or
the use of the proceeds thereof.

 

(e)     Payments.  All amounts due under this Section 10.04
shall be payable on demand therefor.

 

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

 

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

 

10.06              Successors and Assigns.

 

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

 

(b)           Assignments by Lenders.  Any Lender may at any time assign to one or
more Eligible Assignees all or a portion of its rights and obligations under
this Agreement (including all or a 

 

 

portion of its Commitment(s) and
the Loans (including for purposes of this Section 10.06(b),
participations in L/C Obligations and in Swing Line Loans) at the time owing to
it); provided that any such assignment shall be subject to the following
conditions:

 

(i)            Minimum Amounts.

 

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

 

(B)           in any case not described in subsection (b)(i)(A)of this Section, the
aggregate amount of the Commitment (which for this purpose includes Loans
outstanding thereunder) or, if the Commitment is not then in effect, the
principal outstanding balance of the Loans of the assigning Lender subject to
each such assignment, determined as of the date the Assignment and Assumption
with respect to such assignment is delivered to the Administrative Agent or, if
“Trade Date” is specified in the Assignment and Assumption, as of the Trade
Date, shall not be less than $5,000,000 unless each of the Administrative Agent
and, so long as no Default has occurred and is continuing, the Lead Borrower
otherwise consents (each such consent not to be unreasonably withheld or
delayed); provided, however, that concurrent assignments to
members of an Assignee Group and concurrent assignments from members of an
Assignee Group to a single Eligible Assignee (or to an Eligible Assignee and
members of its Assignee Group) will be treated as a single assignment for
purposes of determining whether such minimum amount has been met; and

 

(C)           after giving effect to any such assignment, the aggregate amount of the
remaining Commitment (which for this purpose includes Loans outstanding
thereunder) or, if the Commitment is not then in effect, the principal
outstanding balance of the Loans held by the assigning Lender shall not be less
than $5,000,000 unless each of the Administrative Agent and, so long as no
Default has occurred and is continuing, the Lead Borrower otherwise consents
(each such consent not to be unreasonably withheld or delayed).

 

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

 

(iii)          Required Consents.  No consent to an assignment by a Lender shall
be required for any assignment except to the extent required by subsection
(b)(i)(B) and (b)(i)(C)of this Section and, in addition:

 

(A)          the consent of the Lead Borrower (such consent not to be unreasonably
withheld or delayed) shall be required unless (1) a Default has occurred
and is continuing at the time of such assignment or (2) such assignment is
to a Lender, an Affiliate of a Lender or an Approved Fund; and

 

(B)           the consent of the Administrative Agent (such consent not to be
unreasonably withheld or delayed) shall be required for assignments in respect
of any Commitment if such assignment is to a Person that is not a Lender, an
Affiliate of such Lender or an Approved Fund with respect to such Lender; and

 

 

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

 

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

 

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

 

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

 

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

 

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

 

 

this Agreement.  Any Participant shall agree in writing to
comply with all confidentiality obligations set forth in Section 10.07
as if such Participant was a Lender hereunder.

 

Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any  provision of this Agreement;
provided that such agreement or instrument may provide that such Lender will
not, without the consent of the Participant, agree to any amendment, waiver or
other modification described in the first proviso to Section 10.01
that affects such Participant.  Subject
to subsection (e) of this Section, the Loan Parties agree that each
Participant shall be entitled to the benefits of Sections 3.01, 3.04 and
3.05  to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to Section 10.06(b).  To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 10.08  as though it were a Lender, provided such Participant
agrees to be subject to Section 2.12(e) as though it were a
Lender.

 

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

 

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

 

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

 

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

 

 

Amounts pursuant to Section 2.03(c)).  If Bank of America resigns as Swing Line
Lender, it shall retain all the rights of the Swing Line Lender provided for
hereunder with respect to Swing Line Loans made by it and outstanding as of the
effective date of such resignation, including the right to require the Lenders
to make Prime Rate Loans or fund risk participations in outstanding Swing Line
Loans pursuant to Section 2.04(c). 
Upon the appointment of a successor L/C Issuer and/or Swing Line Lender,
(a) such successor shall succeed to and become vested with all of the
rights, powers, privileges and duties of the retiring L/C Issuer or Swing Line
Lender, as the case may be, and (b) the successor L/C Issuer shall issue
letters of credit in substitution for the Letters of Credit, if any,
outstanding at the time of such succession or make other arrangements
satisfactory to Bank of America to effectively assume the obligations of Bank
of America with respect to such Letters of Credit.

 

10.07              Treatment of Certain Information;
Confidentiality.  Each of the Credit Parties agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its Affiliates and to its and its Affiliates’
respective partners, directors, officers, employees, agents, funding sources,
attorneys, advisors and representatives (it being understood that the Persons
to whom such disclosure is made will be informed of the confidential nature of
such Information and instructed to keep such Information confidential), (b) to
the extent requested by any regulatory authority purporting to have
jurisdiction over it (including any self-regulatory authority, such as the
National Association of Insurance Commissioners), (c) to the extent
required by applicable Laws or regulations or by any subpoena or similar legal
process, (d) to any other party hereto, (e) in connection with the
exercise of any remedies hereunder or under any other Loan Document or any
action or proceeding relating to this Agreement or any other Loan Document or
the enforcement of rights hereunder or thereunder, (f) subject to an
agreement containing provisions substantially the same as those of this
Section, to (i) any assignee of or Participant in, or any prospective
assignee of or Participant in, any of its rights or obligations under this
Agreement or (ii) any actual or prospective counterparty (or its advisors)
to any swap or derivative transaction relating to any Loan Party and its
obligations, (g) with the consent of the Lead Borrower or (h) to the
extent such Information (x) becomes publicly available other than as a
result of a breach of this Section or (y) becomes available to any
Credit Party or any of their respective Affiliates on a non-confidential basis
from a source other than the Loan Parties.

 

For purposes of this Section, “Information” means all information
received from the Loan Parties or any Subsidiary thereof relating to the Loan
Parties or any Subsidiary thereof or their respective businesses, other than
any such information that is available to any Credit Party on a
non-confidential basis prior to disclosure by the Loan Parties or any
Subsidiary thereof, provided that, in the case of information received from any
Loan Party or any Subsidiary after the date hereof, such information is clearly
identified at the time of delivery as confidential.  Any Person required to maintain the
confidentiality of Information as provided in this Section shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.

 

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

 

10.08              Right of Setoff.  If
an Event of Default shall have occurred and be continuing or if any Lender
shall have been served with a trustee process or similar attachment relating to
property of a Loan Party, each Lender, the L/C Issuer and each of their
respective Affiliates is hereby

 

 

authorized at any time and from time to
time, after obtaining the prior written consent of the Administrative Agent or
the Required Lenders, to the fullest extent permitted by applicable Law, to set
off and apply any and all deposits (general or special, time or demand,
provisional or final, in whatever currency) at any time held and other
obligations (in whatever currency) at any time owing by such Lender, the L/C
Issuer or any such Affiliate to or for the credit or the account of the Borrowers
or any other Loan Party against any and all of the Obligations now or hereafter
existing under this Agreement or any other Loan Document to such Lender or the
L/C Issuer, regardless of the adequacy of the Collateral, and irrespective of
whether or not such Lender or the L/C Issuer shall have made any demand under
this Agreement or any other Loan Document and although such obligations of the
Borrowers or such Loan Party may be contingent or unmatured or are owed to a
branch or office of such Lender or the L/C Issuer different from the branch or
office holding such deposit or obligated on such indebtedness.  The rights of each Lender, the L/C Issuer and
their respective Affiliates under this Section are in addition to other
rights and remedies (including other rights of setoff) that such Lender, the
L/C Issuer or their respective Affiliates may have.  Each Lender and the L/C Issuer agrees to
notify the Lead Borrower and the Administrative Agent promptly after any such
setoff and application, provided that the failure to give such notice
shall not affect the validity of such setoff and application.

 

10.09              Interest Rate Limitation.  Notwithstanding
anything to the contrary contained in any Loan Document, the interest paid or
agreed to be paid under the Loan Documents shall not exceed the maximum rate of
non-usurious interest permitted by applicable Law (the “Maximum Rate”).  If the Administrative Agent or any Lender
shall receive interest in an amount that exceeds the Maximum Rate, the excess
interest shall be applied to the principal of the Loans or, if it exceeds such
unpaid principal, refunded to the Borrowers. 
In determining whether the interest contracted for, charged, or received
by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person
may, to the extent permitted by applicable Law, (a) characterize any
payment that is not principal as an expense, fee, or premium rather than
interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize,
prorate, allocate, and spread in equal or unequal parts the total amount of
interest throughout the contemplated term of the Obligations hereunder.

 

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

 

10.11              Survival. 
All representations and
warranties made hereunder and in any other Loan Document or other document
delivered pursuant hereto or thereto or in connection herewith or therewith, as
of the date made or referenced therein, shall survive the execution and
delivery hereof and thereof.  Such
representations and warranties have been or will be relied upon by the Credit
Parties, regardless of any investigation made by any Credit Party or on their
behalf and notwithstanding that any Credit Party may have had notice or
knowledge of any Default at the time of any Credit Extension, and shall
continue in full force and effect as long as any Loan or any other Obligation
hereunder shall remain unpaid or unsatisfied or any Letter of Credit shall
remain

 

 

outstanding.  Further, the provisions of Sections  3.01,
3.04, 3.05 and 10.04 and Article IX shall
survive and remain in full force and effect regardless of the repayment of the
Obligations, the expiration or termination of the Letters of Credit and the
Commitments or the termination of this Agreement or any provision hereof.  In connection with the termination of this Agreement
and the release and termination of the security interests in the Collateral,
the Agents may reasonably require such indemnities and collateral security as
they shall reasonably deem necessary or appropriate to protect the Credit
Parties against (x) loss on account of credits previously applied to the
Obligations that may subsequently be reversed or revoked, and (y) any
obligations that may thereafter arise with respect to future indemnification
obligations or the Other Liabilities or under Section 10.03 hereof.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

10.14              Governing Law; Jurisdiction; Etc.

 

(a)           GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (EXCEPT FOR THE
CONFLICT OF LAWS RULES THEREOF, BUT INCLUDING GENERAL OBLIGATIONS LAW SECTIONS
5-1401 AND 5-1402).

 

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

 

(c)           WAIVER OF VENUE.  EACH PARTY IRREVOCABLY AND UNCONDITIONALLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT IN ANY COURT REFERRED TO IN SECTION 10.14(B).  EACH PARTY HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT
FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

 

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

 

(e)           ACTIONS COMMENCED BY LOAN
PARTIES. EACH LOAN PARTY AGREES THAT ANY ACTION COMMENCED BY ANY LOAN PARTY
ASSERTING ANY CLAIM OR COUNTERCLAIM ARISING UNDER OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL BE BROUGHT SOLELY IN A COURT OF THE
STATE OF NEW YORK SITTING IN NEW YORK COUNTY OR THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AS THE ADMINISTRATIVE AGENT MAY ELECT
IN ITS SOLE DISCRETION AND CONSENTS TO THE EXCLUSIVE JURISDICTION OF SUCH
COURTS WITH RESPECT TO ANY SUCH ACTION.

 

 

10.15              Waiver of Jury Trial.  EACH
PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY
(WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT
IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 10.15.

 

10.16              No Advisory or Fiduciary Responsibility.  In connection with
all aspects of each transaction contemplated hereby, the Loan Parties each
acknowledge and agree that: (i) the credit facility provided for hereunder and any related arranging or other
services in connection therewith (including in connection with any amendment,
waiver or other modification hereof or of any other Loan Document) are an arm’s-length
commercial transaction between the Loan Parties, on the one hand, and the
Credit Parties, on the other hand, and each
of the Loan Parties is capable of evaluating and understanding and understands
and accepts the terms, risks and conditions of the transactions contemplated
hereby and by the other Loan Documents (including any amendment, waiver or
other modification hereof or thereof); (ii) in connection with the process
leading to such transaction, the each Credit Party is and has been acting
solely as a principal and is not the financial advisor, agent or fiduciary, for
the Loan Parties or any of their
respective Affiliates, stockholders, creditors or employees or any other
Person; (iii) none of the Credit Parties has assumed or will assume an
advisory, agency or fiduciary responsibility in favor of the Loan Parties with
respect to any of the transactions contemplated hereby or the process leading
thereto, including with respect to any amendment, waiver or other modification
hereof or of any other Loan Document (irrespective of whether any of the Credit
Parties has advised or is currently advising any Loan Party or any of its Affiliates on other matters) and
none of the Credit Parties has any obligation to any Loan Party or any of its Affiliates with respect to the
transactions contemplated hereby except those obligations expressly set forth
herein and in the other Loan Documents; (iv) the Credit Parties and their
respective Affiliates may be engaged in a broad range of transactions that
involve interests that differ from those of the Loan Parties and their respective Affiliates, and none
of the Credit Parties has any obligation to disclose any of such interests by
virtue of any advisory, agency or fiduciary relationship; and (v) the
Credit Parties have not provided and will not provide any legal, accounting,
regulatory or tax advice with respect to any of the transactions contemplated
hereby (including any amendment, waiver or other modification hereof or of any
other Loan Document) and each of the
Loan Parties has consulted its own legal, accounting, regulatory and tax
advisors to the extent it has deemed appropriate.  Each
of the Loan Parties hereby waives and releases, to the fullest extent
permitted by law, any claims that it may have against each of the Credit
Parties with respect to any breach or alleged breach of agency or fiduciary
duty.

 

10.17              USA PATRIOT Act Notice.  Each
Lender that is subject to the Patriot Act and the Administrative Agent (for
itself and not on behalf of any Lender) hereby notifies the Loan Parties that
pursuant to the requirements of the Patriot Act, it is required to obtain,
verify and record information that identifies each Loan Party, which
information includes the name and address of each Loan Party and other
information that will allow such Lender or the Administrative Agent, as
applicable, to identify each Loan Party in accordance with the Patriot Act.
Each Loan Party is in

 

 

compliance, in all material respects,
with the Patriot Act.  No part of the
proceeds of the Loans will be used by the Loan Parties, directly or indirectly,
for any payments to any governmental official or employee, political party,
official of a political party, candidate for political office, or anyone else
acting in an official capacity, in order to obtain, retain or direct business
or obtain any improper advantage, in violation of the United States Foreign
Corrupt Practices Act of 1977, as amended.

 

10.18              Foreign Assets Control Regulations.  Neither
of the advance of the Loans nor the use of the proceeds of any thereof will
violate the Trading With the Enemy Act (50 U.S.C. § 1 et seq., as amended) (the
“Trading With the Enemy Act”) or any of the foreign assets control
regulations of the United States Treasury Department (31 CFR, Subtitle B,
Chapter V, as amended) (the “Foreign Assets Control Regulations”) or any
enabling legislation or executive order relating thereto (which for the
avoidance of doubt shall include, but shall not be limited to (a) Executive
Order 13224 of September 21, 2001 Blocking Property and Prohibiting
Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism
(66 Fed. Reg. 49079 (2001)) (the “Executive
Order”) and (b) the Patriot Act. 
Furthermore, none of the Borrowers or their Affiliates (a) is or
will become a “blocked person” as described in the Executive Order, the Trading
With the Enemy Act or the Foreign Assets Control Regulations or (b) engages
or will engage in any dealings or transactions, or be otherwise associated,
with any such “blocked person” or in any manner violative of any such order.

 

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

 

10.20              Press
Releases.  Each Loan Party consents to
the publication by Administrative Agent or any Lender of advertising material
relating to the financing transactions contemplated by this Agreement using any
Loan Party’s name, product photographs, logo or trademark.  Administrative Agent or such Lender shall
provide a draft reasonably in advance of any advertising material to the Lead
Borrower for review and comment prior to the publication thereof.  Administrative Agent reserves the right to
provide to industry trade organizations information necessary and customary for
inclusion in league table measurements.

 

10.21              Additional Waivers.

 

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

 

(b)           The obligations of each Loan
Party  shall not be subject to any
reduction, limitation, impairment or termination for any reason (other than the
indefeasible payment in full in cash of the Obligations after the termination
of the Commitments), including any claim of waiver, release, surrender,
alteration or compromise of any of the Obligations, and shall not be subject to
any defense or setoff, counterclaim, recoupment or termination whatsoever by
reason of the invalidity, illegality or unenforceability of any of the
Obligations or otherwise. Without limiting the generality of the foregoing, the
obligations of each Loan Party hereunder shall not be discharged or impaired or
otherwise affected by the failure of any Agent or any other Credit Party to
assert any claim or demand or to enforce any remedy under this Agreement, any
other Loan Document or any other agreement, by any waiver or modification

 

 

of any provision of any
thereof, any default, failure or delay, willful or otherwise, in the
performance of any of the Obligations, or by any other act or omission that may
or might in any manner or to any extent vary the risk of any Loan Party or that
would otherwise operate as a discharge of any Loan Party as a matter of law or
equity (other than the indefeasible payment in full in cash of all the
Obligations after the termination of the Commitments).

 

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

 

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

 

 

(e)           Without limiting the
generality of the foregoing, or of any other waiver or other provision set
forth in this Agreement, each Loan Party hereby absolutely, knowingly,
unconditionally, and expressly waives any and all claim, defense or benefit
arising directly or indirectly under any one or more of Sections 2787 to 2855
inclusive of the California Civil Code or any similar law of California.

 

10.22                      No Strict Construction. 
The parties hereto have participated jointly in the negotiation and
drafting of this Agreement.  In the event
an ambiguity or question of intent or interpretation arises, this Agreement
shall be construed as if drafted jointly by the parties hereto and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement.

 

10.23                      Attachments.  The
exhibits, schedules and annexes attached to this Agreement are incorporated
herein and shall be considered a part of this Agreement for the purposes stated
herein, except that in the event of any conflict between any of the provisions
of such exhibits and the provisions of this Agreement, the provisions of this
Agreement shall prevail.

 

10.24                      Copies and Facsimiles.  This
Agreement and all other documents (including, without limitation, the Loan
Documents) which have been or may be hereinafter furnished by any Loan Party to
any Agent or any Lender may be reproduced by such Agent or such Lender by any
photographic, microfilm, xerographic, digital imaging, or other process. Any
such reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made in the regular course
of business). Any facsimile which bears proof of transmission shall be binding
on the party which or on whose behalf such transmission was initiated and
likewise so admissible in evidence as if the original of such facsimile had
been delivered to the party which or on whose behalf such transmission was
received.

 

[Signature pages follow]

 

 

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

 

	
   

  	
  BORROWERS

  
	
   

  	
   

  
	
   

  	
  /s/THE PEP BOYS —
  MANNY, MOE & JACK

  
	
   

  	
   

  
	
   

  	
  /s/ THE
  PEP BOYS MANNY, MOE & JACK OF CALIFORNIA

  
	
   

  	
   

  
	
   

  	
  /s/ PEP BOYS — MANNY,
  MOE & JACK OF DELAWARE, INC.

  
	
   

  	
   

  
	
   

  	
  /s/ PEP BOYS — MANNY,
  MOE & JACK OF PUERTO RICO, INC.

  
	
   

  	
   

  
	
   

  	
  GUARANTORS

  
	
   

  	
   

  
	
   

  	
  /s/ PBY CORPORATION

  
	
   

  	
   

  
	
   

  	
  /s/ CARRUS SUPPLY CORPORATION

  
	
   

  	
   

  
	
   

  	
  /S/ BANK OF AMERICA, N.A.,
  as Administrative Agent and as Collateral Agent

  
	
   

  	
   

  
	
   

  	
  /S/ BANK OF AMERICA, N.A.,
  as a Lender, L/C Issuer and Swing Line Lender

  
	
   

  	
   

  
	
   

  	
  /S/ WELLS FARGO RETAIL
  FINANCE, LLC, as an L/C Issuer

  
	
   

  	
   

  
	
   

  	
  /S/ WELLS FARGO RETAIL
  FINANCE, LLC, as a Lender

  
	
   

  	
   

  
	
   

  	
  /S/ REGIONS BANK, as a
  Lender

  
	
   

  	
   

  
	
   

  	
  /S/ PNC BANK, NATIONAL
  ASSOCIATION, as a Lender

  
	
   

  	
   

  
	
   

  	
  /S/ CAPITAL ONE LEVERAGE
  FINANCE CORP., as a Lender

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00157-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00157-of-00352.parquet"}]]