Document:

EX-4.16                                  SENIOR SECURED CONVERTIBLE NOTE

No. 1-A                                                          $25,000

                             TRANSAXIS, INC.

                     SENIOR SECURED CONVERTIBLE NOTE

                    Maturity Date: September 29, 2003

THIS NOTE AND THE COMMON STOCK THAT MAY BE ISSUABLE TO THE HOLDER
HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, DONATED OR
OTHERWISE TRANSFERRED WITHOUT COMPLIANCE WITH THE REGISTRATION OR
QUALIFICATION PROVISIONS OF APPLICABLE FEDERAL AND STATE SECURITIES
LAWS OR APPLICABLE EXEMPTIONS THEREFROM.

FOR VALUE RECEIVED, TRANSAXIS, INC. (formerly Digital Courier
Technologies, Inc.), a Delaware corporation (the "Company"), promises
to pay to FREESTAR TECHNOLOGY CORPORATION, the registered holder or
registered assigns hereof (the "Holder"), the principal amount of
TWENTY-FIVE THOUSAND DOLLARS ($25,000) payable on September 29, 2003
(the "Maturity Date"), together with interest on the outstanding
principal amount of this Note, calculated on the basis of a 360 day
year and payable in arrears on a quarterly basis on the first day of
December, March, June and September of each year, accruing at the rate
of (i) twelve and one-half (12%) per annum, commencing on September
1, 2003, provided the acquisition by Holder of not less than 70% of
the capital stock of the Company (the "Acquisition") has not been
consummated on or before August 31, 2003, and (ii) fifteen percent
(15%) per annum, commencing on January 1, 2004, provided the
Acquisition has not been consummated as of such date.  Notwithstanding
any provision to the contrary contained in this Note, in the event
that the Acquisition is consummated on or before August 31, 2003, the
Maturity Date shall be extended for an additional period of one year
after the closing of the Acquisition pursuant to Section 2 of the
Letter of Intent (defined below).

     8.  Payments and Prepayments.

        (a)  Payments of principal and interest on this Note shall
be made at the principal office of the Holder, located at Calle
Fantino Falco, J.A. Baez Building, 2nd Floor, Santo Domingo, Dominican
Republic, or such other place or places as may be specified by the
Holder of this Note in a written notice to the Company at least ten
(10) days before a given payment date.

        (b)  Payments of principal and interest on this Note shall
be made in lawful money of the United States of America by mailing the
Company's good check in the proper amount to the Holder at least five
days prior to the due date of each payment or otherwise transferring
funds so as to be received by the Holder on the due date of each such
payment.

        (c)  If any payment on this Note becomes due and payable on
a Saturday, Sunday or other day on which commercial banks in New York,
New York are authorized or required by law to close, the maturity
thereof shall be extended to the next succeeding business day and,
with respect to payments of principal, interest thereon shall be
payable during such extension at the then applicable rate.

        (d)  This Note is subject to prepayment, in whole or in
part, at the option of the Company, at any time, without premium or
penalty; provided, however, that this Note shall not be prepayable if
the Holder has given notice of election to convert pursuant to Section
4 below.

     9.  Security.  The payment of this Note is secured by a security
agreement dated as of June 30, 2003 (the "Security Agreement").

     10.  Seniority.  The payment of this Note is a senior obligation
of the Company.

     11.  Conversion.  In the event this Note is not repaid in full on
or before December 31, 2003, the Holder shall have the option for a
one-year period (the "Option"), commencing on January 1, 2004 to
convert this Note, without the payment of any other consideration,
into such number of shares of common stock of the Company (the
"Conversion Shares") as will equal the percentage determined in the
following sentence (the "Conversion Percentage") of the Company's then
outstanding number of shares of voting capital stock on a fully-
diluted basis.  The Conversion Percentage shall be at least five
percent (5%) and shall be increased by the number of percentage points
that is obtained by dividing (i) the aggregate amount of principal and
interest that remains outstanding on this Note and any other notes
made by the Holder pursuant to the Letter of Intent as of the date of
calculation by (ii) 15,000.  Until the Note is repaid in full the
Company shall not borrow or become otherwise liable for any sum of
money, incur any debt or subject any of its assets to any lien or
encumbrance whatsoever without the prior written consent of Holder
(the "TransAxis Indebtedness Covenant"), except (i) any borrowing made
to repay Holder in full under this Note or (ii) in the ordinary course
of the Company's business consistent with past practice.  In the event
the Company breaches the TransAxis Indebtedness Covenant, this Note
shall be deemed in default and the Option shall become exercisable as
provided in the first sentence of this Section 4.

     12.  Events of Default.  In the event that any one or more of the
following occurs:

        (i)  the Company defaults in the payment of any installment
of interest required to be made on this Note and such default shall
continue for a period of ten (10) days;

        (ii)  the Company defaults in making any payment of principal
on this Note required to be made on this Note and such default shall
continue for a period of five (5) days;

        (iii)  the occurrence of any default under the Security
Agreement;

        (iv)  the failure of the Company to perform any of its
obligations or the breach of any of its representations or covenants
under Section 1 of the letter of intent dated as of June 30, 2003
between the Holder, the Company and certain stockholders of the
Company (the "Letter of Intent");

        (v)  the failure in any material respect to apply the
proceeds of this Note in accordance with Exhibit C to the Letter of
Intent; or

        (vi)  the Company hereafter makes an assignment for the
benefit of creditors, or files a petition in bankruptcy as to itself,
is adjudicated insolvent or bankrupt, petitions a receiver of or any
trustee for the Company or any substantial part of the property of the
Company under any bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, whether or not hereafter in effect; or if there is
hereafter commenced against the Company any such proceeding and an
order approving the petition is entered or such proceeding remains
undismissed for a period of sixty (60) days, or the Company by any act
or omission to act indicates its consent to the approval of or
acquiescence in any such proceeding or the appointment of any receiver
of, or trustee for, the Company or any substantial part of its
properties, or suffers any such receivership or trusteeship to
continue undischarged for a period of sixty (60) days.

then, and in any such event, and at any time thereafter, if such event
shall then be continuing, the holder of this Note may declare this
Note due and payable, whereupon the same shall be due and payable
without presentment, demand, protest or other notice of any kind.

     13.  Investment Representation.

        (a)  The Holder hereby acknowledges that this Note and the
Conversion Shares are not being registered (i) under the Act on the
ground that the issuance of the Note is exempt from registration under
Section 4(2) of the Act as not involving any public offering or (ii)
under any applicable state securities law because the issuance of this
Note does not involve any public offering; and that the Company's
reliance on the Section 4(2) exemption of the Act and under applicable
state securities laws is predicated in part on the representations
hereby made to the Company by the Holder that it is acquiring this
Note for investment for its own account, with no present intention of
dividing its participation with others or reselling or otherwise
distributing the same except pursuant to any requirement of law that
the disposition of its property shall at any time be within its control.

        (b)  The Holder hereby agrees that it will not sell or
transfer all or any part of this Note and/or Conversion Shares other
than to its subsidiaries or Affiliates (as such term is defined in
Rule 144 promulgated under the Securities Act of 1933, as amended)
unless and until it shall first have given notice to the Company
describing such sale or transfer and furnished to the Company either
(a) an opinion, reasonably satisfactory to counsel for the Company, of
counsel (skilled in securities matters, selected by the Holder and to
the Company) to the effect that the proposed sale or transfer may be
made without registration under the Act and without registration or
qualification under any state law, or (b) an interpretive letter from
the Securities and Exchange Commission to the effect that no
enforcement action will be recommended if the proposed sale or
transfer is made without registration under the Act.

        (c)  If, at the time of issuance of the Conversion Shares,
no registration statement is in effect with respect to such shares
under applicable provisions of the Act, the Company may at its
election require that Holder provide the Company with written
reconfirmation of the Holder's investment intent and that any stock
certificate delivered to the Holder upon conversion of this Note shall
bear legends reading substantially as follows:

     "TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS
     SUBJECT TO CERTAIN RESTRICTIONS SET FORTH IN THE NOTE
     PURSUANT TO WHICH THESE SHARES WERE ISSUED BY THE COMPANY.
     COPIES OF THOSE RESTRICTIONS ARE ON FILE AT THE PRINCIPAL
     OFFICES OF THE COMPANY, AND NO TRANSFER OF SUCH SHARES OR OF
     THIS CERTIFICATE, OR OF ANY SHARES OR OTHER SECURITIES (OR
     CERTIFICATES THEREFOR) ISSUED IN EXCHANGE FOR OR IN RESPECT
     OF SUCH SHARES, SHALL BE EFFECTIVE UNLESS AND UNTIL THE
     TERMS AND CONDITIONS THEREIN SET FORTH SHALL HAVE BEEN
     COMPLIED WITH."

     "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
     REGISTERED UNDER THE SECURITIES ACT OF 1933, AND MAY NOT BE
     SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE
     ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
     SECURITIES ACT OF 1933 OR AN OPINION OF COUNSEL SATISFACTORY
     TO THE ISSUER OF THIS CERTIFICATE THAT REGISTRATION IS NOT
     REQUIRED UNDER SAID ACT."

In addition, so long as the foregoing legend may remain on any stock
certificate delivered to the Holder, the Company may maintain
appropriate "stop transfer" orders with respect to such certificates
and the shares represented thereby on its books and records and with
those to whom it may delegate registrar and transfer functions.

        (d)  The Company may refuse to recognize a transfer of this
Note or any Conversion Shares on its books should a holder attempt to
transfer this Note or any Conversion Shares otherwise than in
compliance with this Section 6.

     14.  Miscellaneous.

        (a)  This Note is the obligation of the Company only, and no
recourse shall be had for the payment thereof or interest thereon
against any shareholder, officer or director of the Company, whether
by virtue or any constitution, statute, rule or law or otherwise, all
such liability, by the acceptance hereof, and as part of the
consideration hereof, being expressly waived.

        (b)  Upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Note and
of a letter of indemnity reasonably satisfactory to the Company, and
upon reimbursement to the Company of all reasonable expenses incident
thereto, and upon surrender or cancellation of this Note, if
mutilated, the Company will make and deliver a new Note of like tenor
in lieu of such lost, stolen, destroyed or mutilated Note.

        (c)  THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF EACH OF THE
COMPANY AND THE HOLDER HEREUNDER SMALL BE CONSTRUED IN ACCORDANCE WITH
AND BE GOVERNED BY THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO
AGREEMENTS AND INSTRUMENTS MADE AND TO BE PERFORMED IN DELAWARE AND
CANNOT BE MODIFIED OR CHANGED ORALLY.

IN WITNESS WHEREOF, the Company has duly caused this Note to
be signed on its behalf, in its corporate name and by its duly
authorized officer as of this 17th day of July, 2003.

TRANSAXIS, INC.

By: /s/  Lynn Langford
Name: Lynn Langford
Title: Chief Financial OfficerExhibit 10.1

 

	
   

  

 

 

CREDIT
AGREEMENT

DATED AS OF NOVEMBER 25, 2003

AMONG

DEPARTMENT 56, INC.

THE LENDERS

AND

BANK ONE, NA

as
Administrative Agent, LC Issuer and Swing Line Lender

 

	
   

  

 

BANC ONE CAPITAL MARKETS,
INC.

as Lead Arranger and Sole Book Runner

 

	
   

  

 

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I  DEFINITIONS

  	
   

  
	
   

  	
   

  
	
  ARTICLE II  THE CREDITS

  	
   

  
	
  2.1

  	
  Commitment

  	
   

  
	
  2.2

  	
  Required Payments

  	
   

  
	
  2.3

  	
  Ratable Loans

  	
   

  
	
  2.4

  	
  Types of Advances

  	
   

  
	
  2.5

  	
  Swing Line Loans

  	
   

  
	
  2.6

  	
  Commitment
  Fee; Reductions and Increases in Aggregate Commitment

  	
   

  
	
  2.7

  	
  Minimum Amount of Each
  Advance

  	
   

  
	
  2.8

  	
  Optional Principal
  Payments

  	
   

  
	
  2.9

  	
  Method
  of Selecting Types and Interest Periods for New Advances

  	
   

  
	
  2.10

  	
  Conversion
  and Continuation of Outstanding Advances

  	
   

  
	
  2.11

  	
  Changes in Interest Rate, etc

  	
   

  
	
  2.12

  	
  Rates Applicable After
  Default

  	
   

  
	
  2.13

  	
  Method of Payment

  	
   

  
	
  2.14

  	
  Noteless
  Agreement; Evidence of Indebtedness

  	
   

  
	
  2.15

  	
  Telephonic Notices

  	
   

  
	
  2.16

  	
  Interest
  Payment Dates; Interest and Fee Basis

  	
   

  
	
  2.17

  	
  Notification of Advances,
  Interest Rates, Prepayments and Commitment Reductions

  	
   

  
	
  2.18

  	
  Lending Installations

  	
   

  
	
  2.19

  	
  Non-Receipt of Funds by the Administrative
  Agent

  	
   

  
	
  2.20

  	
  Facility LCs

  	
   

  
	
  2.21

  	
  Replacement of Lender

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE III  YIELD PROTECTION; TAXES

  	
   

  
	
  3.1

  	
  Yield Protection

  	
   

  
	
  3.2

  	
  Changes in
  Capital Adequacy Regulations

  	
   

  
	
  3.3

  	
  Availability of
  Types of Advances

  	
   

  
	
  3.4

  	
  Funding Indemnification

  	
   

  
	
  3.5

  	
  Taxes

  	
   

  
	
  3.6

  	
  Lender
  Statements; Survival of Indemnity

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV  CONDITIONS PRECEDENT

  	
   

  
	
  4.1

  	
  Initial Credit Extension

  	
   

  
	
  4.2

  	
  Each Credit Extension

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE V  REPRESENTATIONS AND WARRANTIES

  	
   

  
	
  5.1

  	
  Financial Condition

  	
   

  
	
  5.2

  	
  No Change

  	
   

  
	
  5.3

  	
  Corporate
  Existence; Compliance With Law

  	
   

  
	
  5.4

  	
  Corporate Power

  	
   

  
	
  5.5

  	
  No Legal Bar

  	
   

  
	
  5.6

  	
  Litigation

  	
   

  
	
  5.7

  	
  No Default

  	
   

  
	
  5.8

  	
  Ownership of Property;
  Liens

  	
   

  
	
  5.9

  	
  Intellectual Property

  	
   

  

 

i

 

	
  5.10

  	
  Taxes

  	
   

  
	
  5.11

  	
  Federal Regulations

  	
   

  
	
  5.12

  	
  Labor Matters

  	
   

  
	
  5.13

  	
  ERISA

  	
   

  
	
  5.14

  	
  Investment
  Company Act; Other Regulations

  	
   

  
	
  5.15

  	
  Subsidiaries

  	
   

  
	
  5.16

  	
  Use of Proceeds

  	
   

  
	
  5.17

  	
  Environmental Matters

  	
   

  
	
  5.18

  	
  Accuracy of Information

  	
   

  
	
  5.19

  	
  Collateral Documents

  	
   

  
	
  5.20

  	
  Solvency

  	
   

  
	
  5.21

  	
  Reportable Transaction

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI  COVENANTS

  	
   

  
	
  6.1

  	
  Financial Statements

  	
   

  
	
  6.2

  	
  Certificates; Other
  Information

  	
   

  
	
  6.3

  	
  Payment of Obligations

  	
   

  
	
  6.4

  	
  Maintenance of
  Existence; Compliance

  	
   

  
	
  6.5

  	
  Maintenance of
  Property; Insurance

  	
   

  
	
  6.6

  	
  Inspection
  of Property; Books and Records, Discussions

  	
   

  
	
  6.7

  	
  Notices

  	
   

  
	
  6.8

  	
  Environmental Laws

  	
   

  
	
  6.9

  	
  Additional Collateral, Guaranties,
  Etc

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII  NEGATIVE COVENANTS

  	
   

  
	
  7.1

  	
  Financial Condition
  Covenants

  	
   

  
	
  7.2

  	
  Indebtedness

  	
   

  
	
  7.3

  	
  Liens

  	
   

  
	
  7.4

  	
  Fundamental Changes

  	
   

  
	
  7.5

  	
  Disposition of Property

  	
   

  
	
  7.6

  	
  Restricted Payments

  	
   

  
	
  7.7

  	
  Investments

  	
   

  
	
  7.8

  	
  Transactions with
  Affiliates

  	
   

  
	
  7.9

  	
  Changes in Fiscal Periods

  	
   

  
	
  7.10

  	
  Negative Pledge Clauses

  	
   

  
	
  7.11

  	
  Clauses
  Restricting Subsidiary Distributions

  	
   

  
	
  7.12

  	
  Lines of Business

  	
   

  
	
  7.13

  	
  Contingent Obligations

  	
   

  
	
  7.14

  	
  Foreign
  Exchange and Rate Management Transactions

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII  DEFAULTS

  	
   

  
	
   

  	
   

  
	
  ARTICLE IX  ACCELERATION, WAIVERS, AMENDMENTS AND
  REMEDIES

  
	
  9.1

  	
  Acceleration; Facility LC
  Collateral Account

  	
   

  
	
  9.2

  	
  Amendments

  	
   

  
	
  9.3

  	
  Preservation of Rights

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE X  GENERAL PROVISIONS

  	
   

  
	
  10.1

  	
  Survival of Representations

  	
   

  
	
  10.2

  	
  Governmental Regulation

  	
   

  
	
  10.3

  	
  Headings

  	
   

  

 

ii

 

	
  10.4

  	
  Entire Agreement

  	
   

  
	
  10.5

  	
  Several
  Obligations; Benefits of this Agreement

  	
   

  
	
  10.6

  	
  Expenses; Indemnification

  	
   

  
	
  10.7

  	
  Numbers of Documents

  	
   

  
	
  10.8

  	
  Accounting

  	
   

  
	
  10.9

  	
  Severability of Provisions

  	
   

  
	
  10.10

  	
  Nonliability of Lenders

  	
   

  
	
  10.11

  	
  Confidentiality

  	
   

  
	
  10.12

  	
  Nonreliance

  	
   

  
	
  10.13

  	
  Disclosure

  	
   

  
	
  10.14

  	
  USA PATRIOT ACT
  NOTIFICATION

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI  THE ADMINISTRATIVE AGENT

  	
   

  
	
  11.1

  	
  Appointment; Nature
  of Relationship

  	
   

  
	
  11.2

  	
  Powers

  	
   

  
	
  11.3

  	
  General Immunity

  	
   

  
	
  11.4

  	
  No Responsibility for Loans,
  Recitals, etc

  	
   

  
	
  11.5

  	
  Action on
  Instructions of Lenders

  	
   

  
	
  11.6

  	
  Employment
  of Administrative Agents and Counsel

  	
   

  
	
  11.7

  	
  Reliance on Documents;
  Counsel

  	
   

  
	
  11.8

  	
  Administrative
  Agent’s Reimbursement and Indemnification

  	
   

  
	
  11.9

  	
  Notice of Default

  	
   

  
	
  11.10

  	
  Rights as a Lender

  	
   

  
	
  11.11

  	
  Lender Credit Decision

  	
   

  
	
  11.12

  	
  Successor Administrative
  Agent

  	
   

  
	
  11.13

  	
  Administrative
  Agent and Arranger Fees

  	
   

  
	
  11.14

  	
  Delegation to Affiliates

  	
   

  
	
  11.15

  	
  Execution of
  Collateral Documents

  	
   

  
	
  11.16

  	
  Collateral Releases

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XII  SETOFF; RATABLE PAYMENTS

  	
   

  
	
  12.1

  	
  Setoff

  	
   

  
	
  12.2

  	
  Ratable Payments

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIII  BENEFIT OF AGREEMENT; ASSIGNMENTS;
  PARTICIPATIONS

  	
   

  
	
  13.1

  	
  Successors and Assigns

  	
   

  
	
  13.2

  	
  Participations

  	
   

  
	
  13.3

  	
  Assignments

  	
   

  
	
  13.4

  	
  Dissemination of
  Information

  	
   

  
	
  13.5

  	
  Tax Treatment

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIV  NOTICES

  	
   

  
	
  14.1

  	
  Notices;
  Effectiveness; Electronic Communication

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XV  COUNTERPARTS; INTEGRATION; EFFECTIVENESS;
  ELECTRONIC EXECUTION

  	
   

  
	
  15.1

  	
  Counterparts; Effectiveness

  	
   

  
	
  15.2

  	
  Electronic
  Execution of Assignments

  	
   

  

 

iii

 

	
  ARTICLE XVI  CHOICE OF LAW; CONSENT TO JURISDICTION;
  WAIVER OF JURY TRIAL

  	
   

  
	
  16.1

  	
  CHOICE OF LAW

  	
   

  
	
  16.2

  	
  CONSENT TO JURISDICTION

  	
   

  
	
  16.3

  	
  WAIVER OF JURY TRIAL

  	
   

  

 

iv

 

EXHIBITS AND SCHEDULES

 

	
  Exhibits

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  Form of Borrowing Base
  Certificate

  	
   

  
	
  Exhibit B

  	
  Form of Compliance
  Certificate

  	
   

  
	
  Exhibit C

  	
  Form of Assignment Agreement

  	
   

  
	
  Exhibit D

  	
  Loan/Credit Related Money
  Transfer Instruction

  	
   

  
	
  Exhibit E

  	
  Form of Note

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedules

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Commitment
  Schedule

  	
   

  
	
  Pricing
  Schedule

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule 5.4

  	
  Consents, Authorizations, Filings and Notices

  	
   

  
	
  Schedule 5.9

  	
  Intellectual Property

  	
   

  
	
  Schedule 5.15

  	
  Subsidiaries

  	
   

  
	
  Schedule 5.19(a)

  	
  UCC Filing Jurisdictions

  	
   

  
	
  Schedule 7.2(d)

  	
  Existing Indebtedness

  	
   

  
	
  Schedule 7.3(f)

  	
  Existing Liens

  	
   

  
	
  Schedule 7.13

  	
  Contingent Obligations

  	
   

  

 

v

 

CREDIT AGREEMENT

 

This Agreement, dated as of November 25, 2003, is
among Department 56, Inc., the Lenders (as defined herein) and Bank One, NA, a
national banking association having its principal office in Chicago, Illinois,
as LC Issuer, as Swing Line Lender and as Administrative Agent.  The parties hereto agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

As used in this Agreement:

 

“Accounts” has the meaning set forth in the Uniform
Commercial Code.

 

“Advance” means a borrowing hereunder, (a) made by the
Lenders on the same Borrowing Date, or (b) converted or continued by the
Lenders on the same date of conversion or continuation, consisting, in either
case, of the aggregate amount of the several Loans of the same Type and, in the
case of Eurodollar Loans, for the same Interest Period.  The term “Advance” shall include Swing Line
Loans unless otherwise expressly provided.

 

“Administrative Agent” means Bank One in its capacity
as contractual representative of the Lenders pursuant to Article XI,
and not in its individual capacity as a Lender, and any successor
Administrative Agent appointed pursuant to Article XI.

 

“Affiliate” of any Person means any other Person
directly or indirectly controlling, controlled by or under common control with
such Person.  A Person shall be deemed
to control another Person if the controlling Person owns 10% or more of any
class of voting securities (or other ownership interests) of the controlled
Person or possesses, directly or indirectly, the power to direct or cause the
direction of the management or policies of the controlled Person, whether
through ownership of stock, by contract or otherwise.

 

“Aggregate Available Commitment” means, at any time,
(a) the lesser of (i) the Aggregate Commitment at such time and (ii) the
Borrowing Base, less (b) the outstanding LC Obligations at such time, and less
(c) the outstanding Swing Line Loans at such time.

 

“Aggregate Commitment” means the aggregate of the
Commitments of all the Lenders, as reduced or increased from time to time
pursuant to the terms hereof.

 

“Aggregate Outstanding Credit Exposure” means, at any
time, the aggregate of the Outstanding Credit Exposure of all the Lenders.

 

“Agreement” means this credit agreement, as it may be
amended or modified and in effect from time to time.

 

“Alternate Base Rate” means, for any day, a rate of
interest per annum equal to the higher of (a) the Prime Rate for such day and
(b) the sum of the Federal Funds Effective Rate for such day plus 0.5% per
annum.

 

 

“Applicable Fee Rate” means, at any time, the
percentage rate per annum at which Commitment Fees are accruing on the unused
portion  of the Aggregate Commitment
(with outstanding Facility LCs being deemed usage but Swing Line Loans not
being deemed usage) and LC Fees are accruing or are required to be paid on
outstanding Facility LCs, in each case as set forth in the Pricing Schedule.

 

“Applicable Margin” means, with respect to Advances of
any Type at any time, the percentage rate per annum which is applicable at such
time with respect to Advances of such Type as set forth in the Pricing
Schedule.

 

“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 One Capital Markets, Inc., a
Delaware corporation, and its successors, in its capacity as Lead Arranger and
Sole Book Runner.

 

“Article” means an article of this Agreement
unless another document is specifically referenced.

 

“Asset Sale” means any Disposition of Property or
series of related Dispositions of Property (excluding any such Disposition
permitted by clause (a), (b), (c) or (d) of Section 7.5) that
yields gross proceeds to the Borrower or any of its Subsidiaries (valued at the
initial principal amount thereof in the case of non-cash proceeds consisting of
notes or other debt securities and valued at fair market value in the case of
other non-cash proceeds) in excess of $500,000.

 

“Authorized Officer” means, with respect to financial
matters, the chief financial officer of the Borrower, with respect to the
execution and delivery of Borrowing Notices and Swing Line Borrowing Notices,
the chief financial officer or the managing director of finance of the Borrower,
and, with respect to all other matters, the chief executive officer, president
or chief financial officer of the Borrower.

 

“Bank One” means Bank One, NA, a national banking
association having its principal office in Chicago, Illinois, in its individual
capacity, and its successors.

 

“Board” means the Board of Governors of the Federal
Reserve System of the United States (or any successor).

 

“Borrower” means Department 56, Inc., a Delaware
corporation.

 

“Borrowing Base” means, as of any date, the amount, as
determined by the Borrowing Base Certificate most recently furnished to the
Administrative Agent pursuant to Section 4.1(j) or Section 6.2(g),
equal to the greater of (a) $30,000,000 and (b) the sum of (i) 80% of the book
value of all Eligible Accounts plus (ii) 50% of the book value of all Eligible
Inventory, valued at the lower of cost (determined on an averaged cost basis,
which approximates a first-in, first-out basis) or market, at such time.

 

“Borrowing Base Certificate” means a borrowing base
certificate in substantially the form of Exhibit A hereto.

 

“Borrowing Date” means a date on which an Advance is
made hereunder.

 

“Borrowing Notice” is defined in Section 2.9.

 

2

 

“Business Day” means (a) with respect to any
borrowing, payment or rate selection of Eurodollar Advances, a day (other than
a Saturday or Sunday) on which banks generally are open in Chicago and New York
City for the conduct of substantially all of their commercial lending activities,
interbank wire transfers can be made on the Fedwire system and dealings in
United States dollars are carried on in the London interbank market and (b) for
all other purposes, a day (other than a Saturday or Sunday) on which banks
generally are open in Chicago for the conduct of substantially all of their
commercial lending activities and interbank wire transfers can be made on the
Fedwire system.

 

“Capitalized Lease” of a Person means any lease of
Property by such Person as lessee which would be capitalized on a balance sheet
of such Person prepared in accordance with GAAP.

 

“Capital Lease Obligations” of any Person, means the
obligations of such Person to pay rent or other amounts under any Capitalized
Lease and, for the purposes of this Agreement, the amount of such obligations
at any time shall be the capitalized amount thereof at such time determined in
accordance with GAAP.

 

“Capital Stock” means any and all shares, interests,
participations or other equivalents (however designated) of capital stock of a
corporation, any and all equivalent ownership interests in a Person other than
a corporation and any and all warrants, rights or options to purchase any of
the foregoing.

 

“Cash Equivalents” means (a) marketable direct
obligations issued by, or unconditionally guaranteed by, the United States
government or issued by any agency thereof and backed by the full faith and
credit of the United States, in each case maturing within one year from the
date of acquisition; (b) certificates of deposit, time deposits, eurodollar
time deposits or overnight bank deposits having maturities of six months or
less from the date of acquisition issued by any Lender or by any commercial
bank organized under the laws of the United States or any state thereof having
combined capital and surplus of not less than $500,000,000; (c) commercial
paper of an issuer rated at least A-1 by S&P or P-1 by Moody’s, or carrying
an equivalent rating by a nationally recognized rating agency, if both of the
two named rating agencies cease publishing ratings of commercial paper issuers
generally, and maturing within six months from the date of acquisition; (d)
repurchase obligations of any Lender or of any commercial bank satisfying the
requirements of clause (b) of this definition, having a term of not more than
30 days, with respect to securities issued or fully guaranteed or insured by
the United States government; (e) securities with maturities of one year or
less from the date of acquisition issued or fully guaranteed by any state, commonwealth
or territory of the United States, by any political subdivision or taxing
authority of any such state, commonwealth or territory or by any foreign
government, the securities of which state, commonwealth, territory, political
subdivision, taxing authority or foreign government (as the case may be) are
rated at least “A” by S&P or “A” by Moody’s; (f) securities with maturities
of six months or less from the date of acquisition backed by standby letters of
credit issued by any Lender or any commercial bank satisfying the requirements
of clause (b) of this definition; or (g) shares of money market mutual or
similar funds which invest exclusively in assets satisfying the requirements of
clauses (a) through (f) of this definition.

 

“Closing Date” means the date on which the conditions
precedent set forth in Section 4.1 shall have been satisfied or
waived.

 

“Code” means the Internal Revenue Code of 1986, as
amended, reformed or otherwise modified from time to time.

 

“Collateral Documents” means, collectively, the
Guarantee and Collateral Agreement and all other security documents hereafter
delivered to the Administrative Agent granting a Lien or purporting to

 

3

 

grant a Lien on any
property of any Person to secure the obligations and liabilities of any Loan
Party under any Loan Document.

 

“Collateral Shortfall Amount” is defined in Section 9.1.

 

“Commitment” means, for each Lender, the obligation of
such Lender to make Revolving Loans to, and participate in Facility LCs issued
upon the application of, the Borrower in an aggregate amount not exceeding the
amount set forth opposite its name on the Commitment Schedule, as it may be
modified as a result of any assignment that has become effective pursuant to Section 13.3.2
or as otherwise modified from time to time pursuant to Section 2.6
hereof or the other terms hereof.

 

“Commitment Schedule” means the Schedule attached
hereto identified as such.

 

“Commonly Controlled Entity” means an entity, whether
or not incorporated, that is under common control with the Borrower within the
meaning of Section 4001 of ERISA or is part of a group that includes the
Borrower and that is treated as a single employer under Section 414 of the
Code.

 

“Confidential Information Memorandum” means the
Confidential Information Memorandum dated October 2003 and furnished to
the Lenders.

 

“Consolidated EBITDA” means, for any period,
Consolidated Net Income for such period plus (a) without duplication and to the
extent reflected as a charge in the statement of such Consolidated Net Income
for such period, the sum of (i) income tax expense, (ii) interest expense,
amortization or writeoff of debt discount and debt issuance costs and
commissions, discounts and other fees and charges associated with Indebtedness
(including the Loans), (iii) depreciation and amortization expense, (iv)
amortization of intangibles (including, but not limited to, goodwill) and
organization costs, (v) any extraordinary, unusual or non-recurring non-cash
expenses or losses (including, whether or not otherwise includable as a
separate item in the statement of such Consolidated Net Income for such period,
non-cash losses on sales of assets outside of the ordinary course of business); provided,
that the amounts referred to in this clause (v) shall not, in the aggregate,
exceed $5,000,000 for any fiscal year of the Borrower, and (vi) any other
non-cash charges, and minus (b) to the extent included in the statement of such
Consolidated Net Income for such period, the sum of (i) any extraordinary,
unusual or non-recurring income or gains (including, whether or not otherwise
includable as a separate item in the statement of such Consolidated Net Income
for such period, gains on the sales of assets outside of the ordinary course of
business) and (ii) any other non-cash income, all as determined on a
consolidated basis.  For the purposes of
calculating Consolidated EBITDA for any period of four consecutive fiscal
quarters (each, a “Reference Period”) pursuant to any determination of the Consolidated
Leverage Ratio, if during such Reference Period the Borrower or any Subsidiary
shall have made a Permitted Acquisition, Consolidated EBITDA for such Reference
Period shall be calculated after giving pro forma effect thereto as if such
Permitted Acquisition occurred on the first day of such Reference Period.

 

“Consolidated Interest Coverage Ratio” means, for any
period of four consecutive fiscal quarters, the ratio of (a) Consolidated
EBITDA for such period to (b) Consolidated Interest Expense for such period.

 

“Consolidated Interest Expense” means, for any period,
total cash interest expense (including that attributable to Capital Lease
Obligations) of the Borrower and its Subsidiaries for such period with respect
to all outstanding Indebtedness of the Borrower and its Subsidiaries (including
all commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers’ acceptance financing and net costs under Rate
Management Transactions in respect of interest rates to the extent such net
costs are allocable to such period in accordance with GAAP).

 

4

 

“Consolidated Leverage Ratio” means, for any period of
four consecutive fiscal quarters, the ratio of (a) Consolidated Total Debt as
at the last day of such period to (b) Consolidated EBITDA for such period.

 

“Consolidated Net Income” means, for any period, the
consolidated net income (or loss) of the Borrower and its Subsidiaries,
determined on a consolidated basis in accordance with GAAP; provided, that there shall
be excluded (a) the income (or deficit) of any Person accrued prior to the date
it becomes a Subsidiary of the Borrower or is merged into or consolidated with
the Borrower or any of its Subsidiaries, (b) the income (or deficit) of any
Person (other than a Subsidiary of the Borrower) in which the Borrower or any
of its Subsidiaries has an ownership interest, except to the extent that any
such income is actually received by the Borrower or such Subsidiary in the form
of dividends or similar distributions and (c) the undistributed earnings of any
Subsidiary of the Borrower to the extent that the declaration or payment of
dividends or similar distributions by such Subsidiary is not at the time
permitted by the terms of any Contractual Obligation (other than under any Loan
Document) or Requirement of Law applicable to such Subsidiary; provided
further, that in the event that
the Borrower determines its compensation cost for stock options based upon the
fair value thereof, there shall be added back to Consolidated Net Income the
amount of such compensation cost calculated in accordance with GAAP.

 

“Consolidated Net Worth” means, at any date, all
amounts that would, in conformity with GAAP, be included on a consolidated balance
sheet of the Borrower and its Subsidiaries under stockholders’ equity at such
date;
provided that in the event that the Borrower determines its
compensation cost for stock options based upon the fair value thereof, there
shall be added back to Consolidated Net Worth the amount of such compensation
cost as cumulatively charged from the time the Borrower begins to so determine
its compensation cost, calculated in accordance with GAAP.

 

“Consolidated Subsidiary Guarantor” means any
Subsidiary Guarantor the financial results of which would be required to be
consolidated for federal income tax purposes with the financial results of the
Borrower.

 

“Consolidated Total Debt” means, at any date, the
aggregate principal amount of all Indebtedness of the Borrower and its
Subsidiaries at such date, determined on a consolidated basis in accordance
with GAAP;
provided that for the purposes hereof, there shall be included in
Consolidated Total Debt, in lieu of the amount of Indebtedness outstanding
under this Agreement on such date, an amount of Indebtedness equal to (a) the
average daily principal amount of outstanding Credit Extensions for the period
of four consecutive fiscal quarters ending on such date (it being agreed that,
for the purposes of calculating such amount for any test period a portion of
which is a period prior to the Closing Date, the average daily principal amount
of outstanding Credit Extensions for such pre-Closing Date period shall be
deemed to be the average daily principal amount of total extensions of credit
outstanding under the working capital facility of the Existing Credit Agreement
during such pre-Closing Date period plus $22,000,000), plus (b) for the purpose
of determining pro forma compliance in respect of any Permitted Acquisition or
Restricted Payment pursuant to Section 7.6(b) or 7.7(g),
the amount by which total Credit Extensions increased as a result of such
Permitted Acquisition or Restricted Payment.

 

“Contingent Obligation” means, as to any Person, any
guarantee of payment or performance by such Person of any Indebtedness or other
obligation of any other Person, or any agreement to provide financial assurance
with respect to the financial condition, or the payment of the obligations of,
such other Person (including, without limitation, purchase or repurchase
agreements, reimbursement agreements with respect to letters of credit or
bankers’ acceptances, indemnity arrangements, grants of security interests to
support the obligations of another Person, keepwell agreements and take-or-pay
or through-put arrangements) which has the effect of assuring or holding
harmless any third Person against loss with respect to one or more obligations
of such third Person; provided, however, that the term Contingent

 

5

 

Obligation shall not
include endorsements of instruments for deposit or collection in the ordinary
course of business. The amount of any Contingent Obligation of any Person shall
be deemed to be the lesser of (a) an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Contingent Obligation
is made and (b) the maximum amount for which such contingently liable Person
may be liable pursuant to the terms of the instrument embodying such Contingent
Obligation, unless such primary obligation and the maximum amount for which
such contingently liable Person may be liable are not stated or determinable,
in which case the amount of such Contingent Obligation shall be such
contingently liable Person’s maximum reasonably anticipated liability in
respect thereof, as determined by the Borrower in good faith.

 

“Continuing Directors” means the directors of the
Borrower on the Closing Date and each other director thereof, if, in each case,
such other director’s nomination for election to the board of directors of the
Borrower was recommended by at least 66-2/3% of the then Continuing Directors.

 

“Contractual Obligation” means, as to any Person, any
provision of any security issued by such Person or 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.

 

“Conversion/Continuation Notice” is defined in Section 2.10.

 

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

 

“Credit Extension” means the making of an Advance or
the issuance of a Facility LC hereunder.

 

“Credit Extension Date” means the Borrowing Date for
an Advance or the issuance date for a Facility LC hereunder.

 

“Default” means an event described in Article VIII.

 

“Disposition” means, with respect to any property, any
sale, lease, sale and leaseback, assignment, conveyance, transfer or other
disposition thereof.  The terms
“Dispose” and “Disposed of” shall have correlative meanings.

 

“Domestic Subsidiary” means any Subsidiary of the
Borrower organized under the laws of any jurisdiction within the United States.

 

“Eligible Accounts” means the aggregate face amount of
Accounts of the Borrower and its Subsidiaries outstanding from time to time,
derived from the business operations of the Borrower and its Subsidiaries,
except those Accounts that (a) (i) in the case of Accounts that are stated to
be due in the month of November or December in any year and are
stated to be due more than 90 days from the invoice date, are more than 60 days
past due based upon the terms indicated in the original invoice and (ii) in the
case of all other Accounts, are more than 90 days past due based upon the terms
indicated in the original invoice, (b) are subject to any Lien, (c) are due to
a Subsidiary of the Borrower any outstanding capital stock of which is subject
to a Lien in favor of a Person other than the Administrative Agent for the
ratable benefit of the Lenders, or (d) are due from an Affiliate, the Borrower
or a Subsidiary.

 

“Eligible Inventory” means the aggregate book value of
Inventory (including Inventory in transit), whether now owned or hereafter
acquired, to which the Borrower and/or any of its Subsidiaries

 

6

 

have taken title and
which is not (a) work-in-process, (b) subject to any Lien or (c) owned by a
Subsidiary any outstanding capital stock of which is subject to a Lien in favor
of a Person other than the Administrative Agent for the ratable benefit of the
Lenders, after adjusting for reserves for obsolescence, inventory adjustments
and damages (including, but not limited to, foreign exchange adjustments).

 

“Environmental Laws” means any and all foreign,
Federal, state, local or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees, requirements of any Governmental Authority or other
Requirements of Law (including common law) regulating, relating to or imposing
liability or standards of conduct concerning protection of human health or the
environment, as now or may at any time hereafter be in effect.

 

“ERISA” means the Employee Retirement Income Security
Act of 1974, as amended from time to time, and any rule or regulation issued
thereunder.

 

“Eurodollar Advance” means an Advance which, except as
otherwise provided in Section 2.11, bears interest at the
applicable Eurodollar Rate.

 

“Eurodollar Base Rate” means, with respect to a
Eurodollar Advance for the relevant Interest Period, the applicable British
Bankers’ Association LIBOR rate for deposits in U.S. dollars as reported by any
generally recognized financial information service as of 11:00 a.m. (London
time) two Business Days prior to the first day of such Interest Period, and
having a maturity equal to such Interest Period; provided that, if no such
British Bankers’ Association LIBOR rate is available to the Administrative
Agent, the applicable Eurodollar Base Rate for the relevant Interest Period
shall instead be the rate determined by the Administrative Agent to be the rate
at which Bank One or one of its Affiliate banks offers to place deposits in
U.S. dollars with first-class banks in the interbank market at approximately
11:00 a.m. (London time) two Business Days prior to the first day of such
Interest Period, in the approximate amount of Bank One’s relevant Eurodollar
Loan and having a maturity equal to such Interest Period.

 

“Eurodollar Loan” means a Loan which, except as
otherwise provided in Section 2.11, bears interest at the
applicable Eurodollar Rate.

 

“Eurodollar Rate” means, with respect to a Eurodollar
Advance for the relevant Interest Period, the sum of (a) the quotient of (i)
the Eurodollar Base Rate applicable to such Interest Period, divided by (ii)
one minus the Reserve Requirement (expressed as a decimal) applicable to such
Interest Period, plus (b) the Applicable Margin.

 

“Excluded Taxes” means, in the case of each Lender or
applicable Lending Installation and the Administrative Agent, taxes imposed on
its overall net income, and franchise taxes imposed on it, by (a) the
jurisdiction under the laws of which such Lender or the Administrative Agent is
incorporated or organized or (b) the jurisdiction in which the Administrative
Agent’s or such Lender’s principal place of business or such Lender’s
applicable Lending Installation is located.

 

“Existing Credit Agreement” means the Credit
Agreement, dated as of March 19, 1999, among the Borrower, the lenders and
agents parties thereto and JPMorgan Chase Bank (f/k/a The Chase Manhattan
Bank), as the administrative agent (the “Existing Agent”), as amended.

 

“Exhibit” refers to an exhibit to this Agreement,
unless another document is specifically referenced.

 

“Facility Termination Date” means November 25,
2006, or any earlier date on which the Aggregate Commitment is reduced to zero
or otherwise terminated pursuant to the terms hereof.

 

7

 

“Facility LC” is defined in Section 2.20.1.

 

“Facility LC Application” is defined in Section 2.20.3.

 

“Facility LC Collateral Account” is defined in Section 2.20.11.

 

“Federal Funds Effective Rate” means, for any day, an
interest 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 for such day (or, if such
day is not a Business Day, for the immediately preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
such day which is a Business Day, the average of the quotations at approximately
10:00 a.m. (Chicago time) on such day on such transactions received by the
Administrative Agent from three Federal funds brokers of recognized standing
selected by the Administrative Agent in its sole discretion.

 

“Floating Rate” means, for any day, a rate per annum
equal to (a) the Alternate Base Rate for such day plus (b) the Applicable
Margin, in each case changing when and as the Alternate Base Rate changes.

 

“Floating Rate Advance” means an Advance which, except
as otherwise provided in Section 2.12, bears interest at the
Floating Rate.

 

“Floating Rate Loan” means a Loan which, except as
otherwise provided in Section 2.12, bears interest at the Floating
Rate.

 

“Foreign Subsidiary” means any Subsidiary of the
Borrower that is not a Domestic Subsidiary.

 

“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
as in effect from time to time in the United States, applied in a manner
consistent with that used in preparing the financial statements referred to in Section 5.1.

 

“Governmental Authority” means any nation or government,
any state or other political subdivision thereof, any agency, authority,
instrumentality, regulatory body, court, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or
administrative functions of or pertaining to government, any securities
exchange and any self-regulatory organization (including the National
Association of Insurance Commissioners).

 

“Guarantee and Collateral Agreement” means the
Guarantee and Collateral Agreement dated as of the Closing Date to be executed
and delivered by the Borrower and each Subsidiary Guarantor, in form and
substance acceptable to the Administrative Agent, as the same may be amended,
supplemented or otherwise modified from time to time.

 

“Guarantee Obligation” as to any Person (the
“guaranteeing person”), means any obligation of (a) the guaranteeing person or
(b) another Person (including any bank under any letter of credit) to induce
the creation of which the guaranteeing person has issued a reimbursement,
counterindemnity or similar obligation, in either case guaranteeing or in
effect guaranteeing any Indebtedness, leases, dividends or other obligations
(the “primary obligations”) of any other Person (the “primary obligor”) in any
manner,

 

8

 

whether directly or
indirectly, including any obligation of the guaranteeing person, whether or not
contingent, (i) to purchase any such primary obligation or any property
constituting direct or indirect security therefor, (ii) to advance or supply
funds (A) for the purchase or payment of any such primary obligation or (B) to
maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency of the primary obligor, (iii) to purchase
property, securities or services primarily for the purpose of assuring the
owner of any such primary obligation of the ability of the primary obligor to
make payment of such primary obligation or (iv) otherwise to assure or hold
harmless the owner of any such primary obligation against loss in respect
thereof;
provided, however,
that the term Guarantee Obligation shall not include endorsements of
instruments for deposit or collection in the ordinary course of business.  The amount of any Guarantee Obligation of
any guaranteeing person shall be deemed to be the lower of (a) an amount equal
to the stated or determinable amount of the primary obligation in respect of
which such Guarantee Obligation is made and (b) the maximum amount for which
such guaranteeing person may be liable pursuant to the terms of the instrument
embodying such Guarantee Obligation, unless such primary obligation and the
maximum amount for which such guaranteeing person may be liable are not stated
or determinable, in which case the amount of such Guarantee Obligation shall be
such guaranteeing person’s maximum reasonably anticipated liability in respect
thereof as determined by the Borrower in good faith.

 

“Guarantors” means 
the collective reference to the Subsidiary Guarantors.

 

“Indebtedness” of any Person at any date means,
without duplication, (a) all indebtedness of such Person for borrowed money,
(b) all obligations of such Person for the deferred purchase price of property
or services (other than current trade payables incurred in the ordinary course
of such Person’s business), (c) all obligations of such Person evidenced by
notes, bonds, debentures or other similar instruments, (d) all indebtedness
created or arising under any conditional sale or other title retention
agreement with respect to property acquired by such Person (even though the
rights and remedies of the seller or lender under such agreement in the event
of default are limited to repossession or sale of such property), (e) all
Capital Lease Obligations of such Person, (f) all obligations of such Person,
contingent or otherwise, as an account party under acceptance, letter of credit
or similar facilities, (g) the liquidation value of all redeemable preferred
Capital Stock of such Person, (h) all Guarantee Obligations of such Person in
respect of obligations of the kind referred to in clauses (a) through (g)
above, (i) all obligations of the kind referred to in clauses (a) through (h)
above secured by (or for which the holder of such obligation has an existing
right, contingent or otherwise, to be secured by) any Lien on property
(including accounts and contract rights) owned by such Person, whether or not
such Person has assumed or become liable for the payment of such obligation,
and (j) for the purposes of Section 8(e) only, all obligations of
such Person in respect of Rate Management Transactions.

 

“Insolvency” means, with respect to any Multiemployer
Plan, the condition that such Plan is insolvent within the meaning of
Section 4245 of ERISA and “Insolvent” means a condition pertaining to
Insolvency.

 

“Intellectual Property” means the collective reference
to all rights, priorities and privileges relating to intellectual property,
whether arising under United States, multinational or foreign laws or
otherwise, including copyrights, copyright licenses, patents, patent licenses,
trademarks, trademark licenses, technology, know-how and processes, and all
rights to sue at law or in equity for any infringement or other impairment
thereof, including the right to receive all proceeds and damages therefrom.

 

“Interest Period” means, with respect to a Eurodollar
Advance, a period of one, two, three or six months commencing on a Business Day
selected by the Borrower pursuant to this Agreement.  Such Interest Period shall end on the day which corresponds
numerically to such date one, two, three or six

 

9

 

months thereafter; provided,
however, that if there is no such numerically corresponding day in
such next, second, third or sixth succeeding month, such Interest Period shall
end on the last Business Day of such next, second, third or sixth succeeding
month.  If an Interest Period would
otherwise end on a day which is not a Business Day, such Interest Period shall
end on the next succeeding Business Day; provided, however, that if said next
succeeding Business Day falls in a new calendar month, such Interest Period
shall end on the immediately preceding Business Day.

 

“Inventory” has the meaning set forth in the Uniform
Commercial Code.

 

“Investments” is defined in Section 7.7.

 

“LC Fee” is defined in Section 2.20.4.

 

“LC Issuer” means Bank One (or any Affiliate of Bank
One designated by Bank One) in its capacity as issuer of Facility LCs hereunder
or any other Lender (or Affiliate of a Lender) selected from time to time by
the Borrower in its sole discretion to issue Facility LCs hereunder in its
capacity as such.

 

“LC Obligations” means, at any time, the sum, without
duplication, of (a) the aggregate undrawn stated amount under all Facility LCs
outstanding at such time plus (b) the aggregate unpaid amount at such time of
all Reimbursement Obligations.

 

“LC Payment Date” is defined in Section 2.20.5.

 

“Lenders” means the lending institutions listed on the
signature pages of this Agreement and their respective successors and
assigns.  Unless otherwise specified,
the term “Lenders” includes Bank One in its capacity as Swing Line Lender.

 

“Lending Installation” means, with respect to a Lender
or the Administrative Agent, the office, branch, subsidiary or affiliate of
such Lender or the Administrative Agent listed on the signature pages hereof or
on a Schedule or otherwise selected by such Lender or the Administrative
Agent pursuant to Section 2.17.

 

“Lien” means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including the interest of a vendor or lessor under any
conditional sale, Capitalized Lease or other title retention agreement).

 

“Loan” means a Revolving Loan or a Swing Line Loan.

 

“Loan Documents” means this Agreement, the Facility LC
Applications, any Notes issued pursuant to Section 2.14 and the
Collateral Documents.

 

“Loan Parties” means the Borrower and each Subsidiary
of the Borrower that is a party to a Loan Document.

 

“Material Adverse Effect” means a material adverse
effect on (a) the business, Property, condition (financial or otherwise),
results of operations, or prospects of the Borrower and its Subsidiaries taken
as a whole, (b) the ability of the Borrower or any of its Subsidiaries to
perform its obligations under the Loan Documents to which it is a party, or (c)
the validity or enforceability of any of the Loan Documents or the rights or
remedies of the Administrative Agent, the LC Issuer or the Lenders thereunder.

 

10

 

“Material Subsidiary” means any Subsidiary of the
Borrower, (a) whose total assets at the last day of the period of four
consecutive fiscal quarters of the Borrower for which financial statements were
most recently delivered pursuant to Section 6.1, were equal to or
greater than 5% of the consolidated total assets of the Borrower and its
Subsidiaries at such date or (b) whose gross revenues for such period were
equal to or greater than 5% of the consolidated gross revenues of the Borrower
and its Subsidiaries for such period, in each case determined in accordance
with GAAP;
provided that if, at any time, the Subsidiaries that would not be
Material Subsidiaries pursuant to the foregoing constitute 10% of such
consolidated assets or revenues, a sufficient number of Subsidiaries shall be
designated by the Borrower as “Material Subsidiaries”, and the actions shall be
taken with respect thereto as set forth in Section 6.9 so that the
Subsidiaries that are not Material Subsidiaries and Subsidiary Guarantors no
longer constitute 10% or more of such consolidated assets or revenue.

 

“Materials of Environmental Concern” means any
gasoline or petroleum (including crude oil or any fraction thereof) or
petroleum products, polychlorinated biphenyls, urea-formaldehyde insulation,
asbestos, pollutants, contaminants, radioactivity, and any other substances or
forces of any kind, whether or not any such substance or force is defined as
hazardous or toxic under any Environmental Law, that is regulated pursuant to
or could give rise to liability under any Environmental Law.

 

“Modify” and “Modification” are defined in Section 2.20.1.

 

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

 

“Multiemployer Plan” means a Plan maintained pursuant
to a collective bargaining agreement to which the Borrower or any member of the
Controlled Group is a party to which more than one employer is obligated to
make contributions.

 

“Net Cash Proceeds” means (a) in connection with any
Asset Sale or Recovery Event, the proceeds thereof in the form of cash and Cash
Equivalents (including any such proceeds received by way of deferred payment of
principal pursuant to a note or installment receivable or purchase price
adjustment receivable or otherwise, but only as and when received) of such
Asset Sale or Recovery Event, net of attorneys’ fees, accountants’ fees,
investment banking fees, amounts required to be applied to the repayment of
Indebtedness secured by a Lien expressly permitted hereunder on any asset that
is the subject of such Asset Sale or Recovery Event, (other than any Lien
created pursuant to a Collateral Document) and other customary fees and expenses
actually incurred in connection therewith and net of taxes paid or reasonably
estimated to be payable as a result thereof and (b) in connection with any
Stock Issuance or Subordinated Debt Issuance, the cash proceeds received from
such issuance or incurrence, net of attorneys’ fees, investment banking fees,
accountants’ fees, underwriting discounts and commissions and other customary
fees and expenses actually incurred in connection therewith.

 

“Non-U.S. Lender” is defined in Section 3.5(iv).

 

“Note” is defined in Section 2.14.

 

“Obligations” means all unpaid principal of and
accrued and unpaid interest on the Loans, all Reimbursement Obligations, all
accrued and unpaid fees and all expenses, reimbursements, indemnities and other
obligations of the Borrower to the Lenders or to any Lender, the Administrative
Agent or any indemnified party arising under the Loan Documents.

 

“Other Taxes” is defined in Section 3.5(b).

 

11

 

“Outstanding Credit Exposure” means, as to any Lender
at any time, the sum of (a) the aggregate principal amount of its Revolving
Loans outstanding at such time, plus (b) an amount equal to its Pro Rata Share
of the LC Obligations at such time, plus (c) an amount equal to its Pro Rata Share
of the aggregate principal amount of Swing Line Loans outstanding at such time.

 

“Participants” is defined in Section 13.2.1.

 

“Payment Date” means the last Business Day of each
calendar quarter.

 

“PBGC” means the Pension Benefit Guaranty Corporation,
or any successor thereto.

 

“Permitted Acquisition” means any acquisition of
property or series of related acquisitions of property that (a) constitutes
assets comprising all or substantially all of an operating unit of a business
or constitutes all or substantially all of the common stock of a Person and (b)
is permitted by and consummated in compliance with the requirements of Section 7.7(g).

 

“Person” means any natural person, corporation, firm,
joint venture, partnership, limited liability company, association, enterprise,
trust or other entity or organization, or any government or political
subdivision or any agency, department or instrumentality thereof.

 

“Plan” means an employee pension benefit plan which is
covered by Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Code as to which the Borrower or any member of the
Controlled Group may have any liability.

 

“Pledged Stock” is defined in the Guarantee and
Collateral Agreement.

 

“Pricing Schedule” means the Schedule attached
hereto identified as such.

 

“Prime Rate” means a rate per annum equal to the prime
rate of interest announced from time to time by Bank One or its parent (which
is not necessarily the lowest rate charged to any customer), changing when and
as said prime rate changes.

 

“Property” of a Person means any and all property,
whether real, personal, tangible, intangible, or mixed, of such Person, or
other assets owned, leased or operated by such Person.

 

“Pro Rata Share” means, with respect to a Lender, a portion
equal to a fraction, the numerator of which is such Lender’s Commitment and the
denominator of which is the Aggregate Commitment.

 

“Purchasers” is defined in Section 13.3.1.

 

“Rate Management Obligations” of a Person means any
and all obligations of such Person, whether absolute or contingent and
howsoever and whensoever created, arising, evidenced or acquired (including all
renewals, extensions and modifications thereof and substitutions therefor),
under (a) any and all Rate Management Transactions, and (b) any and all
cancellations, buy backs, reversals, terminations or assignments of any Rate
Management Transactions.

 

“Rate Management Transaction” means any transaction
(including an agreement with respect thereto) now existing or hereafter entered
by the Borrower or any Subsidiary which is a rate swap, basis swap, forward
rate transaction, commodity swap, commodity option, equity or equity index
swap, bond option, interest rate option, foreign exchange transaction, cap
transaction, floor transaction, collar transaction, forward transaction,
currency swap transaction, cross-currency rate swap transaction,

 

12

 

currency option or any
other similar transaction (including any option with respect to any of these
transactions) or any combination thereof.

 

“Recovery Event” means any settlement or payment in
excess of $500,000 in respect of any property or casualty insurance claim
(other than business interruption insurance claims) or any condemnation
proceeding relating to any Property (other than assets constituting Inventory)
of the Borrower or any of its Subsidiaries.

 

“Regulation D” means Regulation D of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor thereto or other regulation or official interpretation of said Board
of Governors relating to reserve requirements applicable to member banks of the
Federal Reserve System.

 

“Regulation U” means Regulation U of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor or other regulation or official interpretation of said Board of
Governors relating to the extension of credit by banks for the purpose of
purchasing or carrying margin stocks applicable to member banks of the Federal
Reserve System.

 

“Reimbursement Obligations” means, at any time, the
aggregate of all obligations of the Borrower then outstanding under Section 2.20
to reimburse the LC Issuer for amounts paid by the LC Issuer in respect of any
one or more drawings under Facility LCs.

 

“Reinvestment Deferred Amount” means, with respect to
any Reinvestment Event, that portion of the aggregate Net Cash Proceeds
received by the Borrower or any of its Subsidiaries in connection therewith
that, but for the delivery of a Reinvestment Notice, would have been required
to be applied to the prepayment of Revolving Loans.

 

“Reinvestment Event” means any Asset Sale or Recovery
Event in respect of which the Borrower has delivered a Reinvestment Notice.

 

“Reinvestment Notice” means a written notice executed
by an Authorized Officer stating that no Default has occurred and is continuing
and that the Borrower (directly or indirectly through a Subsidiary) intends and
expects to use all or a specified portion of the Net Cash Proceeds of an Asset
Sale or Recovery Event to acquire assets useful in the Borrower’s or any
Subsidiary’s business within 180 days of the applicable Reinvestment Event.

 

“Reinvestment Prepayment Amount” means, with respect
to any Reinvestment Event, the Reinvestment Deferred Amount relating thereto,
less any amount expended prior to the relevant Reinvestment Prepayment Date to
acquire assets useful in the Borrower’s or any Subsidiary’s business.

 

“Reinvestment Prepayment Date” means, with respect to
any Reinvestment Event, the earlier of (a) the date occurring six months after
such Reinvestment Event and (b) the date on which the Borrower shall have
determined not to acquire assets useful in the Borrower’s business with all or
any portion of the relevant Reinvestment Deferred Amount or, in the case of
this clause (b) only, such later dates chosen by the Borrower to coincide with
the end of one or more Interest Periods so long as such later dates are not
more than six months after such Reinvestment Event.

 

“Reorganization” means, with respect to any
Multiemployer Plan, the condition that such plan is in reorganization within
the meaning of Section 4241 of ERISA.

 

13

 

“Reportable Event” means a reportable event as defined
in Section 4043 of ERISA and the regulations issued under such section,
with respect to a Plan, excluding, however, such events as to which the PBGC
has by regulation waived the requirement of Section 4043(a) of ERISA that
it be notified within 30 days of the occurrence of such event; provided,
however, that a failure to meet the minimum funding standard of
Section 412 of the Code and of Section 302 of ERISA shall be a
Reportable Event regardless of the issuance of any such waiver of the notice
requirement in accordance with either Section 4043(a) of ERISA or
Section 412(d) of the Code.

 

“Reports” is defined in Section 10.6.

 

“Required Lenders” means Lenders in the aggregate
having at least 66 2/3% of the Aggregate Commitment or, if the Aggregate Commitment
has been terminated, Lenders in the aggregate holding at least 66 2/3% of the
Aggregate Outstanding Credit Exposure.

 

“Requirement of Law” as to any Person, means the
certificate or articles of incorporation and by-laws or other organizational or
governing documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any of its property or
to which such Person or any of its property is subject.

 

“Restricted Payments” is defined in Section 7.6.

 

“Reserve Requirement” means, with respect to an
Interest Period, the maximum aggregate reserve requirement (including all
basic, supplemental, marginal and other reserves) which is imposed under
Regulation D on Eurocurrency liabilities.

 

“Revolving Loan” means, with respect to a Lender, such
Lender’s Pro Rata Share of all Advances.

 

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

 

“Sale and Leaseback Transaction” means any sale or
other transfer of Property by any Person with the intent to lease such Property
as lessee.

 

“Schedule” refers to a specific schedule to this
Agreement, unless another document is specifically referenced.

 

“SEC” means the Securities and Exchange Commission,
any successor thereto and any analogous Governmental Authority.

 

“Section” means a numbered section of this
Agreement, unless another document is specifically referenced.

 

“Secured Obligations” means, collectively, (a) the
Obligations and (b) all Rate Management Obligations owing to one or more
Lenders or any Affiliate thereof.

 

“Single Employer Plan” means a Plan (other than a
Multiemployer Plan) maintained by the Borrower or any member of the Controlled
Group for employees of the Borrower or any member of the Controlled Group.

 

14

 

“Solvent” means, when used with respect to any Person,
that, as of any date of determination, (a) the amount of the “present fair
saleable value” of the assets of such Person will, as of such date, exceed the
amount of all “liabilities of such Person, contingent or otherwise”, as of such
date, as such quoted terms are determined in accordance with applicable federal
and state laws governing determinations of the insolvency of debtors, (b) the
present fair saleable value of the assets of such Person will, as of such date,
be greater than the amount that will be required to pay the liability of such
Person on its debts as such debts become absolute and matured, (c) such Person
will not have, as of such date, an unreasonably small amount of capital with
which to conduct its business, and (d) such Person will be able to pay its
debts as they mature.  For purposes of
this definition, (i) “debt” means liability on a “claim”, and (ii) “claim”
means any (x) right to payment, whether or not such a right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured or unsecured or (y) right to an
equitable remedy for breach of performance if such breach gives rise to a right
to payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured or unmatured, disputed, undisputed,
secured or unsecured.

 

“Stock Issuance” means the sale or issuance of Capital
Stock of the Borrower or any Subsidiary of the Borrower.

 

“Subordinated Debt Issuance” means the sale or
issuance of any Indebtedness of the Borrower or any of its Subsidiaries, the
payment of which is subordinated to payment of the Secured Obligations on terms
and conditions acceptable to the Required Lenders.

 

“Subsidiary” of a Person means (a) any corporation
more than 50% of the outstanding securities having ordinary voting power of
which shall at the time be owned or controlled, directly or indirectly, by such
Person or by one or more of its Subsidiaries or by such Person and one or more
of its Subsidiaries, or (b) any partnership, limited liability company,
association, joint venture or similar business organization more than 50% of
the ownership interests having ordinary voting power of which shall at the time
be so owned or controlled.  Unless
otherwise expressly provided, all references herein to a “Subsidiary” shall mean
a Subsidiary of the Borrower.

 

“Subsidiary Guarantor” means each Subsidiary of the
Borrower that is a party to the Guarantee and Collateral Agreement as a
guarantor thereunder (it being understood that except as required by the
definition of “Material Subsidiary”, Subsidiaries that are not Material
Subsidiaries and Subsidiaries that are Foreign Subsidiaries are not required by
this Agreement to become Subsidiary Guarantors, but may elect to do so).

 

“Subsidiary Stock Event” means the sale or issuance of
Capital Stock of any Subsidiary of the Borrower.

 

“Swing Line Borrowing Notice” is defined in Section 2.5.2.

 

“Swing Line Commitment” means the obligation of the
Swing Line Lender to make Swing Line Loans up to a maximum principal amount of
$5,000,000 at any one time outstanding.

 

“Swing Line Lender” means Bank One or such other
Lender which may succeed to its rights and obligations as Swing Line Lender
pursuant to the terms of this Agreement.

 

“Swing Line Loan” means a Loan made available to the
Borrower by the Swing Line Lender pursuant to Section 2.5.

 

15

 

“Taxes” means any and all present or future taxes,
duties, levies, imposts, deductions, charges or withholdings, and any and all
liabilities with respect to the foregoing, but excluding Excluded Taxes and
Other Taxes.

 

“Transferee” is defined in Section 13.4.

 

“Type” means, with respect to any Advance, its nature
as a Floating Rate Advance or a Eurodollar Advance and with respect to any
Loan, its nature as a Floating Rate Loan or a Eurodollar Loan.

 

“Uniform Commercial Code” means the Uniform Commercial
Code as in effect on the date hereof and from time to time in the State of New
York;
provided that if by reason of mandatory provisions of law, the
perfection or the effect of perfection or non-perfection of the security
interests in any Collateral or the availability of any remedy hereunder is
governed by the Uniform Commercial Code as in effect on or after the date
hereof in any other jurisdiction, “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.

 

“Unmatured Default” means an event which but for the
lapse of time or the giving of notice, or both, would constitute a Default.

 

The foregoing definitions shall be equally applicable
to both the singular and plural forms of the defined terms.  Unless otherwise expressly provided herein,
(i) references to agreements (including this Agreement and the other Loan
Documents) and other contractual instruments shall be deemed to include all
subsequent amendments, restatements, supplements and other modifications
thereto, but only to the extent such amendments, restatements, supplements and
other modifications are not prohibited by the terms of any Loan Document, and
(ii) references to any statute or regulation shall be construed as including
all statutory and regulatory provisions amending, replacing, supplementing or
interpreting such statute or regulation.

 

ARTICLE II

 

THE CREDITS

 

2.1                                 Commitment. 
From and including the date of this Agreement and prior to the Facility
Termination Date, each Lender severally agrees, on the terms and conditions set
forth in this Agreement, to (a) make Revolving Loans to the Borrower and (b)
participate in Facility LCs issued upon the request of the Borrower; provided that, after giving effect to the
making of each such Revolving Loan and the issuance of each such Facility LC,
(i) such Lender’s Outstanding Credit Exposure shall not exceed in the aggregate
at any one time outstanding the amount of its Commitment and (ii) the Aggregate
Outstanding Credit Exposure shall not exceed the Aggregate Available Commitment.  Subject to the terms of this Agreement, the
Borrower may borrow, repay in whole or in part and reborrow at any time prior
to the Facility Termination Date.  The
Commitments to extend credit hereunder shall expire on the Facility Termination
Date.  The LC Issuer will issue Facility
LCs hereunder on the terms and conditions set forth in Section 2.20.

 

16

 

2.2                                 Required Payments.

 

2.2.1                        Mandatory Prepayments.

 

(a)                                  Unless
the Required Lenders shall otherwise agree, if on any date the Borrower or any
of its Subsidiaries shall receive Net Cash Proceeds from any Asset Sale,
Recovery Event, Stock Issuance (other than any issuance or grant of Capital
Stock of the Borrower in connection with equity-based compensation) or
Subordinated Debt Issuance that, when added to the aggregate amount of such Net
Cash Proceeds prior thereto in the same fiscal year of the Borrower, exceed
$20,000,000, then, unless, in the case of a Reinvestment Event, a Reinvestment
Notice shall be delivered in respect thereof, 100% of the amount by which such
aggregate Net Cash Proceeds received during such fiscal year exceed $20,000,000
shall be applied on such date toward the prepayment of the Revolving Loans and
the reduction of the Commitments as set forth in Section 2.6; provided,
that on each Reinvestment Prepayment Date, an amount equal to the Reinvestment
Prepayment Amount with respect to the relevant Reinvestment Event shall be
applied toward the prepayment of the Revolving Loans and the reduction of the
Commitments as set forth in Section 2.6; provided, further,
in the case of any such required prepayment in respect of which a Reinvestment
Notice has not been delivered, such prepayment may be made on a date subsequent
to the date of receipt of such Net Cash Proceeds chosen by the Borrower to
coincide with the end of one or more Interest Periods so long as such later
date is not more than six months after such date of receipt of such Net Cash
Proceeds; and provided, further,
that no such prepayment shall be required if, at such time, the Borrower could
satisfy the conditions to a Credit Extension set forth in Section 4.2 for
the reborrowing thereof.  Nothing herein
shall affect the obligations of the Borrower under Section 2.2.1(b)
or 2.6.2(c).

 

(b)                                 If
on any date (i) unless the Required Lenders shall otherwise agree, the
Aggregate Outstanding Credit Exposure exceeds the Borrowing Base or
(ii) the Aggregate Outstanding Credit Exposure exceeds the Aggregate
Commitment (including after giving effect to a reduction in the Aggregate
Commitment pursuant to Section 2.6.2), then in either case the
Borrower shall repay immediately its then outstanding Revolving Loans in such
amount as may be necessary to eliminate such excess; provided, that if an excess
remains after repayment of all outstanding Revolving Loans, then the Borrower
shall cash collateralize the LC Obligations by depositing into the Facility LC
Collateral Account such amount as may be necessary to eliminate such excess.

 

(c)                                  The
Borrower shall repay Loans and cause Facility LCs to expire in such a way so
that for at least 30 consecutive days annually during the period beginning
November 1 and ending on March 31 of each year, the Aggregate
Outstanding Credit Exposure does not exceed $30,000,000 for such 30-day period.

 

2.2.2                        Termination.  The Aggregate Outstanding Credit Exposure
and all other unpaid Obligations shall be paid in full by the Borrower on the
Facility Termination Date.

 

2.3                                 Ratable Loans. 
Each Advance hereunder (other than any Swing Line Loan) shall consist of
Revolving Loans made from the several Lenders ratably according to their Pro
Rata Shares.

 

2.4                                 Types of Advances.  The Advances may be Floating Rate Advances or Eurodollar
Advances, or a combination thereof, selected by the Borrower in accordance with
Sections 2.9 and 2.10, or Swing Line Loans selected by
the Borrower in accordance with Section 2.5.

 

17

 

2.5                                 Swing Line Loans.

 

2.5.1                        Amount of Swing Line Loans.  Upon the satisfaction of the conditions
precedent set forth in Section 4.2 and, if such Swing Line Loan is
to be made on the date of the initial Advance hereunder, the satisfaction of
the conditions precedent set forth in Section 4.1 as well, from and
including the date of this Agreement and prior to the Facility Termination
Date, the Swing Line Lender agrees, on the terms and conditions set forth in
this Agreement, to make Swing Line Loans to the Borrower from time to time in
an aggregate principal amount not to exceed the Swing Line Commitment; provided
that the Aggregate Outstanding Credit Exposure shall not at any time exceed the
Aggregate Commitment.  Subject to the
terms of this Agreement, the Borrower may borrow, repay in whole or in part and
reborrow Swing Line Loans at any time prior to the Facility Termination Date.

 

2.5.2                        Borrowing Notice.  The Borrower shall deliver to the
Administrative Agent and the Swing Line Lender irrevocable notice (a “Swing
Line Borrowing Notice”) not later than noon (Chicago time) on the Borrowing
Date of each Swing Line Loan, specifying (i) the applicable Borrowing Date
(which date shall be a Business Day), and (ii) the aggregate amount of the
requested Swing Line Loan which shall be an amount not less than $100,000.  The Swing Line Loans shall bear interest at
the Floating Rate.

 

2.5.3                        Making of Swing Line Loans.  Promptly after receipt of a Swing Line
Borrowing Notice, the Administrative Agent shall notify each Lender by fax, or
other similar form of transmission, of the requested Swing Line Loan.  Not later than 2:00 p.m. (Chicago time) on
the applicable Borrowing Date, the Swing Line Lender shall make available the
Swing Line Loan, in funds immediately available in Chicago, to the Administrative
Agent at its address specified pursuant to Article XIV.  The Administrative Agent will promptly make
the funds so received from the Swing Line Lender available to the Borrower on
the Borrowing Date by crediting the account of the Borrower at the
Administrative Agent’s aforesaid address or as otherwise directed by the
Borrower.

 

2.5.4                        Repayment of Swing Line
Loans.  Each Swing Line Loan shall
be paid in full by the Borrower on or before the fifth (5th) Business Day after
the Borrowing Date for such Swing Line Loan. 
In addition, the Swing Line Lender (i) may at any time in its sole
discretion with respect to any outstanding Swing Line Loan or (ii) shall on the
fifth (5th) Business Day after the Borrowing Date of any Swing Line Loan if not
repaid by the Borrower on such date, require each Lender (including the Swing
Line Lender) to make a Revolving Loan in the amount of such Lender’s Pro Rata
Share of such Swing Line Loan (including, without limitation, any interest
accrued and unpaid thereon), for the purpose of repaying such Swing Line Loan.  Not later than noon (Chicago time) on the
date of any notice received pursuant to this Section 2.5.4, each
Lender shall make available its required Revolving Loan, in funds immediately
available in Chicago to the Administrative Agent at its address specified
pursuant to Article XIV. 
Revolving Loans made pursuant to this Section 2.5.4 shall
initially be Floating Rate Loans and thereafter may be continued as Floating
Rate Loans or converted into Eurodollar Loans in the manner provided in Section 2.10
and subject to the other conditions and limitations set forth in this Article II.  Unless a Lender shall have notified the
Swing Line Lender, prior to its making any Swing Line Loan, that any applicable
condition precedent set forth in Sections 4.1 or 4.2
had not then been satisfied, such Lender’s obligation to make Revolving Loans
pursuant to this Section 2.5.4 to repay Swing Line Loans shall be
unconditional, continuing, irrevocable and absolute and shall not be affected
by any circumstances, including, without limitation, (a) any set-off,
counterclaim, recoupment, defense or other right which such Lender may have
against the Administrative Agent, the Swing Line Lender or any other Person,
(b) the occurrence or

 

18

 

continuance of a
Default or Unmatured Default, (c) any adverse change in the condition
(financial or otherwise) of the Borrower, or (d) any other circumstances,
happening or event whatsoever.  In the
event that any Lender fails to make payment to the Administrative Agent of any
amount due under this Section 2.5.4, the Administrative Agent shall
be entitled to receive, retain and apply against such obligation the principal
and interest otherwise payable to such Lender hereunder until the
Administrative Agent receives such payment from such Lender or such obligation
is otherwise fully satisfied.  In
addition to the foregoing, if for any reason any Lender fails to make payment
to the Administrative Agent of any amount due under this Section 2.5.4,
such Lender shall be deemed, at the option of the Administrative Agent, to have
unconditionally and irrevocably purchased from the Swing Line Lender, without
recourse or warranty, an undivided interest and participation in the applicable
Swing Line Loan in the amount of such Revolving Loan, and such interest and
participation may be recovered from such Lender together with interest thereon
at the Federal Funds Effective Rate for each day during the period commencing
on the date of demand and ending on the date such amount is received.  On the Facility Termination Date, the
Borrower shall repay in full the outstanding principal balance of the Swing
Line Loans.

 

2.6                                 Commitment Fee; Reductions and
Increases in Aggregate Commitment.

 

2.6.1                        Commitment Fee.  The Borrower agrees to pay to the
Administrative Agent for the account of each Lender according to its Pro Rata
Share a commitment fee for each day at a per annum rate equal to the Applicable
Fee Rate for such day multiplied by the daily unused portion of such Lender’s Commitment
from the date hereof to and including the Facility Termination Date, payable on
each Payment Date hereafter and on the Facility Termination Date.  Swing Line Loans shall not count as usage of
any Lender’s Commitment for the purposes of calculating the commitment fee due
hereunder.

 

2.6.2                        Reductions in Aggregate
Commitment.

 

(a)                                  The
Borrower may permanently reduce the Aggregate Commitment, in whole or in part,
ratably among the Lenders in integral multiples of $5,000,000, upon at least
five (5) Business Days’ written notice to the Administrative Agent, which
notice shall specify the amount of any such reduction; provided, however, that the
amount of the Aggregate Commitment may not be reduced below the Aggregate
Outstanding Credit Exposure.  All accrued
commitment fees shall be payable on the effective date of any termination of
the obligations of the Lenders to make Credit Extensions hereunder.

 

(b)                                 Subject
to Section 2.6.3, the Aggregate Commitment shall be automatically
reduced to $75,000,000 on December 31, 2003.

 

(c)                                  In
addition, the Aggregate Commitment shall be automatically and permanently
reduced on each date the Borrower is required to make a prepayment of the
Revolving Loans pursuant to Section 2.2.1(a) by an amount equal to
such required payment.

 

2.6.3                        Optional Increase in
Aggregate Commitment.  The Borrower
may, at its option, at any time and from time to time on and after
January 1, 2004, seek to increase the Aggregate Commitment by up to an
aggregate amount of $25,000,000 (resulting in a maximum Aggregate Commitment of
$100,000,000) in a minimum amount of $5,000,000 and in integral multiples of
$1,000,000 in excess thereof, upon at least three (3) Business Days’ prior
written notice to the Administrative Agent, which notice shall specify the
amount of any such increase and shall be delivered at a time when no Default or
Unmatured Default has occurred and is continuing.  The

 

19

 

Borrower may,
after giving such notice, offer the increase (which may be declined by any
Lender in its sole discretion) in the Aggregate Commitment on either a ratable
basis to the Lenders or a non pro-rata basis to one or more Lenders and/or to
other Lenders or entities reasonably acceptable to the Administrative Agent.  No increase in the Aggregate Commitment
shall become effective until the existing or new Lenders extending such
incremental Commitment amount and the Borrower shall have delivered to the
Administrative Agent a document in form and substance reasonably satisfactory
to the Administrative Agent pursuant to which any such existing Lender states
the amount of its Commitment increase, any such new Lender states its
Commitment amount and agrees to assume and accept the obligations and rights of
a Lender hereunder and the Borrower accepts such incremental Commitments.  The Lenders (new or existing) shall accept
an assignment from the existing Lenders, and the existing Lenders shall make an
assignment to the new or existing Lender accepting a new or increased Commitment,
of an interest in each then outstanding Advance such that, after giving effect
thereto, all Advances are held ratably by the Lenders in proportion to their
respective Commitments.  Assignments
pursuant to the preceding sentence shall be made in exchange for the principal
amount assigned plus accrued and unpaid interest.  The Borrower shall make any payments under Section 3.4
resulting from such assignments.  Any
such increase of the Aggregate Commitment shall be subject to receipt by the
Administrative Agent and such new Lenders from the Borrower of such
supplemental opinions, resolutions, certificates and other documents as the
Administrative Agent or such new Lenders may reasonably request; provided that the scope of such opinions,
resolutions, certificates and other documents shall be substantially the same
as the scope of the opinions, resolutions, certificates and other documents
delivered on the Closing Date.

 

2.7                                 Minimum Amount of Each Advance.  Each Eurodollar Advance (other than an
Advance to repay Swing Line Loans) shall be in the minimum amount of $1,000,000
(and in multiples of $500,000 if in excess thereof), and each Floating Rate
Advance shall be in the minimum amount of $250,000 (and in multiples of
$250,000 if in excess thereof); provided,
however, that any Floating Rate Advance may be in the amount of the
unused Aggregate Commitment.

 

2.8                                 Optional Principal Payments.  The Borrower may at any time and from time
to time pay, without penalty or premium, all outstanding Floating Rate Advances
(other than Swing Line Loans), or, in a minimum aggregate amount of $100,000 or
any integral multiple of $50,000 in excess thereof, any portion of the
outstanding Floating Rate Advances (other than Swing Line Loans) upon one (1)
Business Day’s prior notice to the Administrative Agent.  The Borrower may at any time pay, without
penalty or premium, all outstanding Swing Line Loans, or, in a minimum amount
of $100,000 and increments of $50,000 in excess thereof, any portion of the
outstanding Swing Line Loans, with notice to the Administrative Agent and the
Swing Line Lender by 11:00 a.m. (Chicago time) on the date of repayment.  The Borrower may from time to time pay,
subject to the payment of any funding indemnification amounts required by Section 3.4
but without penalty or premium, all outstanding Eurodollar Advances, or, in a
minimum aggregate amount of $1,000,000 or any integral multiple of $500,000 in
excess thereof, any portion of the outstanding Eurodollar Advances upon three
(3) Business Days’ prior notice to the Administrative Agent.

 

2.9                                 Method of Selecting Types and
Interest Periods for New Advances. 
The Borrower shall select the Type of Advance and, in the case of each
Eurodollar Advance, the Interest Period applicable thereto from time to time.  The Borrower shall give the Administrative
Agent irrevocable notice (a “Borrowing Notice”) not later than 11:00 a.m.
(Chicago time) on the proposed Borrowing Date of each Floating Rate Advance
(other than a Swing Line Loan) and three Business Days before the Borrowing
Date for each Eurodollar Advance, specifying:

 

(i)                                     the
Borrowing Date, which shall be a Business Day, of such Advance,

 

20

 

(ii)                                  the
aggregate amount of such Advance,

 

(iii)                               the
Type of Advance selected, and

 

(iv)                              in
the case of each Eurodollar Advance, the Interest Period applicable thereto.

 

Not later than noon (Chicago time) on each Borrowing Date, each Lender
shall make available its Revolving Loan or Revolving Loans in funds immediately
available in Chicago to the Administrative Agent at its address specified
pursuant to Article XIV. 
The Administrative Agent will make the funds so received from the
Lenders available to the Borrower as soon as reasonably practicable by
crediting the Borrower’s account at the Administrative Agent’s aforesaid
address or as otherwise directed by the Borrower.

 

2.10                           Conversion and Continuation of
Outstanding Advances.  Floating
Rate Advances (other than Swing Line Loans) shall continue as Floating Rate
Advances unless and until such Floating Rate Advances are converted into
Eurodollar Advances pursuant to this Section 2.10 or are repaid in
accordance with Section 2.8. 
Each Eurodollar Advance shall continue as a Eurodollar Advance until the
end of the then applicable Interest Period therefor, at which time such
Eurodollar Advance shall be automatically converted into a Floating Rate
Advance unless (x) such Eurodollar Advance is or was repaid in accordance with Section 2.8
or (y) the Borrower shall have given the Administrative Agent a
Conversion/Continuation Notice (as defined below) requesting that, at the end
of such Interest Period, such Eurodollar Advance continue as a Eurodollar
Advance for the same or another Interest Period.  Subject to the terms of Section 2.7, the Borrower may
elect from time to time to convert all or any part of a Floating Rate Advance
(other than Swing Line Loans) into a Eurodollar Advance.  The Borrower shall give the Administrative
Agent irrevocable notice (a “Conversion/Continuation Notice”) of each
conversion of a Floating Rate Advance into a Eurodollar Advance or continuation
of a Eurodollar Advance not later than 11:00 a.m. (Chicago time) at least
three Business Days prior to the date of the requested conversion or
continuation, specifying:

 

(i)                                     the
requested date, which shall be a Business Day, of such conversion or
continuation,

 

(ii)                                  the
aggregate amount and Type of the Advance which is to be converted or continued,
and

 

(iii)                               the
amount of such Advance which is to be converted into or continued as a
Eurodollar Advance and the duration of the Interest Period applicable thereto.

 

2.11                           Changes in Interest Rate, etc.  Each Floating Rate Advance (other than Swing
Line Loans) shall bear interest on the outstanding principal amount thereof,
for each day from and including the date such Advance is made or is
automatically converted from a Eurodollar Advance into a Floating Rate Advance
pursuant to Section 2.10, to but excluding the date it is paid or
is converted into a Eurodollar Advance pursuant to Section 2.10
hereof, at a rate per annum equal to the Floating Rate for such day.  Each Swing Line Loan shall bear interest on
the outstanding principal amount thereof, for each day from and including the
day such Swing Line Loan is made to but excluding the date it is paid, at a
rate per annum equal to the Floating Rate for such day.  Changes in the rate of interest on that
portion of any Advance maintained as a Floating Rate Advance will take effect
simultaneously with each change in the Alternate Base Rate.  Each Eurodollar Advance shall bear interest
on the outstanding principal amount thereof from and including the first day of
the Interest Period applicable thereto to (but not including) the last day of
such Interest Period at the Eurodollar Rate applicable to such Eurodollar
Advance based upon

 

21

 

the Borrower’s selections under Sections 2.8
and 2.9 and otherwise in accordance with the terms hereof.  No Interest Period may end after the Facility
Termination Date.

 

2.12                           Rates Applicable After Default.  Notwithstanding anything to the contrary
contained in Section 2.9, 2.10 or 2.11, during
the continuance of a Default or Unmatured Default the Required Lenders may, at
their option, by notice to the Borrower (which notice may be revoked at the
option of the Required Lenders notwithstanding any provision of Section 9.2
requiring unanimous consent of the Lenders to changes in interest rates),
declare that no Advance may be made as, converted into or continued as a
Eurodollar Advance.  During the
continuance of a Default the Required Lenders may, at their option, by notice
to the Borrower (which notice may be revoked at the option of the Required
Lenders notwithstanding any provision of Section 9.2 requiring
unanimous consent of the Lenders to changes in interest rates), declare that
(i) each Eurodollar Advance shall bear interest for the remainder of the
applicable Interest Period at the rate otherwise applicable to such Interest
Period plus 2% per annum, (ii) each Floating Rate Advance shall bear interest
at a rate per annum equal to the Floating Rate in effect from time to time plus
2% per annum and (iii) the LC Fee shall be increased by 2% per annum; provided that, during the continuance of
a Default under Section 8(f), the interest rates set forth in
clauses (i) and (ii) above and the increase in the LC Fee set forth in clause
(iii) above shall be applicable to all Credit Extensions without any election
or action on the part of the Administrative Agent or any Lender.

 

2.13                           Method of Payment.  All payments of the Obligations hereunder shall be made, without
setoff, deduction, or counterclaim, in immediately available funds to the
Administrative Agent at the Administrative Agent’s address specified pursuant
to Article XIV, or at any other Lending Installation of the
Administrative Agent specified in writing prior to the date of such payment by
the Administrative Agent to the Borrower, by noon (local time) on the date when
due and shall (except with respect to repayments of Swing Line Loans and except
in the case of Reimbursement Obligations for which the LC Issuer has not been
fully indemnified by the Lenders, or as otherwise specifically required
hereunder) be applied ratably by the Administrative Agent among the
Lenders.  Each payment delivered to the
Administrative Agent for the account of any Lender shall be delivered promptly
by the Administrative Agent to such Lender in the same type of funds that the
Administrative Agent received at its address specified pursuant to Article XIV
or at any Lending Installation specified in a notice received by the
Administrative Agent from such Lender. 
The Administrative Agent is hereby authorized to charge the account of
the Borrower maintained with Bank One for each payment of principal, interest
and fees (but, absent the existence of a Default, no other amount due
hereunder) as it becomes due hereunder; provided that
so long as no Default has occurred and is continuing, the Borrower may revoke
such authorization by delivering written notice in accordance with Section 14.1
hereof to the Administrative Agent at least one (1) Business Day prior to the
intended date of revocation and such authorization shall be automatically
reinstated while any Default is continuing. 
Each reference to the Administrative Agent in this Section 2.13
shall also be deemed to refer, and shall apply equally, to the LC Issuer, in
the case of payments required to be made by the Borrower to the LC Issuer
pursuant to Section 2.20.6.

 

2.14                           Noteless Agreement; Evidence of
Indebtedness.

 

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

 

(b)                                 The
Administrative Agent shall also maintain accounts in which it will record (i)
the amount of each Loan made hereunder, the Type thereof and the Interest
Period with respect thereto, (ii) the amount of any principal or interest due
and payable or to become due and payable from the Borrower to each Lender
hereunder, (iii) the original stated amount of each

 

22

 

Facility LC and the
amount of LC Obligations outstanding at any time, and (iv) the amount of any
sum received by the Administrative Agent hereunder from the Borrower and each
Lender’s share thereof.

 

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

 

(d)                                 Any
Lender may request that its Loans be evidenced by a promissory note or, in the
case of the Swing Line Lender, promissory notes representing its Revolving
Loans and Swing Line Loans, respectively (each, a “Note”).  In such event, the Borrower shall prepare,
execute and deliver to such Lender a Note payable to the order of such Lender
in substantially the form of Exhibit E.  Thereafter, the Loans evidenced by such Note and interest thereon
shall at all times (prior to any assignment pursuant to Section 13.3)
be represented by one or more Notes payable to the order of the payee named
therein, except to the extent that any such Lender subsequently returns any
such Note for cancellation and requests that such Loans once again be evidenced
as described in paragraphs (a) and (b) above.

 

2.15                           Telephonic Notices.  The Borrower hereby authorizes the Lenders and the Administrative
Agent to extend, convert or continue Advances, effect selections of Types of
Advances and to transfer funds based on telephonic notices made by any person
or persons the Administrative Agent or any Lender in good faith believes to be
acting on behalf of the Borrower, it being understood that the foregoing
authorization is specifically intended to allow Borrowing Notices and
Conversion/Continuation Notices to be given telephonically.  The Borrower agrees to deliver promptly to
the Administrative Agent a written confirmation, if such confirmation is
requested by the Administrative Agent or any Lender, of each telephonic notice
signed by an Authorized Officer.  If the
written confirmation differs in any material respect from the action taken by
the Administrative Agent and the Lenders, the records of the Administrative
Agent and the Lenders shall govern absent manifest error.

 

2.16                           Interest Payment Dates; Interest and
Fee Basis.  Interest accrued on
each Floating Rate Advance shall be payable on each Payment Date, commencing
with the first such date to occur after the date hereof, on any date on which
the Floating Rate Advance is prepaid, whether due to acceleration or otherwise,
and at maturity.  Interest accrued on
that portion of the outstanding principal amount of any Floating Rate Advance
converted into a Eurodollar Advance on a day other than a Payment Date shall be
payable on the date of conversion. 
Interest accrued on each Eurodollar Advance shall be payable on the last
day of its applicable Interest Period, on any date on which the Eurodollar
Advance is prepaid, whether by acceleration or otherwise, and at maturity.  Interest accrued on each Eurodollar Advance
having an Interest Period longer than three months shall also be payable on the
last day of each three-month interval during such Interest Period.  Interest on all Eurodollar Advances and fees
shall be calculated for actual days elapsed on the basis of a 360-day
year.  Interest on Floating Rate
Advances shall be calculated for actual days elapsed on the basis of a 365, or
when appropriate 366, day year. 
Interest shall be payable for the day an Advance is made but not for the
day of any payment on the amount paid if payment is received prior to noon (local
time) at the place of payment.  If any
payment of principal, interest, fees or other amounts payable by the Borrower
hereunder shall become due on a day which is not a Business Day, such payment
shall be made on the next succeeding Business Day and such extension of time
shall be included in computing interest in connection with such payment.

 

2.17                           Notification of Advances, Interest
Rates, Prepayments and Commitment Reductions.  Promptly after receipt thereof, the Administrative Agent will
notify each Lender of the contents of each

 

23

 

Aggregate Commitment reduction notice, Borrowing
Notice, Swing Line Borrowing Notice, Conversion/Continuation Notice, and
repayment notice received by it hereunder. 
Promptly after notice from the LC Issuer, the Administrative Agent will
notify each Lender of the contents of each request for issuance of a Facility
LC hereunder.  The Administrative Agent
will notify the Borrower and each Lender of the interest rate applicable to
each Eurodollar Advance promptly upon determination of such interest rate and
will give the Borrower and each Lender prompt notice of each change in the
Alternate Base Rate.

 

2.18                           Lending Installations.  Each Lender may book its Loans and its
participation in any LC Obligations and the LC Issuer may book the Facility LCs
at any Lending Installation selected by such Lender or the LC Issuer, as the
case may be, and may change its Lending Installation from time to time.  All terms of this Agreement shall apply to
any such Lending Installation and the Loans, Facility LCs, participations in LC
Obligations  and any Notes issued
hereunder shall be deemed held by each Lender or the LC Issuer, as the case may
be, for the benefit of any such Lending Installation.  Each Lender and the LC Issuer may, by written notice to the
Administrative Agent and the Borrower in accordance with Article XIV,
designate replacement or additional Lending Installations through which Loans
will be made by it or Facility LCs will be issued by it and for whose account
Loan payments or payments with respect to Facility LCs are to be made.

 

2.19                           Non-Receipt of Funds by the Administrative Agent.  Unless the Borrower or a Lender, as the case
may be, notifies the Administrative Agent prior to the date on which it is
scheduled to make payment to the Administrative Agent of (i) in the case of a
Lender, the proceeds of a Loan or (ii) in the case of the Borrower, a payment
of principal, interest or fees to the Administrative Agent for the account of
the Lenders, that it does not intend to make such payment, the Administrative
Agent may assume that such payment has been made.  The Administrative Agent may, but shall not be obligated to, make
the amount of such payment available to the intended recipient in reliance upon
such assumption.  If such Lender or the
Borrower, as the case may be, has not in fact made such payment to the
Administrative Agent, the recipient of such payment shall, on demand by the
Administrative Agent, repay to the Administrative Agent the amount so made
available together with interest thereon in respect of each day during the
period commencing on the date such amount was so made available by the
Administrative Agent until the date the Administrative Agent recovers such
amount at a rate per annum equal to (x) in the case of payment by a Lender, the
Federal Funds Effective Rate for such day for the first three days and,
thereafter, the interest rate applicable to the relevant Loan or (y) in the
case of payment by the Borrower, the interest rate applicable to the relevant
Loan.

 

2.20                           Facility LCs.

 

2.20.1                  Issuance.  The LC Issuer hereby agrees, on the terms
and conditions set forth in this Agreement, to issue standby and commercial
letters of credit (each, a “Facility LC”) and to renew, extend, increase,
decrease or otherwise modify each Facility LC (“Modify,” and each such action a
“Modification”), from time to time from and including the date of this
Agreement and prior to the Facility Termination Date upon the request of and
for the account of the Borrower; provided that immediately after each such
Facility LC is issued or Modified, (i) the aggregate amount of the outstanding
LC Obligations shall not exceed the Aggregate Commitment and (ii) the Aggregate
Outstanding Credit Exposure shall not exceed the Aggregate Commitment.  No Facility LC shall have an expiry date
later than the earlier of (x) the fifth Business Day prior to the Facility
Termination Date and (y) one year after its issuance; provided that any Facility LC with a
one-year term may provide for the renewal thereof for additional one-year
periods (which in no event shall extend beyond the date referred to in clause
(x) above).

 

2.20.2                  Participations.  Upon the issuance or Modification by the LC
Issuer of a Facility LC in accordance with this Section 2.20, the
LC Issuer shall be deemed, without further action by

 

24

 

any party hereto, to have
unconditionally and irrevocably sold to each Lender, and each Lender shall be
deemed, without further action by any party hereto, to have unconditionally and
irrevocably purchased from the LC Issuer, a participation in such Facility LC
(and each Modification thereof) and the related LC Obligations in proportion to
its Pro Rata Share.

 

2.20.3                  Notice.  Subject to Section 2.20.1, the
Borrower shall give the LC Issuer notice prior to 10:00 a.m. (Chicago time) (a)
on the proposed date of issuance or Modification of  each commercial Facility LC and (b) two Business Days before the
proposed date of issuance or Modification of each standby Facility LC, in each
case specifying the beneficiary, the proposed date of issuance (or
Modification) and the expiry date of such Facility LC, and describing the
proposed terms of such Facility LC and the nature of the transactions proposed
to be supported thereby.  Upon receipt
of such notice, the LC Issuer shall promptly notify the Administrative Agent,
and the Administrative Agent shall promptly notify each Lender, of the contents
thereof and of the amount of such Lender’s participation in such proposed
Facility LC.  The issuance or
Modification by the LC Issuer of any Facility LC shall, in addition to the
conditions precedent set forth in Article IV (the satisfaction of
which the LC Issuer shall have no duty to ascertain), be subject to the
conditions precedent that such Facility LC shall be satisfactory to the LC
Issuer and that the Borrower shall have executed and delivered such application
agreement and/or such other instruments and agreements relating to such
Facility LC as the LC Issuer shall have reasonably requested (each, a “Facility
LC Application”).  In the event of any
conflict between the terms of this Agreement and the terms of any Facility LC
Application, the terms of this Agreement shall control.

 

2.20.4                  Fees.  The Borrower shall pay to the Administrative
Agent, for the account of the Lenders ratably in accordance with their
respective Pro Rata Shares, (i) with respect to each standby Facility LC, a
letter of credit fee at a per annum rate equal to the Applicable Fee Rate for
standby Facility LCs in effect from time to time on the average daily undrawn
stated amount under such standby Facility LC, such fee to be payable in arrears
on each Payment Date, and (ii) with respect to each commercial Facility LC, a
letter of credit fee at a per annum rate equal to the Applicable Fee Rate for
commercial Facility LCs in effect from time to time on the average daily
undrawn stated amount under such commercial Facility LC, such fee to be payable
in arrears on each Payment Date (each such fee described in this sentence an
“LC Fee”).  The Borrower shall also pay
to the LC Issuer for its own account (x) at the time of issuance (or any
Modification which increases the face amount of such Facility LC) of each
standby Facility LC issued by Bank One, a fronting fee of 0.125% of the face
amount (or, in the case of a Modification which increases the face amount of a
Facility LC, 0.125% of the amount of such increase) of each such standby
Facility LC or, in the case of any LC Issuer other than Bank One, a fronting fee
in an amount to be agreed upon between such LC Issuer and the Borrower and (y)
documentary and processing charges in connection with the issuance or
Modification of and draws under Facility LCs in accordance with the
schedule for such charges previously agreed to by the LC Issuer and the
Borrower.

 

2.20.5                  Administration;
Reimbursement by Lenders.  Upon
receipt from the beneficiary of any Facility LC of any demand for payment under
such Facility LC, the LC Issuer shall promptly notify the Administrative Agent
and the Administrative Agent shall promptly notify the Borrower and each other
Lender as to the amount to be paid by the LC Issuer as a result of such demand
and the proposed payment date (the “LC Payment Date”).  The LC Issuer will use commercially reasonable
efforts to give such notice not later than the Business Day following such
demand; provided that the failure
to provide such notice shall not affect the obligations of the Borrower
hereunder.  The responsibility of the LC
Issuer to the Borrower and each Lender shall be only to determine that the
documents (including each demand for payment) delivered

 

25

 

under each Facility LC in
connection with such presentment shall be in conformity in all material
respects with such Facility LC.  The LC
Issuer shall endeavor to exercise the same care in the issuance and
administration of the Facility LCs as it does with respect to letters of credit
in which no participations are granted, it being understood that in the absence
of any gross negligence or willful misconduct by the LC Issuer, each Lender
shall be unconditionally and irrevocably liable without regard to the
occurrence of any Default or Unmatured Default or any condition precedent
whatsoever, to reimburse the LC Issuer on demand for (i) such Lender’s Pro Rata
Share of the amount of each payment made by the LC Issuer under each Facility
LC to the extent such amount is not reimbursed by the Borrower pursuant to Section 2.20.6
below, plus (ii) interest on the foregoing amount to be reimbursed by such
Lender, for each day from the date of the LC Issuer’s demand for such
reimbursement (or, if such demand is made after 11:00 a.m. (Chicago time) on
such date, from the next succeeding Business Day) to the date on which such
Lender pays the amount to be reimbursed by it, at a rate of interest per annum
equal to the Federal Funds Effective Rate for the first three days and,
thereafter, at a rate of interest equal to the rate applicable to Floating Rate
Advances.  Each LC Issuer shall provide
the Administrative Agent with a list of all outstanding Facility LCs and all
outstanding LC Obligations in respect of each Facility LC issued by it on a
weekly basis and at such other times as shall reasonably be requested by the
Administrative Agent.

 

2.20.6                  Reimbursement
by Borrower.  The Borrower shall be
irrevocably and unconditionally obligated to reimburse the LC Issuer not later
than the applicable LC Payment Date for any amounts paid by the LC Issuer upon
any drawing under any Facility LC, without presentment, demand, protest or
other formalities of any kind; provided that neither the Borrower nor
any Lender shall hereby be precluded from asserting any claim for direct (but
not consequential) damages suffered by the Borrower or such Lender to the
extent, but only to the extent, caused by (i) the willful misconduct or gross
negligence of the LC Issuer in determining whether a request presented under
any Facility LC issued by it complied with the terms of such Facility LC or
(ii) the LC Issuer’s failure to pay under any Facility LC issued by it after
the presentation to it of a request strictly complying with the terms and
conditions of such Facility LC.  All
such amounts paid by the LC Issuer shall bear interest, payable on demand, for
each day after the LC Payment Date until paid at a rate per annum equal to the
sum of 2% plus the rate applicable to Floating Rate Advances.  The LC Issuer will pay to each Lender
ratably in accordance with its Pro Rata Share all amounts received by it from
the Borrower for application in payment, in whole or in part, of the
Reimbursement Obligation in respect of any Facility LC issued by the LC Issuer,
but only to the extent such Lender has made payment to the LC Issuer in respect
of such Facility LC pursuant to Section 2.20.5.  Subject to the terms and conditions of this
Agreement (including without limitation the submission of a Borrowing Notice in
compliance with Section 2.9 and the satisfaction of the applicable
conditions precedent set forth in Article IV), the Borrower may
request an Advance hereunder for the purpose of satisfying any Reimbursement
Obligation.

 

2.20.7                  Obligations
Absolute.  The Borrower’s
obligations under this Section 2.20 shall be absolute and
unconditional under any and all circumstances and irrespective of any setoff,
counterclaim or defense to payment which the Borrower may have or have had
against the LC Issuer, any Lender or any beneficiary of a Facility LC.  The Borrower further agrees with the LC
Issuer and the Lenders that the LC Issuer and the Lenders shall not be
responsible for, and the Borrower’s Reimbursement Obligation in respect of any
Facility LC shall not be affected by, among other things, the validity or
genuineness of documents or of any endorsements thereon, even if such documents
should in fact prove to be in any or all respects invalid, fraudulent or
forged, or any dispute between or among the Borrower, any of its Affiliates,
the beneficiary of any Facility LC or any financing institution or other party
to whom any Facility LC may be

 

26

 

transferred or any claims
or defenses whatsoever of the Borrower or of any of its Affiliates against the
beneficiary of any Facility LC or any such transferee.  The LC Issuer shall not be liable for any
error, omission, interruption or delay in transmission, dispatch or delivery of
any message or advice, however transmitted, in connection with any Facility LC,
except for errors or omissions determined in a final non-appealable judgment by
a court of competent jurisdiction to have resulted from the gross negligence or
willful misconduct of the LC Issuer. 
The Borrower agrees that any action taken or omitted by the LC Issuer or
any Lender under or in connection with each Facility LC and the related drafts
and documents, if done without gross negligence or willful misconduct, shall be
binding upon the Borrower and shall not put the LC Issuer or any Lender under
any liability to the Borrower.  Nothing
in this Section 2.20.7 is intended to limit the right of the
Borrower to make a claim against the LC Issuer for damages as contemplated by
the proviso to the first sentence of Section 2.20.6.

 

2.20.8                  Actions of LC
Issuer.  The LC Issuer shall be
entitled to rely, and shall be fully protected in relying, upon any Facility
LC, draft, writing, resolution, notice, consent, certificate, affidavit,
letter, cablegram, telegram, telecopy, telex or teletype message, statement,
order or other document believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons, and upon advice and
statements of legal counsel, independent accountants and other experts selected
by the LC Issuer.  Notwithstanding any
other provision of this Section 2.20, the LC Issuer shall in all
cases be fully protected in acting, or in refraining from acting, under this
Agreement in accordance with a request of, or at the direction of, the Required
Lenders, and such request and any action taken or failure to act pursuant thereto
shall be binding upon the Lenders and any future holders of a participation in
any Facility LC.  The LC Issuer may, as
condition to taking or refusing to take any action under this Agreement,
require that it shall first be indemnified to its reasonable satisfaction by
the Lenders against any and all liability and expense which may be incurred by
it by reason of taking, refusing or continuing to take any such action; provided that this Section 2.20.8
shall not affect the Borrower’s rights against the Lenders under the terms of
this Agreement.

 

2.20.9                  Indemnification.  The Borrower hereby agrees to indemnify and
hold harmless each Lender, the LC Issuer and the Administrative Agent, and
their respective directors, officers, agents and employees from and against any
and all claims and damages, losses, liabilities, costs or expenses which such
Lender, the LC Issuer or the Administrative Agent may incur (or which may be
claimed against such Lender, the LC Issuer or the Administrative Agent by any
Person whatsoever) by reason of or in connection with the issuance, execution
and delivery or transfer of or payment or failure to pay under any Facility LC
or any actual or proposed use of any Facility LC, including, without
limitation, any claims, damages, losses, liabilities, costs or expenses which
the LC Issuer may incur by reason of or in connection with (i) the failure
of any other Lender to fulfill or comply with its obligations to the LC Issuer
hereunder (but nothing herein contained shall affect any rights the Borrower
may have against any defaulting Lender) or (ii) by reason of or on account
of the LC Issuer issuing any Facility LC which specifies that the term
“Beneficiary” included therein includes any successor by operation of law of
the named Beneficiary, but which Facility LC does not require that any drawing
by any such successor Beneficiary be accompanied by a copy of a legal document,
satisfactory to the LC Issuer, evidencing the appointment of such successor
Beneficiary;
provided that the Borrower shall not be required to indemnify any
Lender, the LC Issuer or the Administrative Agent for any claims, damages,
losses, liabilities, costs or expenses to the extent, but only to the extent,
caused by (x) the willful misconduct or gross negligence of the LC Issuer in
determining whether a request presented under any Facility LC complied with the
terms of such Facility LC or (y) the LC Issuer’s failure to pay under any
Facility LC after the presentation to it of a request strictly

 

27

 

complying with the terms
and conditions of such Facility LC. Nothing in this Section 2.20.9
is intended to limit the obligations of the Borrower under any other provision
of this Agreement.

 

2.20.10            Lenders’
Indemnification.  Each Lender shall,
ratably in accordance with its Pro Rata Share, indemnify the LC Issuer, its
affiliates and their respective directors, officers, agents and employees (to
the extent not reimbursed by the Borrower) against any cost, expense (including
reasonable counsel fees and disbursements), claim, demand, action, loss or
liability (except such as result from such indemnitees’ gross negligence or
willful misconduct or the LC Issuer’s failure to pay under any Facility LC
after the presentation to it of a request strictly complying with the terms and
conditions of the Facility LC) that such indemnitees may suffer or incur in
connection with this Section 2.20 or any action taken or omitted by
such indemnitees hereunder.

 

2.20.11            Facility LC
Collateral Account.  The Borrower
agrees that it will, upon the request of the Administrative Agent or the
Required Lenders and until the final expiration date of any Facility LC and
thereafter as long as any amount is payable to the LC Issuer or the Lenders in
respect of any Facility LC, maintain a special collateral account (the
“Facility LC Collateral Account”) at the Administrative Agent’s office at the
address specified pursuant to Article XIV, in the name of such
Borrower but under the sole dominion and control of the Administrative Agent,
for the benefit of the Lenders and in which such Borrower shall have no
interest other than as set forth in Section 9.1.  The Borrower hereby pledges, assigns and
grants to the Administrative Agent, on behalf of and for the ratable benefit of
the Lenders and the LC Issuer, a security interest in all of the Borrower’s
right, title and interest in and to all funds which may from time to time be on
deposit in the Facility LC Collateral Account to secure the prompt and complete
payment and performance of the Obligations in accordance with Sections
2.2.1(b) and  9.1.  The Administrative Agent will invest any
funds on deposit from time to time in the Facility LC Collateral Account in
certificates of deposit of Bank One having a maturity not exceeding 30
days.  Nothing in this Section 2.20.11
shall either obligate the Administrative Agent to require the Borrower to
deposit any funds in the Facility LC Collateral Account or limit the right of
the Administrative Agent to release any funds held in the Facility LC
Collateral Account in each case other than as required by this Agreement.

 

2.20.12            Rights as a Lender.  In its capacity as a Lender, the LC Issuer
shall have the same rights and obligations as any other Lender.

 

2.21                           Replacement of Lender.  If the Borrower is required pursuant to Section 3.1,
3.2 or 3.5 to make any additional payment to any Lender or
if any Lender’s obligation to make or continue, or to convert Floating Rate
Advances into, Eurodollar Advances shall be suspended pursuant to Section 3.3
(any Lender so affected an “Affected Lender”), the Borrower may elect, if such
amounts continue to be charged or such suspension is still effective, to
replace such Affected Lender as a Lender party to this Agreement; provided that no Default or Unmatured
Default shall have occurred and be continuing at the time of such replacement; provided further that, concurrently with
such replacement, (i) another bank or other entity which is reasonably
satisfactory to the Borrower and the Administrative Agent shall agree, as of
such date, to purchase for cash the Advances and other Obligations due to the
Affected Lender pursuant to an assignment substantially in the form of Exhibit C
and to become a Lender for all purposes under this Agreement and to assume all
obligations of the Affected Lender to be terminated as of such date and to
comply with the requirements of Section 13.3 applicable to
assignments, and (ii) the Borrower shall pay to such Affected Lender in same
day funds on the day of such replacement (A) all interest, fees and other
amounts then accrued but unpaid to such Affected Lender by the Borrower
hereunder to and including the date of termination, including without
limitation payments due to such Affected Lender under Sections 3.1,
3.2 and 3.5, and (B) an amount, if any, equal to the payment
which would have been

 

28

 

due to such Lender on the day of such replacement
under Section 3.4 had the Loans of such Affected Lender been
prepaid on such date rather than sold to the replacement Lender.

 

ARTICLE III

 

YIELD
PROTECTION; TAXES

 

3.1                                 Yield Protection.  If, on or after the date of this Agreement, the adoption of any
law or any governmental or quasi-governmental rule, regulation, policy,
guideline or directive (whether or not having the force of law), or any change
in the interpretation or administration thereof by any governmental or
quasi-governmental authority, central bank or comparable agency charged with
the interpretation or administration thereof, or compliance by any Lender or
applicable Lending Installation or the LC Issuer with any request or directive
(whether or not having the force of law) of any such authority, central bank or
comparable agency:

 

(a)                                  imposes
or increases or deems applicable any reserve, assessment, insurance charge,
special deposit or similar requirement against assets of, deposits with or for
the account of, or credit extended by, any Lender or any applicable Lending
Installation or the LC Issuer (other than reserves and assessments taken into
account in determining the interest rate applicable to Eurodollar Advances), or

 

(b)                                 imposes
any other condition,

 

and the result of any of
the foregoing is to increase the cost to such Lender or applicable Lending
Installation or the LC Issuer, as the case may be, by an amount that such
Lender or applicable Lending Installation or the LC Issuer reasonably deems
material, of making or maintaining its Eurodollar Loans or Commitment or of
issuing or participating in Facility LCs or to reduce the return received by
such Lender or applicable Lending Installation or the LC Issuer, as the case
may be, in connection with such Eurodollar Loans, Commitment, Facility LCs or
participations therein, then, within 15 days of demand by such Lender or the LC
Issuer, as the case may be, the Borrower shall pay such Lender or the LC
Issuer, as the case may be, such additional amount or amounts as will
compensate such Lender or the LC Issuer, as the case may be, for such increased
cost or reduction in amount received.

 

3.2                                 Changes in Capital Adequacy
Regulations.  If a Lender or the
LC Issuer determines the amount of capital required or expected to be
maintained by such Lender or the LC Issuer, any Lending Installation of such
Lender or the LC Issuer, or any corporation controlling such Lender or the LC
Issuer is increased as a result of a Change, then, within 15 days of demand by
such Lender or the LC Issuer, the Borrower shall pay such Lender or the LC
Issuer the amount necessary to compensate for any shortfall in the rate of
return on the portion of such increased capital which such Lender or the LC
issuer determines is attributable to this Agreement, its Outstanding Credit
Exposure or its Commitment to make Loans and issue or participate in Facility
LCs, as the case may be, hereunder (after taking into account such Lender’s or
the LC Issuer’s policies as to capital adequacy).  “Change” means (a) any change after the date of this Agreement in
the Risk-Based Capital Guidelines or (b) any adoption of or change in any other
law, governmental or quasi-governmental rule, regulation, policy, guideline,
interpretation, or directive (whether or not having the force of law) after the
date of this Agreement which affects the amount of capital required or expected
to be maintained by any Lender or the LC Issuer or any Lending Installation or
any corporation controlling any Lender or the LC Issuer.  “Risk-Based Capital Guidelines” means (a)
the risk-based capital guidelines in effect in the United States on the date of
this Agreement, including transition rules, and (b) the corresponding capital
regulations promulgated by regulatory authorities outside the United States
implementing the July 1988 report of the Basle Committee on Banking
Regulation and Supervisory Practices Entitled “International Convergence of
Capital Measurements and

 

29

 

Capital Standards,” including transition rules, and
any amendments to such regulations adopted prior to the date of this Agreement.

 

3.3                                 Availability of Types of Advances.  If any Lender determines that
maintenance of its Eurodollar Loans at a suitable Lending Installation would
violate any applicable law or any governmental or quasi-governmental rule,
regulation, or directive, whether or not having the force of law, or if the
Required Lenders determine that (a) deposits of a type and maturity appropriate
to match fund Eurodollar Advances are not available or (b) the interest rate
applicable to Eurodollar Advances does not accurately reflect the cost of
making or maintaining Eurodollar Advances, then the Administrative Agent shall
suspend the availability of Eurodollar Advances and require any affected
Eurodollar Advances to be repaid or converted to Floating Rate Advances,
subject to the payment of any funding indemnification amounts required by Section 3.4.

 

3.4                                 Funding Indemnification.  If any payment of a Eurodollar Advance
occurs on a date which is not the last day of the applicable Interest Period,
whether because of acceleration, prepayment or otherwise, or a Eurodollar
Advance is not made on the date specified by the Borrower for any reason other
than default by the Lenders, the Borrower will indemnify each Lender for any
loss or cost incurred by it resulting therefrom, including, without limitation,
any loss or cost in liquidating or employing deposits acquired to fund or
maintain such Eurodollar Advance.

 

3.5                                 Taxes.

 

(a)                                  All
payments by the Borrower to or for the account of any Lender, the LC Issuer or
the Administrative Agent hereunder or under any other Loan Document shall be
made free and clear of and without deduction for any and all Taxes.  If any Taxes are required to be withheld
from or in respect of any sum payable hereunder to any Lender, the LC Issuer or
the Administrative Agent, (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 3.5) such Lender, the
LC Issuer or the Administrative Agent (as the case may be) receives an amount
equal to the sum it would have received had no such deductions been made, (ii)
the Borrower shall make such deductions, (iii) the Borrower shall pay the full
amount deducted to the relevant authority in accordance with applicable law and
(iv) the Borrower shall furnish to the Administrative Agent the original copy
of a receipt evidencing payment thereof as soon as practicable after such
payment is made.

 

(b)                                 In
addition, the Borrower hereby agrees to pay any present or future stamp or documentary
taxes and any other excise or property taxes, charges or similar levies which
arise from any payment made hereunder or under any other Loan Document or from
the execution or delivery of, or otherwise with respect to, this Agreement or
any other Loan Document (“Other Taxes”).

 

(c)                                  The
Borrower hereby agrees to indemnify the Administrative Agent, the LC Issuer and
each Lender for the full amount of Taxes or Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed on amounts payable under this Section 3.5)
paid by the Administrative Agent, the LC Issuer  or such Lender as a result of its Commitment, any Loans made by
it hereunder, or otherwise in connection with its participation in this
Agreement and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto. 
Payments due under this indemnification shall be made within 30 days of
the date the Administrative Agent, the LC Issuer or such Lender makes demand
therefor pursuant to Section 3.6.

 

30

 

(d)                                 Each
Lender that is not incorporated under the laws of the United States of America
or a state thereof (each a “Non-U.S. Lender”) agrees that it will, on or before
the date it becomes a party to this Agreement, (i) deliver to the
Administrative Agent two duly completed copies of United States Internal
Revenue Service Form W-8BEN or W-8ECI, certifying in either case that such
Lender is entitled to receive payments under this Agreement without deduction
or withholding of any United States federal income taxes, and (ii) deliver to
the Administrative Agent a United States Internal Revenue Service Form W-8 or
W-9, as the case may be, and certify that it is entitled to an exemption from
United States backup withholding tax. 
Each Non-U.S. Lender further undertakes to deliver to each of the
Borrower and the Administrative Agent (x) renewals or additional copies of such
form (or any successor form) on or before the date that such form expires or
becomes obsolete, and (y) after the occurrence of any event requiring a change
in the most recent forms so delivered by it, such additional forms or
amendments thereto as may be reasonably requested by the Borrower or the
Administrative Agent.  All forms or
amendments described in the preceding sentence shall certify that such Lender
is entitled to receive payments under this Agreement without deduction or
withholding of any United States federal income taxes, unless an event which has
not been caused or initiated by such Lender (including without limitation any
change in treaty, law or regulation) has occurred prior to the date on which
any such delivery would otherwise be required which renders all such forms
inapplicable or which would prevent such Lender from duly completing and
delivering any such form or amendment with respect to it and such Lender
advises the Borrower and the Administrative Agent that it is not capable of
receiving payments without any deduction or withholding of United States
federal income tax.

 

(e)                                  For
any period during which a Non-U.S. Lender has failed to provide the Borrower
with an appropriate form pursuant to clause (d) above (unless such failure is
due to a change in treaty, law or regulation, or any change in the
interpretation or administration thereof by any governmental authority,
occurring subsequent to the date on which a form originally was required to be
provided), such Non-U.S. Lender shall not be entitled to indemnification under
this Section 3.5 with respect to Taxes imposed by the United
States;
provided that, should a Non-U.S. Lender which is otherwise exempt
from or subject to a reduced rate of withholding tax become subject to Taxes
because of its failure to deliver a form required under clause (d) above, the
Borrower shall take such steps as such Non-U.S. Lender shall reasonably request
to assist such Non-U.S. Lender to recover such Taxes.

 

(f)                                    Any
Lender that is entitled to an exemption from or reduction of withholding tax
with respect to payments under this Agreement or any Note pursuant to the law
of any relevant jurisdiction or any treaty shall deliver to the Borrower (with
a copy to the Administrative Agent), at the time or times prescribed by
applicable law, 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.

 

(g)                                 If
the U.S. Internal Revenue Service or any other governmental authority of the
United States or any other country or any political subdivision thereof asserts
a claim that the Administrative Agent did not properly withhold tax from
amounts paid to or for the account of any Lender (because the appropriate form
was not delivered or properly completed, because such Lender failed to notify
the Administrative Agent of a change in circumstances which rendered its
exemption from withholding ineffective, or for any other reason), such Lender
shall indemnify the Administrative Agent fully for all amounts paid, directly
or indirectly, by the Administrative Agent as tax, withholding therefor, or
otherwise, including penalties and interest, and including taxes imposed by any
jurisdiction on amounts payable to the Administrative Agent under this
subsection, together with all costs and expenses related thereto (including attorneys

 

31

 

fees and time charges of
attorneys for the Administrative Agent, which attorneys may be employees of the
Administrative Agent).  The obligations
of the Lenders under this Section 3.5(vii) shall survive the
payment of the Obligations and termination of this Agreement.

 

3.6                                 Lender Statements; Survival of
Indemnity. To the extent reasonably possible, each Lender shall
designate an alternate Lending Installation with respect to its Eurodollar
Loans to reduce any liability of the Borrower to such Lender under Sections 3.1,
3.2 and 3.5 or to avoid the unavailability of Eurodollar
Advances under Section 3.3, so long as such designation is not, in
the judgment of such Lender, disadvantageous to such Lender.  Each Lender shall deliver a written
statement of such Lender to the Borrower (with a copy to the Administrative
Agent) as to the amount due, if any, under Section 3.1, 3.2,
3.4 or 3.5.  Such written
statement shall set forth in reasonable detail the calculations and assumptions
upon which such Lender determined such amount and shall be final, conclusive
and binding on the Borrower in the absence of manifest error.  Determination of amounts payable under such
Sections in connection with a Eurodollar Loan shall be calculated as though
each Lender funded its Eurodollar Loan through the purchase of a deposit of the
type and maturity corresponding to the deposit used as a reference in
determining the Eurodollar Rate applicable to such Loan, whether in fact that
is the case or not.  Unless otherwise
provided herein, the amount specified in the written statement of any Lender
shall be payable on demand after receipt by the Borrower of such written
statement.  The obligations of the
Borrower under Sections 3.1, 3.2, 3.4 and 3.5
shall survive payment of the Obligations and termination of this Agreement.

 

ARTICLE IV

 

CONDITIONS
PRECEDENT

 

4.1                                 Initial Credit Extension.  The Lenders shall not be required to make
the initial Credit Extension hereunder unless the Borrower has furnished to the
Administrative Agent:

 

(a)                                  Copies
of the articles or certificate of incorporation of the Borrower and each
Guarantor, together with all amendments, and a certificate of good standing,
each certified by the appropriate governmental officer in its respective
jurisdiction of incorporation, as well as any other information required by
Section 326 of the USA PATRIOT Act or necessary for the Administrative
Agent or any Lender to verify the identity of the Borrower as required by Section 326
of the USA PATRIOT Act.

 

(b)                                 Copies,
certified by the Secretary or Assistant Secretary of the Borrower and each
Guarantor, of its by-laws and of its Board of Directors’ resolutions and of
resolutions or actions of any other body authorizing the execution of the Loan
Documents to which the Borrower and such Guarantor is a party.

 

(c)                                  An
incumbency certificate, executed by the Secretary or Assistant Secretary of the
Borrower and each Guarantor, which shall identify by name and title and bear
the signatures of the Authorized Officers and any other officers of the
Borrower and such Guarantor authorized to sign the Loan Documents to which the
Borrower and such Guarantor is a party, upon which certificate the
Administrative Agent and the Lenders shall be entitled to rely until informed
of any change in writing by the Borrower.

 

(d)                                 A
certificate, signed by the chief financial officer of the Borrower, stating
that on the initial Credit Extension Date (i) the representations and
warranties contained in Article V are true and correct as of the
initial Credit Extension Date and (ii) no Default or Unmatured Default has
occurred and is continuing.

 

32

 

(e)                                  (i)
A written legal opinion of Cleary, Gottlieb, Steen & Hamilton, counsel to
the Borrower and its Subsidiaries, addressed to the Administrative Agent and
the Lenders in form and substance reasonably acceptable to the Administrative
Agent, (ii) a written legal opinion of David H. Weiser, General Counsel of the
Borrower and its Subsidiaries, addressed to the Administrative Agent and the
Lenders in form and substance reasonably acceptable to the Administrative Agent
and (iii) written legal opinions of such local counsel requested by the
Administrative Agent in form and substance reasonably acceptable to the
Administrative Agent.

 

(f)                                    Any
Notes requested by a Lender pursuant to Section 2.14 payable to the
order of each such requesting Lender.

 

(g)                                 Written
money transfer instructions, in substantially the form of Exhibit D,
addressed to the Administrative Agent and signed by an Authorized Officer,
together with such other related money transfer authorizations as the
Administrative Agent may have reasonably requested.

 

(h)                                 The
Guarantee and Collateral Agreement, duly executed by each of the parties
thereto together with all certificates representing Pledged Stock and related
stock powers executed in blank.

 

(i)                                     A
properly completed and executed Facility LC Application as and to the extent
requested by each LC Issuer.

 

(j)                                     A
duly completed Borrowing Base Certificate dated as of the Closing Date.

 

(k)                                  Written
confirmation from the Existing Agent that upon the making of the initial Credit
Extension and the payment of the requisite amount to the Existing Agent, all
principal, interest and other amounts due under the Existing Credit Agreement
will be paid in full, all commitments thereunder will be terminated, all liens
and security interests thereunder will be released and terminated (and all
collateral held by the Existing Agent or lender thereunder will be delivered to
the Borrower or its designee), and the Existing Credit Agreement and all other
loan and security documents thereunder will be terminated.

 

(l)                                     (a)
Such duly completed and executed UCC-1 financing statements as the Administrative
Agent shall have requested to perfect its Lien in the Collateral; (b) copies of
searches of financing statements filed under the Uniform Commercial Code with
respect to the assets of the Borrower and its Subsidiaries in such
jurisdictions as the Administrative Agent may request; and (c) such duly
executed UCC-3 termination statements and similar documents as the
Administrative Agent may request with respect to any security interests
securing the obligations of the Borrower and its Subsidiaries under the
Existing Credit Agreement.

 

(m)                               Such
other documents as any Lender, the LC Issuer or its counsel may have reasonably
requested.

 

4.2                                 Each Credit Extension.  The Lenders shall not be required to make
any Credit Extension (except as otherwise set forth in Section 2.5.4
with respect to Revolving Loans for the purpose of repaying Swing Line Loans)
unless on the applicable Credit Extension Date:

 

(a)                                  There
exists no Default or Unmatured Default.

 

33

 

(b)                                 The
representations and warranties contained in Article V are true and
correct in all material respects as of such Credit Extension Date except to the
extent any such representation or warranty is stated to relate solely to an
earlier date, in which case such representation or warranty shall have been
true and correct in all material respects on and as of such earlier date.

 

Each Borrowing Notice, Swing Line Borrowing Notice, or request for
issuance of a Facility LC, as the case may be, with respect to each such Credit
Extension shall constitute a representation and warranty by the Borrower that
the conditions contained in Sections 4.2(a) and (b)
have been satisfied.

 

ARTICLE V

 

REPRESENTATIONS
AND WARRANTIES

 

The Borrower represents and warrants to the Lenders that:

 

5.1                                 Financial Condition.  The audited consolidated balance sheets
of the Borrower and its consolidated Subsidiaries as at December 28, 2002
and December 29, 2001, and the related consolidated statements of income
and of cash flows for the fiscal years ended on such dates, reported on by and
accompanied by an unqualified report from Deloitte & Touche LLP present
fairly the consolidated financial condition of the Borrower and its
consolidated Subsidiaries as at such date, and the consolidated results of its
operations and its consolidated cash flows for the respective fiscal years then
ended.  The unaudited consolidated
balance sheet of the Borrower and its consolidated Subsidiaries as at
October 4, 2003, and the related unaudited consolidated statements of
income and cash flows for the nine-month period ended on such date, present
fairly the consolidated financial condition of the Borrower and its
consolidated Subsidiaries as at such date, and the consolidated results of its
operations and its consolidated cash flows for the nine-month period then ended
(subject to normal year-end audit adjustments).  All such financial statements, including the related schedules
and notes thereto, have been prepared in accordance with GAAP applied
consistently throughout the periods involved (except as approved by the
aforementioned firm of accountants and disclosed therein).  The Borrower and its consolidated
Subsidiaries do not have any material Guarantee Obligations, contingent
liabilities and liabilities for taxes, or any long-term leases or unusual
forward or long-term commitments, including any interest rate or foreign
currency swap or exchange transaction or other obligation in respect of
derivatives, that are not reflected in the most recent financial statements
referred to in this paragraph.

 

5.2                                 No Change. 
Since December 28, 2002, there has been no development or event
that has had or could reasonably be expected to have a Material Adverse Effect.

 

5.3                                 Corporate Existence; Compliance
With Law.  Each of the Borrower
and its Subsidiaries (a) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, (b) has the
corporate power and authority, and the legal right, to own and operate its
Property, to lease the property it operates as lessee and to conduct the
business in which it is currently engaged, (c) is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of Property or the conduct of its business
requires such qualification and (d) is in compliance with all Requirements of
Law except to the extent that the failure to comply therewith could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.

 

5.4                                 Corporate Power.  Each Loan Party has the corporate power and authority, and the
legal right, to make, deliver and perform the Loan Documents to which it is a
party and, in the case of the Borrower, to borrow hereunder, and to have
Facility LCs issued for its account hereunder. 
Each Loan

 

34

 

Party has taken all necessary corporate action to
authorize the execution, delivery and performance of the Loan Documents to
which it is a party and, in the case of the Borrower, to authorize the
borrowings on the terms and conditions of this Agreement, the issuance of
Facility LCs for its account hereunder. 
No consent or authorization of, filing with, notice to or other act by
or in respect of, any Governmental Authority or any other Person is required in
connection with the borrowings hereunder or with the execution, delivery,
performance, validity or enforceability of this Agreement or any of the Loan
Documents, except (i) consents, authorizations, filings and notices described
in Schedule 5.4, which consents, authorizations, filings and
notices have been obtained or made and are in full force and effect and (ii)
the filings referred to in Section 5.19.  Each Loan Document has been duly executed and delivered on behalf
of each Loan Party party thereto.  This
Agreement constitutes, and each other Loan Document upon execution will
constitute, a legal, valid and binding obligation of each Loan Party party
thereto, enforceable against each such Loan Party in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors’ rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).

 

5.5                                 No Legal Bar. 
The execution, delivery and performance of this Agreement and the other
Loan Documents, the issuance of Facility LCs, the Credit Extensions hereunder
and the use of the proceeds thereof will not violate any Requirement of Law or
any Contractual Obligation of the Borrower or any of its Subsidiaries and will
not result in, or require, the creation or imposition of any Lien on any of
their respective properties or revenues pursuant to any Requirement of Law or
any such Contractual Obligation (other than the Liens created by the Collateral
Documents).

 

5.6                                 Litigation. 
Except as set forth in Schedule 5.9, no litigation,
investigation or proceeding of or before any arbitrator or Governmental
Authority is pending or, to the knowledge of the Borrower, threatened by or
against the Borrower or any of its Subsidiaries or against any of their
respective properties or revenues (a) with respect to any of the Loan
Documents, the Credit Extensions hereunder and the use of the proceeds thereof,
of any drawings under a Facility LC or of the creation and discounting of any
Acceptance, or any of the transactions contemplated hereby or thereby, or (b)
that could reasonably be expected to have a Material Adverse Effect.

 

5.7                                 No Default. 
Neither the Borrower nor any of its Subsidiaries is in default under or
with respect to any of its Contractual Obligations in any respect that could
reasonably be expected to have a Material Adverse Effect.  No Default or Unmatured Default has occurred
and is continuing.

 

5.8                                 Ownership of Property; Liens.  Each of the Borrower and each of its
Subsidiaries has title in fee simple to, or a valid leasehold interest in, all
its real property, and good title to, or a valid leasehold interest in, all its
other Property, and none of such Property is subject to any material Lien
except as permitted by Section 7.3.

 

5.9                                 Intellectual Property.  Except as set forth in Schedule 5.9
hereto, (a) each of the Borrower and each of its Subsidiaries owns, or is licensed
to use, all Intellectual Property necessary for the conduct of its business as
currently conducted; (b) no material claim that could reasonably be expected to
result in a Material Adverse Effect has been asserted and is pending by any
Person challenging or questioning the use of any Intellectual Property or the
validity or effectiveness of any Intellectual Property, nor does the Borrower
know of any valid basis for any such claim; and (c) the use of Intellectual
Property by the Borrower and its Subsidiaries does not infringe on the rights
of any Person in any material respect.

 

5.10                           Taxes.  Each of
the Borrower and each of its Subsidiaries has filed or caused to be filed all
Federal, state (other than immaterial sales tax returns) and other material tax
returns that are required to be filed and has paid all taxes shown to be due
and payable on said returns or on any assessments made

 

35

 

against it or any of its Property and all other
material taxes, fees or other charges imposed on it or any of its Property by
any Governmental Authority (other than any the amount or validity of which are
currently being contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been provided on the
books of the Borrower or a Subsidiary, as the case may be); no tax Lien has
been filed, and, to the knowledge of the Borrower, no claim is being asserted,
with respect to any such tax, fee or other charge, except for Liens securing
immaterial amounts affecting assets other than any Collateral.

 

5.11                           Federal Regulations.  Neither the Borrower nor any of its
Subsidiaries is engaged, directly or indirectly, principally, or as one of its
important activities, in the business of extending, or arranging for the
extension of, credit for the purpose of purchasing or carrying “margin stock”
within the meaning of Regulation U or X. 
No part of the proceeds of any Credit Extension will be used in any way
that would violate the provisions of Regulation T, U or X as now and
from time to time hereafter in effect or for any purpose that violates the
provisions of the Regulations of the Board. 
If requested by any Lender or the Administrative Agent, the Borrower
will furnish to the Administrative Agent and each Lender a statement to the
foregoing effect in conformity with the requirements of FR Form G-3 or FR Form
U-1, as applicable, referred to in Regulation U.  Following the application of the proceeds of any Credit
Extension, less than 25% of the value (as determined by any reasonable method)
of the assets of the Borrower and its Subsidiaries taken as a whole have been,
and will continue to be, represented by “margin stock”.

 

5.12                           Labor Matters. 
Except as, in the aggregate, could not reasonably be expected to have a
Material Adverse Effect:  (a) there are
no strikes or other labor disputes against the Borrower or any of its
Subsidiaries pending or, to the knowledge of the Borrower, threatened which could
reasonably be expected to have an Material Adverse Effect; (b) the hours worked
by and payment made to employees of the Borrower and its Subsidiaries have not
been in material violation of the Fair Labor Standards Act or any other
applicable Requirement of Law dealing with such matters; and (c) all
material payments due from the Borrower or any of its Subsidiaries on account
of employee health and welfare insurance have been paid or accrued as a
liability on the books of the Borrower or the relevant Subsidiary.

 

5.13                           ERISA.  Neither a
Reportable Event nor an “accumulated funding deficiency” (within the meaning of
Section 412 of the Code or Section 302 of ERISA) has occurred during
the five-year period prior to the date on which this representation is made or
deemed made with respect to any Single Employer Plan, and each Single Employer
Plan and, to the knowledge of the Borrower, any Multiemployer Plan, has
complied in all material respects with the applicable provisions of ERISA and
the Code.  Neither the Borrower nor any
Commonly Controlled Entity has failed to make a required contribution to a
Multiemployer Plan during the five year period prior to the date on which this
representation is made or deemed made. 
No termination, other than a standard termination (within the meaning of
Section 4041 of ERISA) as to which there is no liability to the Borrower
or any Commonly Controlled Entity, of a Single Employer Plan has occurred, and
no Lien in favor of the PBGC or a Single Employer Plan has arisen, during such
five-year period.  The present value of
all accrued benefits under each Single Employer Plan (based on assumptions used
to fund such Plan) did not, as of the last annual valuation date prior to the
date on which this representation is made or deemed made, exceed the fair
market value of the assets of such Plan allocable to such accrued benefits by a
material amount.  Neither the Borrower
nor any Commonly Controlled Entity has had a complete or partial withdrawal
from any Multiemployer Plan that has resulted or could reasonably be expected
to result in a material liability under ERISA, and neither the Borrower nor any
Commonly Controlled Entity would become subject to any material liability under
ERISA if the Borrower or any such Commonly Controlled Entity were to withdraw
completely from all Multiemployer Plans as of the valuation date most closely
preceding the date on which this representation is made or deemed made.  No such Multiemployer Plan is in

 

36

 

Reorganization or Insolvent as a result of which the
Borrower or any Commonly Controlled Entity has incurred or could reasonably be
expected to incur a material liability.

 

5.14                           Investment Company Act; Other
Regulations.  No Loan Party is
an “investment company”, or a company “controlled” by an “investment company”,
within the meaning of the Investment Company Act of 1940, as amended.  No Loan Party is subject to regulation under
any Requirement of Law (other than Regulation X of the Board) that limits its
ability to incur Indebtedness.

 

5.15                           Subsidiaries. 
Except as disclosed to the Administrative Agent by the Borrower in
writing from time to time after the Closing Date, (a) Schedule 5.15
sets forth the name and jurisdiction of incorporation of each Subsidiary and,
as to each such Subsidiary, the percentage of each class of Capital Stock owned
by any Loan Party and (b) there are no outstanding subscriptions, options,
warrants, calls, rights or other agreements or commitments (other than stock
options granted to employees or directors and directors’ qualifying shares) of
any nature relating to any Capital Stock of the Borrower or any Subsidiary,
except as created by the Loan Documents.

 

5.16                           Use of Proceeds. 
(a)  The proceeds of the
Advances may only be used for general corporate and working capital purposes
including, without limitation, to finance Permitted Acquisitions, share
repurchases and dividends and distributions with respect to the Borrower’s
Capital Stock and to refinance the outstanding obligations under the Existing
Credit Agreement, (b) the commercial Facility LCs shall be issued, and drawn
upon, in connection with the importation or exportation by the Borrower of
goods in the ordinary course of business, and (c) the standby Facility LCs
shall be issued, and drawn upon, in respect of obligations of the Borrower or
any of its Subsidiaries incurred pursuant to contracts made or performances
undertaken or to be undertaken or like matters relating to contracts to which
the Borrower or such Subsidiary is or proposes to become a party in the ordinary
course of the Borrower’s or such Subsidiary’s business, including, without
limiting the foregoing, for insurance purposes or in respect of advance
payments or as bid or performance bonds.

 

5.17                           Environmental Matters.  Except as, in the aggregate, could not
reasonably be expected to have a Material Adverse Effect:

 

(a)                                  to
the knowledge of the Borrower after due inquiry (but subject to the
qualification set forth below) the facilities and Property owned, leased or
operated by the Borrower or any of its Subsidiaries do not contain, and have
not previously contained, any Materials of Environmental Concern in amounts or
concentrations or under circumstances that constitute or constituted a
violation of, or could give rise to liability under, any applicable
Environmental Law;

 

(b)                                 neither
the Borrower nor any of its Subsidiaries has received or is aware of any notice
of violation, alleged violation, non-compliance, liability or potential
liability regarding environmental matters or compliance with applicable
Environmental Laws with regard to any of the Property owned, leased or operated
by, or the business operated by, the Borrower or any of its Subsidiaries (the
“Business”), nor does the Borrower have knowledge or reason to believe that any
such notice will be received or is being threatened;

 

(c)                                  to
the knowledge of the Borrower after due inquiry (but subject to the
qualification set forth below) Materials of Environmental Concern have not been
transported or disposed of from any Property owned, leased or operated by the
Borrower or any of its Subsidiaries in violation of, or in a manner or to a
location that could give rise to liability under, any applicable Environmental
Law, nor have any Materials of Environmental Concern been generated, treated,
stored or disposed of at, on or under any of the Property owned, leased or

 

37

 

operated by the Borrower
or any of its Subsidiaries in violation of, or in a manner that could give rise
to liability under, any applicable Environmental Law;

 

(d)                                 no
judicial proceeding or governmental or administrative action is pending or, to
the knowledge of the Borrower, threatened, under any applicable Environmental
Law to which the Borrower or any Subsidiary is or will be named as a party with
respect to any Property owned, leased or operated by the Borrower or any of its
Subsidiaries or the Business, nor are there any consent decrees or other
decrees, consent orders, administrative orders or other orders, or other
administrative or judicial requirements outstanding under any applicable
Environmental Law with respect to any Property owned, leased or operated by the
Borrower or any of its Subsidiaries or the Business;

 

(e)                                  there
has been no release or threat of release of Materials of Environmental Concern
at or from any Property owned, leased or operated by the Borrower or any of its
Subsidiaries, or arising from or related to the operations of the Borrower or
any Subsidiary in connection with any Property owned, leased or operated by the
Borrower or any of its Subsidiaries or otherwise in connection with the
Business, in violation of or in amounts or in a manner that could give rise to
liability under Environmental Laws;

 

(f)                                    all
Property owned, leased or operated by the Borrower or any of its
Subsidiaries  and all operations at such
Property are in compliance, and to the knowledge of the Borrower after due
inquiry (but subject to the qualification set forth below) have in the last
five years been in compliance, with all applicable Environmental Laws, and to
the knowledge of the Borrower after due inquiry (but subject to the
qualification set forth below) there is no contamination at, under or about
such Property or violation of any applicable Environmental Law with respect to
such Property or the Business; and

 

(g)                                 neither
the Borrower nor any of its Subsidiaries has assumed any liability of any other
Person under Environmental Laws.

 

Notwithstanding the
qualifications of the foregoing representations as to the Borrower’s knowledge
in clauses (a), (c) and (f) above, in the event that a condition exists that
would have resulted in a Default pursuant to Section 8(b) but for
such qualification, such Default shall be deemed to have occurred
notwithstanding such qualification.

 

5.18                           Accuracy of Information.  The statements and information contained in
this Agreement, the other Loan Documents, the Confidential Information
Memorandum (except, in the case of certain financial information contained
therein, to the extent superseded by subsequent information delivered to the
Lenders prior to the Closing Date) and any other document, certificate or
statement furnished by or on behalf of any Loan Party to the Administrative
Agent or the Lenders, or any of them, for use in connection with the transactions
contemplated by this Agreement or the other Loan Documents, as of the date such
statements and information were or are so furnished (or, in the case of the
Confidential Information Memorandum, as of the date of this Agreement), were or
are true and correct in all material respects. 
Any projections and pro  forma financial information
contained in the materials referenced above are based upon good faith estimates
and assumptions believed by management of the Borrower to be reasonable at the
time made, it being recognized by the Lenders that such financial information
as it relates to future events is not to be viewed as fact and that actual
results during the period or periods covered by such financial information may
differ from the projected results set forth therein by a material amount.  There is no fact known to any Loan Party
that could reasonably be expected to have a Material Adverse Effect that has
not been expressly disclosed herein, in the other Loan Documents, in the
Confidential Information Memorandum or in any other documents, certificates and
statements furnished

 

38

 

to the Administrative
Agent and the Lenders for use in connection with the transactions contemplated
hereby and by the other Loan Documents.

 

5.19                           Collateral Documents.  (a) 
The Guarantee and Collateral Agreement is effective to create in favor
of the Administrative Agent, for the benefit of the Lenders, a legal, valid and
enforceable security interest in the Collateral described therein and proceeds
thereof.  In the case of Pledged Stock
that constitutes Certificated Securities (as defined in the Uniform Commercial
Code), when stock certificates representing such Pledged Stock are delivered to
the Administrative Agent together with undated stock powers covering such
certificates executed in blank, the grantors thereunder shall have granted to
the Administrative Agent a fully perfected Lien on, and security interest in,
all right, title and interest of the Loan Parties in such Collateral and the
proceeds thereof, as security for the Secured Obligations, in each case prior
and superior in right to any other Person (except Liens permitted by Sections 7.3(a)
and (g), and subject, in the case of Proceeds, to the applicable
limitations under Section 9-315 of the Uniform Commercial Code).  In the case of Pledged Stock that
constitutes General Intangibles or Uncertificated Securities (as defined in the
Uniform Commercial Code), when financing statements specified on Schedule 5.19(a)
in appropriate form are filed in the offices specified on Schedule 5.19(a)
and, in the case of Uncertificated Securities, the Administrative Agent has
obtained “control” (within the meaning of the Uniform Commercial Code) of such
Uncertificated Securities, the grantors thereunder shall have granted to the
Administrative Agent a fully perfected Lien on, and security interest in, all
right, title and interest of the Loan Parties in such Collateral and the
Proceeds thereof, as security for the Secured Obligations, in each case prior
and superior in right to any other Person (except Liens permitted by Sections 7.3(a)
and (g), and subject, in the case of Proceeds to the applicable
limitations under Section 9-315 of the Uniform Commercial Code).  Schedule 5.19(a) specifies the
locations in which to file the financing statements which may perfect a legal,
valid and enforceable security interest granted under the Guarantee and
Collateral Agreement in the Investment Property (as defined in the Guarantee
and Collateral Agreement) pursuant to Section 9-305(c) of the Uniform
Commercial Code.

 

5.20                           Solvency.  Each
Loan Party is, and after giving effect to the incurrence of all Indebtedness
and obligations being incurred in connection herewith will be and will continue
to be, Solvent.

 

5.21                           Reportable Transaction. The Borrower does
not intend to treat the Credit Extensions and related transactions as being a
“reportable transaction” (within the meaning of Treasury Regulation
Section 1.6011-4).  In the event
the Borrower determines to take any action inconsistent with such intention, it
will promptly notify the Administrative Agent thereof.  The Borrower acknowledges that one or more
of the Lenders may treat its Credit Extensions as part of a transaction that is
subject to Treasury Regulation Section 1.6011-4 or
Section 301.6112-1, and the Administrative Agent and such Lender or
Lenders, as applicable, may file such IRS forms or maintain such lists and
other records as they may determine is required by such Treasury Regulations.

 

ARTICLE VI

 

COVENANTS

 

Until all of the Obligations have been indefeasibly paid in full and
the Aggregate Commitment has been terminated, unless the Required Lenders shall
otherwise consent in writing, the Borrower shall, and shall cause each of its
Subsidiaries to:

 

6.1                                 Financial Statements.  Furnish to the Administrative Agent and each
Lender:

 

39

 

(a)                                  as
soon as available, but in any event not later than the earlier of (A)
90 days after the end of each fiscal year of the Borrower and (B) the
public filing with the SEC of the Borrower’s Form 10-K for such fiscal year, a
copy of the audited consolidated balance sheet of the Borrower and its
consolidated Subsidiaries as at the end of such year and the related audited
consolidated statements of income and of cash flows for such year, setting
forth in each case in comparative form the figures for the previous year,
reported on without a “going concern” or like qualification or exception, or
qualification arising out of the scope of the audit, by Deloitte & Touche
LLP or other independent certified public accountants of nationally recognized
standing;

 

(b)                                 as
soon as available, but in any event not later than the earlier of (A) 45 days
after the end of each of the first three quarterly periods of each fiscal year
of the Borrower and (B) the public filing with the SEC of the Borrower’s Form
10-Q for each such fiscal quarter, the unaudited consolidated balance sheet of
the Borrower and its consolidated Subsidiaries as at the end of such quarter
and the related unaudited consolidated statements of income and of cash flows
for such quarter and the portion of the fiscal year through the end of such
quarter, setting forth in each case in comparative form the figures for the previous
year, certified by an Authorized Officer as being fairly stated in all material
respects (subject to normal year-end audit adjustments); and

 

(c)                                  as
soon as practicable, and in any event within 40 days after the end of each
fiscal month of each fiscal year of the Borrower (or, in the case of
December of each year, or March, June and September of each
year, together with the financial statements referred to in Section 6.1(a)
or 6.1(b) for the applicable period), the unaudited consolidated balance
sheet of Borrower and its Subsidiaries as at the end of such month and the
related unaudited statements of income of the Borrower and its Subsidiaries for
such month and for the portion of the fiscal year of the Borrower through such
date, in the form and detail similar to those customarily prepared by the
Borrower’s management for internal use as in effect on or prior to the Closing
Date, setting forth in each case in comparative form the consolidated figures
for the corresponding fiscal month of the previous year, certified by the chief
financial officer, controller or treasurer of the Borrower as being fairly
stated in all material respects;

 

All such financial statements shall be complete and
correct in all material respects and shall be prepared in reasonable detail and
in accordance with GAAP applied consistently throughout the periods reflected
therein and with prior periods (except as approved by such accountants or
officer, as the case may be, and disclosed therein).

 

6.2                                 Certificates; Other Information.  Furnish to the Administrative Agent and each
Lender (or, in the case of clause (h), to the relevant Lender):

 

(a)                                  concurrently
with the delivery of the consolidated financial statements referred to in Section 6.1(a),
a letter from the independent certified public accountants reporting on such
financial statements stating that in making the examination necessary to
express their opinion on such financial statements no knowledge was obtained of
any Default or Unmatured Default, except as specified in such letter;

 

(b)                                 concurrently
with the delivery of the financial statements referred to in Sections 6.1(a)
and (b), a certificate of the chief financial officer of the
Borrower substantially in the form of Exhibit B hereto (i) stating
that, to the best of such officer’s knowledge, each of the Borrower and its
Subsidiaries has observed or performed all of its covenants and other
agreements, and satisfied every condition, contained in this Agreement, the
Notes and the other

 

40

 

Loan Documents to be
observed, performed or satisfied by it, and that such officer has obtained no
knowledge of any Default or Unmatured Default except as specified in such
certificate, (ii) showing in detail as of the end of the related fiscal period
the figures and calculations supporting such statement in respect of Sections 7.1(a)
through 7.1(c), (iii) if not specified in the financial statements
delivered pursuant to Section 6.1, specifying the aggregate amount
of interest paid or accrued by the Borrower and its Subsidiaries, and the
aggregate amount of depreciation, depletion and amortization charged on the
books of the Borrower and its Subsidiaries, during such accounting period and
(iv) listing all Contingent Obligations of the type described in Section 7.3(a)
and all Indebtedness (other than Indebtedness hereunder) in each case incurred
since the date of the previous consolidated balance sheet of the Borrower
delivered pursuant to Section 6.1(a) or (b);

 

(c)                                  concurrently
with the financial statements referred to in Sections 6.1(a)
and (b), a management summary describing and analyzing the
performance of the Borrower and its Subsidiaries during the periods covered by
such financial statements;

 

(d)                                 promptly
upon receipt thereof, copies of all final reports submitted to the Borrower or
to any of its Subsidiaries by independent certified public accountants in
connection with each annual, interim or special audit of the books of the
Borrower or any of its Subsidiaries made by such accountants, including,
without limitation, any final comment letter submitted by such accountants to
management in connection with their annual audit;

 

(e)                                  not
later than 60 days after the beginning of each fiscal year of the Borrower, a
copy of the business plan for such fiscal year on a consolidated basis as
adopted by the Board of Directors of the Borrower;

 

(f)                                    promptly
upon their becoming available, copies of all financial statements, reports,
notices and proxy statements sent or made available generally by the Borrower
or any of its Subsidiaries to its shareholders and all regular and periodic
reports and all final registration statements and final prospectuses, if any,
filed by the Borrower or any of its Subsidiaries with any securities exchange
or with the SEC or any Governmental Authority succeeding to any of its
functions;

 

(g)                                 within
20 Business Days after the last day of each fiscal month of the Borrower, a
fully completed and executed Borrowing Base Certificate as of such last day of
such fiscal month of the Borrower; and

 

(h)                                 promptly,
such additional financial and other information as any Lender may from time to
time reasonably request.

 

6.3                                 Payment of Obligations.  Pay, discharge or otherwise satisfy at or
before maturity or before they become delinquent, as the case may be, all its
material obligations of whatever nature, except where the amount or validity
thereof is currently being contested in good faith by appropriate proceedings
and reserves in conformity with GAAP with respect thereto have been provided on
the books of the Borrower or its Subsidiaries, as the case may be.

 

6.4                                 Maintenance of Existence; Compliance.  (a) (i) Preserve, renew and keep in full
force and effect its corporate existence and (ii) take all reasonable action to
maintain all rights, privileges and franchises necessary or desirable in the
normal conduct of its business, except, in each case, as otherwise permitted by
Section 7.4 and except, in the case of clause (ii) above, to the
extent that failure to do so could not reasonably be expected to have a
Material Adverse Effect; and (b) comply with all Contractual

 

41

 

Obligations and Requirements of Law except to the extent that failure
to comply therewith could not, in the aggregate, reasonably be expected to have
a Material Adverse Effect.

 

6.5                                 Maintenance of Property; Insurance.  (a)  Keep all Property useful and
necessary in its business in good working order and condition, ordinary wear
and tear excepted and (b) maintain with financially sound and reputable
insurance companies insurance on all its Property in at least such amounts and
against at least such risks (but including in any event public liability,
product liability and business interruption) as are usually insured against in
the same general area by companies engaged in the same or a similar business.

 

6.6                                 Inspection of Property; Books and
Records, Discussions.  (a)  Keep proper books of records and account in
which full, true and correct entries in conformity with GAAP and all
Requirements of Law shall be made of all dealings and transactions in relation
to its business and activities, (b) permit representatives of any Lender, at
such Lender’s expense, to visit and inspect any of its properties and examine
any of its books and records upon reasonable notice to the Borrower (provided, that, for so long as no Default
has occurred and is continuing, such requests and visitations (i) shall be
coordinated through the Administrative Agent, and (ii) shall not interfere with
or disrupt operations of the Borrower or its Subsidiaries), and (c) discuss the
business, operations, properties and financial and other condition of the
Borrower and its Subsidiaries with officers and employees of the Borrower and
its Subsidiaries and with its independent certified public accountants at any
reasonable time.

 

6.7                                 Notices. 
Promptly give notice to the Administrative Agent and each Lender of:

 

(a)                                  the
occurrence of any Default or Unmatured Default;

 

(b)                                 any
(i) default or event of default under any Contractual Obligation of the
Borrower or any of its Subsidiaries or (ii) litigation, investigation or
proceeding that may exist at any time between the Borrower or any of its
Subsidiaries and any Governmental Authority, that in either case, if not cured or
if adversely determined, as the case may be, could reasonably be expected to
have a Material Adverse Effect;

 

(c)                                  any
litigation or proceeding affecting the Borrower or any of its Subsidiaries in
which the amount involved is $1,000,000 or more and not covered by insurance or
in which injunctive or similar relief is sought that if not cured or if
adversely determined, as the case may be, could reasonably be expected to have
a Material Adverse Effect;

 

(d)                                 the
following events, as soon as possible and in any event within 30 days after the
Borrower knows or has reason to know thereof: 
(i) the occurrence of any Reportable Event with respect to any Plan, a
failure to make any required contribution to a Plan, the creation of any Lien
in favor of the PBGC or a Single Employer Plan or any withdrawal from, or the
termination, Reorganization or Insolvency of, any Multiemployer Plan or (ii)
the institution of proceedings or the taking of any other action by the PBGC or
the Borrower or any Commonly Controlled Entity or any Multiemployer Plan with
respect to the withdrawal from, or the termination, Reorganization or
Insolvency of, any Plan; and

 

(e)                                  any
development or event that has had or could reasonably be expected to have a
Material Adverse Effect.

 

Each notice pursuant to this Section 6.7 shall be
accompanied by a statement of an Authorized Officer setting forth details of
the occurrence referred to therein and stating what action the Borrower or the
relevant Subsidiary proposes to take with respect thereto.

 

42

 

6.8                                 Environmental Laws.

 

(a)                                  Comply
in all material respects with all applicable Environmental Laws, and obtain and
comply in all material respects with and maintain, any and all material
licenses, approvals, notifications, registrations or permits required by
applicable Environmental Laws.

 

(b)                                 Conduct
and complete all investigations, studies, sampling and testing, and all
remedial, removal and other actions required under Environmental Laws and
promptly comply in all material respects with all lawful orders and directives
of all Governmental Authorities regarding Environmental Laws.

 

6.9                                 Additional Collateral, Guaranties, Etc.  If, after the date hereof, any Material
Subsidiary of the Borrower shall be formed, acquired or capitalized, promptly
deliver to the Administrative Agent, as applicable, (a) a stock
certificate or certificates evidencing all of the issued and outstanding shares
of Capital Stock of such Subsidiary held by the Borrower or a Subsidiary, together
with undated stock powers covering each such certificate, duly executed in
blank by the Borrower or the Subsidiary that directly owns such Capital Stock,
(b) a supplement to the Guarantee and Collateral Agreement, executed by a
duly authorized officer of the Borrower and such Subsidiary, pursuant to which
the Capital Stock of any such Subsidiary acquired or created is pledged
thereunder on the same terms as those provided in respect of pledges under the
Guarantee and Collateral Agreement on the Closing Date and pursuant to which
any such Subsidiary (and the Subsidiary (to the extent not already a party to
the Guarantee and Collateral Agreement) that directly owns the Capital Stock of
such Subsidiary) becomes a Subsidiary Guarantor thereunder on the same terms as
those provided in respect of pledges under the Guarantee and Collateral
Agreement on the Closing Date, pursuant to documentation satisfactory to the
Administrative Agent, (c) legal opinions with respect to the pledge of
stock from the General Counsel of the Borrower and/or such other counsel as are
reasonably satisfactory to the Administrative Agent; provided, that the scope of such opinions shall be no
broader than the scope of the opinions of such counsel delivered on the Closing
Date, and (d) such other certificates, resolutions and documents as the
Administrative Agent may reasonably request;
provided, that if such Subsidiary is a Foreign Subsidiary, not more
than 65% of the total combined voting power of all classes of such Subsidiary’s
Capital Stock entitled to vote shall be required to be pledged pursuant to this
subsection; provided, further, that (i) no Capital Stock of any Foreign Subsidiary
owned by another Foreign Subsidiary shall be required to be pledged pursuant to
this Section 6.9 and (ii) no such Subsidiary shall be required to
become a Guarantor if it is a Foreign Subsidiary.  In addition, the Borrower shall from time to time promptly take
all necessary actions in the foregoing clauses (a) through (d) with
respect to Subsidiaries in order to comply with the definition of “Material
Subsidiary.”

 

ARTICLE VII

 

NEGATIVE
COVENANTS

 

Until all of the Obligations have been indefeasibly paid in full and
the Aggregate Commitment has been terminated, unless the Required Lenders
otherwise consent, the Borrower shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly:

 

7.1                                 Financial Condition Covenants.

 

(a)                                  Consolidated
Interest Coverage Ratio.  At the
last day of any fiscal quarter, permit the Consolidated Interest Coverage Ratio
of the Borrower for the period of four consecutive fiscal quarters ending on
such day to be less than 4.00 to 1.00.

 

43

 

(b)                                 Consolidated
Leverage Ratio.  At the last day of
any fiscal quarter permit the Consolidated Leverage Ratio of the Borrower for
the period of four consecutive fiscal quarters ending on such day to be more
than 2.75 to 1.00.

 

(c)                                  Consolidated
Net Worth.  At the last day of any
fiscal quarter permit Consolidated Net Worth of the Borrower to be less than
the greater of (i) $80,000,000, or (ii) 75% of Consolidated Net Worth as of
October 4, 2003.

 

7.2                                 Indebtedness. 
Create, issue, incur, assume, become liable in respect of or suffer to
exist any Indebtedness, except:

 

(a)                                  Indebtedness
of any Loan Party pursuant to any Loan Document or under the Facility LCs;

 

(b)                                 Indebtedness
of the Borrower to any Subsidiary Guarantor and any Consolidated Subsidiary
Guarantor (or any other Subsidiary if such Indebtedness is subordinated to the
Obligations on terms satisfactory to the Administrative Agent) to the Borrower
or any other Subsidiary;

 

(c)                                  Guarantee
Obligations incurred in the ordinary course of business by the Borrower or any
of its Subsidiaries of obligations of any Consolidated Subsidiary Guarantor;

 

(d)                                 Indebtedness
outstanding on the date hereof and listed on Schedule 7.2(d) and
any refinancings, refundings, renewals or extensions thereof (without
increasing, or shortening the maturity of, the principal amount thereof);

 

(e)                                  additional
Indebtedness of the Subsidiaries of the Borrower (other than Indebtedness owed
to the Borrower or another Subsidiary) in an aggregate principal amount which
when added to the Indebtedness permitted by Section 7.2(h) shall
not exceed an amount equal to 20% of Consolidated Net Worth at any one time
outstanding calculated as of the end of the most recently completed fiscal
quarter for which financial statements have been delivered pursuant to Section 6.1(a)
or (b), so long as no Default exists at the time of incurrence
thereof;

 

(f)                                    additional
unsecured Indebtedness of the Borrower so long as (i) the Borrower, after
giving pro  forma effect as if such Indebtedness had been incurred
on the first day of the most recently ended period of four consecutive fiscal
quarters of the Borrower for which financial statements have been delivered
pursuant to Section 6.1(a) or (b), would be in
compliance with the financial covenants set forth in Section 7.1,
(ii) at the time of incurrence thereof no Default or Unmatured Default shall
have occurred and be continuing or would result therefrom, (iii) the terms of
such Indebtedness, viewed as a whole, are no more favorable to the holders of
such Indebtedness or burdensome on the Borrower or any Subsidiary than the
terms of any Loan Document (other than interest rates which shall be at market
rates), (iv) no principal payments on such Indebtedness are required to be made
on or prior to the Facility Termination Date and (v) such Indebtedness does not
constitute Indebtedness of the type described in clause (h) of the definition
thereof;

 

(g)                                 additional
unsecured Guarantee Obligations of the Subsidiaries of the Borrower in respect
of Indebtedness incurred under Section 7.2(f), so long as such
Guarantee Obligations are pari passu with (or have interests or rights that are
inferior to pari passu with) the Guarantee Obligations under the Loan Documents
and so long as the terms of such Guarantee Obligations are no more favorable to
the holders of such Indebtedness or burdensome on the

 

44

 

Borrower or any
Subsidiary than the terms of the Guarantee Obligations under the Loan
Documents;

 

(h)                                 additional
Indebtedness secured by a Lien pursuant to Section 7.3(i) which,
when added to any outstanding Indebtedness permitted to be incurred under Section 7.2(e),
shall not exceed the amount equal to 20% of Consolidated Net Worth at any one
time outstanding calculated as of the end of the most recently completed fiscal
quarter for which financial statements have been delivered pursuant to Section 6.1(a)
or (b); and

 

(i)                                     additional
Indebtedness (including, without limitation, Capital Lease Obligations, but
excluding Indebtedness of any Subsidiary owed to the Borrower or another
Subsidiary) secured by Liens permitted by Section 7.3(j); provided,
that the aggregate principal amount of such Indebtedness incurred in any fiscal
year pursuant to this clause (i) does not exceed the sum of (x) $5,000,000 and
(y) the portion of the amount permitted to be incurred pursuant to this clause
(i) in the fiscal years prior to such fiscal year to the extent not utilized to
incur Indebtedness pursuant to this clause (i) in any other fiscal year prior
to such current fiscal year.

 

7.3                                 Liens.  Create,
incur, assume or suffer to exist any Lien upon any of its Property, whether now
owned or hereafter acquired, except for:

 

(a)                                  Liens
for taxes, assessments or other governmental charges or levies not yet due or
that are being contested in good faith by appropriate proceedings; provided
that adequate reserves with respect thereto are maintained on the books of the
Borrower or its Subsidiaries, as the case may be, in conformity with GAAP;

 

(b)                                 carriers’,
warehousemen’s, mechanics’, materialmen’s, repairmen’s, customs or other like
Liens arising in the ordinary course of business that are not overdue for a
period of more than 30 days or that are being contested in good faith by
appropriate proceedings; provided that adequate reserves with
respect thereto are maintained on the books of the Borrower or its
Subsidiaries, as the case may be, in conformity with GAAP;

 

(c)                                  pledges
or deposits in connection with workers’ compensation, unemployment insurance
and other social security legislation;

 

(d)                                 deposits
(i) to secure Permitted Acquisitions so long as the aggregate amount of all
deposits at any time outstanding does not exceed $3,000,000 and (ii) to secure
the performance of bids, trade contracts (other than for borrowed money),
leases, statutory obligations, surety and appeal bonds, performance bonds and
other obligations of a like nature incurred in the ordinary course of business;

 

(e)                                  easements,
rights of way, restrictions and other similar encumbrances incurred in the
ordinary course of business that, in the aggregate, are not substantial in
amount and that do not in any case materially detract from the value of the
Property subject thereto or materially interfere with the ordinary conduct of
the business of the Borrower or any of its Subsidiaries;

 

(f)                                    Liens
in existence on the date hereof listed on Schedule 7.3(f), securing
Indebtedness permitted by Section 7.2(d); provided, that no such Lien
is spread to cover any additional Property after the Closing Date and that the
amount of Indebtedness secured thereby is not increased;

 

45

 

(g)                                 Liens
created pursuant to the Collateral Documents;

 

(h)                                 Liens
arising in connection with ordinary commercial banking transactions, including
repurchase agreements;

 

(i)                                     additional
Liens securing Indebtedness (including, without limitation, Capital Lease
Obligations) of the Borrower and its Subsidiaries which when added to
Indebtedness permitted under Section 7.2(e) shall not exceed the
amount equal to 20% of Consolidated Net Worth at any one time outstanding calculated
as of the end of the most recently completed fiscal quarter for which financial
statements pursuant to Sections 6.1(a) and 6.1(b) have
been delivered, so long as (i) no such Lien encumbers any Collateral and (ii)
no Default exists at the time of the creation or incurrence of such Lien or
would result therefrom; and

 

(j)                                     Liens
securing Indebtedness of the Borrower or any Subsidiary incurred pursuant to Section 7.2(i)
to finance the acquisition of fixed or capital assets constituting plant,
property or equipment; provided that (i) such Liens shall be
created substantially simultaneously with the acquisition of such fixed or
capital assets, and (ii) such Liens do not at any time encumber any Property
other than the Property financed by such Indebtedness.

 

7.4                                 Fundamental Changes.  Enter into any merger, consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), or Dispose of, all or substantially all of its
Property or business, except that:

 

(a)                                  any
Subsidiary of the Borrower may be merged or consolidated with or into the
Borrower (provided that the Borrower shall be the continuing or
surviving corporation) or with or into any Consolidated Subsidiary Guarantor (provided
that the Consolidated Subsidiary Guarantor shall be the continuing or surviving
corporation);

 

(b)                                 any
Subsidiary of the Borrower may Dispose of any or all of its assets (upon
voluntary liquidation or otherwise) to the Borrower or any Consolidated
Subsidiary Guarantor;

 

(c)                                  the
Borrower may Dispose of any of its assets and the Subsidiaries of the Borrower
may Dispose of any or all of their assets, in any such case in a transaction
satisfying the requirements of Section 7.5; and

 

(d)                                 the
Subsidiaries of the Borrower may enter into any merger, consolidation or
acquisition transaction meeting the requirements of Section 7.7(g).

 

7.5                                 Disposition of Property.  Dispose of any of its Property, whether now
owned or hereafter acquired, or, in the case of any Subsidiary, issue or sell
any shares of such Subsidiary’s Capital Stock to any Person, except:

 

(a)                                  the
Disposition of obsolete or worn out Property in the ordinary course of
business;

 

(b)                                 the
sale of Inventory in the ordinary course of business;

 

(c)                                  Dispositions
permitted by Section 7.4(b);

 

46

 

(d)                                 the
sale or issuance of any Subsidiary’s Capital Stock to the Borrower or any
Consolidated Subsidiary Guarantor and, in the event that the Borrower or such
Consolidated Subsidiary Guarantor does not own all of the applicable class of
such Capital Stock, to any minority holder of such Capital Stock on a pro rata
basis based on the interests of such holders immediately prior thereto; and

 

(e)                                  Subsidiary
Stock Events and Dispositions of any other Property (including, without
limitation, Collateral) having a fair market value not to exceed (i)
$50,000,000  in the aggregate cumulatively
after the Closing Date and (ii) $20,000,000 during any fiscal year of the
Borrower.

 

7.6                                 Restricted Payments.  Declare or pay any dividend (other than
dividends payable solely in common stock of the Person making such dividend)
on, or make any payment on account of, or set apart assets for a sinking or
other analogous fund for, the purchase, redemption, defeasance, retirement or
other acquisition of, any Capital Stock of the Borrower or any Subsidiary,
whether now or hereafter outstanding, or make any other distribution in respect
thereof, either directly or indirectly, whether in cash or property or in
obligations of the Borrower or any Subsidiary (collectively, “Restricted
Payments”), except that:

 

(a)                                  any
Subsidiary may make Restricted Payments (i) to the Borrower or any Consolidated
Subsidiary Guarantor and, in the event that the Borrower or such Consolidated
Subsidiary Guarantor does not own all of the applicable Class of the Capital
Stock in respect of which such Restricted Payment is made, to the minority
holders of such Capital Stock, so long as such Restricted Payments shall be
made pro rata based on the interests of such holders immediately prior thereto,
or (ii) to any other Subsidiary and in the event that such Subsidiary does not
own all of the applicable class of the Capital Stock in respect of which such
Restricted Payment is made, to the minority holders of such Capital Stock, so
long as such Restricted Payments shall be made pro rata based on the interests
of such holders immediately prior thereto, and so long as such Restricted
Payments received by such Subsidiary are, immediately upon receipt thereof,
made as Restricted Payments to the Borrower or any Consolidated Subsidiary
Guarantor in accordance with clause (i) above; and

 

(b)                                 so
long as no Default or Unmatured Default shall have occurred and be continuing
or would result therefrom, the Borrower may pay dividends and redeem or
repurchase its Capital Stock if, after giving effect thereto, it would be in
compliance with the financial covenants set forth in Section 7.1,
on a pro forma basis as of the last day of the most recently completed fiscal
quarter for which financial statements have been delivered pursuant to Section 6.1(a)
or (b).

 

7.7                                 Investments. 
Make any advance, loan, extension of credit (by way of guaranty or
otherwise) or capital contribution to, or purchase any Capital Stock, bonds,
notes, debentures or other debt securities of, or any assets constituting a
business unit of, or make any other investment in, any Person (all of the
foregoing, “Investments”), except:

 

(a)                                  extensions
of trade credit in the ordinary course of business;

 

(b)                                 investments
in Cash Equivalents;

 

(c)                                  Guarantee
Obligations permitted by Section 7.2 and advances permitted by Section 7.2(b);

 

47

 

(d)                                 loans
and advances to employees and sales representatives of the Borrower or any Subsidiary
of the Borrower in the ordinary course of business (including for travel,
entertainment and relocation expenses) in an aggregate amount for the Borrower
or any Subsidiary of the Borrower not to exceed $1,000,000 at any one time
outstanding;

 

(e)                                  Investments
in assets useful in the business of the Borrower and its Subsidiaries made by
the Borrower or any of its Subsidiaries with the proceeds of any Reinvestment
Deferred Amount;

 

(f)                                    Investments
by the Borrower or any of its Subsidiaries in the Borrower or any Person that,
prior to and after such investment, is a Consolidated Subsidiary Guarantor; and

 

(g)                                 the
Borrower or any Subsidiary may make Permitted Acquisitions, and may create
Subsidiaries to own, directly or indirectly, the property acquired thereby; provided
that (i) any acquisition of Capital Stock results in the issuer thereof
becoming a Subsidiary, (ii) any Material Subsidiary created or acquired in
connection therewith shall become a Subsidiary Guarantor and the requirements
of Section 6.9 shall be satisfied prior to or concurrently with the
consummation of such Permitted Acquisition, (iii) no Permitted Acquisition
shall be consummated unless, after giving pro  forma effect
thereto as if such Permitted Acquisition had been made (and the related
Indebtedness incurred or assumed) on the first day of the most recent period of
four consecutive fiscal quarters ending prior thereto for which financial
statements have been delivered pursuant to Section 6.1(a) or (b),
the Borrower and its Subsidiaries would have a Consolidated Leverage Ratio of
less than or equal to 2.50:1.00 and a Consolidated Interest Coverage Ratio of
greater than or equal to 4.25:1.00 for such period (as demonstrated, in the
case of any Permitted Acquisition the aggregate consideration for which exceeds
$10,000,000, by delivery to the Administrative Agent of a certificate to such
effect showing such calculation in reasonable detail), (iv) no Default or
Unmatured Default exists at the time thereof or would result therefrom, and (v)
such acquisition has not been opposed, or has been approved, prior to the
consummation thereof, by a majority of the board of directors of the entity
being acquired; and

 

(h)                                 in
addition to Investments otherwise expressly permitted by this Section, additional
Investments by the Borrower or any of its Subsidiaries in an aggregate amount
(valued at cost) not to exceed, at any time, $10,000,000 plus 10% of the
Consolidated Net Worth calculated as of the end of the most recently completed
fiscal quarter for which financial statements have been delivered pursuant to Section 6.1(a)
or (b) or, before the first delivery of such financial statements
hereunder, as of October 4, 2003.

 

7.8                                 Transactions with Affiliates.  Enter into any transaction, including any
purchase, sale, lease or exchange of Property, the rendering of any service or
the payment of any management, advisory or similar fees, with any Affiliate
(other than the Borrower or any Consolidated Subsidiary Guarantor) unless such
transaction is upon fair and reasonable terms no less favorable to the Borrower
or such Subsidiary, as the case may be, than it would obtain in a comparable
arm’s length transaction with a Person that is not an Affiliate.

 

7.9                                 Changes in Fiscal Periods.  For financial reporting purposes, permit the
fiscal year of the Borrower to end on a day other than the Saturday closest to
the end of the calendar year, or change the Borrower’s method of determining
fiscal quarters, except that the Borrower may, upon written notice to the
Administrative Agent, change the financial reporting convention specified above
to any other financial reporting convention reasonably acceptable to the
Administrative Agent, in which case the

 

48

 

Borrower and the Administrative Agent will, and are hereby authorized
by the Lenders to, make any adjustments to this Agreement that are necessary in
order to reflect such change in financial reporting.

 

7.10                           Negative Pledge Clauses.  Enter into or suffer to exist or become
effective any agreement that prohibits or limits the ability of the Borrower or
any of its Subsidiaries to create, incur, assume or suffer to exist any Lien
upon any of its Property or revenues, whether now owned or hereafter acquired,
other than (a) this Agreement and the other Loan Documents, (b) any agreements
governing any purchase money Liens or Capital Lease Obligations otherwise
permitted hereby (in which case, any prohibition or limitation shall only be
effective against the assets financed thereby) and (c) agreements governing any
Indebtedness incurred pursuant to Section 7.2(e), 7.2(f)
or 7.2(h) that contain limitations on Liens customary for such
incurrences; provided that in no
event shall any such agreement affect the Capital Stock of any Subsidiary.

 

7.11                           Clauses Restricting Subsidiary
Distributions.  Enter into or
suffer to exist or become effective any consensual encumbrance or restriction
on the ability of any Subsidiary of the Borrower to (a) make Restricted
Payments in respect of any Capital Stock of such Subsidiary held by, or pay any
Indebtedness owed to, the Borrower or any other Subsidiary of the Borrower, (b)
make loans or advances to, or other Investments in, the Borrower or any other
Subsidiary of the Borrower or (c) transfer any of its assets to the Borrower or
any other Subsidiary of the Borrower, except for such encumbrances or
restrictions existing under or by reason of (i) any restrictions existing under
the Loan Documents and (ii) any restrictions with respect to a Subsidiary imposed
pursuant to an agreement that has been entered into in connection with the
Disposition of all or substantially all of the Capital Stock or assets of such
Subsidiary.

 

7.12                           Lines of Business.  Enter into any business, either directly or through any Subsidiary,
except for those businesses in which the Borrower and its Subsidiaries are
engaged in on the date of this Agreement or that are reasonably related
thereto, including, without limitation, collectibles, giftware and decorative
accessories.

 

7.13                           Contingent Obligations.  Create, incur, assume or suffer to exist any
Contingent Obligation except:

 

(a)                                  guarantees
created pursuant to this Agreement and the other Loan Documents;

 

(b)                                 guarantees
made in the ordinary course of its business by the Borrower of the obligations
of any of its Subsidiaries; provided those obligations are otherwise
permitted under this Agreement;

 

(c)                                  Contingent
Obligations described on Schedule 7.13;

 

(d)                                 Contingent
Obligations arising on account of the Facility LCs; and

 

(e)                                  Contingent
Obligations permitted by Section 7.2.

 

7.14                           Foreign Exchange and Rate
Management Transactions.  Enter
into any foreign currency exchange contracts (other than foreign currency
exchange contracts entered into for the sole purpose of hedging with respect to
the purchase or sale by the Borrower and its Subsidiaries of Inventory to be
purchased or sold for payments in foreign currencies in the ordinary course of
their respective businesses); or enter into any other Rate Management
Transaction other than in the ordinary course of

 

49

 

business to protect the Borrower and its Subsidiaries from interest
rate and currency fluctuations in respect of Indebtedness owed by them.

 

ARTICLE VIII

 

DEFAULTS

 

The occurrence of any one or more of the following events shall
constitute a Default:

 

(a)                                  the
Borrower shall fail to pay any principal of any Loan or Reimbursement
Obligation when due in accordance with the terms hereof; or the Borrower shall
fail to pay any interest on any Loan or Reimbursement Obligation, or any other
amount payable hereunder or under any other Loan Document, within five days
after any such interest or other amount becomes due in accordance with the
terms hereof; or

 

(b)                                 any
representation or warranty made or deemed made by any Loan Party herein or in
any other Loan Document or that is contained in any certificate, document or
financial or other statement furnished by it at any time under or in connection
with this Agreement or any such other Loan Document shall prove to have been
inaccurate in any material respect on or as of the date made or deemed made; or

 

(c)                                  any
Loan Party shall default in the observance or performance of any agreement
contained in clause (i) or (ii) of Section 6.4(a) (with respect to
the Borrower only), Section 6.7(a) or Section 7 of this
Agreement or Sections 5.3(a), 5.3(b) and 5.6 of
the Guarantee and Collateral Agreement; or

 

(d)                                 any
Loan Party shall default in the observance or performance of any other
agreement contained in this Agreement or any other Loan Document (other than as
provided in paragraphs (a) through (c) of this Section), and such default shall
continue unremedied for a period of 30 days; or

 

(e)                                  the
Borrower or any of its Subsidiaries shall (i) default in making any payment of
any principal of any Indebtedness (including any Guarantee Obligation, but
excluding the Loans) on the scheduled or original due date with respect thereto
or within any applicable grace period; or (ii) default in making any payment of
any interest on any such Indebtedness beyond the period of grace, if any,
provided in the instrument or agreement under which such Indebtedness was
created; or (iii) default in the observance or performance of any other
agreement or condition relating to any such Indebtedness or contained in any
instrument or agreement evidencing, securing or relating thereto, or any other
event shall occur or condition exist, the effect of which default or other
event or condition is to cause, or to permit the holder or beneficiary of such
Indebtedness (or a trustee or agent on behalf of such holder or beneficiary) to
cause, with the giving of notice if required, such Indebtedness to become due
prior to its stated maturity or (in the case of any such Indebtedness
constituting a Guarantee Obligation) to become payable; provided, that a default,
event or condition described in clause (i), (ii) or (iii) of this paragraph (e)
shall not at any time constitute a Default unless, at such time, one or more
defaults, events or conditions of the type described in clauses (i), (ii) and
(iii) of this paragraph (e) shall have occurred and be continuing with respect
to Indebtedness the outstanding principal amount of which exceeds in the
aggregate $3,000,000; or

 

(f)                                    (i)
the Borrower or any of its Material Subsidiaries shall commence any case,
proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic

 

50

 

or foreign,
relating to bankruptcy, insolvency, reorganization or relief of debtors,
seeking to have an order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, winding-up, liquidation, dissolution, composition or other relief
with respect to it or its debts, or (B) seeking appointment of a receiver,
trustee, custodian, conservator or other similar official for it or for all or
any substantial part of its assets, or the Borrower or any of its Material
Subsidiaries shall make a general assignment for the benefit of its creditors;
or (ii) there shall be commenced against the Borrower or any of its Material
Subsidiaries any case, proceeding or other action of a nature referred to in
clause (i) above that (A) results in the entry of an order for relief or any
such adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of 60 days; or (iii) there shall be commenced against the
Borrower or any of its Material Subsidiaries any case, proceeding or other
action seeking issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its assets that results
in the entry of an order for any such relief that shall not have been vacated,
discharged, or stayed or bonded pending appeal within 60 days from the entry
thereof; or (iv) the Borrower or any of its Subsidiaries shall take any action
in furtherance of, or indicating its consent to, approval of, or acquiescence
in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v) the
Borrower or any of its Material Subsidiaries shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay its debts as they
become due; or

 

(g)           (i) any Person shall engage in any “prohibited
transaction” (as defined in Section 406 of ERISA or Section 4975 of
the Code) involving any Plan, (ii) any “accumulated funding deficiency” (as
defined in Section 302 of ERISA), whether or not waived, shall exist with
respect to any Single Employer Plan or any Lien in favor of the PBGC or a
Single Employer Plan shall arise on the assets of the Borrower or any Commonly
Controlled Entity, (iii) a Reportable Event shall occur with respect to, or the
PBGC shall commence proceedings to have a trustee appointed, or a trustee shall
be appointed, to administer or to terminate, any Single Employer Plan, which
Reportable Event or commencement of proceedings or appointment of a trustee is
reasonably likely to result in the termination of such Plan for purposes of
Title IV of ERISA, (iv) any Single Employer Plan shall terminate for purposes
of Title IV of ERISA, (v) the Borrower or any Commonly Controlled Entity
shall or is reasonably likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a Multiemployer Plan
or (vi) any other similar event or condition shall occur or exist with respect
to a Plan other than in the ordinary course; and in each case in clauses (i)
through (vi) above, such event or condition, together with all other such
events or conditions, if any, could, in the reasonable judgment of the Required
Lenders, be expected to have a Material Adverse Effect; or

 

(h)           one
or more judgments or decrees shall be entered against the Borrower or any of its
Subsidiaries involving in the aggregate a liability (not paid or fully covered
by insurance as to which the relevant insurance company has acknowledged
coverage) of $3,000,000 or more, and any or all such judgments or decrees shall
not have been vacated, discharged, stayed or bonded pending appeal within 60
days from the entry thereof; or

 

(i)            any of the Collateral Documents shall cease, for
any reason, to be in full force and effect, or any Loan Party or any Affiliate
of any Loan Party shall so assert, or any Lien created by any of the Collateral
Documents shall cease to be enforceable and of the same effect and priority
purported to be created thereby; or

 

(j)            the
guarantee contained in Section 2 of the Guarantee and Collateral Agreement
shall cease, for any reason, to be in full force and effect or any Loan Party
shall so assert; or

 

51

 

(k)           (i)  any “person” or “group” (as such terms are
used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”)), shall become, or obtain rights (whether
by means or warrants, options or otherwise) to become, the “beneficial owner”
(as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or
indirectly, of more than 30% of the outstanding common stock of the Borrower;
(ii) the Board of Directors of the Borrower shall cease to consist of a
majority of Continuing Directors; (iii) the Borrower shall cease to own and
control, of record and beneficially, directly or indirectly, 100% of each class
of outstanding Capital Stock of D56, Inc. free and clear of all Liens (except
Liens created by the Collateral Documents).

 

ARTICLE IX

ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES

 

9.1           Acceleration; Facility LC Collateral
Account.

 

(a)           If a Default described in Section 8(f)
occurs with respect to the Borrower, the obligations of the Lenders to make
Loans hereunder and the obligation and power of the LC Issuer to issue Facility
LCs shall automatically terminate and the Obligations shall immediately become
due and payable without any election or action on the part of the
Administrative Agent, the LC Issuer or any Lender and the Borrower will be and
become thereby unconditionally obligated, without any further notice, act or demand,
to pay to the Administrative Agent an amount in immediately available funds,
which funds shall be held in the Facility LC Collateral Account, equal to the
difference of (x) the amount of LC Obligations at such time, less (y) the
amount on deposit in the Facility LC Collateral Account at such time which is
free and clear of all rights and claims of third parties and has not been
applied against the Obligations (such difference, the “Collateral Shortfall
Amount”).  If any other Default occurs,
the Required Lenders (or the Administrative Agent with the consent of the
Required Lenders) may (i) terminate or suspend the obligations of the Lenders
to make Loans hereunder and the obligation and power of the LC Issuer to issue
Facility LCs, or declare the Obligations to be due and payable, or both,
whereupon the Obligations shall become immediately due and payable, without
presentment, demand, protest or notice of any kind, all of which the Borrower
hereby expressly waives, and (ii) upon notice to the Borrower and in addition
to the continuing right to demand payment of all amounts payable under this
Agreement, make demand on the Borrower to pay, and the Borrower will, forthwith
upon such demand and without any further notice or act, pay to the
Administrative Agent the Collateral Shortfall Amount, which funds shall be
deposited in the Facility LC Collateral Account.

 

(b)           If
at any time while any Default is continuing, the Administrative Agent
reasonably determines that the Collateral Shortfall Amount at such time is
greater than zero, the Administrative Agent may make demand on the Borrower to
pay, and the Borrower will, forthwith upon such demand and without any further
notice or act, pay to the Administrative Agent the Collateral Shortfall Amount,
which funds shall be deposited in the Facility LC Collateral Account.

 

(c)           At any time while any Default is continuing, the
Administrative Agent may at any time or from time to time after funds are
deposited in the Facility LC Collateral Account, apply such funds to the
payment of the Obligations and any other amounts as shall from time to time
have become due and payable by the Borrower to the Lenders or the LC Issuer
under the Loan Documents.

 

52

 

(d)           At
any time while any Default is continuing, neither the Borrower nor any Person
claiming on behalf of or through the Borrower shall have any right to withdraw
any of the funds held in the Facility LC Collateral Account.  After all of the Obligations have been
indefeasibly paid in full and the Aggregate Commitment has been terminated, any
funds remaining in the Facility LC Collateral Account shall be returned by the
Administrative Agent to the Borrower or paid to whomever may be legally
entitled thereto at such time.

 

(e)           If,
within 30 days after acceleration of the maturity of the Obligations or
termination of the obligations of the Lenders to make Loans and the obligation
and power of the LC Issuer to issue Facility LCs hereunder as a result of any
Default (other than any Default as described in Section 8(f) with
respect to the Borrower) and before any judgment or decree for the payment of
the Obligations due shall have been obtained or entered, the Required Lenders
(in their sole discretion) shall so direct, the Administrative Agent shall, by
notice to the Borrower, rescind and annul such acceleration and/or termination.

 

9.2           Amendments. 
Subject to the provisions of this Section 9.2, the Required
Lenders (or the Administrative Agent with the consent in writing of the Required
Lenders) and the Loan Parties party to the applicable Loan Document may enter
into agreements supplemental hereto for the purpose of adding or modifying any
provisions to such Loan Documents or changing in any manner the rights of the
Lenders or such Loan Parties under the applicable Loan Document or waiving any
Default hereunder; provided, however,
that no such supplemental agreement shall, without the consent of all of the
Lenders:

 

(a)           Extend
the final maturity of any Loan, extend the expiry date of any Facility LC to a
date after the Facility Termination Date, postpone any regularly scheduled
payment of principal of any Loan or forgive all or any portion of the principal
amount thereof or any Reimbursement Obligation related thereto, or reduce the
rate or extend the time of payment of interest or fees thereon or Reimbursement
Obligations related thereto.

 

(b)           Reduce
the percentage specified in the definition of Required Lenders.

 

(c)           Extend
the Facility Termination Date, or reduce the amount or extend the payment date
for, the mandatory payments required under Section 2.2.1(b)(ii) or Section 2.2.2,
or except as contemplated by Section 2.6.3, increase the amount of
the Commitment of any Lender hereunder or the commitment to issue Facility LCs,
or permit the Borrower to assign its rights under this Agreement.

 

(d)           Amend
this Section 9.2.

 

(e)           Release
any Subsidiary Guarantor that is a Material Subsidiary or, except as provided
in the Collateral Documents, release all or substantially all of the
Collateral.

 

Any Default which is
waived by the Lenders in accordance with this Section 9.2 shall be
deemed to be no longer continuing.  No
amendment of any provision of this Agreement relating to the Administrative
Agent shall be effective without the written consent of the Administrative
Agent, and no amendment of any provision relating to the LC Issuer shall be
effective without the written consent of the LC Issuer.  No
amendment of any provision of this Agreement relating to the Swing Line Lender
or any Swing Line Loans shall be effective without the written consent of the
Swing Line Lender.  The
Administrative Agent may waive payment of the fee required under Section 13.3.3
without obtaining the consent of any other party to this Agreement.  Notwithstanding the foregoing, upon the
execution and delivery of all documentation required by Section 2.6.3
to be delivered in connection with an increase to the Aggregate Commitment, the
Administrative Agent, the Borrower and the new or existing Lenders whose

 

53

 

Commitments have been
affected may and shall enter into an amendment hereof (which shall be binding
on all parties hereto) solely for the purpose of reflecting any new Lenders and
their new Commitments and any increase in the Commitment of any existing
Lender.

 

9.3           Preservation of Rights.  No delay or omission of the Lenders, the LC
Issuer or the Administrative Agent to exercise any right under the Loan
Documents shall impair such right or be construed to be a waiver of any Default
or an acquiescence therein, and the making of a Credit Extension
notwithstanding the existence of a Default or the inability of the Borrower to
satisfy the conditions precedent to such Credit Extension shall not constitute
any waiver or acquiescence.  Any single
or partial exercise of any such right shall not preclude other or further
exercise thereof or the exercise of any other right, and no waiver, amendment
or other variation of the terms, conditions or provisions of the Loan Documents
whatsoever shall be valid unless in writing signed by the Lenders required
pursuant to Section 9.2, and then only to the extent in such
writing specifically set forth.  All
remedies contained in the Loan Documents or by law afforded shall be cumulative
and all shall be available to the Administrative Agent, the LC Issuer and the
Lenders until the Obligations have been paid in full.

 

ARTICLE X

 

GENERAL
PROVISIONS

 

10.1         Survival of Representations.  All representations and warranties of the
Borrower contained in this Agreement shall survive the making of the Credit
Extensions herein contemplated.

 

10.2         Governmental Regulation.  Anything contained in this Agreement to the
contrary notwithstanding, neither the LC Issuer nor any Lender shall be
obligated to extend credit to the Borrower in violation of any limitation or
prohibition provided by any applicable statute or regulation.

 

10.3         Headings. 
Section headings in the Loan Documents are for convenience of
reference only, and shall not govern the interpretation of any of the
provisions of the Loan Documents.

 

10.4         Entire Agreement.  The Loan Documents embody the entire agreement and understanding
among the Borrower, the Administrative Agent, the LC Issuer and the Lenders and
supersede all prior agreements and understandings among the Borrower, the
Administrative Agent, the LC Issuer and the Lenders relating to the subject
matter thereof other than those contained in the fee letter described in Section 11.13
which shall survive and remain in full force and effect until all of the
Obligations have been indefeasibly paid in full and the Aggregate Commitment
has been terminated.

 

10.5         Several Obligations; Benefits of
this Agreement.  The respective
obligations of the Lenders hereunder are several and not joint and no Lender
shall be the partner or agent of any other (except to the extent to which the
Administrative Agent is authorized to act as such).  The failure of any Lender to perform any of its obligations
hereunder shall not relieve any other Lender from any of its obligations
hereunder.  This Agreement shall not be
construed so as to confer any right or benefit upon any Person other than the
parties to this Agreement and their respective successors and assigns; provided, however, that the parties
hereto expressly agree that the Arranger shall enjoy the benefits of the
provisions of Sections 10.6, 10.10 and 11.11 to
the extent specifically set forth therein and shall have the right to enforce
such provisions on its own behalf and in its own name to the same extent as if
it were a party to this Agreement.

 

54

 

10.6         Expenses; Indemnification.

 

(a)           The
Borrower shall reimburse the Administrative Agent and the Arranger for any
reasonable and documented out-of-pocket expenses (including attorneys’ fees and
time charges of attorneys for the Administrative Agent, which attorneys may be
employees of the Administrative Agent) paid or incurred by the Administrative
Agent or the Arranger in connection with the preparation, negotiation,
execution, delivery, syndication, distribution (including, without limitation,
via the internet), review, amendment, modification, and administration of the
Loan Documents; provided that
such out-of-pocket expenses incurred in connection with the closing of the
transactions contemplated by this Agreement shall not exceed $100,000 in the
aggregate.  The Borrower also agrees to
reimburse the Administrative Agent, the Arranger, the LC Issuer and the Lenders
for any reasonable and documented out-of-pocket expenses (including attorneys’
fees and time charges of attorneys for the Administrative Agent, the Arranger,
the LC Issuer and the Lenders, which attorneys may be employees of the
Administrative Agent, the Arranger, the LC Issuer or the Lenders) paid or incurred
by the Administrative Agent, the Arranger, the LC Issuer or any Lender in
connection with the collection and enforcement of the Loan Documents.  Expenses being reimbursed by the Borrower
under this Section include, without limitation, reasonable and documented
out-of-pocket expenses incurred in connection with the Reports described in the
following sentence.  The Borrower
acknowledges that from time to time Bank One may prepare and may distribute to
the Lenders (but shall have no obligation or duty to prepare or to distribute
to the Lenders) certain audit reports (the “Reports”) pertaining to the
Borrower’s assets for internal use by Bank One from information furnished to it
by or on behalf of the Borrower, after Bank One has exercised its rights of inspection
pursuant to this Agreement.

 

(b)           The
Borrower hereby further agrees to indemnify the Administrative Agent, the
Arranger, the LC Issuer and each Lender, their respective affiliates, and each
of their directors, officers and employees against all losses, claims, damages,
penalties, judgments, liabilities and expenses (including, without limitation,
all expenses of litigation or preparation therefor whether or not the
Administrative Agent, the Arranger, the LC Issuer or any Lender or any
affiliate is a party thereto) which any of them may pay or incur arising out of
or relating to this Agreement, the other Loan Documents, the transactions
contemplated hereby or the direct or indirect application of the proceeds of
any Credit Extension hereunder except to the extent that they are determined in
a final non-appealable judgment by a court of competent jurisdiction to have
resulted from the gross negligence or willful misconduct of the party seeking
indemnification.  The obligations of the
Borrower under this Section 10.6 shall survive the termination of
this Agreement.

 

10.7         Numbers of Documents.  All statements, notices, closing documents,
and requests hereunder shall be furnished to the Administrative Agent with
sufficient counterparts so that the Administrative Agent may furnish one to the
LC Issuer and each of the Lenders.

 

10.8         Accounting. 
Except as provided to the contrary herein, all accounting terms used
herein shall be interpreted and all accounting determinations hereunder shall
be made in accordance with GAAP in a manner consistent with that used in
preparing the financial statements referred to in Section 5.1,
except that any calculation or determination which is to be made on a
consolidated basis shall be made for the Borrower and all of its Subsidiaries,
including those Subsidiaries, if any, which are unconsolidated on the
Borrower’s audited financial statements.  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 the Borrower, the Administrative Agent or the Required
Lenders shall so request, the Administrative Agent, the Lenders and the Loan
Parties shall negotiate in good faith to amend such ratio or requirement to
preserve the

 

55

 

original intent thereof
in light of such change in GAAP (subject to the approval of the Required
Lenders); provided that until so amended, such ratio or
requirement shall continue to be computed in accordance with GAAP prior to such
change therein and the Borrower shall provide to the Administrative Agent and
the Lenders reconciliation statements showing the difference in such
calculation, together with the delivery of monthly, quarterly and annual
financial statements required hereunder.

 

10.9         Severability of Provisions.  Any provision in any Loan Document that is
held to be inoperative, unenforceable, or invalid in any jurisdiction shall, as
to that jurisdiction, be inoperative, unenforceable, or invalid without
affecting the remaining provisions in that jurisdiction or the operation,
enforceability, or validity of that provision in any other jurisdiction, and to
this end the provisions of all Loan Documents are declared to be severable.

 

10.10       Nonliability of Lenders.  The relationship between the Borrower on the
one hand and the Lenders, the LC Issuer and the Administrative Agent on the
other hand shall be solely that of borrower and lender.  Neither the Administrative Agent, the
Arranger, the LC Issuer nor any Lender shall have any fiduciary
responsibilities to the Borrower. 
Neither the Administrative Agent, the Arranger, the LC Issuer nor any
Lender undertakes any responsibility to the Borrower to review or inform the
Borrower of any matter in connection with any phase of the Borrower’s business
or operations.  The Borrower agrees that
neither the Administrative Agent, the Arranger, the LC Issuer nor any Lender
shall have liability to the Borrower (whether sounding in tort, contract or
otherwise) for losses suffered by the Borrower in connection with, arising out
of, or in any way related to, the transactions contemplated and the
relationship established by the Loan Documents, or any act, omission or event
occurring in connection therewith, unless it is determined in a final non-appealable
judgment by a court of competent jurisdiction that such losses resulted from
the gross negligence or willful misconduct of the party from which recovery is
sought.  Neither the Administrative
Agent, the Arranger, the LC Issuer nor any Lender shall have any liability with
respect to, and the Borrower hereby waives, releases and agrees not to sue for,
any special, indirect, consequential or punitive damages suffered by the
Borrower in connection with, arising out of, or in any way related to the Loan
Documents or the transactions contemplated thereby.

 

10.11       Confidentiality.  The Administrative Agent and each Lender agrees to hold any
confidential information which it may receive or has received from the Borrower
or any of its Subsidiaries in connection with this Agreement in confidence,
except for disclosure (i) to its Affiliates and to the Administrative Agent and
any other Lender and, to the extent in connection with the transactions
contemplated hereby and on a confidential basis, their respective Affiliates,
(ii) to legal counsel, accountants, and other professional advisors to such
Lender or to a Transferee, (iii) to regulatory officials upon request or
demand, (iv) to any Person as requested pursuant to or as required by law,
regulation, or legal process, (v) to any Person in connection with any legal
proceeding to which it is a party, (vi) to its direct or indirect contractual
counterparties in swap agreements or to legal counsel, accountants and other
professional advisors to such counterparties, (vii) permitted by Section 13.4,
and (viii) to rating agencies if requested or required by such agencies in
connection with a rating relating to the Advances hereunder.  Without limiting Section 10.4,
the Borrower agrees that the terms of this Section 10.11 shall set
forth the entire agreement between the Borrower and each Lender (including the
Administrative Agent) with respect to any confidential information previously
or hereafter received by such Lender in connection with this Agreement, and
this Section 10.11 shall supersede any and all prior
confidentiality agreements entered into by such Lender with respect to such
confidential information. 
Notwithstanding anything herein to the contrary, confidential
information shall not include, and each party hereto (and each employee,
representative or other agent of any party hereto) may disclose to any and all
Persons, without limitation of any kind, the U.S. federal income tax treatment
and U.S. federal income tax structure of the transactions contemplated hereby
and all materials of any kind (including opinions or other tax analyses) that
are or have been provided to such party relating to such tax treatment

 

56

 

or tax structure, and it
is hereby confirmed that each party hereto has been authorized to make such
disclosures since the commencement of discussions regarding the transactions
contemplated hereby.

 

10.12       Nonreliance. 
Each Lender hereby represents that it is not relying on or looking to
any margin stock (as defined in Regulation U of the Board of Governors of the
Federal Reserve System) for the repayment of the Credit Extensions provided for
herein.

 

10.13       Disclosure. 
The Borrower and each Lender hereby acknowledge and agree that Bank One
and/or its Affiliates from time to time may hold investments in, make other
loans to or have other relationships with the Borrower and its Affiliates.

 

10.14       USA PATRIOT ACT NOTIFICATION.  The following notification is provided to
the Borrower pursuant to Section 326 of the USA Patriot Act of 2001, 31
U.S.C. Section 5318:

 

IMPORTANT INFORMATION
ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT. To help the government fight the
funding of terrorism and money laundering activities, Federal law requires all
financial institutions to obtain, verify, and record information that
identifies each person or entity that opens an account, including any deposit
account, treasury management account, loan, other extension of credit, or other
financial services product. What this means for the Borrower: When the Borrower
opens an account, if the Borrower is an individual, the Administrative Agent
and the Lenders will ask for the Borrower’s name, residential address, tax
identification number, date of birth, and other information that will allow the
Administrative Agent and the Lenders to identify the Borrower, and, if the
Borrower is not an individual, the Administrative Agent and the Lenders will
ask for the Borrower’s name, tax identification number, business address, and
other information that will allow Administrative Agent and the Lenders to
identify the Borrower.  The
Administrative Agent and the Lenders may also ask, if the Borrower is an
individual, to see the Borrower’s driver’s license or other identifying
documents, and, if the Borrower is not an individual, to see the Borrower’s
legal organizational documents or other identifying documents.

 

ARTICLE XI

THE ADMINISTRATIVE AGENT

 

11.1         Appointment; Nature of Relationship.  Bank One, NA is hereby appointed by each of
the Lenders as its contractual representative (herein referred to as the
“Administrative Agent”) hereunder and under each other Loan Document, and each
of the Lenders irrevocably authorizes the Administrative Agent to act as the
contractual representative of such Lender with the rights and duties expressly
set forth herein and in the other Loan Documents.  The Administrative Agent agrees to act as such contractual
representative upon the express conditions contained in this Article XI.  Notwithstanding the use of the defined term
“Administrative Agent,” it is expressly understood and agreed that the
Administrative Agent shall not have any fiduciary responsibilities to any
Lender by reason of this Agreement or any other Loan Document and that the
Administrative Agent is merely acting as the contractual representative of the
Lenders with only those duties as are expressly set forth in this Agreement and
the other Loan Documents.  In its
capacity as the Lenders’ contractual representative, the Administrative Agent
(i) does not hereby assume any fiduciary duties to any of the Lenders, (ii) is
a “representative” of the Lenders within the meaning of the term “secured
party” as defined in the Illinois Uniform Commercial Code and (iii) is acting
as an independent contractor, the rights and duties of which are limited to
those expressly set forth in this Agreement and the other Loan Documents.  Each of the Lenders hereby agrees to assert
no claim against the Administrative Agent on any agency theory or any other
theory of liability for breach of fiduciary duty, all of which claims each
Lender hereby waives.

 

57

 

11.2         Powers.  The
Administrative Agent shall have and may exercise such powers under the Loan
Documents as are specifically delegated to the Administrative Agent by the
terms of each thereof, together with such powers as are reasonably incidental
thereto.  The Administrative Agent shall
have no implied duties to the Lenders, or any obligation to the Lenders to take
any action thereunder except any action specifically provided by the Loan
Documents to be taken by the Administrative Agent.

 

11.3         General Immunity.  Neither the Administrative Agent nor any of its directors,
officers, agents or employees shall be liable to the Borrower, the Lenders or
any Lender for any action taken or omitted to be taken by it or them hereunder
or under any other Loan Document or in connection herewith or therewith except
to the extent such action or inaction is determined in a final non-appealable
judgment by a court of competent jurisdiction to have arisen from the gross
negligence or willful misconduct of such Person.

 

11.4         No Responsibility for Loans, Recitals, etc.  Neither the Administrative Agent nor any of
its directors, officers, agents or employees shall be responsible to any Lender
for or have any duty to any Lender to ascertain, inquire into, or verify (a)
any statement, warranty or representation made in connection with any Loan
Document or any borrowing hereunder; (b) the performance or observance of any
of the covenants or agreements of any obligor under any Loan Document,
including, without limitation, any agreement by an obligor to furnish
information directly to each Lender; (c) the satisfaction of any condition
specified in Article IV, except receipt of items required to be
delivered solely to the Administrative Agent; (d) the existence or possible
existence of any Default or Unmatured Default; (e) the validity,
enforceability, effectiveness, sufficiency or genuineness of any Loan Document
or any other instrument or writing furnished in connection therewith; (f) the
value, sufficiency, creation, perfection or priority of any Lien in any
collateral security; or (g) the financial condition of the Borrower or any
guarantor of any of the Obligations or of any of the Borrower’s or any such
guarantor’s respective Subsidiaries. 
The Administrative Agent shall have no duty to disclose to the Lenders
information that is not required to be furnished by the Borrower to the
Administrative Agent at such time, but is voluntarily furnished by the Borrower
to the Administrative Agent (either in its capacity as Administrative Agent or
in its individual capacity).

 

11.5         Action on Instructions of Lenders.  The Administrative Agent shall in all cases
be fully protected in acting, or in refraining from acting, hereunder and under
any other Loan Document in accordance with written instructions signed by the
Required Lenders, and such instructions and any action taken or failure to act
pursuant thereto shall be binding on all of the Lenders.  The Lenders hereby acknowledge that the
Administrative Agent shall be under no duty to take any discretionary action
permitted to be taken by it pursuant to the provisions of this Agreement or any
other Loan Document unless it shall be requested in writing to do so by the
Required Lenders.  The Administrative
Agent shall be fully justified in failing or refusing to take any action
hereunder and under any other Loan Document unless it shall first be
indemnified to its satisfaction by the Lenders pro rata against any and all
liability, cost and expense that it may incur by reason of taking or continuing
to take any such action; provided that
this Section 11.5 shall not affect the Borrower’s rights against
the Lenders under the terms of this Agreement.

 

11.6         Employment of Administrative Agents
and Counsel.  The Administrative
Agent may execute any of its duties as Administrative Agent hereunder and under
any other Loan Document by or through employees, agents, and attorneys-in-fact
and shall not be answerable to the Lenders, except as to money or securities
received by it or its authorized agents, for the default or misconduct of any
such agents or attorneys-in-fact selected by it with reasonable care.  The Administrative Agent shall be entitled
to advice of counsel concerning the contractual arrangement between the
Administrative Agent and the Lenders and all matters pertaining to the
Administrative Agent’s duties hereunder and under any other Loan Document.

 

58

 

11.7         Reliance on Documents; Counsel.  The Administrative Agent shall be entitled
to rely upon any Note, notice, consent, certificate, affidavit, letter,
telegram, facsimile, telex, electronic mail message, statement, paper or
document believed by it to be genuine and correct and to have been signed or
sent by the proper person or persons, and, in respect to legal matters, upon
the opinion of counsel selected by the Administrative Agent, which counsel may
be employees of the Administrative Agent. 
For purposes of determining compliance with the conditions specified in Sections 4.1
and 4.2, 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 applicable date specifying
its objection thereto.

 

11.8         Administrative Agent’s
Reimbursement and Indemnification. 
The Lenders agree to reimburse and indemnify the Administrative Agent
ratably in proportion to their respective Commitments (or, if the Commitments
have been terminated, in proportion to their Commitments immediately prior to
such termination) (i) for any amounts not reimbursed by the Borrower for which
the Administrative Agent is entitled to reimbursement by the Borrower under the
Loan Documents, (ii) for any other expenses incurred by the Administrative Agent
on behalf of the Lenders, in connection with the preparation, execution,
delivery, administration and enforcement of the Loan Documents (including,
without limitation, for any expenses incurred by the Administrative Agent in
connection with any dispute between the Administrative Agent and any Lender or
between two or more of the Lenders) and (iii) for any liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against the Administrative Agent in any way relating to
or arising out of the Loan Documents or any other document delivered in
connection therewith or the transactions contemplated thereby (including, without
limitation, for any such amounts incurred by or asserted against the
Administrative Agent in connection with any dispute between the Administrative
Agent and any Lender or between two or more of the Lenders), or the enforcement
of any of the terms of the Loan Documents or of any such other documents; provided that (i) no Lender shall be
liable for any of the foregoing to the extent any of the foregoing is found in
a final non-appealable judgment by a court of competent jurisdiction to have
resulted from the gross negligence or willful misconduct of the Administrative
Agent and (ii) any indemnification required pursuant to Section 3.5(g)
shall, notwithstanding the provisions of this Section 11.8, be paid
by the relevant Lender in accordance with the provisions thereof.  The obligations of the Lenders under this Section 11.8
shall survive payment of the Obligations and termination of this Agreement.

 

11.9         Notice of Default.  The Administrative Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Unmatured Default hereunder unless
the Administrative Agent has received written notice from a Lender or the
Borrower referring to this Agreement describing such Default or Unmatured
Default and stating that such notice is a “notice of default”.  In the event that the Administrative Agent
receives such a notice, the Administrative Agent shall give prompt notice
thereof to the Lenders.

 

11.10       Rights as a Lender.  In the event the Administrative Agent is a Lender, the
Administrative Agent shall have the same rights and powers hereunder and under
any other Loan Document with respect to its Commitment and its Loans as any
Lender and may exercise the same as though it were not the Administrative
Agent, and the term “Lender” or “Lenders” shall, at any time when the
Administrative Agent is a Lender, unless the context otherwise indicates,
include the Administrative Agent in its individual capacity.  The Administrative Agent and its Affiliates
may accept deposits from, lend money to, and generally engage in any kind of
trust, debt, equity or other transaction, in addition to those contemplated by
this Agreement or any other Loan Document, with the Borrower or any of its
Subsidiaries in which the Borrower or such Subsidiary is not restricted hereby
from engaging with any other Person. 
The Administrative Agent, in its individual capacity, is not obligated
to remain a Lender.

 

59

 

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

 

11.12       Successor Administrative Agent.  The Administrative Agent may resign at any
time by giving written notice thereof to the Lenders and the Borrower, such
resignation to be effective upon the appointment of a successor Administrative
Agent or, if no successor Administrative Agent has been appointed, forty-five
days after the retiring Administrative Agent gives notice of its intention to
resign.  The Administrative Agent may be
removed at any time with or without cause by written notice received by the
Administrative Agent from the Required Lenders, such removal to be effective on
the date specified by the Required Lenders. 
Upon any such resignation or removal, the Required Lenders shall have
the right to appoint, on behalf of the Borrower and the Lenders, a successor
Administrative Agent, which successor agent shall (unless a Default shall have
occurred and be continuing) be subject to approval by the Borrower, which
approval shall not be unreasonably withheld or delayed.  If no successor Administrative Agent shall
have been so appointed by the Required Lenders within thirty days after the
resigning Administrative Agent’s giving notice of its intention to resign, then
the resigning Administrative Agent may appoint, on behalf of the Borrower and
the Lenders, a successor Administrative Agent, which successor agent shall
(unless a Default shall have occurred and be continuing) be subject to approval
by the Borrower, which approval shall not be unreasonably withheld or
delayed.  Notwithstanding the previous
sentence, the Administrative Agent may at any time without the consent of the
Borrower or any Lender, appoint any of its Affiliates which is a commercial
bank as a successor Administrative Agent hereunder.  If the Administrative Agent has resigned or been removed and no
successor Administrative Agent has been appointed, the Lenders may perform all
the duties of the Administrative Agent hereunder and the Borrower shall make
all payments in respect of the Obligations to the applicable Lender and for all
other purposes shall deal directly with the Lenders.  No successor Administrative Agent shall be deemed to be appointed
hereunder until such successor Administrative Agent has accepted the
appointment.  Any such successor
Administrative Agent shall be a commercial bank having capital and retained
earnings of at least $100,000,000.  Upon
the acceptance of any appointment as Administrative Agent hereunder by a
successor Administrative Agent, such successor Administrative Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the resigning or removed Administrative Agent.  Upon the effectiveness of the resignation or
removal of the Administrative Agent, the resigning or removed Administrative
Agent shall be discharged from its duties and obligations hereunder and under
the Loan Documents.  After the
effectiveness of the resignation or removal of an Administrative Agent, the
provisions of this Article XI shall continue in effect for the
benefit of such Administrative Agent in respect of any actions taken or omitted
to be taken by it while it was acting as the Administrative Agent hereunder and
under the other Loan Documents.  In the
event that there is a successor to the Administrative Agent by merger, or the
Administrative Agent assigns its duties and obligations to an Affiliate
pursuant to this Section 11.12, then the term “Prime Rate” as used
in this Agreement shall mean the prime rate, base rate or other analogous rate
of the new Administrative Agent.

 

11.13       Administrative Agent and Arranger
Fees.  The Borrower agrees to
pay to the Administrative Agent and the Arranger, for their respective
accounts, the fees agreed to by the Borrower, the Administrative Agent and the
Arranger pursuant to that certain letter agreement dated October 3, 2003,
or as otherwise agreed from time to time.

 

60

 

11.14       Delegation to Affiliates.  The Borrower and the Lenders agree that the
Administrative Agent may delegate any of its duties under this Agreement to any
of its Affiliates.  Any such Affiliate
(and such Affiliate’s directors, officers, agents and employees) which performs
duties in connection with this Agreement shall be entitled to the same benefits
of the indemnification, waiver and other protective provisions to which the
Administrative Agent is entitled under Articles XI and XII.

 

11.15       Execution of Collateral Documents.  The Lenders hereby empower and authorize the
Administrative Agent to execute and deliver to the Borrower on their behalf the
Collateral Documents and all related financing statements and any financing
statements, agreements, documents or instruments as shall be necessary or
appropriate to effect the purposes of the Collateral Documents.

 

11.16       Collateral Releases.  The Lenders hereby empower and authorize the
Administrative Agent to execute and deliver to the Borrower on their behalf any
agreements, documents or instruments as shall be necessary or appropriate to
effect any releases of Collateral which shall be permitted by the terms hereof
or of any other Loan Document or which shall otherwise have been approved by
the Required Lenders (or, if required by the terms of Section 9.2,
all of the Lenders) in writing.

 

ARTICLE XII

SETOFF; RATABLE PAYMENTS

 

12.1         Setoff.  In
addition to, and without limitation of, any rights of the Lenders under
applicable law, if the Borrower becomes insolvent, however evidenced, or any
Default occurs, any and all deposits (including all account balances, whether
provisional or final and whether or not collected or available) and any other
Indebtedness at any time held or owing by any Lender or any Affiliate of any
Lender to or for the credit or account of the Borrower may be offset and
applied toward the payment of the Secured Obligations owing to such Lender,
whether or not the Secured Obligations, or any part thereof, shall then be due.

 

12.2         Ratable Payments.  If any Lender, whether by setoff or otherwise, has payment made
to it upon its Loans (other than payments received pursuant to Section 3.1,
3.2, 3.4 or 3.5) in a greater proportion than that
received by any other Lender, such Lender agrees, promptly upon demand, to
purchase a portion of the Loans held by the other Lenders so that after such
purchase each Lender will hold its ratable proportion of Loans.  If any Lender, whether in connection with
setoff or amounts which might be subject to setoff or otherwise, receives
collateral or other protection for its Obligations or such amounts which may be
subject to setoff, such Lender agrees, promptly upon demand, to take such
action necessary such that all Lenders share in the benefits of such collateral
ratably in proportion to their Loans. 
In case any such payment is disturbed by legal process, or otherwise,
appropriate further adjustments shall be made.

 

ARTICLE XIII

BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS

 

13.1         Successors and Assigns.  The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Borrower and
the Lenders and their respective successors and assigns permitted hereby,
except that (a) the Borrower shall not have the right to assign its rights or
obligations under the Loan Documents without the prior written consent of each
Lender, (b) any assignment by any Lender must be made in compliance with Section 13.3,
and (c) any transfer by Participation must be made in compliance with Section 13.2.  Any attempted assignment or transfer by any
party not made in compliance with this Section 13.1 shall be null
and void, unless such attempted

 

61

 

assignment or transfer is
treated as a participation in accordance with Section 13.3.2.  The parties to this Agreement acknowledge
that clause (b) of this Section 13.1 relates only to absolute
assignments and this Section 13.1 does not prohibit assignments
creating security interests, including, without limitation, (x) any pledge or
assignment by any Lender of all or any portion of its rights under this
Agreement and any Note to a Federal Reserve Bank or (y) in the case of a Lender
which is a Fund, any pledge or assignment of all or any portion of its rights
under this Agreement and any Note to its trustee in support of its obligations
to its trustee; provided, however, that
no such pledge or assignment creating a security interest shall release the
transferor Lender from its obligations hereunder unless and until the parties
thereto have complied with the provisions of Section 13.3.  The Administrative Agent may treat the
Person which made any Loan or which holds any Note as the owner thereof for all
purposes hereof unless and until such Person complies with Section 13.3; provided, however, that the
Administrative Agent may in its discretion (but shall not be required to)
follow instructions from the Person which made any Loan or which holds any Note
to direct payments relating to such Loan or Note to another Person.  Any assignee of the rights to any Loan or
any Note agrees by acceptance of such assignment to be bound by all the terms
and provisions of the Loan Documents. 
Any request, authority or consent of any Person, who at the time of
making such request or giving such authority or consent is the owner of the
rights to any Loan (whether or not a Note has been issued in evidence thereof),
shall be conclusive and binding on any subsequent holder or assignee of the
rights to such Loan.

 

13.2         Participations.

 

13.2.1      Permitted
Participants; Effect.  Any Lender
may at any time sell to one or more banks or other entities (“Participants”)
participating interests in any Outstanding Credit Exposure Loan owing to such
Lender, any Note held by such Lender, any Commitment of such Lender or any
other interest of such Lender under the Loan Documents.  In the event of any such sale by a Lender of
participating interests to a Participant, such Lender’s obligations under the
Loan Documents shall remain unchanged, such Lender shall remain solely
responsible to the other parties hereto for the performance of such
obligations, such Lender shall remain the owner of its Outstanding Credit
Exposure Loans and the holder of any Note issued to it in evidence thereof for
all purposes under the Loan Documents, all amounts payable by the Borrower
under this Agreement shall be determined as if such Lender had not sold such
participating interests, and the Borrower and the Administrative Agent shall
continue to deal solely and directly with such Lender in connection with such
Lender’s rights and obligations under the Loan Documents.

 

13.2.2      Voting
Rights.  Each Lender shall retain
the sole right to approve, without the consent of any Participant, any
amendment, modification or waiver of any provision of the Loan Documents other
than any amendment, modification or waiver with respect to any Credit Extension
or Commitment in which such Participant has an interest which would require
consent of all of the Lenders pursuant to the terms of Section 9.2
or of any other Loan Document.

 

13.2.3      Benefit
of Certain Provisions.  The Borrower
agrees that each Participant shall be deemed to have the right of setoff
provided in Section 12.1 in respect of its participating interest
in amounts owing under the Loan Documents to the same extent as if the amount
of its participating interest were owing directly to it as a Lender under the
Loan Documents; provided that each Lender shall retain the right of setoff
provided in Section 12.1 with respect to the amount of
participating interests sold to each Participant.  The Lenders agree to share with each Participant, and each
Participant, by exercising the right of setoff provided in Section 12.1,
agrees to share with each Lender, any amount received pursuant to the exercise
of its right of setoff, such amounts to be shared in accordance with Section 12.2
as if each Participant were a Lender. 
The Borrower further agrees that each Participant shall be entitled to
the benefits of Sections 3.1, 3.2, 3.4 and 3.5
to the same extent as if it were a Lender and had acquired its interest by
assignment

 

62

 

pursuant to Section 13.3; provided
that (a) a Participant shall not be entitled to receive any greater payment
under Section 3.1, 3.2 or 3.5 than the Lender
who sold the participating interest to such Participant would have received had
it retained such interest for its own account, unless the sale of such interest
to such Participant is made with the prior written consent of the Borrower, and
(b) any Participant not incorporated under the laws of the United States of
America or any State thereof agrees to comply with the provisions of Section 3.5
to the same extent as if it were a Lender.

 

13.3         Assignments.

 

13.3.1      Permitted
Assignments.  Any Lender may at any
time assign to one or more banks or other entities (“Purchasers”) all or any
part of its rights and obligations under the Loan Documents.  Such assignment shall be substantially in
the form of Exhibit C or in such other form as may be agreed to by
the parties thereto.  Each such
assignment with respect to a Purchaser which is not a Lender or an Affiliate of
a Lender or an Approved Fund shall either be in an amount equal to the entire
applicable Commitment and Loans of the assigning Lender or  (unless each of the Borrower and the
Administrative Agent otherwise consents) be in an aggregate amount not less
than $5,000,000 or, if less, the remaining amount of the assigning Lender’s
Commitment. The amount of the assignment shall be based on the Commitment or
outstanding Loans (if the Commitment has been terminated) subject to the
assignment, determined as of the date of such assignment or as of the “Trade
Date,” if the “Trade Date” is specified in the assignment.

 

13.3.2      Consents.  The consent of the Borrower shall be
required prior to an assignment becoming effective unless the Purchaser is a
Lender, an Affiliate of a Lender or an Approved Fund; provided that the consent
of the Borrower shall not be required if a Default has occurred and is
continuing.  The consent of the
Administrative Agent and the LC Issuer shall be required prior to an assignment
becoming effective unless the Purchaser is a Lender, an Affiliate of a Lender
or an Approved Fund.  Any consent
required under this Section 13.3.2 shall not be unreasonably
withheld or delayed; provided
that the Borrower may withhold its consent to any assignment if the proposed
assignee would be entitled, as of the date of such proposed assignment, to
receive any greater payment under Section 3.5 than the Lender
proposing to make such assignment would have received had it retained such
interest for its own account.

 

13.3.3      Effect;
Effective Date.  Upon (a) delivery
to the Administrative Agent of an assignment, together with any consents
required by Sections 13.3.1 and 13.3.2, and (b) payment
of a $3,500 fee by the assignor or the assignee to the Administrative Agent for
processing such assignment (unless such fee is waived by the Administrative
Agent), such assignment shall become effective on the effective date specified
in such assignment.  The assignment
shall contain a representation by the Purchaser to the effect that none of the
consideration used to make the purchase of the Commitment and Loans under the
applicable assignment agreement constitutes “plan assets” as defined under
ERISA and that the rights and interests of the Purchaser in and under the Loan
Documents will not be “plan assets” under ERISA.  On and after the effective date of such assignment, such
Purchaser shall for all purposes be a Lender party to this Agreement and any
other Loan Document executed by or on behalf of the Lenders and shall have all
the rights and obligations of a Lender under the Loan Documents, to the same
extent as if it were an original party thereto, and the transferor Lender shall
be released with respect to the Commitment and Outstanding Credit Exposure
assigned to such Purchaser without any further consent or action by the
Borrower, the Lenders or the Administrative Agent.  In the case of an assignment covering all of the assigning
Lender’s rights and obligations under this Agreement, such Lender shall cease
to be a Lender hereunder but shall continue to be entitled to the benefits

 

63

 

of, and subject
to, those provisions of this Agreement and the other Loan Documents which
survive payment of the Obligations and termination of the applicable
agreement.  Any assignment or transfer
by a Lender of rights or obligations under this Agreement that does not comply
with this Section 13.3 shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with Section 13.2.  Upon the consummation of any assignment to a
Purchaser pursuant to this Section 13.3.3, the transferor Lender,
the Administrative Agent and the Borrower shall, if the transferor Lender or
the Purchaser desires that its Loans be evidenced by Notes, make appropriate
arrangements so that new Notes or, as appropriate, replacement Notes are issued
to such transferor Lender and new Notes or, as appropriate, replacement Notes,
are issued to such Purchaser, in each case in principal amounts reflecting
their respective Commitments, as adjusted pursuant to such assignment.

 

13.3.4      Register.  The Administrative Agent, acting solely for
this purpose as an agent of the Borrower, shall maintain at one of its offices
in Chicago, Illinois 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 owing to, each
Lender pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be
conclusive, and the Borrower, 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 Borrower at any
reasonable time and from time to time upon reasonable prior notice.

 

13.4         Dissemination of Information.  The Borrower authorizes each Lender to
disclose to any Participant or Purchaser or any other Person acquiring an
interest in the Loan Documents by operation of law (each a “Transferee”) and
any prospective Transferee any and all information in such Lender’s possession
concerning the creditworthiness of the Borrower and its Subsidiaries, including
without limitation any information contained in any Reports; provided that each Transferee and
prospective Transferee agrees to be bound by Section 10.11 of this
Agreement.

 

13.5         Tax Treatment. 
If any interest in any Loan Document is transferred to any Transferee
which is not incorporated under the laws of the United States or any State
thereof, the transferor Lender shall cause such Transferee, concurrently with
the effectiveness of such transfer, to comply with the provisions of Section 3.5(d).

 

ARTICLE XIV

NOTICES

 

14.1         Notices; Effectiveness; Electronic
Communication.

 

(a)           Notices
Generally.  Except in the case of
notices and other communications expressly permitted to be given by telephone
(and except as provided in paragraph (b) below), all notices and other
communications provided for herein shall be in writing and shall be delivered
by hand or overnight courier service, mailed by certified or registered mail or
sent by telecopier as follows:

 

(i)            if
to the Borrower, at its address or telecopier number set forth on the signature
page hereof;

 

64

 

(ii)           if
to the Administrative Agent, at its address or telecopier number set forth on
the signature page hereof;

 

(iii)          if
to the LC Issuer, at its address or telecopier number set forth, in the case of
Bank One, on the signature page hereof or, in the case of any other LC Issuer,
at its address or telecopier number provided to the Borrower;

 

(iv)          if
to a Lender, to it at its address or telecopier number set forth in its
Administrative Questionnaire.

 

Notices sent by hand or overnight courier service
shall be deemed to have been given when delivered; notices mailed by certified
or registered mail shall be deemed to have been given three (3) Business Days
after being deposited in the mail; notices sent by telecopier shall be deemed
to have been given when sent (except that, if not given during normal business
hours for the recipient, shall be deemed to have been given at the opening of
business on the next Business Day for the recipient).  Notices delivered through electronic communications to the extent
provided in paragraph (b) below, shall be effective as provided in said
paragraph (b).

 

(b)           Electronic
Communications.  Notices and other
communications to the Lenders and the LC 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
or as otherwise determined by the Administrative Agent,  provided that the foregoing shall not apply
to notices to any Lender or the LC Issuer pursuant to Article II if
such Lender or the LC Issuer, as applicable, has notified the Administrative
Agent that it is incapable of receiving notices under such Article by
electronic communication.  The
Administrative Agent or the Borrower may, in its respective discretion, agree
to accept notices and other communications to it hereunder by electronic
communications pursuant to procedures approved by it or as it otherwise
determines;
provided that such determination or approval 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 acknowledgement from the intended
recipient (such as by the “return receipt requested” function, as available,
return e-mail or other written acknowledgement); provided that if such
notice or other communication is not given during the normal business hours of
the recipient, such notice or communication shall be deemed to have been given
at the opening of business on the next Business Day for the recipient, and (ii)
notices or communications posted to an Internet or intranet website shall be
deemed received upon the deemed receipt by the intended recipient at its e-mail
address as described in the foregoing clause (i) of notification that such
notice or communication is available and identifying the website address therefor.

 

(c)           Change
of Address, Etc.  Any party hereto
may change its address or telecopier number for notices and other
communications hereunder by notice to the other parties hereto.

 

ARTICLE XV

COUNTERPARTS; INTEGRATION; EFFECTIVENESS; ELECTRONIC EXECUTION

 

15.1         Counterparts; 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

 

65

 

which when taken together
shall constitute a single contract. 
Except as provided in Article IV, 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
which, when taken together, bear the signatures of each of the parties hereto,
and thereafter shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns.  Delivery of an executed counterpart of a signature page of this
Agreement by telecopy shall be effective as delivery of a manually executed
counterpart of this Agreement.

 

15.2         Electronic Execution of Assignments.  The words “execution,” “signed,”
“signature,” and words of like import in any assignment and assumption
agreement 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, or any other state laws based on the
Uniform Electronic Transactions Act.

 

ARTICLE XVI

 

CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER
OF JURY TRIAL

 

16.1         CHOICE OF LAW.  THE LOAN DOCUMENTS (OTHER
THAN THOSE CONTAINING A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, BUT
GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.

 

16.2         CONSENT TO JURISDICTION.  THE BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES
FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK, NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND THE BORROWER
HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY
WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS
AN INCONVENIENT FORUM.  NOTHING HEREIN
SHALL LIMIT THE RIGHT OF THE ADMINISTRATIVE AGENT, THE LC ISSUER OR ANY LENDER
TO BRING PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY OTHER
JURISDICTION.  ANY JUDICIAL PROCEEDING
BY THE BORROWER AGAINST THE ADMINISTRATIVE AGENT, THE LC ISSUER OR ANY LENDER
OR ANY AFFILIATE OF THE ADMINISTRATIVE AGENT, THE LC ISSUER OR ANY LENDER
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A
COURT IN NEW YORK, NEW YORK.

 

16.3         WAIVER OF JURY TRIAL.  THE BORROWER, THE ADMINISTRATIVE
AGENT, THE LC ISSUER AND EACH LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL
PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN
TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR
CONNECTED WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.

 

[signature pages follow]

 

66

 

IN WITNESS WHEREOF, the Borrower, the Lenders and the
Administrative Agent, the LC Issuer and the Swing Line Lender have executed
this Agreement as of the date first above written.

 

	
   

  	
  DEPARTMENT 56, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Timothy Schugel

  	
   

  
	
   

  	
  Title:  

  	
  Executive Vice
  President and CFO

  	
   

  
	
   

  	
   

  
	
   

  	
  1 Village Place

  
	
   

  	
  6436 City West Parkway

  
	
   

  	
  Eden Prairie, Minnesota
  55344

  
	
   

  	
   

  
	
   

  	
  Attention:

  	
  Timothy Schugel

  
	
   

  	
  Telecopy:

  	
  (952) 943-4490

  
	
   

  	
  Telephone:

  	
  (952) 943-4513

  
	
   

  	
   

  
	
   

  	
  BANK ONE, NA,

  
	
   

  	
  Individually, as
  Administrative Agent, as LC

  Issuer and as Swing Line Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Anthony W. Bartell

  	
   

  
	
   

  	
  Title

  	
  Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
  Mail Code WI1-2032

  
	
   

  	
  111 East Wisconsin
  Avenue

  
	
   

  	
  Milwaukee, Wisconsin
  53202

  
	
   

  	
   

  
	
   

  	
  Attention:

  	
  Anthony Bartell

  
	
   

  	
  Telecopy:

  	
  (414) 765-2288

  
	
   

  	
  Telephone:

  	
  (414) 765-2654

  
								

 

Signature Page to Credit
Agreement

 

 

	
   

  	
  U.S. BANK NATIONAL
  ASSOCIATION, as a

  Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael J. Reymann

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Signature Page to
Credit Agreement

 

 

 

	
   

  	
  WELLS FARGO BANK, N.A.,
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Sharlyn Rekenthaler

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Signature Page to
Credit Agreement

 

 

	
   

  	
  MERRILL LYNCH BUSINESS
  FINANCIAL

  SERVICES INC., as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Randall R. Meck

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Signature Page to
Credit Agreement

 

 

COMMITMENT
SCHEDULE

 

	
  Lender

  	
   

  	
  Commitment

  	
   

  
	
  Bank One, NA

  	
   

  	
  $

  	
  30,000,000

  	
   

  
	
  U.S. Bank National Association

  	
   

  	
  $

  	
  25,000,000

  	
   

  
	
  Wells Fargo Bank, N.A.

  	
   

  	
  $

  	
  25,000,000

  	
   

  
	
  Merrill Lynch
  Business Financial

  Services Inc.

  	
   

  	
  $

  	
  20,000,000

  	
   

  

 

 

PRICING SCHEDULE

 

	
  APPLICABLE

  MARGIN

  	
   

  	
  LEVEL I STATUS

  	
   

  	
  LEVEL II

  STATUS

  	
   

  	
  LEVEL III

  STATUS

  	
   

  	
  LEVEL IV

  STATUS

  	
   

  
	
  Eurodollar
  Rate

  	
   

  	
  .875

  	
  %

  	
  1.00

  	
  %

  	
  1.125

  	
  %

  	
  1.25

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Floating
  Rate

  	
   

  	
  0

  	
  %

  	
  .125

  	
  %

  	
  .25

  	
  %

  	
  .375

  	
  %

  

 

	
  APPLICABLE FEE

  RATE

  	
   

  	
  LEVEL I STATUS

  	
   

  	
  LEVEL II

  STATUS

  	
   

  	
  LEVEL III

  STATUS

  	
   

  	
  LEVEL IV

  STATUS

  	
   

  
	
  Standby
  Letter
  of Credit Fee

  	
   

  	
  .875

  	
  %

  	
  1.00

  	
  %

  	
  1.125

  	
  %

  	
  1.25

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Commercial
  Letter of Credit Fee

  	
   

  	
  .50

  	
  %

  	
  .50

  	
  %

  	
  .563

  	
  %

  	
  .625

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Commitment
  Fee

  	
   

  	
  .20

  	
  %

  	
  .25

  	
  %

  	
  .25

  	
  %

  	
  .375

  	
  %

  

 

For
the purposes of this Schedule, the following terms have the following meanings,
subject to the final paragraph of this Schedule:

 

“Financials”
means the annual or quarterly financial statements of the Borrower delivered
pursuant to Section 6.1(a) or (b).

 

“Level
I Status” exists at any date if, as of the last day of the fiscal quarter of
the Borrower referred to in the most recent Financials, the Leverage Ratio is
less than or equal to 1.0 to 1.00.

 

“Level
II Status” exists at any date if, as of the last day of the fiscal quarter of
the Borrower referred to in the most recent Financials, (a) the Borrower has
not qualified for Level I Status and (b) the Leverage Ratio is less than or
equal to 1.5 to 1.00.

 

“Level
III Status” exists at any date if, as of the last day of the fiscal quarter of
the Borrower referred to in the most recent Financials, (a) the Borrower has
not qualified for Level I Status or Level II Status and (b) the Leverage Ratio
is less than or equal to 2.0 to 1.00.

 

“Level
IV Status” exists at any date if the Borrower has not qualified for Level I
Status, Level II Status or Level III Status.

 

“Status”
means either Level I Status, Level II Status, Level III Status or Level IV
Status.

 

The
Applicable Margin and Applicable Fee Rate shall be determined in accordance
with the foregoing table based on the Borrower’s Status as reflected in the
then most recent Financials; provided
that the initial Applicable Margin and Applicable Fee Rate shall be based on
Level II Status until the date on which the Financials are required to be
delivered for the fiscal year ending January 3, 2004.  Adjustments, if any, to the Applicable
Margin or Applicable Fee Rate shall be effective five Business Days after the
Administrative Agent has received the applicable Financials.  If the Borrower fails to deliver the
Financials to the Administrative Agent at the time required pursuant to
Section 6.1, then the Applicable Margin and

 

 

Applicable Fee Rate shall
be the highest Applicable Margin and Applicable Fee Rate set forth in the
foregoing table until five days after such Financials are so delivered.

 

 

EXHIBIT
A

 

FORM
OF BORROWING BASE CERTIFICATE

[Date]

 

This Borrowing Base
Certificate is furnished pursuant to that certain Credit Agreement dated as of
November 25, 2003 (as amended, modified, renewed or extended from time to
time, the “Agreement”) among the Department 56, Inc. (the “Borrower”), the
lenders party thereto and Bank One, NA, as Administrative Agent for the
Lenders.  Unless otherwise defined
herein, capitalized terms used in this Borrowing Base Certificate shall have
the meanings ascribed thereto in the Agreement.

 

The undersigned hereby
certifies that the following computation of the Borrowing Base is true and
correct as of                      .

 

	
   

  	
   

  	
   

  	
   

  	
  (000’s Omitted)

  	
   

  
	
  1.
  Accounts

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  net
  outstanding Accounts of the Borrower and its Subsidiaries

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
  (b)

  	
  minus
  ineligible Accounts [1]

  	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  equals
  total Eligible Accounts

  	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  multiplied
  by

  	
   

  	
  80

  	
  %

  
	
   

  	
  (e)

  	
  equals

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.
  Inventory

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  total
  Inventory of the Borrower and its Subsidiaries

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
  (b)

  	
  minus
  ineligible Inventory [2]

  	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  equals
  total Eligible Inventory

  	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  multiplied
  by

  	
   

  	
  50

  	
  %

  
	
   

  	
  (e)

  	
  equals

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.
  Borrowing Base

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  the
  sum of

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)

  	
  Item
  1(e)

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)

  	
  Item
  2(e)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  equals
  available for the Borrowing Base

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Borrowing
  Base (min $30,000, max $100,000)

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.
  Outstanding Credit Extensions

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  the
  sum of

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)

  	
  Revolving
  Loans

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)

  	
  Outstanding
  Facility LCs

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)

  	
  Swing
  Line Loans

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  equals

  	
   

  	
  $

  	
   

  	
   

  
									

 

	
   

  	
  Department 56, Inc.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

[1]           All outstanding Accounts of the
Borrower and its Subsidiaries that are not Eligible Accounts as of [                    ]

[2]           All Inventory of the Borrower and its
Subsidiaries that is not Eligible Inventory as of [                    ].

 

 

EXHIBIT
B

 

FORM OF
COMPLIANCE CERTIFICATE

 

To:                              The
Lenders parties to the

Credit
Agreement Described Below

 

This
Compliance Certificate is furnished pursuant to that certain Credit Agreement
dated as of November 25, 2003 (as amended, modified, renewed or extended
from time to time, the “Agreement”) among Department 56, Inc. (the “Borrower”),
the lenders party thereto and Bank One, NA, as Administrative Agent for the
Lenders.  Unless otherwise defined
herein, capitalized terms used in this Compliance Certificate have the meanings
ascribed thereto in the Agreement.

 

THE
UNDERSIGNED HEREBY CERTIFIES THAT:

 

1.  I am the duly elected                
of the Borrower;

 

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

 

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

 

4.  Schedule I attached hereto sets forth
financial data and computations evidencing the Borrower’s compliance with
certain covenants of the Agreement, all of which data and computations are
true, complete and correct.

 

5.
Schedule II attached hereto sets forth the various reports and deliveries
which are required at this time under the Credit Agreement, the Collateral
Documents and the other Loan Documents and the status of compliance.

 

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

 

	
   

  
	
   

  
	
   

  
	
   

  

 

 

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

 

 

	
   

  	
   

  

 

 

SCHEDULE I
TO COMPLIANCE CERTIFICATE

 

Compliance as of          ,
        with

provisions of Sections 7.1(a), (b) and (c) of

the Agreement

 

Consolidated
Interest Coverage Ratio

Section 7.1(a)

As of [                   ]
($000’s)

 

	
   

  	
   

  	
  12 Months
  Ended

  [              ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Consolidated EBITDA:

  	
   

  	
   

  	
   

  
	
  Net Income

  	
   

  	
  $

  	
   

  	
   

  
	
  Income Tax Expense

  	
   

  	
   

  	
   

  
	
  Interest Expense

  	
   

  	
   

  	
   

  
	
  Depreciation

  	
   

  	
   

  	
   

  
	
  Amortization

  	
   

  	
   

  	
   

  
	
  Loss on Sale of Assets

  	
   

  	
   

  	
   

  
	
  Consolidated EBITDA

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Consolidated Interest Expense:

  	
   

  	
   

  	
   

  
	
  Interest Expense

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Consolidated Interest Coverage
  Ratio

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Minimum Required

  	
   

  	
  4.00

  	
   

  

 

 

Consolidated
Leverage Ratio

Section 7.1(b)

As of [                            ]
($000’s)

 

	
   

  	
   

  	
  12 Months
  Ended

  [              ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Consolidated Total Debt:

  	
   

  	
   

  	
   

  
	
  Credit Extensions (average daily amount of
  outstanding Credit Extensions for 12 month period ended)

  	
   

  	
  $

  	
   

  	
   

  
	
  Capital Lease Obligations

  	
   

  	
   

  	
   

  
	
  Other Indebtedness

  	
   

  	
   

  	
   

  
	
  Consolidated Total Debt

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Consolidated EBITDA:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Net Income

  	
   

  	
  $

  	
   

  	
   

  
	
  Income Tax Expense

  	
   

  	
   

  	
   

  
	
  Interest Expense

  	
   

  	
   

  	
   

  
	
  Depreciation

  	
   

  	
   

  	
   

  
	
  Amortization

  	
   

  	
   

  	
   

  
	
  Loss on Sale of Assets

  	
   

  	
   

  	
   

  
	
  Consolidated EBITDA

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Consolidated Leverage Ratio

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Maximum Allowed

  	
   

  	
  2.75

  	
   

  

 

 

Consolidated
Net Worth

Section 7.1(c)

As of [                           ]
($000’s)

 

	
   

  	
   

  	
  12 Months
  Ended

  [              ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Consolidated Net Worth

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Minimum Required

  	
   

  	
  $

  	
   

  	
  1

  

 

1
Greater of (i) $80,000,000 or (ii) 75% of Consolidated Net Worth as of October
4, 2003

 

 

SCHEDULE II TO COMPLIANCE
CERTIFICATE

 

Reports and Deliveries Currently Due

 

 

EXHIBIT C

 

FORM OF ASSIGNMENT AND ASSUMPTION
AGREEMENT

 

This
Assignment and Assumption (the “Assignment and Assumption”) is dated as
of the Effective Date set forth below and is entered into by and between [Insert name of
Assignor] (the “Assignor”) and [Insert name of Assignee]
(the “Assignee”).  Capitalized
terms used but not defined herein shall have the meanings given to them in the
Credit Agreement identified below (as amended, the “Credit Agreement”),
receipt of a copy of which is hereby acknowledged by the Assignee.  The Terms and Conditions set forth in Annex
1 attached hereto are hereby agreed to and incorporated herein by reference and
made a part of this Assignment and Assumption as if set forth herein in full.

 

For an
agreed consideration, the Assignor hereby irrevocably sells and assigns to the
Assignee, and the Assignee hereby irrevocably purchases and assumes from the
Assignor, subject to and in accordance with the Terms and Conditions and the
Credit Agreement, as of the Effective Date inserted by the Administrative Agent
as contemplated below, the interest in and to all of the Assignor’s rights and
obligations in its capacity as a Lender under the Credit Agreement and any
other documents or instruments delivered pursuant thereto that represents the
amount and percentage interest identified below of all of the Assignor’s
outstanding rights and obligations under the respective facilities identified
below (including without limitation any letters of credit, guaranties and
swingline loans included in such facilities and, to the extent permitted to be
assigned under applicable law, all claims (including without limitation
contract claims, tort claims, malpractice claims, statutory claims and all
other claims at law or in equity), suits, causes of action and any other right
of the Assignor against any Person whether known or unknown arising under or in
connection with the Credit Agreement, any other documents or instruments
delivered pursuant thereto or the loan transactions governed thereby) (the “Assigned
Interest”).  Such sale and
assignment is without recourse to the Assignor and, except as expressly
provided in this Assignment and Assumption, without representation or warranty
by the Assignor.

 

1.                                       Assignor:                                                                                                                                                    

 

2.                                       Assignee:                                                                                                             [and
is an Affiliate/Approved

Fund of [identify Lender]1

 

3.                                       Borrower(s):                                                                                                                                                 

 

	
  4.

  	
  Administrative
  Agent:

  	
  Bank One, NA, as
  the administrative agent under the Credit Agreement.

  
	
   

  	
   

  	
   

  
	
  5.

  	
  Credit
  Agreement:

  	
  The Credit
  Agreement dated as of November 25, 2003 among

  Department 56, Inc., the Lenders party thereto, Bank One, NA, as
  Administrative Agent, and the other agents party thereto.

  

 

1  Select
as applicable.

 

6.                                       Assigned
Interest:

                

	
  Aggregate
  Amount of

  Commitment/Loans for

  all Lenders*

  	
   

  	
  Amount of

  Commitment/Loans

  Assigned*

  	
   

  	
  Percentage Assigned of

  Commitment/Loans(2)

  	
   

  
	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  
	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  
	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  

 

 

7.                                       Trade
Date:                                                                                                         3

 

Effective Date:                                             ,
20                     
[TO BE INSERTED BY AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION
OF TRANSFER BY THE ADMINISTRATIVE AGENT.]

 

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

 

	
   

  	
  ASSIGNOR

  
	
   

  	
  [NAME OF
  ASSIGNOR]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  ASSIGNEE

  
	
   

  	
  [NAME OF
  ASSIGNEE]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  
					

 

[Consented to and]4Accepted:

 

BANK ONE, NA, as
Administrative Agent

 

	
  By:

  	
   

  	
   

  
	
  Title:

  

 

[Consented to:]5

 

DEPARTMENT 56, INC.

 

	
  By:

  	
   

  	
   

  
	
  Title:

  

 

*Amount to be adjusted by
the counterparties to take into account any payments or prepayments made
between the Trade Date and the Effective Date.

2  Set forth, to at least 9 decimals, as a
percentage of the Commitment/Loans of all Lenders thereunder.

3  Insert if satisfaction of minimum amounts is
to be determined as of the Trade Date.

4  To be added only if the consent of the
Administrative Agent is required by the terms of the Credit Agreement.

5  To be added only if the consent of the
Borrower and/or other parties (e.g. Swingline Lender, L/C Issuer) is required
by the terms of the Credit Agreement.

 

 

ANNEX 1

TERMS
AND CONDITIONS FOR

ASSIGNMENT
AND ASSUMPTION

 

1.  Representations and Warranties.

 

1.1   Assignor.  The Assignor represents and warrants that (i) it is the legal and
beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free
and clear of any lien, encumbrance or other adverse claim and (iii) it has full
power and authority, and has taken all action necessary, to execute and deliver
this Assignment and Assumption and to consummate the transactions contemplated
hereby.  Neither the Assignor nor any of
its officers, directors, employees, agents or attorneys shall be responsible
for (i) any statements, warranties or representations made in or in connection
with the Credit Agreement or any other Loan Document, (ii) the execution,
legality, validity, enforceability, genuineness, sufficiency, perfection,
priority, collectibility, or value of the Loan Documents or any collateral
thereunder, (iii) the financial condition of the Borrower, any of its
Subsidiaries or Affiliates or any other Person obligated in respect of any Loan
Document, (iv) the performance or observance by the Borrower, any of its
Subsidiaries or Affiliates or any other Person of any of their respective
obligations under any Loan Documents, (v) inspecting any of the property, books
or records of the Borrower, or any guarantor, or (vi) any mistake, error of
judgment, or action taken or omitted to be taken in connection with the Loans
or the Loan Documents.

 

1.2.  Assignee.  The Assignee (a) represents and warrants that (i) it has full
power and authority, and has taken all action necessary, to execute and deliver
this Assignment and Assumption and to consummate the transactions contemplated
hereby and to become a Lender under the Credit Agreement, (ii) from and after
the Effective Date, it shall be bound by the provisions of the Credit Agreement
as a Lender thereunder and, to the extent of the Assigned Interest, shall have
the obligations of a Lender thereunder, (iii) agrees that its payment
instructions and notice instructions are as set forth in Schedule 1 to
this Assignment and Assumption, (iv) confirms that none of the funds, monies,
assets or other consideration being used to make the purchase and assumption
hereunder are “plan assets” as defined under ERISA and that its rights,
benefits and interests in and under the Loan Documents will not be “plan
assets” under ERISA, (v) agrees to indemnify and hold the Assignor harmless
against all losses, costs and expenses (including, without limitation,
reasonable attorneys’ fees) and liabilities incurred by the Assignor in
connection with or arising in any manner from the Assignee’s non-performance of
the obligations assumed under this Assignment and Assumption, (vi) it has
received a copy of  the Credit
Agreement, together with copies of financial statements and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Assumption and to
purchase the Assigned Interest on the basis of which it has made such analysis
and decision independently and without reliance on the Administrative Agent or
any other Lender, and (vii) attached as Schedule 1 to this Assignment and
Assumption is any documentation required to be delivered by the Assignee with
respect to its tax status pursuant to the terms of the Credit Agreement, duly
completed and executed by the Assignee and (b) agrees that (i) it will,
independently and without reliance on the Administrative Agent, the Assignor or
any other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Loan Documents, and (ii) it will perform in
accordance with their terms all of the obligations which by the terms of the
Loan Documents are required to be performed by it as a Lender.

 

2.   Payments.    The Assignee shall pay the Assignor, on the Effective Date, the
amount agreed to by the Assignor and the Assignee.  From and after the Effective Date, the Administrative Agent shall
make all payments in respect of the Assigned Interest (including payments of
principal, interest, fees

 

 

and other amounts) to the
Assignor for amounts which have accrued to but excluding the Effective Date and
to the Assignee for amounts which have accrued from and after the Effective
Date.

 

3.  General Provisions. This Assignment
and Assumption shall be binding upon, and inure to the benefit of, the parties
hereto and their respective successors and assigns.  This Assignment and Assumption may be executed in any number of
counterparts, which together shall constitute one instrument.  Delivery of an executed counterpart of a signature
page of this Assignment and Assumption by telecopy shall be effective as
delivery of a manually executed counterpart of this Assignment and
Assumption.  This Assignment and
Assumption shall be governed by, and construed in accordance with, the law of
the State of New York.

 

 

ADMINISTRATIVE
QUESTIONNAIRE

 

(Schedule to be supplied by Closing Unit or Trading Documentation
Unit)

 

(For Forms for Primary Syndication call Peterine Svoboda at
312-732-8844)

(For Forms after Primary Syndication call Jim Bartz at 312-732-1242)

 

 

US AND
NON-US TAX INFORMATION REPORTING REQUIREMENTS

 

(Schedule to be supplied by Closing Unit or Trading Documentation
Unit)

 

(For Forms for Primary Syndication call Peterine Svoboda at
312-732-8844)

(For Forms after Primary Syndication call Jim Bartz at 312-732-1242)

 

 

EXHIBIT D

 

LOAN/CREDIT
RELATED MONEY TRANSFER INSTRUCTION

 

To Bank One, NA,

as Administrative Agent
(the “Administrative Agent”) under the Credit Agreement

Described Below.

 

Re:                               Credit
Agreement, dated as of November 25, 2003 (as the same may be amended or
modified, the “Credit Agreement”), among Department 56, Inc. (the “Borrower”),
the Lenders named therein and the Administrative Agent.  Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned thereto in the Credit
Agreement.

 

The
Administrative Agent is specifically authorized and directed to act upon the
following standing money transfer instructions with respect to the proceeds of
Advances or other extensions of credit from time to time until receipt by the
Administrative Agent of a specific written revocation of such instructions by
the Borrower; provided, however, that the Administrative Agent may
otherwise transfer funds as hereafter directed in writing by the Borrower in
accordance with Section 14.1 of the Credit Agreement or based on any
telephonic notice made in accordance with Section 2.14 of the Credit
Agreement.

 

Facility Identification
Number(s)                                                                                                                          

 

Customer/Account Name                                                                                                                                      

 

Transfer Funds To                                                                                                                                                 

 

                                                                                                                                                 

 

For Account No.                                                                                                                                                    

 

Reference/Attention To                                                                                                                                         

 

	
  Authorized
  Officer (Customer Representative)

  	
   

  	
  Date

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (Please Print)

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  
	
  Bank Officer
  Name

  	
   

  	
  Date

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (Please Print)

  	
   

  	
  Signature

  

 

(Deliver
Completed Form to Credit Support Staff For Immediate Processing)

 

 

EXHIBIT E

 

FORM OF
NOTE

 

	
   

  	
  [Date]

  

 

Department
56, Inc., a Delaware corporation (the “Borrower”), promises to pay to the order
of                                            
(the “Lender”) the aggregate unpaid principal amount of all Loans made by the
Lender to the Borrower pursuant to Article II of the Agreement (as
hereinafter defined), in immediately available funds at the main office of Bank
One, NA in Chicago, Illinois, as Administrative Agent, together with interest
on the unpaid principal amount hereof at the rates and on the dates set forth
in the Agreement.  The Borrower shall
pay the principal of and accrued and unpaid interest on the Loans in full on
the Facility Termination Date.

 

The
Lender shall, and is hereby authorized to, record on the schedule attached
hereto, or to otherwise record in accordance with its usual practice, the date
and amount of each Loan and the date and amount of each principal payment
hereunder.

 

This
Note is one of the Notes issued pursuant to, and is entitled to the benefits
of, the Credit Agreement dated as of November 25, 2003 (which, as it may
be amended or modified and in effect from time to time, is herein called the
“Agreement”), among the Borrower, the lenders party thereto, including the
Lender, and Bank One, NA, as Administrative Agent, to which Agreement reference
is hereby made for a statement of the terms and conditions governing this Note,
including the terms and conditions under which this Note may be prepaid or its
maturity date accelerated.  This Note is
secured pursuant to the Collateral Documents, all as more specifically
described in the Agreement, and reference is made thereto for a statement of
the terms and provisions thereof. 
Capitalized terms used herein and not otherwise defined herein are used
with the meanings attributed to them in the Agreement.

 

 

	
   

  	
  DEPARTMENT 56,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Print Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

 

SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL

TO

NOTE OF DEPARTMENT 56, INC.,

DATED                   
,

 

	
  Date

  	
   

  	
  Principal

  Amount of

  Loan

  	
   

  	
  Maturity

  of Interest

  Period

  	
   

  	
  Principal

  Amount

  Paid

  	
   

  	
  Unpaid

  Balance

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00059-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00059-of-00352.parquet"}]]