Document:

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                                                                    EXHIBIT 10.1

                                                                  EXECUTION COPY

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                                 [JPMORGAN LOGO]

                                CREDIT AGREEMENT

                                  dated as of

                               September 14, 2005

                                     among

                       PACIFIC SUNWEAR OF CALIFORNIA, INC.

                            The Lenders Party Hereto

              NATIONAL CITY BANK and U.S. BANK NATIONAL ASSOCIATION
                           as Co-Documentation Agents

                              BANK OF AMERICA, N.A.
                              as Syndication Agent

                                       and

                            JPMORGAN CHASE BANK, N.A.
                             as Administrative Agent

                            -------------------------

        J.P. MORGAN SECURITIES INC. and BANC OF AMERICA SECURITIES LLC,
                  as Joint Bookrunners and Joint Lead Arrangers

================================================================================

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                               TABLE OF CONTENTS

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                             ARTICLE I Definitions

SECTION 1.01. Defined Terms.................................................    1
SECTION 1.02. Classification of Loans and Borrowings........................   18
SECTION 1.03. Terms Generally...............................................   18
SECTION 1.04. Accounting Terms; GAAP........................................   18

ARTICLE II The Credits                                                         19

SECTION 2.01. Commitments...................................................   19
SECTION 2.02. Loans and Borrowings..........................................   19
SECTION 2.03. Requests for Revolving Borrowings.............................   19
SECTION 2.04. Intentionally Omitted.........................................   20
SECTION 2.05. Swingline Loans...............................................   20
SECTION 2.06. Letters of Credit.............................................   21
SECTION 2.07. Funding of Borrowings.........................................   26
SECTION 2.08. Interest Elections............................................   26
SECTION 2.09. Termination and Reduction of Commitments......................   27
SECTION 2.10. Repayment of Loans; Evidence of Debt..........................   28
SECTION 2.11. Prepayment of Loans...........................................   29
SECTION 2.12. Fees..........................................................   29
SECTION 2.13. Interest......................................................   31
SECTION 2.14. Alternate Rate of Interest....................................   31
SECTION 2.15. Increased Costs...............................................   32
SECTION 2.16. Break Funding Payments........................................   33
SECTION 2.17. Taxes.........................................................   34
SECTION 2.18. Payments Generally; Pro Rata Treatment; Sharing of Set-offs...   35
SECTION 2.19. Mitigation Obligations; Replacement of Lenders................   36
SECTION 2.20. Expansion Option..............................................   37

ARTICLE III Representations and Warranties                                     38

SECTION 3.01. Organization; Powers; Subsidiaries............................   38
SECTION 3.02. Authorization; Enforceability.................................   38
SECTION 3.03. Governmental Approvals; No Conflicts..........................   39
SECTION 3.04. Financial Condition; No Material Adverse Change...............   39
SECTION 3.05. Properties....................................................   39
SECTION 3.06. Litigation and Environmental Matters..........................   39
SECTION 3.07. Compliance with Laws and Agreements...........................   40
SECTION 3.08. Investment and Holding Company Status.........................   40
SECTION 3.09. Taxes.........................................................   40
SECTION 3.10. ERISA.........................................................   40
SECTION 3.11. Disclosure....................................................   41
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                               Table of Contents
                                  (continued)

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SECTION 3.12. Federal Reserve Regulations...................................   41
SECTION 3.13. No Default....................................................   41

ARTICLE IV Conditions                                                          41

SECTION 4.01. Effective Date................................................   41
SECTION 4.02. Each Credit Event.............................................   42

ARTICLE V Affirmative Covenants                                                43

SECTION 5.01. Financial Statements and Other Information....................   43
SECTION 5.02. Notices of Material Events....................................   44
SECTION 5.03. Existence; Conduct of Business................................   45
SECTION 5.04. Payment of Obligations........................................   45
SECTION 5.05. Maintenance of Properties; Insurance..........................   45
SECTION 5.06. Books and Records; Inspection Rights..........................   45
SECTION 5.07. Compliance with Laws..........................................   46
SECTION 5.08. Use of Proceeds and Letters of Credit.........................   46
SECTION 5.09. Guaranties....................................................   46

ARTICLE VI Negative Covenants                                                  46

SECTION 6.01. Indebtedness..................................................   46
SECTION 6.02. Liens.........................................................   48
SECTION 6.03. [Intentionally Omitted].......................................   48
SECTION 6.04. Fundamental Changes...........................................   48
SECTION 6.05. Investments, Loans, Advances, Guarantees and Acquisitions.....   49
SECTION 6.06. Swap Agreements...............................................   50
SECTION 6.07. Transactions with Affiliates..................................   50
SECTION 6.08. Financial Covenants...........................................   50

ARTICLE VII Events of Default                                                  50

ARTICLE VIII The Administrative Agent                                          53

ARTICLE IX Miscellaneous                                                       55

SECTION 9.01. Notices.......................................................   55
SECTION 9.02. Waivers; Amendments...........................................   56
SECTION 9.03. Expenses; Indemnity; Damage Waiver............................   57
SECTION 9.04. Successors and Assigns........................................   58
SECTION 9.05. Survival......................................................   61
SECTION 9.06. Counterparts; Integration; Effectiveness......................   61
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                                       ii
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                                Table of Contents
                                   (continued)

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SECTION 9.07. Severability..................................................   62
SECTION 9.08. Right of Setoff...............................................   62
SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process....   62
SECTION 9.10. WAIVER OF JURY TRIAL..........................................   63
SECTION 9.11. Headings......................................................   63
SECTION 9.12. Confidentiality...............................................   63
SECTION 9.13. USA PATRIOT Act...............................................   64
</TABLE>

                                      iii
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                                Table of Contents
                                   (continued)

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SCHEDULES:

Schedule 2.01 - Commitments
Schedule 2.06 - Letters of Credit
Schedule 3.01 - Subsidiaries
Schedule 3.06 - Disclosed Matters
Schedule 6.01 - Existing Indebtedness
Schedule 6.02 - Existing Liens
Schedule 6.05 - Existing Investments

EXHIBITS:

Exhibit A - Form of Assignment and Assumption
Exhibit B - Form of Opinion of Loan Parties' Counsel
Exhibit C - Form of Increasing Lender Supplement
Exhibit D - Form of Augmenting Lender Supplement
Exhibit E - List of Closing Documents
</TABLE>

                                       iv
<PAGE>

            CREDIT AGREEMENT dated as of September 14, 2005 among PACIFIC
SUNWEAR OF CALIFORNIA, INC., the LENDERS party hereto, NATIONAL CITY BANK and
U.S. BANK NATIONAL ASSOCIATION, as Co-Documentation Agents, BANK OF AMERICA,
N.A., as Syndication Agent and JPMORGAN CHASE BANK, N.A., as Administrative
Agent.

            The parties hereto agree as follows:

                                    ARTICLE I

                                   Definitions

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

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

            "Adjusted LIBO Rate" means, with respect to any Eurodollar Borrowing
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest
Period multiplied by (b) the Statutory Reserve Rate.

            "Administrative Agent" means JPMorgan Chase Bank, N.A., in its
capacity as administrative agent for the Lenders hereunder.

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

            "Affiliate" means, with respect to a specified Person, another
Person (other than any officer or director of such specified Person in their
capacity as an officer or director of such specified Person) that directly, or
indirectly through one or more intermediaries, Controls or is Controlled by or
is under common Control with the Person specified.

            "Alternate Base Rate" means, for any day, a rate per annum equal to
the greater of (a) the Prime Rate in effect on such day and (b) the Federal
Funds Effective Rate in effect on such day plus 1/2 of 1%. Any change in the
Alternate Base Rate due to a change in the Prime Rate or the Federal Funds
Effective Rate shall be effective from and including the effective date of such
change in the Prime Rate or the Federal Funds Effective Rate, respectively.

            "Applicable Percentage" means, with respect to any Lender, the
percentage of the total Commitments represented by such Lender's Commitment. If
the Commitments have terminated or expired, the Applicable Percentages shall be
determined based upon the Commitments most recently in effect, giving effect to
any assignments.

<PAGE>

            "Applicable Rate" means, for any day, with respect to any Eurodollar
Revolving Loan, or with respect to the facility fees and commercial Letter of
Credit fees payable hereunder, as the case may be, the applicable rate per annum
set forth below under the caption "Eurodollar Spread", "Facility Fee Rate" or
"Commercial Letter of Credit Rate", as the case may be, based upon the Leverage
Ratio applicable on such date:

<TABLE>
<CAPTION>
                                          Eurodollar  Facility Fee  Commercial Letter
Leverage Ratio:                             Spread       Rate         of Credit Rate
------------------------------------      ----------  ------------  -----------------
<S>                                       <C>         <C>           <C>
Category 1: < 1.00x                         0.525%       0.100%          0.25%
Category 2: > or = 1.00 but < 1.50x         0.625%       0.125%          0.30%
Category 3: > or = 1.50 but < 2.00x         0.725%       0.150%          0.35%
Category 4: > or = 2.00 but < 2.25x         0.825%       0.175%          0.40%
Category 5: > or = 2.25x                    0.875%       0.250%          0.45%
</TABLE>

      For purposes of the foregoing,

            (i) if at any time the Borrower fails to deliver the Financials on
      or before the 30th day after the date the Financials are due, Category 5
      shall be deemed applicable for the period commencing five (5) Business
      Days after such 30th day and ending on the date which is five (5) Business
      Days after the Financials are actually delivered, after which the Category
      shall be determined in accordance with the table above as applicable;

            (ii) adjustments, if any, to the Category then in effect shall be
      effective five (5) Business Days after the Administrative Agent has
      received the applicable Financials (it being understood and agreed that
      each change in Category shall apply during the period commencing on the
      effective date of such change and ending on the date immediately preceding
      the effective date of the next such change); and

            (iii) notwithstanding the foregoing, Category 1 shall be deemed to
      be applicable until the Administrative Agent's receipt of the applicable
      Financials for the Borrower's fiscal quarter ending on or about October
      29, 2005, and adjustments to the Category then in effect shall thereafter
      be effected in accordance with the preceding paragraphs.

            "Approved Fund" has the meaning assigned to such term in Section
9.04.

            "Assignment and Assumption" means an assignment and assumption
entered into by a Lender and an assignee (with the consent of any party whose
consent is required by Section 9.04), and accepted by the Administrative Agent,
in the form of Exhibit A or any other form approved by the Administrative Agent.

            "Augmenting Lender" has the meaning assigned to such term in Section
2.20.

            "Availability Period" means the period from and including the
Effective Date to but excluding the earlier of the Maturity Date and the date of
termination of the Commitments.

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<PAGE>

            "Board" means the Board of Governors of the Federal Reserve System
of the United States of America.

            "Borrower" means Pacific Sunwear of California, Inc., a California
corporation.

            "Borrowing" means (a) Revolving Loans of the same Type, made,
converted or continued on the same date and, in the case of Eurodollar Loans, as
to which a single Interest Period is in effect or (b) a Swingline Loan.

            "Borrowing Request" means a request by the Borrower for a Revolving
Borrowing in accordance with Section 2.03.

            "Business Day" means any day that is not a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or required by law
to remain closed; provided that, when used in connection with a Eurodollar Loan,
the term "Business Day" shall also exclude any day on which banks are not open
for dealings in the London interbank market.

            "Capital Expenditures" means, without duplication, any expenditures
that should be included in "additions to property, plant or equipment" or
comparable items reflected in the consolidated statement of cash flows of the
Borrower and its Subsidiaries 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 lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations at any time shall be the capitalized amount
thereof at such time determined in accordance with GAAP.

            "Change in Control" means (a) the acquisition of ownership, directly
or indirectly, beneficially or of record, by any Person or group (within the
meaning of Rule 13d-5 of the Securities Exchange Act of 1934 as in effect on the
date hereof), of Equity Interests representing more than 35% of the aggregate
ordinary voting power represented by the issued and outstanding Equity Interests
of the Borrower; or (b) occupation of a majority of the seats (other than vacant
seats) on the board of directors of the Borrower by Persons who were neither (i)
nominated by the board of directors of the Borrower nor (ii) appointed by
directors so nominated; provided, however, that any merger effected for the sole
purpose of reincorporating the Borrower in Delaware (other than through the
formation of a holding company that will own any portion of the Equity Interest
of the Borrower following such merger) and any changes in ownership resulting
therefrom shall not constitute a Change in Control.

            "Change in Law" means (a) the adoption of any law, rule, treaty or
regulation after the date of this Agreement, (b) any change in any law, rule,
treaty or regulation or in the interpretation or application thereof by any
Governmental Authority after the date of this Agreement or (c) compliance by any
Lender or any Issuing Bank (or, for purposes of Section 2.15(b), by any office
of such Lender from or at which Loans and/or Letters of Credit are made or
issued, or are booked, as the case may be, in accordance with the terms of this
Agreement)

                                        3
<PAGE>

with any request, guideline or directive (whether or not having the force of
law) of any Governmental Authority made or issued after the date of this
Agreement.

            "Class", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans
or Swingline Loans.

            "Code" means the Internal Revenue Code of 1986, as amended from time
to time.

            "Commitment" means, with respect to each Lender, the commitment of
such Lender to make Revolving Loans and to acquire participations in Letters of
Credit and Swingline Loans hereunder, expressed as an amount representing the
maximum aggregate amount of such Lender's Revolving Credit Exposure hereunder,
as such commitment may be (a) reduced from time to time pursuant to Section
2.09, (b) increased from time to time pursuant to Section 2.20 and (c) reduced
or increased from time to time pursuant to assignments by or to such Lender
pursuant to Section 9.04. The initial amount of each Lender's Commitment is set
forth on Schedule 2.01, or in the Assignment and Assumption pursuant to which
such Lender shall have assumed its Commitment, as applicable. The initial
aggregate amount of the Lenders' Commitments is $200,000,000.

            "Consolidated Capital Expenditures" means, with reference to any
period, the Capital Expenditures of the Borrower and its Subsidiaries calculated
on a consolidated basis for such period; provided that (i) expenditures for
Permitted Acquisitions and other investments and (ii) replacement Capital
Expenditures from insurance and condemnation proceeds shall be excluded from
this definition.

            "Consolidated EBITDA" means, with reference to any period,
Consolidated Net Income for such period plus, to the extent deducted in
determining such Consolidated Net Income, (i) Consolidated Interest Expense,
(ii) expense for taxes paid or accrued, (iii) depreciation, (iv) amortization,
(v) charges arising from the impairment of goodwill, (vi) any non-cash charges
or expenses resulting from any currently outstanding stock options or any future
grant, exercise or cancellation of stock options, shares of restricted stock, or
warrants or from any restructuring or consolidation, and (vii) any other
non-cash charges or expenses which do not represent a cash item in such period
or any future period (it being understood and agreed that a write-down of
inventory shall be considered a cash expense in the relevant period) minus, to
the extent included in determining such Consolidated Net Income, any
extraordinary non-cash income or gains which do not represent a cash item in
such period or any future period, all calculated for the Borrower and its
Subsidiaries in accordance with GAAP on a consolidated basis.

            For the purposes of calculating Consolidated EBITDA for any period
of four consecutive fiscal quarters (each, a "Reference Period"), (i) if at any
time during such Reference Period the Borrower or any Subsidiary shall have made
any Material Disposition, the Consolidated EBITDA for such Reference Period
shall be reduced by an amount equal to the Consolidated EBITDA (if positive)
attributable to the property that is the subject of such Material Disposition
for such Reference Period or increased by an amount equal to the Consolidated
EBITDA (if negative) attributable thereto for such Reference Period, and (ii) if
during such Reference Period the Borrower or any Subsidiary shall have made a
Material

                                        4
<PAGE>

Acquisition, Consolidated EBITDA for such Reference Period shall be calculated
after giving pro forma effect thereto (taking into account (A) such adjustments
with respect to cost savings as are consistent with the standards set forth in
Rule 11-02(b)(6) of Regulation S-X and (B) all transactions that are directly
related to such Material Acquisition and are entered into in connection and
substantially contemporaneously therewith) as if such Material Acquisition
occurred on the first day of such Reference Period. As used in this definition,
"Material Acquisition" means any acquisition of property or series of related
acquisitions of property that (a) constitutes (i) assets comprising all or
substantially all or any significant portion of a business or operating unit of
a business, or (ii) all or substantially all of the common stock or other Equity
Interests of a Person, and (b) involves the payment of consideration by the
Borrower and its Subsidiaries in excess of $10,000,000; "Material Disposition"
means any Disposition of property or series of related Dispositions of property
that yields gross proceeds to the Borrower or any of its Subsidiaries in excess
of $10,000,000. In making any calculation pursuant to this paragraph with
respect to a Material Acquisition of a Person, business or rights for which
quarterly financial statements are not available, the Borrower shall base such
calculation on the financial statements of such Person, business or rights for
the then most recently completed period of twelve consecutive calendar months
for which such financial statements are available and shall deem the
contribution of such Person, business or rights to Consolidated EBITDA for the
period from the beginning of the applicable Reference Period to the date of such
Material Acquisition to be equal to the product of (x) the number of days in
such period divided by 365 multiplied by (y) the amount of Consolidated EBITDA
of such Person, business or rights for the twelve-month period referred to above
(calculated on the basis set forth in this definition).

            "Consolidated EBITDAR" means, for any period, Consolidated EBITDA
for such period plus, to the extent deducted in determining Consolidated Net
Income, Consolidated Rent Expense for such period, all calculated for the
Borrower and its Subsidiaries in accordance with GAAP on a consolidated basis.

            "Consolidated Interest Expense" means, with reference to any period,
total 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 Swap
Agreements in respect of interest rates to the extent such net costs are
allocable to such period in accordance with GAAP), minus total interest income
of the Borrower and its Subsidiaries not exceeding $25,000,000 for such period
(including net interest income under Swap Agreements in respect of interest
rates to the extent such net interest income is allocable to such period), all
calculated on a consolidated basis for the Borrower and its Subsidiaries for
such period in accordance with GAAP.

            "Consolidated Net Income" means, with reference to any period, the
net income (or loss) of the Borrower and its Subsidiaries calculated in
accordance with GAAP on a consolidated basis (without duplication) for such
period.

            "Consolidated Rent Expense" means, with reference to any period, all
rent and common area maintenance payments payable under Operating Leases to the
extent deducted in

                                        5
<PAGE>

computing Consolidated Net Income, calculated in accordance with GAAP for the
Borrower and its Subsidiaries on a consolidated basis for such period.

            "Consolidated Total Assets" means, as of the date of any
determination thereof, total assets of the Borrower and its Subsidiaries
calculated in accordance with GAAP on a consolidated basis as of such date.

            "Consolidated Total Indebtedness" means at any time the sum, without
duplication, of the aggregate Indebtedness of the Borrower and its Subsidiaries
calculated on a consolidated basis as of such time in accordance with GAAP.

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

            "Default" means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.

            "Disclosed Matters" means the actions, suits and proceedings and the
environmental matters disclosed in Schedule 3.06.

            "Dollars" or "$" refers to lawful money of the United States of
America.

            "Domestic Subsidiary" means a Subsidiary organized under the laws of
a jurisdiction located in the United States of America.

            "Effective Date" means the date on which the conditions specified in
Section 4.01 are satisfied (or waived in accordance with Section 9.02).

            "Environmental Laws" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material or to health and safety matters.

            "Environmental Liability" means any liability, contingent or
otherwise (including any liability for damages, costs of environmental
remediation, fines, penalties or indemnities), of the Borrower or any Subsidiary
directly or indirectly resulting from or based upon (a) violation of any
Environmental Law, (b) the generation, use, handling, transportation, storage,
treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous
Materials, (d) the release or threatened release of any Hazardous Materials into
the environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.

            "Equity Interests" means shares of capital stock, partnership
interests, membership interests in a limited liability company, beneficial
interests in a trust or other equity

                                        6
<PAGE>

ownership interests in a Person, and any warrants, options or other rights
entitling the holder thereof to purchase or acquire any such equity interest.

            "Equity Payment" means any dividend or other distribution (whether
in cash, securities or other property) with respect to any Equity Interests in
the Borrower or any Subsidiary, or any payment (whether in cash, securities or
other property), including any sinking fund or similar deposit, on account of
the purchase, redemption, retirement, acquisition, cancellation or termination
of any such Equity Interests in the Borrower or any option, warrant or other
right to acquire any such Equity Interests in the Borrower.

            "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time.

            "ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.

            "ERISA Event" means (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder with respect to a
Plan (other than an event for which the 30-day notice period is waived); (b) the
existence with respect to any Plan of an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA
Affiliates of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate
from the PBGC or a plan administrator of any notice relating to an intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f)
the incurrence by the Borrower or any of its ERISA Affiliates of any liability
with respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of
any notice, or the receipt by any Multiemployer Plan from the Borrower or any
ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability
or a determination that a Multiemployer Plan is, or is expected to be, insolvent
or in reorganization, within the meaning of Title IV of ERISA.

            "Eurodollar", when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Adjusted LIBO Rate.

            "Event of Default" has the meaning assigned to such term in Article
VII.

            "Excluded Subsidiaries" means, at any time, any Subsidiary formed or
acquired after the Effective Date that is not a "Significant Subsidiary" (as
defined in Regulation S-X).

            "Excluded Taxes" means, with respect to the Administrative Agent,
any Lender, any Issuing Bank or any other recipient of any payment to be made by
or on account of any obligation of the Borrower hereunder, (a) income or
franchise taxes imposed on (or measured by) its net income by the United States
of America, or by any other Governmental Authority as

                                        7
<PAGE>

a result of a present or former connection between the Administrative Agent, any
Lender, any Issuing Bank or any other recipient of any payment to be made by the
Borrower under this Agreement and the jurisdiction of the Governmental Authority
imposing such tax or any political subdivision or taxing authority thereof or
therein (other than any such connection arising solely from the Administrative
Agent, any Lender, any Issuing Bank or any other recipient of any payment to be
made by the Borrower under this Agreement having executed, delivered or
performed its obligations or received a payment under, or enforced, this
Agreement or any other Loan Document), (b) any branch profits taxes imposed by
the United States of America or any similar tax imposed by any other
jurisdiction described in clause (a) above and (c) in the case of a Foreign
Lender, including any Issuing Bank that is a Foreign Lender (other than an
assignee pursuant to a request by the Borrower under Section 2.19(b)), any
withholding tax that is imposed on amounts payable to such Foreign Lender at the
time such Foreign Lender becomes a party to this Agreement (or (i) causes
pursuant to Section 2.02(b) a new branch or an Affiliate to make any Loan, or
(ii) designates a new lending office) or is attributable to such Foreign
Lender's failure to comply with Section 2.17(e), except to the extent that such
Foreign Lender (or its assignor, if any) was entitled, at the time of
designation of a new lending office (or assignment), to receive additional
amounts from the Borrower with respect to such withholding tax pursuant to
Section 2.17(a), and (d) any amounts with respect to any taxes described in
clause (a), (b) or (c) above that are imposed as a result of any event occurring
after the Administrative Agent, any Lender, any Issuing Bank or any other
recipient of any payment to be made by the Borrower under this Agreement becomes
a party to this Agreement, other than a Change in Law.

            "Federal Funds Effective Rate" means, for any day, the weighted
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.

            "Financial Officer" means the chief financial officer, vice
president of finance, principal accounting officer, treasurer or controller of
the Borrower.

            "Financials" means the annual or quarterly financial statements, and
accompanying certificates and other documents, of the Borrower required to be
delivered pursuant to Section 5.01(a) or 5.01(b).

            "Fitch" means Fitch Ratings.

            "Foreign Lender" means any Lender that is organized under the laws
of (or the applicable lending office of which is located in) a jurisdiction
other than that in which the Borrower is located. For purposes of this
definition, the United States of America, each State thereof and the District of
Columbia shall be deemed to constitute a single jurisdiction.

            "GAAP" means generally accepted accounting principles in the United
States of America.

                                        8
<PAGE>

            "Governmental Authority" means the government of the United States
of America, any other nation or any political subdivision thereof, whether state
or local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.

            "Guarantee" of or by any Person (the "guarantor") means any
obligation, contingent or otherwise, of the guarantor guaranteeing or having the
economic effect of guaranteeing any Indebtedness or other obligation of any
other Person (the "primary obligor") in any manner, whether directly or
indirectly, and including any obligation of the guarantor, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment thereof, (b) to
purchase or lease property, securities or services for the purpose of assuring
the owner of such Indebtedness or other obligation of the payment thereof, (c)
to maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party
in respect of any letter of credit or letter of guaranty issued to support such
Indebtedness or obligation; provided, that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business.

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

            "Hostile Acquisition" means (a) the acquisition of the Equity
Interests of a Person through a tender offer or similar solicitation of the
owners of such Equity Interests which has not been approved (prior to such
acquisition) by the board of directors (or any other applicable governing body)
of such Person or by similar action if such Person is not a corporation and (b)
any such acquisition as to which such approval has been withdrawn.

            "Increasing Lender" has the meaning assigned to such term in Section
2.20.

            "Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
under conditional sale or other title retention agreements relating to property
acquired by such Person, (d) all obligations of such Person in respect of the
deferred purchase price of property or services (excluding accounts payable and
accrued expense obligations incurred in the ordinary course of business), (e)
all Indebtedness of others secured by any Lien on property owned or acquired by
such Person (to the extent of such Person's interest in such property), whether
or not the Indebtedness secured thereby has been assumed, (f) all Guarantees by
such Person of Indebtedness of others, (g) all Capital Lease Obligations of such
Person, (h) all obligations, contingent or otherwise, of such Person as an
account party in respect of letters of credit and letters of guaranty and (i)
all obligations, contingent or otherwise, of such

                                        9
<PAGE>

Person in respect of bankers' acceptances. The Indebtedness of any Person shall
include the Indebtedness of any other entity (including any partnership in which
such Person is a general partner) to the extent such Person is liable therefor
as a result of such Person's ownership interest in or other relationship with
such entity, except to the extent the terms of such Indebtedness provide that
such Person is not liable therefor. For purposes of all calculations provided
for in this Agreement, there shall be disregarded any Guarantee of any Person in
respect of any Indebtedness of any other Person with which the accounts of such
first Person are then required to be consolidated in accordance with GAAP.

            "Indemnified Taxes" means Taxes other than Excluded Taxes.

            "Information Memorandum" means the Confidential Information
Memorandum dated July 2005 relating to the Borrower and the Transactions.

            "Interest Election Request" means a request by the Borrower to
convert or continue a Revolving Borrowing in accordance with Section 2.08.

            "Interest Payment Date" means (a) with respect to any ABR Loan
(other than a Swingline Loan), the last day of each March, June, September and
December, (b) with respect to any Eurodollar Loan, the last day of the Interest
Period applicable to the Borrowing of which such Loan is a part and, in the case
of a Eurodollar Borrowing with an Interest Period of more than three months'
duration, each day prior to the last day of such Interest Period that occurs at
intervals of three months' duration after the first day of such Interest Period
and (c) with respect to any Swingline Loan, the day that such Loan is required
to be repaid.

            "Interest Period" means with respect to any Eurodollar Borrowing,
the period commencing on the date of such Borrowing and ending on the
numerically corresponding day in the calendar month that is one, two, three or
six months thereafter, as the Borrower may elect; provided, that (i) if any
Interest Period would end on a day other than a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless such next
succeeding Business Day would fall in the next calendar month, in which case
such Interest Period shall end on the next preceding Business Day and (ii) any
Interest Period that commences on the last Business Day of a calendar month (or
on a day for which there is no numerically corresponding day in the last
calendar month of such Interest Period) shall end on the last Business Day of
the last calendar month of such Interest Period. For purposes hereof, the date
of a Borrowing initially shall be the date on which such Borrowing is made and,
in the case of a Revolving Borrowing, thereafter shall be the effective date of
the most recent conversion or continuation of such Borrowing.

            "Investment" means, as applied to any Person, any direct or indirect
purchase or other acquisition by such Person of Equity Interests or other
securities of, or any assets constituting a business unit of, any other Person,
or any direct or indirect loan, advance or capital contribution by such Person
to any other Person. In computing the amount involved in any Investment at the
time outstanding, (a) undistributed earnings of, and unpaid interest accrued in
respect of Indebtedness owing by, such other Person shall not be included, (b)
there shall not be deducted from the amounts invested in such other Person any
amounts received as earnings (in the form of dividends, interest or otherwise)
on such Investment or as loans from such other

                                       10
<PAGE>

Person and (c) unrealized increases or decreases in value, or write-ups,
write-downs or write-offs, of Investments in such other Person shall be
disregarded.

            "Issuing Bank" means, as the context may require, (a) JPMorgan Chase
Bank, N.A. and Bank of America, N.A., each with respect to Letters of Credit
issued by it, or (b) any other Lender that becomes an Issuing Bank pursuant to
Section 2.06(k), with respect to Letters of Credit issued by it, and in each
case its successors in such capacity as provided in Section 2.06(i). Each
Issuing Bank may, in its discretion, arrange for one or more Letters of Credit
to be issued by Affiliates of such Issuing Bank, in which case the term "Issuing
Bank" shall include any such Affiliate with respect to Letters of Credit issued
by such Affiliate; provided, however, that no arrangement of a type described in
this sentence shall be permitted if, immediately after giving effect thereto,
amounts would become payable by the Borrower under Section 2.15 or 2.17 that are
in excess of those that would be payable under such Section if such arrangement
were not implemented and, provided further, that the fees payable to any such
Affiliate shall be subject to the second sentence of Section 2.12(b).

            "LC Disbursement" means a payment made by an Issuing Bank pursuant
to a Letter of Credit.

            "LC Exposure" means, at any time, the sum of (a) the aggregate
undrawn amount of all outstanding Letters of Credit at such time plus (b) the
aggregate amount of all LC Disbursements that have not yet been reimbursed by or
on behalf of the Borrower at such time. The LC Exposure of any Lender at any
time shall be its Applicable Percentage of the total LC Exposure at such time.

            "Lenders" means the Persons listed on Schedule 2.01 and any other
Person that shall have become a party hereto pursuant to an Assignment and
Assumption or an Augmenting Lender Supplement, other than any such Person that
ceases to be a party hereto pursuant to an Assignment and Assumption. Unless the
context otherwise requires, the term "Lenders" includes the Swingline Lender.

            "Letter of Credit" means any standby or commercial letter of credit
issued pursuant to this Agreement.

            "Leverage Ratio" has the meaning assigned to such term in Section
6.08(b).

            "LIBO Rate" means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate appearing on Page 3750 of the Dow Jones Market Service
(or on any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to deposits in Dollars in the London interbank market)
at approximately 11:00 a.m., London time, two (2) Business Days prior to the
commencement of such Interest Period, as the rate for deposits in Dollars with a
maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the "LIBO Rate" with respect to such
Eurodollar Borrowing for such Interest Period shall be the rate at which
deposits in Dollars of $5,000,000 and for a maturity comparable to such Interest
Period

                                       11
<PAGE>

are offered by the principal London office of the Administrative Agent in
immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two (2) Business Days prior to the commencement of such
Interest Period.

            "Lien" means, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.

            "Loans" means the loans made by the Lenders to the Borrower pursuant
to this Agreement.

            "Loan Documents" means this Agreement, the Subsidiary Guaranty and
any promissory notes executed and delivered pursuant to Section 2.10(e).

            "Loan Parties" means, collectively, the Borrower and the Subsidiary
Guarantors.

            "Material Adverse Effect" means a material adverse effect on (a) the
business, assets, condition, financial or otherwise, of the Borrower and the
Subsidiaries taken as a whole or (b) the validity or enforceability of this
Agreement any or any and all other Loan Documents or the rights or remedies of
the Administrative Agent and the Lenders thereunder.

            "Material Indebtedness" means Indebtedness (other than the Loans,
obligations under the Subsidiary Guaranty and Letters of Credit), or obligations
in respect of one or more Swap Agreements, of any one or more of the Borrower
and its Subsidiaries in an aggregate principal amount exceeding $10,000,000. For
purposes of determining Material Indebtedness, the "principal amount" of the
obligations of the Borrower or any Subsidiary in respect of any Swap Agreement
at any time shall be the maximum aggregate amount (giving effect to any netting
agreements) that the Borrower or such Subsidiary would be required to pay if
such Swap Agreement were terminated at such time.

            "Maturity Date" means September 14, 2010.

            "Moody's" means Moody's Investors Service, Inc.

            "Multiemployer Plan" means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.

            "Operating Lease" of a Person means any lease of property (other
than a capital lease under GAAP) by such Person as lessee which has an original
term (including any required renewals and any renewals effective at the option
of the lessor) of one year or more.

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

                                       12
<PAGE>

            "Participant" has the meaning set forth in Section 9.04.

            "PBGC" means the Pension Benefit Guaranty Corporation referred to
and defined in ERISA and any successor entity performing similar functions.

            "Permitted Acquisition" means any acquisition (whether by purchase,
merger, consolidation or otherwise but excluding in any event a Hostile
Acquisition) or series of related acquisitions by the Borrower or any Subsidiary
of (i) all or substantially all or any significant portion of the assets of a
Person or division or line of business or a business unit of a Person, (ii) the
Equity Interests of a Person or (iii) if clauses (i) and (ii) above are
inapplicable, the rights of any licensee (including by means of the termination
of such licensee's rights under such license) under a trademark license to such
licensee from the Borrower or any Subsidiary, if, at the time of and immediately
after giving effect thereto, (a) no Default has occurred and is continuing or
would arise after giving effect thereto, (b) the assets so acquired or the
assets of a Person so acquired, as the case may be, shall be in a Related Line
of Business, (c) the Borrower and the Subsidiaries are in compliance, on a pro
forma basis after giving effect to such acquisition (taking into account such
adjustments with respect to cost savings as are consistent with the standards
set forth in Rule 11-02(b)(6) of Regulation S-X), with the covenants contained
in Section 6.08 recomputed as of the last day of the most recently ended fiscal
quarter of the Borrower for which financial statements are available, as if such
acquisition (and any related incurrence or repayment of Indebtedness, with any
new Indebtedness being deemed to be amortized over the applicable testing period
in accordance with its terms) had occurred on the first day of each relevant
period for testing such compliance and, if the aggregate consideration paid in
respect of such acquisition exceeds $100,000,000, the Borrower shall have
delivered to the Administrative Agent a certificate of a Financial Officer of
the Borrower to such effect, together with all relevant material financial
information utilized by the Borrower in making its determination to complete
such acquisition included in any pro forma calculations described in this clause
(c), and (d) in the case of a merger, consolidation or amalgamation involving
the Borrower or a Subsidiary Guarantor, the Borrower or a Subsidiary Guarantor
is the surviving entity of such merger, consolidation and/or amalgamation (or,
in the case of a merger involving a Subsidiary Guarantor, the surviving entity
is a Person that will become a Subsidiary Guarantor upon the effectiveness of
such merger, consolidation or amalgamation); provided that in the case of a
merger, consolidation or amalgamation in which the Borrower is one of the
entities being merged, consolidated and/or amalgamated, the Borrower shall be
the surviving entity of such merger, consolidation and/or amalgamation.

            "Permitted Encumbrances" means:

            (a) Liens imposed by law for taxes and duties, assessments,
governmental charges or levies that are not yet due or are being contested in
compliance with Section 5.04;

            (b) landlords', carriers', warehousemen's, mechanics',
materialmen's, repairmen's and other like Liens imposed by law, Liens of
collecting banks under the Uniform Commercial Code on items in the course of
collection, Liens and rights of set-off of banks, in each case arising in the
ordinary course of business and securing obligations that are not overdue by
more than thirty (30) days or are being contested in compliance with Section
5.04;

                                       13
<PAGE>

            (c) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance and other social
security laws or regulations;

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

            (e) attachment, judgment or other similar liens in respect of
judgments that do not constitute an Event of Default under clause (k) of Article
VII;

            (f) easements, zoning restrictions, rights-of-way, restrictive
covenants, encroachments, and similar encumbrances on real property imposed by
law or arising in the ordinary course of business that do not secure any
monetary obligations and do not materially detract from the value of the
affected property or interfere with the ordinary conduct of business of the
Borrower or any Subsidiary;

            (g) Liens incurred in the ordinary course of business in connection
with the sale, lease, transfer or other disposition of any credit card
receivables of the Borrower or any of its Subsidiaries;

            (h) possessory Liens in favor of brokers and dealers arising in
connection with the acquisition or disposition of Permitted Investments;

            (i) licenses, leases or subleases granted to third parties and not
interfering in any material respect with the conduct of the business of the
Borrower or any of its Subsidiaries taken as a whole; and

            (j) any (i) interest or title of a lessor or sublessor under any
lease, (ii) Lien or restriction that the interest or title of such lessor or
sublessor may be subject to, or (iii) subordination of the interest of the
lessee or sublessee under such lease to any Lien or restriction referred to in
clause (ii);

provided that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness.

            "Permitted Investment Policy" shall mean the investment policy of
the Borrower and its Subsidiaries as in effect on the Effective Date, which has
been approved by the board of directors of the Borrower, as amended, restated,
supplemented or otherwise modified from time to time, so long as such amendment,
restatement, supplement or modification has been approved by the Administrative
Agent, which approval shall not be unreasonably withheld.

            "Permitted Investments" means:

            (a) direct obligations of, or obligations the principal of and
      interest on which are directly and fully guaranteed or insured by, the
      United States of America (or by any agency thereof to the extent such
      obligations are backed by the full faith and credit of the United States
      of America);

                                       14
<PAGE>

            (b) investments in commercial paper having, at such date of
      acquisition, a credit rating of at least A-2 from S&P or P-2 from Moody's
      or F-2 from Fitch;

            (c) investments in certificates of deposit, eurodollar time
      deposits, banker's acceptances and time deposits maturing within one year
      from the date of acquisition thereof issued or guaranteed by or placed
      with, and money market deposit accounts issued or offered by, any Lender
      or any commercial bank which has a combined capital and surplus and
      undivided profits of not less than $100,000,000;

            (d) repurchase agreements with a term of not more than thirty (30)
      days for securities described in clause (a) above and entered into with a
      financial institution satisfying the criteria described in clause (c)
      above;

            (e) securities with maturities of two years or less from the date of
      acquisition issued or fully guaranteed by any state, commonwealth or
      territory of the United States or 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 or territory,
      political subdivision, taxing authority or foreign government (as the case
      may be) are rated, at such date of acquisition, at least A by S&P or A2 by
      Moody's or F-2 by Fitch;

            (f) securities with maturities of two years 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 (c) of this
      definition;

            (g) shares of money market funds that (i) comply with the criteria
      set forth in Securities and Exchange Commission Rule 2a-7 under the
      Investment Company Act of 1940, and (ii) have portfolio assets of at least
      (x) in the case of funds that invest exclusively in assets satisfying the
      requirements of clause (a) of this definition, $250,000,000 and (y) in all
      other cases, $500,000,000;

            (h) in the case of investments by any foreign Subsidiary,
      obligations of a credit quality and maturity comparable to that of the
      items referred to in clauses (a) through (g) above that are available in
      local markets;

            (i) investments in auction rate securities with a rating of AAA from
      S&P or Aaa from Moody's or AAA from Fitch and a maximum holding period of
      forty-five (45) days, for which the reset date will be used to determine
      the maturity date;

            (j) investments in short term loan participations of up to
      thirty-five (35) days if the short term debt rating thereof is A-2 from
      S&P or P-2 from Moody's or F-2 from Fitch or an equivalent long term
      rating of investment grade by Moody's or S&P of Fitch exists with respect
      thereto; and

            (k) investments made in accordance with the Permitted Investment
      Policy.

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

                                       15
<PAGE>

            "Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.

            "Prime Rate" means the rate of interest per annum publicly announced
from time to time by JPMorgan Chase Bank, N.A. as its prime rate in effect at
its principal office in New York City; each change in the Prime Rate shall be
effective from and including the date such change is publicly announced as being
effective.

            "Register" has the meaning set forth in Section 9.04.

            "Regulation S-X" means Regulation S-X under the Securities Act of
1933, as amended.

            "Related Line of Business" means: (a) any line of business in which
the Borrower or any of its Subsidiaries is engaged as of, or immediately prior
to, the Effective Date, (b) any wholesale, retail or other distribution of
products or services under any domestic or foreign patent, trademark, service
mark, trade name, copyright or license or (c) any similar or related or
complementary business and any business which provides a service and/or supplies
products in connection with any business described in clause (a) or (b) above.

            "Related Parties" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.

            "Required Lenders" means, at any time, Lenders having Revolving
Credit Exposures and unused Commitments representing more than 50% of the sum of
the total Revolving Credit Exposures and unused Commitments at such time.

            "Revolving Credit Exposure" means, with respect to any Lender at any
time, the sum of the outstanding principal amount of such Lender's Revolving
Loans and its LC Exposure and Swingline Exposure at such time.

            "Revolving Loan" means a Loan made pursuant to Section 2.03.

            "S&P" means Standard & Poor's.

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

                                       16
<PAGE>

Regulation D or any comparable regulation. The Statutory Reserve Rate shall be
adjusted automatically on and as of the effective date of any change in any
reserve percentage.

            "subsidiary" means, with respect to any Person (the "parent") at any
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or, in the
case of a partnership, more than 50% of the general partnership interests are,
as of such date, owned, controlled or held, or (b) that is, as of such date,
otherwise Controlled, by the parent or one or more subsidiaries of the parent or
by the parent and one or more subsidiaries of the parent.

            "Subsidiary" means any subsidiary of the Borrower.

            "Subsidiary Guarantor" means each Domestic Subsidiary (other than an
Excluded Subsidiary) that becomes a party to the Subsidiary Guaranty. The
Subsidiary Guarantors on the Effective Date are identified as such in Schedule
3.01 hereto.

            "Subsidiary Guaranty" means that certain Guaranty dated as of the
Effective Date (including any and all supplements thereto) and executed by each
Subsidiary Guarantor, as amended, restated, supplemented or otherwise modified
from time to time.

            "Swap Agreement" means any agreement with respect to any swap,
forward, future or derivative transaction or option or similar agreement
involving, or settled by reference to, one or more rates, currencies,
commodities, equity or debt instruments or securities, or economic, financial or
pricing indices or measures of economic, financial or pricing risk or value or
any similar transaction or any combination of these transactions; provided that
no phantom stock or similar plan providing for payments only on account of
services provided by current or former directors, officers, employees or
consultants of the Borrower or the Subsidiaries shall be a Swap Agreement.

            "Swingline Exposure" means, at any time, the aggregate principal
amount of all Swingline Loans outstanding at such time. The Swingline Exposure
of any Lender at any time shall be its Applicable Percentage of the total
Swingline Exposure at such time.

            "Swingline Lender" means JPMorgan Chase Bank, N.A., in its capacity
as lender of Swingline Loans hereunder.

            "Swingline Loan" means a Loan made pursuant to Section 2.05.

            "Taxes" means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.

            "Transactions" means the execution, delivery and performance by the
Borrower of this Agreement and, if applicable, the promissory notes pursuant to
Section 2.10(e), and by the

                                       17
<PAGE>

Subsidiary Guarantors of the Subsidiary Guaranty, the borrowing of Loans, the
use of the proceeds thereof and the issuance of Letters of Credit hereunder.

            "Type", when used in reference to any Loan or Borrowing, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate
Base Rate.

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

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

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

            SECTION 1.04. Accounting Terms; GAAP. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time; provided
that, if the Borrower notifies the Administrative Agent that the Borrower
requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on
the operation of such provision (or if the Administrative Agent notifies the
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.

                                       18
<PAGE>

                                   ARTICLE II

                                   The Credits

            SECTION 2.01. Commitments. Subject to the terms and conditions set
forth herein, each Lender agrees to make Revolving Loans to the Borrower in
Dollars from time to time during the Availability Period in an aggregate
principal amount that will not result in (a) such Lender's Revolving Credit
Exposure exceeding such Lender's Commitment or (b) the sum of the total
Revolving Credit Exposures exceeding the total Commitments. Within the foregoing
limits and subject to the terms and conditions set forth herein, the Borrower
may borrow, prepay and reborrow Revolving Loans.

            SECTION 2.02. Loans and Borrowings. (a) Each Revolving Loan shall be
made as part of a Borrowing consisting of Revolving Loans made by the Lenders
ratably in accordance with their respective Commitments. The failure of any
Lender to make any Loan required to be made by it shall not relieve any other
Lender of its obligations hereunder; provided that the Commitments of the
Lenders are several and no Lender shall be responsible for any other Lender's
failure to make Loans as required.

            (b) Subject to Section 2.14, each Revolving Borrowing shall be
comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request
in accordance herewith. Each Swingline Loan shall be an ABR Loan. Each Lender at
its option may make any Eurodollar Loan by causing any domestic or foreign
branch or Affiliate of such Lender to make such Loan; provided that any exercise
of such option shall not affect the obligation of the Borrower to repay such
Loan in accordance with the terms of this Agreement; provided further that no
such option may be exercised by any Lender if, immediately after giving effect
thereto, amounts would become payable by the Borrower under Section 2.15 or 2.17
that are in excess of those that would be payable under such Section if such
option were not exercised.

            (c) At the commencement of each Interest Period for any Eurodollar
Revolving Borrowing, such Borrowing shall be in an aggregate amount that is an
integral multiple of $1,000,000 and not less than $5,000,000. At the time that
each ABR Revolving Borrowing is made, such Borrowing shall be in an aggregate
amount that is an integral multiple of $500,000 and not less than $500,000;
provided that an ABR Revolving Borrowing may be in an aggregate amount that is
equal to the entire unused balance of the total Commitments or that is required
to finance the reimbursement of an LC Disbursement as contemplated by Section
2.06(e). Each Swingline Loan shall be in an amount that is an integral multiple
of $500,000 and not less than $1,000,000. Borrowings of more than one Type and
Class may be outstanding at the same time; provided that there shall not at any
time be more than a total of ten (10) Eurodollar Revolving Borrowings
outstanding.

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

            SECTION 2.03. Requests for Revolving Borrowings. To request a
Revolving Borrowing, the Borrower shall notify the Administrative Agent of such
request by telephone (a)

                                       19
<PAGE>

in the case of a Eurodollar Borrowing, not later than 1:00 p.m., New York City
time, three (3) Business Days before the date of the proposed Borrowing or (b)
in the case of an ABR Borrowing, not later than 1:00 p.m., New York City time,
on the date of the proposed Borrowing. Each such telephonic Borrowing Request
shall be irrevocable and shall be confirmed promptly by hand delivery or
telecopy to the Administrative Agent of a written Borrowing Request in a form
approved by the Administrative Agent and signed by the Borrower. Each such
telephonic and written Borrowing Request shall specify the following information
in compliance with Section 2.02:

            (i) the aggregate amount of the requested Borrowing;

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

            (iii) whether such Borrowing is to be an ABR Borrowing or a
      Eurodollar Borrowing;

            (iv) in the case of a Eurodollar Borrowing, the initial Interest
      Period to be applicable thereto, which shall be a period contemplated by
      the definition of the term "Interest Period"; and

            (v) the location and number of the Borrower's account to which funds
      are to be disbursed, which shall comply with the requirements of Section
      2.07.

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

            SECTION 2.04. Intentionally Omitted.

            SECTION 2.05. Swingline Loans. (a) Subject to the terms and
conditions set forth herein, the Swingline Lender agrees to make Swingline Loans
in Dollars to the Borrower from time to time during the Availability Period, in
an aggregate principal amount at any time outstanding that will not result in
(i) the aggregate principal amount of outstanding Swingline Loans exceeding
$15,000,000 or (ii) the sum of the total Revolving Credit Exposures exceeding
the total Commitments; provided that the Swingline Lender shall not be required
to make a Swingline Loan to refinance an outstanding Swingline Loan. Within the
foregoing limits and subject to the terms and conditions set forth herein, the
Borrower may borrow, prepay and reborrow Swingline Loans.

            (b) To request a Swingline Loan, the Borrower shall notify the
Administrative Agent of such request by telephone (confirmed by telecopy), not
later than 1:00 p.m., New York City time, on the day of a proposed Swingline
Loan. Each such notice shall be irrevocable and shall specify the requested date
(which shall be a Business Day) and amount of the requested Swingline Loan. The
Administrative Agent will promptly advise the Swingline Lender of any such
notice received from the Borrower. The Swingline Lender shall make each
Swingline Loan

                                       20
<PAGE>

available to the Borrower by means of a credit to the general deposit account of
the Borrower with the Swingline Lender (or, in the case of a Swingline Loan made
to finance the reimbursement of an LC Disbursement as provided in Section
2.06(e), by remittance to the relevant Issuing Bank) by 4:00 p.m., New York City
time, on the requested date of such Swingline Loan.

            (c) The Swingline Lender may by written notice given to the
Administrative Agent not later than 10:00 a.m., New York City time, on any
Business Day require the Lenders to acquire participations on such Business Day
in all or a portion of the Swingline Loans outstanding. Such notice shall
specify the aggregate amount of Swingline Loans in which Lenders will
participate. Promptly upon receipt of such notice, the Administrative Agent will
give notice thereof to each Lender, specifying in such notice such Lender's
Applicable Percentage of such Swingline Loan or Loans. Each Lender hereby
absolutely and unconditionally agrees, upon receipt of notice as provided above,
to pay to the Administrative Agent, for the account of the Swingline Lender,
such Lender's Applicable Percentage of such Swingline Loan or Loans. Each Lender
acknowledges and agrees that its obligation to acquire participations in
Swingline Loans pursuant to this paragraph is absolute and unconditional and
shall not be affected by any circumstance whatsoever, including the occurrence
and continuance of a Default or reduction or termination of the Commitments, and
that each such payment shall be made without any offset, abatement, withholding
or reduction whatsoever. Each Lender shall comply with its obligation under this
paragraph by wire transfer of immediately available funds, in the same manner as
provided in Section 2.07 with respect to Loans made by such Lender (and Section
2.07 shall apply, mutatis mutandis, to the payment obligations of the Lenders),
and the Administrative Agent shall promptly pay to the Swingline Lender the
amounts so received by it from the Lenders. The Administrative Agent shall
notify the Borrower of any participations in any Swingline Loan acquired
pursuant to this paragraph, and thereafter payments in respect of such Swingline
Loan shall be made to the Administrative Agent and not to the Swingline Lender.
Any amounts received by the Swingline Lender from the Borrower (or other party
on behalf of the Borrower) in respect of a Swingline Loan after receipt by the
Swingline Lender of the proceeds of a sale of participations therein shall be
promptly remitted to the Administrative Agent; any such amounts received by the
Administrative Agent shall be promptly remitted by the Administrative Agent to
the Lenders that shall have made their payments pursuant to this paragraph and
to the Swingline Lender, as their interests may appear; provided that any such
payment so remitted shall be repaid to the Swingline Lender or to the
Administrative Agent, as applicable, if and to the extent such payment is
required to be refunded to the Borrower for any reason. The purchase of
participations in a Swingline Loan pursuant to this paragraph shall not relieve
the Borrower of any default in the payment thereof.

            SECTION 2.06. Letters of Credit. (a) General. Subject to the terms
and conditions set forth herein, the Borrower may request the issuance of, and
each Issuing Bank agrees to issue, Letters of Credit denominated in Dollars (or
the amendment, renewal or extension of an outstanding Letter of Credit) for its
own account or for the account of any of its Subsidiaries, in a form reasonably
acceptable to the relevant Issuing Bank, at any time and from time to time
during the Availability Period. In the event of any inconsistency between the
terms and conditions of this Agreement and the terms and conditions of any form
of letter of credit application or other agreement submitted by the Borrower to,
or entered into by the Borrower with, the relevant Issuing Bank relating to any
Letter of Credit, the terms and conditions of this

                                       21
<PAGE>

Agreement shall control. The letters of credit identified on Schedule 2.06 shall
be deemed to be "Letters of Credit" issued on the Effective Date for all
purposes of the Loan Documents.

            (b) Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions. To request the issuance of a Letter of Credit (or the amendment,
renewal or extension of an outstanding Letter of Credit), the Borrower shall
hand deliver or telecopy (or transmit by electronic communication, if
arrangements for doing so have been approved by the relevant Issuing Bank) to an
Issuing Bank and the Administrative Agent (reasonably in advance of the
requested date of issuance, amendment, renewal or extension) a notice requesting
the issuance of a Letter of Credit, or identifying the Letter of Credit to be
amended, renewed or extended, and specifying the date of issuance, amendment,
renewal or extension (which shall be a Business Day), the date on which such
Letter of Credit is to expire (which shall comply with paragraph (c) of this
Section), the amount of such Letter of Credit, the name and address of the
beneficiary thereof and such other information as shall be necessary to prepare,
amend, renew or extend such Letter of Credit. If requested by such Issuing Bank,
the Borrower also shall submit a letter of credit application on such Issuing
Bank's standard form in connection with any request for a Letter of Credit. A
Letter of Credit shall be issued, amended, renewed or extended only if (and upon
issuance, amendment, renewal or extension of each Letter of Credit the Borrower
shall be deemed to represent and warrant that), after giving effect to such
issuance, amendment, renewal or extension, the total Revolving Credit Exposures
shall not exceed the total Commitments.

            (c) Expiration Date. Each Letter of Credit shall expire at or prior
to the close of business on the earlier of (i) the date one year after the date
of the issuance of such Letter of Credit (or, in the case of any renewal or
extension thereof, one year after such renewal or extension) and (ii) the date
that is five (5) Business Days prior to the Maturity Date; provided that any
such Letter of Credit with a tenor of one year shall, if requested by the
Borrower or any of its Subsidiaries, have renewal periods for additional one
year periods so long as the expiration date shall not extend beyond the date
described in clause (ii).

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

                                       22
<PAGE>

            (e) Reimbursement. If any Issuing Bank shall make any LC
Disbursement in respect of a Letter of Credit, the Borrower shall reimburse such
LC Disbursement by paying to such Issuing Bank in Dollars the amount equal to
such LC Disbursement, calculated as of the date such Issuing Bank made such LC
Disbursement not later than 2:00 p.m., New York City time, on the date that such
LC Disbursement is made, if the Borrower shall have received notice of such LC
Disbursement prior to 12:00 noon, New York City time, on such date, or, if such
notice has not been received by the Borrower prior to such time on such date,
then not later than 2:00 p.m., New York City time, on (i) the Business Day that
the Borrower receives such notice, if such notice is received prior to 12:00
noon, New York City time, on the day of receipt, or (ii) the Business Day
immediately following the day that the Borrower receives such notice, if such
notice is not received prior to such time on the day of receipt; provided that,
if such LC Disbursement is not less than $500,000, the Borrower may, subject to
the conditions to borrowing set forth herein, request in accordance with Section
2.03 or 2.05 that such payment be financed with an ABR Revolving Borrowing or
Swingline Loan in an equivalent amount of such LC Disbursement and, to the
extent so financed, the Borrower's obligation to make such payment shall be
discharged and replaced by the resulting ABR Revolving Borrowing or Swingline
Loan. If the Borrower fails to make such payment when due, the applicable
Issuing Bank shall immediately notify the Administrative Agent, which shall
notify each Lender of the applicable LC Disbursement, the payment then due from
the Borrower in respect thereof and such Lender's Applicable Percentage thereof.
Promptly following receipt of such notice, each Lender (other than such Issuing
Bank) shall pay to the Administrative Agent its Applicable Percentage of the
payment then due from the Borrower, in the same manner as provided in Section
2.07 with respect to Loans made by such Lender (and Section 2.07 shall apply,
mutatis mutandis, to the payment obligations of the Lenders), and the
Administrative Agent shall promptly pay to such Issuing Bank the amounts so
received by it from the Lenders. Promptly following receipt by the
Administrative Agent of any payment from the Borrower pursuant to this
paragraph, the Administrative Agent shall distribute such payment to the
applicable Issuing Bank or, to the extent that Lenders have made payments
pursuant to this paragraph to reimburse such Issuing Bank, then to such Lenders
and such Issuing Bank as their interests may appear. Any payment made by a
Lender pursuant to this paragraph to reimburse an Issuing Bank for any LC
Disbursement (other than the funding of ABR Revolving Loans or a Swingline Loan
as contemplated above) shall not constitute a Loan and shall not relieve the
Borrower of its obligation to reimburse such LC Disbursement.

            (f) Obligations Absolute. The Borrower's obligation to reimburse LC
Disbursements as provided in paragraph (e) of this Section shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit or this Agreement, or any term or provision therein, (ii) any draft or
other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by an Issuing Bank under a Letter of
Credit against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit, or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this Section, constitute a legal or equitable discharge of, or
provide a right of setoff against, the Borrower's obligations hereunder. Neither
the Administrative Agent, the Lenders nor any Issuing Bank, nor any of their
Related Parties, shall have any liability or responsibility by reason

                                       23
<PAGE>

of or in connection with the issuance or transfer of any Letter of Credit or any
payment or failure to make any payment thereunder (irrespective of any of the
circumstances referred to in the preceding sentence), or any error, omission,
interruption, loss or delay in transmission or delivery of any draft, notice or
other communication under or relating to any Letter of Credit (including any
document required to make a drawing thereunder), any error in interpretation of
technical terms or any consequence arising from causes beyond the control of the
relevant Issuing Bank; provided that the foregoing shall not be construed to
excuse any Issuing Bank from liability to the Borrower to the extent of any
direct damages (as opposed to consequential damages, claims in respect of which
are hereby waived by the Borrower to the extent permitted by applicable law)
suffered by the Borrower that are caused by such Issuing Bank's failure to
exercise care when determining whether drafts and other documents presented
under a Letter of Credit comply with the terms thereof. The parties hereto
expressly agree that, in the absence of gross negligence or willful misconduct
on the part of any Issuing Bank (as finally determined by a court of competent
jurisdiction), such Issuing Bank shall be deemed to have exercised care in each
such determination. In furtherance of the foregoing and without limiting the
generality thereof, the parties agree that, with respect to documents presented
which appear on their face to be in substantial compliance with the terms of a
Letter of Credit, each Issuing Bank may, in its sole discretion, either accept
and make payment upon such documents without responsibility for further
investigation, regardless of any notice or information to the contrary, or
refuse to accept and make payment upon such documents if such documents are not
in strict compliance with the terms of such Letter of Credit.

            (g) Disbursement Procedures. Each Issuing Bank shall, promptly
following its receipt thereof, examine all documents purporting to represent a
demand for payment under a Letter of Credit. Such Issuing Bank shall promptly
notify the Borrower by telephone (confirmed by telecopy) of such demand for
payment and whether such Issuing Bank has made or will make an LC Disbursement
thereunder; provided that any failure to give or delay in giving such notice
shall not relieve the Borrower of its obligation to reimburse such Issuing Bank
and the Lenders with respect to any such LC Disbursement. Each Issuing Bank
shall, on each Business Day (or such longer frequency as is agreed to by the
Administrative Agent), deliver to the Administrative Agent and the Borrower a
report via facsimile or e-mail setting forth a list of all Letters of Credit
issued by such Issuing Bank outstanding as of such day (or, if the
Administrative Agent has agreed to a longer frequency, the previous date of
delivery of such report by such Issuing Bank), together with the LC Exposure,
the outstanding LC Disbursements and the expiration date of each such Letter of
Credit.

            (h) Interim Interest. Except as otherwise agreed with any Issuing
Bank with respect to any Letter of Credit relating to the period beginning on
any date an LC Disbursement is made and ending two Business Days after the
Borrower's receiving notice from such Issuing Bank of such LC Disbursement, if
any Issuing Bank shall make any LC Disbursement, then, unless the Borrower shall
reimburse such LC Disbursement in full on the date such LC Disbursement is made
(or, if such date is not a Business Day, on or prior to the next Business Day),
the unpaid amount thereof shall bear interest, for each day from and including
the date such LC Disbursement is made to but excluding the date that the
Borrower reimburses such LC Disbursement, at the rate per annum then applicable
to ABR Revolving Loans; provided that, if the Borrower fails to reimburse such
LC Disbursement when due pursuant to paragraph (e) of this Section, then Section
2.13(c) shall apply. Interest accrued pursuant to this paragraph shall be

                                       24
<PAGE>

for the account of such Issuing Bank, except that interest accrued on and after
the date of payment by any Lender pursuant to paragraph (e) of this Section to
reimburse such Issuing Bank shall be for the account of such Lender to the
extent of such payment.

            (i) Replacement of Any Issuing Bank. Any Issuing Bank may be
replaced at any time by written agreement among the Borrower, the Administrative
Agent, the replaced Issuing Bank and the successor Issuing Bank. The
Administrative Agent shall notify the Lenders of any such replacement of an
Issuing Bank. At the time any such replacement shall become effective, the
Borrower shall pay all unpaid fees accrued for the account of the replaced
Issuing Bank pursuant to Section 2.12(b). From and after the effective date of
any such replacement, (i) the successor Issuing Bank shall have all the rights
and obligations of an Issuing Bank under this Agreement with respect to Letters
of Credit to be issued thereafter and (ii) references herein to the term
"Issuing Bank" shall be deemed to refer to such successor or to any previous
Issuing Bank, or to such successor and all previous Issuing Banks, as the
context shall require. After the replacement of an Issuing Bank hereunder, the
replaced Issuing Bank shall remain a party hereto and shall continue to have all
the rights and obligations of an Issuing Bank under this Agreement with respect
to Letters of Credit issued by it prior to such replacement, but shall not be
required to issue additional Letters of Credit.

            (j) Cash Collateralization. If any Event of Default shall occur and
be continuing, on the Business Day that the Borrower receives notice from the
Administrative Agent or the Required Lenders (or, if the maturity of the Loans
has been accelerated, Lenders with LC Exposure representing greater than 50% of
the total LC Exposure) demanding the deposit of cash collateral pursuant to this
paragraph, the Borrower shall deposit in an account with the Administrative
Agent, in the name of the Administrative Agent and for the benefit of the
Lenders, an amount in cash equal to the amount of the LC Exposure as of such
date plus any accrued and unpaid interest thereon; provided that the obligation
to deposit such cash collateral shall become effective immediately, and such
deposit shall become immediately due and payable, without demand or other notice
of any kind, upon the occurrence of any Event of Default with respect to the
Borrower described in clause (h) or (i) of Article VII. Such deposit shall be
held by the Administrative Agent as collateral for the payment and performance
of the obligations of the Borrower under this Agreement. The Administrative
Agent shall have exclusive dominion and control, including the exclusive right
of withdrawal, over such account. Other than any interest earned on the
investment of such deposits, which investments shall be made at the option and
sole discretion of the Administrative Agent and at the Borrower's risk and
expense, such deposits shall not bear interest. Interest or profits, if any, on
such investments shall accumulate in such account. Moneys in such account shall
be applied by the Administrative Agent to reimburse the relevant Issuing Bank
for LC Disbursements for which it has not been reimbursed and, to the extent not
so applied, shall be held for the satisfaction of the reimbursement obligations
of the Borrower for the LC Exposure at such time or, if the maturity of the
Loans has been accelerated (but subject to the consent of Lenders with LC
Exposure representing greater than 50% of the total LC Exposure), be applied to
satisfy other obligations of the Borrower under this Agreement. If the Borrower
is required to provide an amount of cash collateral hereunder as a result of the
occurrence of an Event of Default, such amount (to the extent not applied as
aforesaid) shall be returned to the Borrower within three (3) Business Days
after all Events of Default have been cured or waived.

                                       25
<PAGE>

            (k) Additional Issuing Banks. The Borrower may, at any time and from
time to time with the consent of the Administrative Agent (which consent shall
not be unreasonably withheld) and such Lender, designate one or more additional
Lenders to act as an issuing bank under the terms of this Agreement. Any Lender
designated as Issuing Bank pursuant to this paragraph (k) shall be deemed to be
an "Issuing Bank" for the purposes of this Agreement (in addition to being a
Lender) with respect to Letters of Credit issued by such Lender.

            SECTION 2.07. Funding of Borrowings. (a) Each Lender shall make each
Loan to be made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 12:00 noon, New York City time, to the account of
the Administrative Agent most recently designated by it for such purpose by
notice to the Lenders; provided that Swingline Loans shall be made as provided
in Section 2.05. The Administrative Agent will make such Loans available to the
Borrower by promptly crediting the amounts so received, in like funds, to an
account of the Borrower maintained with the Administrative Agent in New York
City and designated by the Borrower in the applicable Borrowing Request;
provided that ABR Revolving Loans made to finance the reimbursement of an LC
Disbursement as provided in Section 2.06(e) shall be remitted by the
Administrative Agent to the relevant Issuing Bank.

            (b) Unless the Administrative Agent shall have received notice from
a Lender prior to the proposed date of any Borrowing that such Lender will not
make available to the Administrative Agent such Lender's share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with paragraph (a) of this Section
and may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. In such event, if a Lender has not in fact made its share
of the applicable Borrowing available to the Administrative Agent, then the
applicable Lender and the Borrower severally agree to pay to the Administrative
Agent forthwith on demand such corresponding amount with interest thereon, for
each day from and including the date such amount is made available to the
Borrower to but excluding the date of payment to the Administrative Agent, at
(i) in the case of such Lender, the greater of the Federal Funds Effective Rate
and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation or (ii) in the case of the Borrower,
the interest rate applicable to ABR Loans. If such Lender pays such amount to
the Administrative Agent, then such amount shall constitute such Lender's Loan
included in such Borrowing.

            SECTION 2.08. Interest Elections. (a) Each Revolving Borrowing
initially shall be of the Type specified in the applicable Borrowing Request
and, in the case of a Eurodollar Revolving Borrowing, shall have an initial
Interest Period as specified in such Borrowing Request. Thereafter, the Borrower
may elect to convert such Borrowing to a different Type or to continue such
Borrowing and, in the case of a Eurodollar Revolving Borrowing, may elect
Interest Periods therefor, all as provided in this Section. The Borrower may
elect different options with respect to different portions of the affected
Borrowing, in which case each such portion shall be allocated ratably among the
Lenders holding the Loans comprising such Borrowing, and the Loans comprising
each such portion shall be considered a separate Borrowing. This Section shall
not apply to Swingline Borrowings, which may not be converted or continued.

                                       26
<PAGE>

            (b) To make an election pursuant to this Section, the Borrower shall
notify the Administrative Agent of such election by telephone by the time that a
Borrowing Request would be required under Section 2.03 if the Borrower were
requesting a Revolving Borrowing of the Type resulting from such election to be
made on the effective date of such election. Each such telephonic Interest
Election Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Interest Election
Request in a form approved by the Administrative Agent and signed by the
Borrower.

            (c) Each telephonic and written Interest Election Request shall
specify the following information in compliance with Section 2.02:

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

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

            (iii) whether the resulting Borrowing is to be an ABR Borrowing or a
      Eurodollar Borrowing; and

            (iv) if the resulting Borrowing is a Eurodollar Borrowing, the
      Interest Period to be applicable thereto after giving effect to such
      election, which shall be a period contemplated by the definition of the
      term "Interest Period".

If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration.

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

            (e) If the Borrower fails to deliver a timely Interest Election
Request with respect to a Eurodollar Revolving Borrowing prior to the end of the
Interest Period applicable thereto, then, unless such Borrowing is repaid as
provided herein, at the end of such Interest Period such Borrowing shall be
converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if
an Event of Default has occurred and is continuing and the Administrative Agent,
at the request of the Required Lenders, so notifies the Borrower, then, so long
as an Event of Default is continuing (i) no outstanding Revolving Borrowing may
be converted to or continued as a Eurodollar Borrowing and (ii) unless repaid,
each Eurodollar Revolving Borrowing shall be converted to an ABR Borrowing at
the end of the Interest Period applicable thereto.

            SECTION 2.09. Termination and Reduction of Commitments. (a) Unless
previously terminated, the Commitments shall terminate on the Maturity Date.

                                       27
<PAGE>

            (b) The Borrower may at any time terminate, or from time to time
reduce, the Commitments without premium or penalty but subject to Section 2.16
with respect to any Loans in the event such Loans are required to be repaid as a
result of such termination or reduction; provided that (i) each reduction of the
Commitments shall be in an amount that is an integral multiple of $100,000 and
not less than $1,000,000 or, if less, the remaining amount of the total
Commitments, and (ii) the Borrower shall not terminate or reduce the Commitments
if, after giving effect to any concurrent prepayment of the Loans in accordance
with Section 2.11, the sum of the Revolving Credit Exposures would exceed the
total Commitments.

            (c) The Borrower shall notify the Administrative Agent of any
election to terminate or reduce the Commitments under paragraph (b) of this
Section at least two (2) Business Days prior to the effective date of such
termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any notice, the Administrative Agent
shall advise the Lenders of the contents thereof. Each notice delivered by the
Borrower pursuant to this Section shall be irrevocable; provided that a notice
of termination of the Commitments delivered by the Borrower may state that such
notice is conditioned upon the effectiveness of other credit facilities, in
which case such notice may be revoked by the Borrower (by notice to the
Administrative Agent on or prior to the specified effective date) if such
condition is not satisfied. Any termination or reduction of the Commitments
shall be permanent. Each reduction of the Commitments shall be made ratably
among the Lenders in accordance with their respective Commitments.

            SECTION 2.10. Repayment of Loans; Evidence of Debt. (a) The Borrower
hereby unconditionally promises to pay (i) to the Administrative Agent for the
account of each Lender the then unpaid principal amount of each Revolving Loan
on the Maturity Date and (ii) to the Swingline Lender the then unpaid principal
amount of each Swingline Loan on the earlier of the Maturity Date and the first
date after such Swingline Loan is made that is the 15th or last day of a
calendar month and is at least five (5) Business Days after such Swingline Loan
is made; provided that on each date that a Revolving Borrowing is made, the
Borrower shall repay all Swingline Loans then outstanding.

            (b) 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, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder.

            (c) The Administrative Agent shall maintain accounts in which it
shall record (i) the amount of each Loan made hereunder, the Class and Type
thereof and the Interest Period applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from the
Borrower to each Lender hereunder and (iii) the amount of any sum received by
the Administrative Agent hereunder for the account of the Lenders and each
Lender's share thereof.

            (d) The entries made in the accounts maintained pursuant to
paragraph (b) or (c) of this Section shall be prima facie evidence of the
existence and amounts of the obligations recorded therein; provided that the
failure of any Lender or the Administrative Agent to maintain

                                       28
<PAGE>

such accounts or any error therein shall not in any manner affect the obligation
of the Borrower to repay the Loans in accordance with the terms of this
Agreement.

            (e) Any Lender may request that Loans made by it be evidenced by a
promissory note. In such event, the Borrower shall prepare, execute and deliver
to such Lender a promissory note payable to the order of such Lender (or, if
requested by such Lender, to such Lender and its registered assigns) and in a
form approved by the Administrative Agent. Thereafter, the Loans evidenced by
such promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 9.04) be represented by one or more promissory
notes in such form payable to the order of the payee named therein (or, if such
promissory note is a registered note, to such payee and its registered assigns).

            SECTION 2.11. Prepayment of Loans.

            (a) The Borrower shall have the right at any time and from time to
time to prepay voluntarily any Borrowing in whole or in part, without premium or
penalty, subject to prior notice in accordance with paragraph (b) of this
Section and subject to Section 2.16.

            (b) The Borrower shall notify the Administrative Agent (and, in the
case of prepayment of a Swingline Loan, the Swingline Lender) by telephone
(confirmed by telecopy) of any prepayment hereunder (i) in the case of
prepayment of a Eurodollar Revolving Borrowing, not later than 1:00 p.m., New
York City time, one (1) Business Day before the date of prepayment, (ii) in the
case of prepayment of an ABR Revolving Borrowing, not later than 1:00 p.m., New
York City time, on the date of prepayment or (iii) in the case of prepayment of
a Swingline Loan, not later than 2:00 p.m., New York City time, on the date of
prepayment. Each such notice shall be irrevocable and shall specify the
prepayment date, the principal amount of each Borrowing or portion thereof to be
prepaid and whether the prepayment is of Eurodollar Loans, ABR Loans or a
combination thereof, and, if of a combination thereof, the amount allocable to
each; provided that, if a notice of prepayment is given in connection with a
conditional notice of termination of the Commitments as contemplated by Section
2.09, then such notice of prepayment may be revoked if such notice of
termination is revoked in accordance with Section 2.09. Promptly following
receipt of any such notice relating to a Revolving Borrowing, the Administrative
Agent shall advise the Lenders of the contents thereof. Each partial prepayment
of any Revolving Borrowing shall be in an amount that is an integral multiple of
$100,000 and not less than $500,000. Each prepayment of a Revolving Borrowing
shall be applied ratably to the Loans included in the prepaid Borrowing.
Prepayments shall be accompanied by accrued interest to the extent required by
Section 2.13.

            SECTION 2.12. Fees. (a) The Borrower agrees to pay to the
Administrative Agent for the account of each Lender a facility fee, which shall
accrue at the Applicable Rate on the daily amount of the Commitment of such
Lender (whether used or unused) during the period from and including the
Effective Date to but excluding the date on which such Commitment terminates;
provided that, if such Lender continues to have any Revolving Credit Exposure
after its Commitment terminates, then such facility fee shall continue to accrue
on the daily amount of such Lender's Revolving Credit Exposure from and
including the date on which its Commitment terminates to but excluding the date
on which such Lender ceases to have any Revolving Credit Exposure. Accrued
facility fees shall be payable in arrears on the last day of March, June,

                                       29
<PAGE>

September and December of each year and on the date on which the Commitments
terminate, commencing on the first such date to occur after the date hereof;
provided that any facility fees accruing after the date on which the Commitments
terminate shall be payable on demand. All facility fees shall be computed on the
basis of a year of 360 days and shall be payable for the actual number of days
elapsed (including the first day but excluding the last day).

            (b) The Borrower agrees to pay (i) to the Administrative Agent for
the account of each Lender a participation fee with respect to its
participations in Letters of Credit, which shall accrue, in the case of standby
Letters of Credit at the same Applicable Rate used to determine the interest
rate applicable to Eurodollar Revolving Loans and, in the case of commercial
Letters of Credit, at the Applicable Rate applicable to such Letters of Credit,
in each case on the average daily amount of such Lender's LC Exposure (excluding
any portion thereof attributable to unreimbursed LC Disbursements) during the
period from and including the Effective Date to but excluding the later of the
date on which such Lender's Commitment terminates and the date on which such
Lender ceases to have any LC Exposure and (ii) to the applicable Issuing Bank a
fronting fee, which shall accrue at the rate of 0.125% per annum or such other
rate as is separately agreed upon between the Borrower and such Issuing Bank on
the average daily amount of the LC Exposure (excluding any portion thereof
attributable to unreimbursed LC Disbursements) attributable to Letters of Credit
issued by such Issuing Bank during the period from and including the Effective
Date to but excluding the later of the date of termination of the Commitments
and the date on which there ceases to be any LC Exposure, as well as such
Issuing Bank's standard fees and commissions (including without limitation
standard commissions with respect to commercial Letters of Credit, payable at
the time of invoice of such amounts) with respect to the issuance, amendment,
cancellation, negotiation, transfer, presentment, renewal or extension of any
Letter of Credit or processing of drawings thereunder. For the avoidance of
doubt, in any case where, in accordance with the second sentence of the
definition of Issuing Bank, an Issuing Bank arranges for one or more Letters of
Credit to be issued by an Affiliate of such Issuing Bank, the fees agreed upon
by such Issuing Bank with the Borrower shall be deemed to have been agreed upon
by such Affiliate unless the Borrower and such Affiliate otherwise agree. Unless
otherwise specified above, participation fees and fronting fees accrued through
and including the last day of March, June, September and December of each year
shall be payable on the third (3rd) Business Day following such last day,
commencing on the first such date to occur after the Effective Date; provided
that all such fees shall be payable on the date on which the Commitments
terminate and any such fees accruing after the date on which the Commitments
terminate shall be payable on demand. Any other fees payable to any Issuing Bank
pursuant to this paragraph shall be payable within ten (10) days after demand.
All participation fees and fronting fees shall be computed on the basis of a
year of 360 days and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day).

            (c) The Borrower agrees to pay to the Administrative Agent, for its
own account, fees payable in the amounts and at the times separately agreed upon
between the Borrower and the Administrative Agent.

            (d) All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Administrative Agent (or to the relevant
Issuing Bank, in the case of fees payable to it) for distribution, in the case
of facility fees and participation fees, to the Lenders.

                                       30
<PAGE>

Fees paid shall not be refundable under any circumstances (other than in the
case, and to the extent, of any overpayment thereof by the Loan Parties).

            SECTION 2.13. Interest. (a) The Loans comprising each ABR Borrowing
(including each Swingline Loan) shall bear interest at the Alternate Base Rate.

            (b) The Loans comprising each Eurodollar Borrowing shall bear
interest at the Adjusted LIBO Rate for the Interest Period in effect for such
Borrowing plus the Applicable Rate.

            (c) Notwithstanding the foregoing, if any principal of or interest
on any Loan or any fee or other amount payable by the Borrower hereunder is not
paid when due, whether at stated maturity, upon acceleration or otherwise, upon
written notice to the Borrower by the Administrative Agent, such overdue amount
shall bear interest, after as well as before judgment, at a rate per annum equal
to (i) in the case of overdue principal of any Loan, 2% plus the rate otherwise
applicable to such Loan as provided in the preceding paragraphs of this Section
or (ii) in the case of any other amount, 2% plus the rate applicable to ABR
Loans as provided in paragraph (a) of this Section.

            (d) Accrued interest on each Loan shall be payable in arrears on
each Interest Payment Date for such Loan and, in the case of Revolving Loans,
upon termination of the Commitments; provided that (i) interest accrued pursuant
to paragraph (c) of this Section shall be payable on demand, (ii) in the event
of any repayment or prepayment of any Loan (other than a prepayment of an ABR
Revolving Loan prior to the end of the Availability Period), accrued interest on
the principal amount repaid or prepaid shall be payable on the date of such
repayment or prepayment and (iii) in the event of any conversion of any
Eurodollar Revolving Loan prior to the end of the current Interest Period
therefor, accrued interest on such Loan shall be payable on the effective date
of such conversion.

            (e) All interest hereunder shall be computed on the basis of a year
of 360 days, except that interest computed by reference to the Alternate Base
Rate at times when the Alternate Base Rate is based on the Prime Rate shall be
computed on the basis of a year of 365 days (or 366 days in a leap year) and in
each case shall be payable for the actual number of days elapsed (including the
first day but excluding the last day). The applicable Alternate Base Rate,
Adjusted LIBO Rate or LIBO Rate shall be determined by the Administrative Agent,
and such determination shall be conclusive absent manifest error.

            SECTION 2.14. Alternate Rate of Interest. If prior to the
commencement of any Interest Period for a Eurodollar Borrowing:

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

            (b) the Administrative Agent is advised by the Required Lenders that
      the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest
      Period will not adequately and fairly reflect the cost to such Lenders (or
      Lender) of making or

                                       31

<PAGE>

      maintaining their Loans (or its Loan) included in such Borrowing for such
      Interest Period;

then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Revolving Borrowing to, or
continuation of any Revolving Borrowing as, a Eurodollar Borrowing shall be
ineffective and (ii) if any Borrowing Request requests a Eurodollar Revolving
Borrowing, such Borrowing shall be made as an ABR Borrowing; provided that if
the circumstances giving rise to such notice affect only one Type of Borrowings,
then the other Type of Borrowings shall be permitted.

            SECTION 2.15. Increased Costs. (a) If any Change in Law shall:

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

            (ii) impose on any Lender or any Issuing Bank or the London
      interbank market any other condition affecting this Agreement or
      Eurodollar Loans made by such Lender or any Letter of Credit or
      participation therein;

and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make such Loan) or to increase the cost to such Lender or such
Issuing Bank of participating in, issuing or maintaining any Letter of Credit or
to reduce the amount of any sum received or receivable by such Lender or such
Issuing Bank hereunder, whether of principal, interest or otherwise, then the
Borrower will pay to such Lender or such Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or such Issuing
Bank, as the case may be, for such additional costs incurred or reduction
suffered.

            (b) If any Lender or any Issuing Bank determines that any Change in
Law regarding capital requirements has or would have the effect of reducing the
rate of return on such Lender's or such Issuing Bank's capital as a consequence
of this Agreement or the Loans made by, or participations in Letters of Credit
held by, such Lender, or the Letters of Credit issued by such Issuing Bank, to a
level below that which such Lender could have achieved but for such Change in
Law (taking into consideration such Lender's or such Issuing Bank's policies
with respect to capital adequacy), then from time to time the Borrower will pay
to such Lender or such Issuing Bank, as the case may be, such additional amount
or amounts as will compensate such Lender or such Issuing Bank for any such
reduction suffered.

            (c) A certificate of a Lender or an Issuing Bank setting forth the
amount or amounts necessary to compensate such Lender or such Issuing Bank, as
the case may be, as specified in paragraph (a) or (b) of this Section,
containing a reasonably detailed explanation of the basis on which such amount
or amounts were calculated and explaining the Change in Law

                                       32

<PAGE>

by reason of which it has become entitled to be so compensated, shall be
delivered to the Borrower and shall be conclusive absent manifest error. No
Lender or Issuing Bank shall be entitled to the benefits of this Section 2.15
unless such Lender or Issuing Bank shall have complied with the requirements of
this Section 2.15. The Borrower shall pay such Lender or such Issuing Bank, as
the case may be, the amount shown as due on any such certificate within ten (10)
days after receipt thereof.

            (d) Failure or delay on the part of any Lender or any Issuing Bank
to demand compensation pursuant to this Section shall not constitute a waiver of
such Lender's or such Issuing Bank's right to demand such compensation; provided
that the Borrower shall not be required to compensate a Lender or an Issuing
Bank pursuant to this Section for any increased costs or reductions incurred
more than 270 days prior to the date that such Lender or such Issuing Bank, as
the case may be, notifies the Borrower of the Change in Law giving rise to such
increased costs or reductions and of such Lender's or such Issuing Bank's
intention to claim compensation therefor; provided further that, if the Change
in Law giving rise to such increased costs or reductions is retroactive, then
the 270-day period referred to above shall be extended to include the period of
retroactive effect thereof. Notwithstanding any other provision of this Section
2.15, no Lender shall demand compensation for any increased costs or reduction
referred to above in this Section if it shall not then be the general policy of
such Lender to demand such compensation in similar circumstances from comparable
borrowers under comparable provisions of other credit agreements, if any (it
being understood, for the avoidance of doubt, that a waiver by any Lender in any
given case of its right to demand such compensation from any given borrower
shall not, in and of itself, be deemed to constitute a change in the general
policy of such Lender).

            (e) Notwithstanding any other provision to the contrary, this
Section 2.15 shall have no application with respect to any Indemnified Taxes,
Other Taxes or any Excluded Taxes, which matters, for the avoidance of doubt,
shall be dealt with exclusively under Section 2.17.

            SECTION 2.16. Break Funding Payments. In the event of (a) the
payment of any principal of any Eurodollar Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event of
Default), (b) the conversion of any Eurodollar Loan other than on the last day
of the Interest Period applicable thereto, (c) the failure to borrow, convert,
continue or prepay any Eurodollar Loan on the date specified in any notice
delivered pursuant hereto (regardless of whether such notice may be revoked
under Section 2.11(b) and is revoked in accordance therewith) or (d) the
assignment of any Eurodollar Loan other than on the last day of the Interest
Period applicable thereto as a result of a request by the Borrower pursuant to
Section 2.19, then, in any such event, the Borrower shall compensate each Lender
for the loss, cost and expense attributable to such event. Such loss, cost or
expense to any Lender shall be deemed to include an amount determined by such
Lender to be the excess, if any, of (i) the amount of interest which would have
accrued on the principal amount of such Loan had such event not occurred, at the
Adjusted LIBO Rate that would have been applicable to such Loan, for the period
from the date of such event to the last day of the then current Interest Period
therefor (or, in the case of a failure to borrow, convert or continue, for the
period that would have been the Interest Period for such Loan), over (ii) the
amount of interest which would accrue on such principal amount for such period
at the interest rate which such Lender would bid were it to bid, at the
commencement of such period, for deposits in Dollars of a comparable amount and
period

                                       33

<PAGE>

from other banks in the eurodollar market. A certificate of any Lender setting
forth any amount or amounts that such Lender is entitled to receive pursuant to
this Section shall be delivered to the Borrower and shall be conclusive absent
manifest error. The Borrower shall pay such Lender the amount shown as due on
any such certificate within ten (10) days after receipt thereof.

            SECTION 2.17. Taxes. (a) Any and all payments by or on account of
any obligation of the Borrower hereunder shall be made free and clear of and
without deduction for any Indemnified Taxes or Other Taxes; provided that if the
Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from
such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Administrative Agent, Lender or
the relevant Issuing Bank (as the case may be) receives an amount equal to the
sum it would have received had no such deductions been made, (ii) the Borrower
shall make such deductions and (iii) the Borrower shall pay the full amount
deducted to the relevant Governmental Authority in accordance with applicable
law.

            (b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.

            (c) The Borrower shall indemnify the Administrative Agent, each
Lender and any Issuing Bank, as promptly as possible but in any event within
thirty (30) days after written demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes paid by the Administrative Agent, such Lender
or such Issuing Bank, as the case may be, on or with respect to any payment by
or on account of any obligation of the Borrower hereunder (including Indemnified
Taxes or Other Taxes imposed on or attributable to amounts payable under this
Section) and any penalties, interest and reasonable expenses arising therefrom
or with respect thereto, whether or not such Indemnified Taxes or Other Taxes
were correctly or legally imposed by the relevant Governmental Authority. A
certificate as to the amount of such payment or liability delivered to the
Borrower by a Lender or any Issuing Bank, or by the Administrative Agent on its
own behalf or on behalf of a Lender or any Issuing Bank, shall be conclusive
absent manifest error.

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

            (e) Each Foreign Lender (including each Issuing Bank that is a
Foreign Lender) shall deliver to the Borrower (with a copy to the Administrative
Agent), at the time it becomes a Lender (or, in the case of any Participant, on
or before the date such Participant purchases the related participation) and at
all times prescribed by applicable law, such properly completed and executed
documentation prescribed by applicable law or reasonably requested by the
Borrower as will permit such payments to be made without withholding. Each
Foreign Lender (including each Issuing Bank that is a Foreign Lender) shall
promptly notify the Borrower at any time it determines, in its reasonable
discretion, that it is not practicable to provide any documentation required to
be delivered to the Borrower pursuant to this paragraph. No Person shall be
deemed

                                       34

<PAGE>

to be a Lender or Participant as defined herein unless it shall have complied
with the requirements of the first sentence of this paragraph (if such
requirements are applicable to it).

            (f) If the Administrative Agent, a Lender or an Issuing Bank
determines that it has received a refund which, in the good faith judgment of
the Administrative Agent, such Lender or such Issuing Bank, as the case may be,
is allocable to any Indemnified Taxes or Other Taxes as to which it has been
indemnified by the Borrower or with respect to which the Borrower has paid
additional amounts pursuant to this Section 2.17, it shall promptly pay over
such refund to the Borrower (but only to the extent of indemnity payments made,
or additional amounts paid, by the Borrower under this Section 2.17 with respect
to the Taxes or Other Taxes giving rise to such refund), net of all
out-of-pocket expenses of the Administrative Agent or such Lender and without
interest (other than any interest paid by the relevant Governmental Authority
with respect to such refund); provided, that the Borrower, upon the request of
the Administrative Agent or such Lender, agrees to repay the amount paid over to
the Borrower (plus any penalties, interest or other charges imposed by the
relevant Governmental Authority) to the Administrative Agent or such Lender in
the event the Administrative Agent or such Lender is required to repay such
refund to such Governmental Authority. This Section shall not be construed to
require the Administrative Agent or any Lender to make available its tax returns
(or any other information relating to its taxes which it deems confidential) to
the Borrower or any other Person.

            SECTION 2.18. Payments Generally; Pro Rata Treatment; Sharing of
Set-offs.

            (a) The Borrower shall make each payment required to be made by it
hereunder (whether of principal, interest, fees or reimbursement of LC
Disbursements, or of amounts payable under Section 2.15, 2.16 or 2.17, or
otherwise) prior to 12:00 noon, New York City time on the date when due, in
immediately available funds, without set-off or counterclaim. Any amounts
received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at its offices at 270 Park Avenue, New
York, New York, except payments to be made directly to an Issuing Bank or
Swingline Lender as expressly provided herein and except that payments pursuant
to Sections 2.15, 2.16, 2.17 and 9.03 shall be made directly to the Persons
entitled thereto. The Administrative Agent shall distribute any such payments
received by it for the account of any other Person to the appropriate recipient
promptly following receipt thereof. If any payment hereunder shall be due on a
day that is not a Business Day, the date for payment shall be extended to the
next succeeding Business Day, and, in the case of any payment accruing interest,
interest thereon shall be payable for the period of such extension. All payments
hereunder shall be made in Dollars.

            (b) If at any time insufficient funds are received by and available
to the Administrative Agent to pay fully all amounts of principal, unreimbursed
LC Disbursements, interest and fees then due hereunder, such funds shall be
applied (i) first, towards payment of interest and fees then due hereunder,
ratably among the parties entitled thereto in accordance with the amounts of
interest and fees then due to such parties, and (ii) second, towards payment of
principal and unreimbursed LC Disbursements then due hereunder, ratably among
the parties entitled thereto in accordance with the amounts of principal and
unreimbursed LC Disbursements then due to such parties.

                                       35

<PAGE>

            (c) If any Lender shall, by exercising any right of set-off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Revolving Loans or participations in LC Disbursements or
Swingline Loans resulting in such Lender receiving payment of a greater
proportion of the aggregate amount of its Revolving Loans and participations in
LC Disbursements and Swingline Loans and accrued interest thereon than the
proportion received by any other Lender, then the Lender receiving such greater
proportion shall purchase (for cash at face value) participations in the
Revolving Loans and participations in LC Disbursements and Swingline Loans of
other Lenders to the extent necessary so that the benefit of all such payments
shall be shared by the Lenders ratably in accordance with the aggregate amount
of principal of and accrued interest on their respective Revolving Loans and
participations in LC Disbursements and Swingline Loans; provided that (i) if any
such participations are purchased and all or any portion of the payment giving
rise thereto is recovered, such participations shall be rescinded and the
purchase price restored to the extent of such recovery, without interest, and
(ii) the provisions of this paragraph shall not be construed to apply to any
payment made by the Borrower pursuant to and in accordance with the express
terms of this Agreement or any payment obtained by a Lender as consideration for
the assignment of or sale of a participation in any of its Loans or
participations in LC Disbursements to any assignee or participant, other than to
the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions
of this paragraph shall apply). The Borrower consents to the foregoing and
agrees, to the extent it may effectively do so under applicable law, that any
Lender acquiring a participation pursuant to the foregoing arrangements may
exercise against the Borrower rights of set-off and counterclaim with respect to
such participation as fully as if such Lender were a direct creditor of the
Borrower in the amount of such participation.

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

            (e) If any Lender shall fail to make any payment required to be made
by it pursuant to Section 2.05(c), 2.06(d) or (e), 2.07(b), 2.18(d) or 9.03(c),
then the Administrative Agent may, in its discretion (notwithstanding any
contrary provision hereof), apply any amounts thereafter received by the
Administrative Agent for the account of such Lender to satisfy such Lender's
obligations under such Sections until all such unsatisfied obligations are fully
paid.

            SECTION 2.19. Mitigation Obligations; Replacement of Lenders. (a) If
any Lender requests compensation under Section 2.15, or if the Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender

                                       36

<PAGE>

pursuant to Section 2.17, then such Lender shall use reasonable efforts to
designate a different lending office for funding or booking its Loans hereunder
or to assign its rights and obligations hereunder to another of its offices,
branches or affiliates, if, in the judgment of such Lender, such designation or
assignment (i) would eliminate or reduce amounts payable pursuant to Section
2.15 or 2.17, as the case may be, in the future and (ii) would not subject such
Lender to any unreimbursed cost or expense and would not otherwise be
disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable
costs and expenses incurred by any Lender in connection with any such
designation or assignment.

            (b) If any Lender requests compensation under Section 2.15, or if
the Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.17,
or if any Lender defaults in its obligation to fund Loans hereunder, then the
Borrower may, at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 9.04), all its interests, rights and obligations under this Agreement to
an assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment); provided that (i) the Borrower
shall have received the prior written consent of the Administrative Agent, which
consent shall not unreasonably be withheld, (ii) such Lender shall have received
payment of an amount equal to the outstanding principal of its Loans and
participations in LC Disbursements and Swingline Loans, accrued interest
thereon, accrued fees and all other amounts payable to it hereunder, from the
assignee (to the extent of such outstanding principal and accrued interest and
fees) or the Borrower (in the case of all other amounts) and (iii) in the case
of any such assignment resulting from a claim for compensation under Section
2.15 or payments required to be made pursuant to Section 2.17, such assignment
will result in a reduction in such compensation or payments. A Lender shall not
be required to make any such assignment and delegation if, prior thereto, as a
result of a waiver by such Lender or otherwise, the circumstances entitling the
Borrower to require such assignment and delegation cease to apply. No such
assignment shall be deemed to be a waiver of any rights which the Borrower, the
Administrative Agent or any other Lender shall have against the replaced Lender.
Each reference to any Lender in this Section 2.19 shall also refer to any
Issuing Bank.

            SECTION 2.20. Expansion Option. The Borrower may from time to time
elect to increase the Commitments in a minimum amount of $5,000,000 so long as,
after giving effect thereto, the aggregate amount of the Commitments does not
exceed $275,000,000. The Borrower may arrange for any such increase to be
provided by one or more Lenders (each Lender so agreeing to an increase in its
Commitment, an "Increasing Lender"), or by one or more new banks, financial
institutions or other entities (each such new bank, financial institution or
other entity, an "Augmenting Lender"), to increase their existing Commitments,
or extend Commitments, as the case may be, provided that (i) each Augmenting
Lender, shall be reasonably acceptable to the Borrower and the Administrative
Agent and (ii) (x) in the case of an Increasing Lender, the Borrower and such
Increasing Lender execute an agreement substantially in the form of Exhibit C
hereto, and (y) in the case of an Augmenting Lender, the Borrower and such
Augmenting Lender execute an agreement substantially in the form of Exhibit D
hereto. Increases and new Commitments created pursuant to this Section 2.20
shall become effective on the date agreed by the Borrower, the Administrative
Agent and the relevant Increasing Lenders or Augmenting Lenders and the
Administrative Agent shall notify each Lender thereof.

                                       37

<PAGE>

Notwithstanding the foregoing, no increase in the Commitments (or in the
Commitment of any Lender), shall become effective under this paragraph unless,
(i) on the proposed date of the effectiveness of such increase, the conditions
set forth in paragraphs (a) and (b) of Section 5.02 shall be satisfied or waived
by the Required Lenders and the Administrative Agent shall have received a
certificate to that effect dated such date and executed by a Responsible Officer
of the Borrower and (ii) the Administrative Agent shall have received documents
consistent with those delivered on the Effective Date as to the corporate power
and authority of the Borrower to borrow hereunder after giving effect to such
increase. On the effective date of any increase in the Commitments, (i) each
relevant Increasing Lender and Augmenting Lender shall make available to the
Administrative Agent such amounts in immediately available funds as the
Administrative Agent shall determine, for the benefit of the other Lenders, as
being required in order to cause, after giving effect to such increase and the
use of such amounts to make payments to such other Lenders, each Lender's
portion of the outstanding Revolving Loans of all the Lenders to equal its
Applicable Percentage of such outstanding Revolving Loans, and (ii) the Borrower
shall be deemed to have repaid and reborrowed all outstanding Revolving Loans as
of the date of any increase in the Commitments (with such reborrowing to consist
of the Types of Revolving Loans, with related Interest Periods if applicable,
specified in a notice delivered by the Borrower in accordance with the
requirements of Section 2.03). The deemed payments made pursuant to clause (ii)
of the immediately preceding sentence shall be accompanied by payment of all
accrued interest on the amount prepaid and, in respect of each Eurodollar Loan,
shall be subject to indemnification by the Borrower pursuant to the provisions
of Section 2.16 if the deemed payment occurs other than on the last day of the
related Interest Periods.

                                   ARTICLE III

                         Representations and Warranties

            The Borrower represents and warrants to the Lenders that:

            SECTION 3.01. Organization; Powers; Subsidiaries. Each of the
Borrower and its Subsidiaries (other than Excluded Subsidiaries) is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, has all requisite power and authority to carry
on its business as now conducted and, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, is qualified to do business in, and is in good
standing in, every jurisdiction where such qualification is required. Schedule
3.01 hereto (as supplemented from time to time) identifies each Subsidiary, the
jurisdiction of its incorporation or organization, as the case may be, the
percentage of issued and outstanding shares of each class of its capital stock
or other equity interests owned by the Borrower and the other Subsidiaries and,
if such percentage is not 100% (excluding directors' qualifying shares as
required by law), a description of each class issued and outstanding.

            SECTION 3.02. Authorization; Enforceability. The Transactions are
within the Borrower's corporate powers and have been duly authorized by all
necessary corporate and, if required, stockholder action. This Agreement has
been duly executed and delivered by the Borrower and constitutes a legal, valid
and binding obligation of the Borrower, enforceable in

                                       38

<PAGE>

accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights generally
and subject to general principles of equity, regardless of whether considered in
a proceeding in equity or at law.

            SECTION 3.03. Governmental Approvals; No Conflicts. The Transactions
(a) do not require any consent or approval of, registration or filing with, or
any other action by, any Governmental Authority, except such as have been
obtained or made and are in full force and effect, (b) will not violate any
applicable law or regulation or the charter, by-laws or other organizational
documents of the Borrower or any of its Subsidiaries or any order of any
Governmental Authority, (c) will not violate or result in a default under any
indenture, agreement or other instrument binding upon the Borrower or any of its
Subsidiaries or its assets, or give rise to a right thereunder to require any
payment to be made by the Borrower or any of its Subsidiaries other than any
violation or default that could not reasonably be expected to result in a
Material Adverse Effect, and (d) will not result in the creation or imposition
of any Lien on any asset of the Borrower or any of its Subsidiaries (other than
Liens permitted under Section 6.02).

            SECTION 3.04. Financial Condition; No Material Adverse Change. (a)
The Borrower has heretofore furnished to the Lenders its consolidated balance
sheet and statements of income, stockholders equity and cash flows (i) as of and
for the fiscal year ended January 29, 2005 reported on by Deloitte & Touche LLP,
independent public accountants, and (ii) as of and for the fiscal quarter and
the portion of the fiscal year ended July 30, 2005, certified by its chief
financial officer. Such financial statements present fairly, in all material
respects, the financial position and results of operations and cash flows of the
Borrower and its consolidated Subsidiaries as of such dates and for such periods
in accordance with GAAP, subject to year-end audit adjustments and the absence
of footnotes in the case of the statements referred to in clause (ii) above.

            (b) Since January 29, 2005, there has been no material adverse
change in the business, assets, operations or condition, financial or otherwise,
of the Borrower and its Subsidiaries, taken as a whole.

            SECTION 3.05. Properties. (a) Each of the Borrower and its
Subsidiaries has good title to, or valid leasehold interests in, all its real
and personal property material to its business, except for minor defects in
title that do not interfere with its ability to conduct its business as
currently conducted or to utilize such properties for their intended purposes or
such other defects as, in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect.

            (b) Each of the Borrower and its Subsidiaries owns, or is licensed
to use, all trademarks, tradenames, copyrights, patents and other intellectual
property material to its business as currently conducted, and the use thereof by
the Borrower and its Subsidiaries does not infringe upon the rights of any other
Person, except for any such infringements that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.

            SECTION 3.06. Litigation and Environmental Matters. (a) There are no
actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending

                                       39

<PAGE>

against or, to the knowledge of the Borrower, threatened against or affecting
the Borrower or any of its Subsidiaries (i) as to which there is a reasonable
possibility of an adverse determination and that, if adversely determined, could
reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect (other than the Disclosed Matters) or (ii) that involve
this Agreement or the Transactions. There are no labor controversies pending
against or, to the knowledge of the Borrower, threatened against or affecting
the Borrower or any of its Subsidiaries (i) which could reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect (other
than the Disclosed Matters), or (ii) that involve this Agreement or the
Transactions.

            (b) Except for the Disclosed Matters and except with respect to any
other matters that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, neither the Borrower nor any of
its Subsidiaries (i) has failed to comply with any Environmental Law or to
obtain, maintain or comply with any permit, license or other approval required
under any Environmental Law, (ii) has become subject to any Environmental
Liability, (iii) has received notice of any claim with respect to any
Environmental Liability or (iv) knows of any basis for any Environmental
Liability.

            (c) Since the date of this Agreement, there has been no change in
the status of the Disclosed Matters that, individually or in the aggregate, has
resulted in a Material Adverse Effect.

            SECTION 3.07. Compliance with Laws and Agreements. Each of the
Borrower and its Subsidiaries is in compliance with all laws, regulations and
orders of any Governmental Authority applicable to it or its property and all
indentures, agreements and other instruments binding upon it or its property,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.

            SECTION 3.08. Investment and Holding Company Status. Neither the
Borrower nor any of its Subsidiaries is (a) an "investment company" as defined
in, or subject to regulation under, the Investment Company Act of 1940 or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.

            SECTION 3.09. Taxes. Each of the Borrower and its Subsidiaries has
timely filed or caused to be filed all Tax returns and reports required to have
been filed and has paid or caused to be paid all Taxes required to have been
paid by it, except (a) Taxes that are being contested in good faith by
appropriate proceedings and for which the Borrower or such Subsidiary, as
applicable, has set aside on its books adequate reserves or (b) to the extent
that the failure to do so could not reasonably be expected to result in a
Material Adverse Effect.

            SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed by more
than $10,000,000 the fair market value of the assets of such Plan, and the
present value of all

                                       40

<PAGE>

accumulated benefit obligations of all underfunded Plans (based on the
assumptions used for purposes of Statement of Financial Accounting Standards No.
87) did not, as of the date of the most recent financial statements reflecting
such amounts, exceed by more than $10,000,000 the fair market value of the
assets of all such underfunded Plans.

            SECTION 3.11. Disclosure. The Information Memorandum together with
any of the other reports, financial statements, certificates or other
information furnished by or on behalf of the Borrower to the Administrative
Agent or any Lender in connection with the negotiation of this Agreement or
hereafter delivered hereunder or reports filed pursuant to the Securities
Exchange Act of 1934 (as modified or supplemented by other information so
furnished prior to the date on which this representation or warranty is made or
deemed made) do not contain any material misstatement of fact or omit to state
any material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that, with
respect to projected financial information, the Borrower represents only that
such information was prepared in good faith based upon assumptions believed to
be reasonable at the time, provided further that the Borrower makes no
representation or warranty whatsoever concerning the information contained in
the Information Memorandum under the heading "Industry Overview" or any
financial information delivered pursuant to clause (c) of the definition of
"Permitted Acquisition".

            SECTION 3.12. Federal Reserve Regulations. No part of the proceeds
of any Loan have been used or will be used, whether directly or indirectly, for
any purpose that entails a violation of any of the Regulations of the Board,
including Regulations T, U and X.

            SECTION 3.13. No Default. No Default or Event of Default has
occurred and is continuing.

                                   ARTICLE IV

                                   Conditions

            SECTION 4.01. Effective Date. The obligations of the Lenders to make
Loans and of any Issuing Bank to issue Letters of Credit hereunder shall not
become effective until the date on which each of the following conditions is
satisfied (or waived in accordance with Section 9.02):

            (a) The Administrative Agent (or its counsel) shall have received
      from each party hereto either (i) a counterpart of this Agreement signed
      on behalf of such party or (ii) written evidence reasonably satisfactory
      to the Administrative Agent (which may include telecopy transmission of a
      signed signature page of this Agreement) that such party has signed a
      counterpart of this Agreement.

            (b) The Administrative Agent shall have received a favorable written
      opinion (addressed to the Administrative Agent and the Lenders and dated
      the Effective Date) of O'Melveny & Myers LLP, counsel for the Loan
      Parties, substantially in the form of Exhibit B. The Borrower hereby
      requests such counsel to deliver such opinion.

                                       41

<PAGE>

            (c) The Lenders shall have received (i) reasonably satisfactory
      audited consolidated financial statements of the Borrower for the two most
      recent fiscal years ended prior to the Closing Date as to which such
      financial statements are available, (ii) reasonably satisfactory unaudited
      interim consolidated financial statements of the Borrower for each
      quarterly period ended subsequent to the date of the latest financial
      statements delivered pursuant to clause (i) of this paragraph as to which
      such financial statements are available and (iii) reasonably satisfactory
      financial statement projections through and including the Borrower's 2010
      fiscal year, together with such information as the Administrative Agent
      and the Lenders shall reasonably request (including, without limitation, a
      reasonably detailed description of the assumptions used in preparing such
      projections).

            (d) The Administrative Agent shall have received such documents and
      certificates as the Administrative Agent or its counsel may reasonably
      request relating to the organization, existence and good standing of the
      Borrower, the authorization of the Transactions and any other legal
      matters relating to the Loan Parties, the Loan Documents or the
      Transactions, all in form and substance satisfactory to the Administrative
      Agent and its counsel and as further described in the list of closing
      documents attached as Exhibit E.

            (e) The Administrative Agent shall have received a certificate,
      dated the Effective Date and signed by the President, a Vice President or
      a Financial Officer of the Borrower, confirming compliance with the
      conditions set forth in paragraphs (a) and (b) of Section 4.02.

            (f) The Administrative Agent shall have received evidence
      satisfactory to it that all of the Borrower's existing credit facilities
      shall have been cancelled and terminated and all indebtedness thereunder
      shall have been fully repaid (except to the extent being so repaid with
      the initial Revolving Loans and other than the letters of credit listed on
      Schedule 2.06).

            (g) The Administrative Agent shall have received all fees and other
      amounts due and payable on or prior to the Effective Date, including, to
      the extent invoiced, reimbursement or payment of all reasonable
      out-of-pocket expenses required to be reimbursed or paid by the Borrower
      hereunder.

The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding. Notwithstanding
the foregoing, the obligations of the Lenders to make Loans and of the Issuing
Banks to issue Letters of Credit hereunder shall not become effective unless
each of the foregoing conditions is satisfied (or waived pursuant to Section
9.02) at or prior to 3:00 p.m., New York City time, on the Effective Date (and,
in the event such conditions are not so satisfied or waived, the Commitments
shall terminate at such time).

            SECTION 4.02. Each Credit Event. The obligation of each Lender to
make a Loan on the occasion of any Borrowing, and of any Issuing Bank to issue,
increase, renew or extend any Letter of Credit, is subject to the satisfaction
of the following conditions:

                                       42

<PAGE>

            (a) The representations and warranties of the Borrower set forth in
      this Agreement shall be true and correct in all material respects on and
      as of the date of such Borrowing or the date of issuance, increase,
      renewal or extension of such Letter of Credit, as applicable (other than
      such representations as are made as of a specific earlier date, in which
      case such representations and warranties shall be true and correct in all
      material respects as of such earlier date).

            (b) At the time of and immediately after giving effect to such
      Borrowing or the issuance, increase, renewal or extension of such Letter
      of Credit, as applicable, no Default shall have occurred and be
      continuing.

Each Borrowing and each issuance, increase, renewal or extension of a Letter of
Credit shall be deemed to constitute a representation and warranty by the
Borrower on the date thereof as to the matters specified in paragraphs (a) and
(b) of this Section.

                                    ARTICLE V

                              Affirmative Covenants

                  Until the Commitments have expired or been terminated and the
principal of and interest on each Loan and all fees payable hereunder shall have
been paid in full and all Letters of Credit shall have expired or terminated and
all LC Disbursements shall have been reimbursed, the Borrower covenants and
agrees with the Lenders that:

                  SECTION 5.01. Financial Statements and Other Information. The
Borrower will furnish to the Lenders through the Administrative Agent:

            (a) within ninety (90) days after the end of each fiscal year of the
      Borrower, its audited consolidated balance sheet and related statements of
      operations, stockholders' equity and cash flows as of the end of and for
      such year, setting forth in each case in comparative form the figures for
      the previous fiscal year, all reported on by Deloitte & Touche LLP or
      other independent public accountants of recognized national standing
      (without a "going concern" or like qualification or exception and without
      any qualification or exception as to the scope of such audit) to the
      effect that such consolidated financial statements present fairly in all
      material respects the financial condition and results of operations of the
      Borrower and its consolidated Subsidiaries on a consolidated basis in
      accordance with GAAP consistently applied; provided, however, that, so
      long as the Borrower is required to file reports under Section 13 of the
      Securities and Exchange Act of 1934, the requirements of this paragraph
      shall be deemed satisfied by the delivery of, the Annual Report of the
      Borrower on Form 10-K for such fiscal year, signed by the duly authorized
      officer or officers of the Borrower;

            (b) within forty-five (45) days after the end of each of the first
      three fiscal quarters of each fiscal year of the Borrower, its
      consolidated balance sheet and related statements of operations,
      stockholders' equity and cash flows as of the end of and for such fiscal
      quarter and the then elapsed portion of the fiscal year, setting forth in
      each case in comparative form the figures for the corresponding period or
      periods of (or, in the

                                       43

<PAGE>

      case of the balance sheet, as of the end of) the previous fiscal year, all
      certified by one of its Financial Officers as presenting fairly in all
      material respects the financial condition and results of operations of the
      Borrower and its consolidated Subsidiaries on a consolidated basis in
      accordance with GAAP consistently applied, subject to normal year-end
      audit adjustments and the absence of footnotes; provided, however, that,
      so long as the Borrower is required to file reports under Section 13 of
      the Securities and Exchange Act of 1934, the requirements of this
      paragraph shall be deemed satisfied by the delivery of the Quarterly
      Report of the Borrower on Form 10-Q for the relevant fiscal quarter,
      signed by the duly authorized officer or officers of the Borrower;

            (c) concurrently with any delivery of financial statements under
      clause (a) or (b) above, a certificate of a Financial Officer of the
      Borrower (i) stating that he or she has obtained no knowledge that a
      Default has occurred (other than as set forth in such certificate) and, if
      a Default has occurred, specifying the details thereof and any action
      taken or proposed to be taken with respect thereto, (ii) setting forth
      reasonably detailed calculations demonstrating compliance with Section
      6.08 and (iii) stating whether any change in GAAP or in the application
      thereof has occurred since the date of the audited financial statements
      referred to in Section 3.04 which has had an effect on such financial
      statements and, if any such change has occurred, specifying the effect of
      such change on the financial statements accompanying such certificate;

            (d) promptly after the same become publicly available, copies of all
      other periodic and other reports, proxy statements and other materials
      filed by the Borrower or any Subsidiary with the Securities and Exchange
      Commission, or any Governmental Authority succeeding to any or all of the
      functions of said Commission, or with any national securities exchange, or
      distributed by the Borrower to its shareholders generally, as the case may
      be; provided, however, that, so long as the Borrower files any such
      material with the Securities Exchange Commission pursuant to the
      requirements of the Securities and Exchange Act of 1934, the requirements
      of this paragraph shall be deemed satisfied by such filings; and

            (e) promptly following any request therefor, such other information
      regarding the operations, business affairs and financial condition of the
      Borrower or any Subsidiary, or compliance with the terms of this
      Agreement, as the Administrative Agent or any Lender may reasonably
      request.

            SECTION 5.02. Notices of Material Events. The Borrower will furnish
to the Lenders through the Administrative Agent prompt written notice of the
following:

            (a) the occurrence of any Default;

            (b) the filing or commencement of any action, suit or proceeding by
      or before any arbitrator or Governmental Authority against or affecting
      the Borrower or any Affiliate thereof that could reasonably be expected to
      result in a Material Adverse Effect;

                                       44

<PAGE>

            (c) the occurrence of any ERISA Event that, alone or together with
      any other ERISA Events that have occurred, could reasonably be expected to
      result in liability of the Borrower and its Subsidiaries in an aggregate
      amount exceeding $5,000,000; and

            (d) any other development that results in, or would reasonably be
      expected to result in, a Material Adverse Effect.

Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Borrower setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.

            SECTION 5.03. Existence; Conduct of Business. The Borrower will, and
will cause each of its Subsidiaries (other than the Excluded Subsidiaries) to,
do or cause to be done all things necessary to preserve, renew and keep in full
force and effect its legal existence and the rights, licenses, permits,
privileges and franchises material to the conduct of its business except, in
each case (other than the case of the foregoing requirements insofar as they
relate to the legal existence of the Borrower and the Subsidiary Guarantors), to
the extent that failure to do so could not reasonably be expected to result in a
Material Adverse Effect; provided that the foregoing shall not prohibit any
merger, consolidation, liquidation or dissolution permitted under Section 6.04.

            SECTION 5.04. Payment of Obligations. The Borrower will, and will
cause each of its Subsidiaries to, pay its obligations, including Tax
liabilities, that, if not paid, could reasonably be expected to result in a
Material Adverse Effect before the same shall become delinquent or in default,
except where (a) the validity or amount thereof is being contested in good faith
by appropriate proceedings, (b) the Borrower or such Subsidiary has set aside on
its books adequate reserves with respect thereto in accordance with GAAP and (c)
the failure to make payment pending such contest could not reasonably be
expected to result in a Material Adverse Effect.

            SECTION 5.05. Maintenance of Properties; Insurance. Except where the
failure to do so could not reasonably be expected to result in a Material
Adverse Effect, the Borrower will, and will cause each of its Subsidiaries to,
(a) maintain all property material to the conduct of 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 such of
its property and in such amounts and against such risks as are customarily
maintained by companies engaged in the same or similar businesses operating in
the same or similar locations.

            SECTION 5.06. Books and Records; Inspection Rights. The Borrower
will, and will cause each of its Subsidiaries to, keep proper books of record
and account in which entries in conformity in all material respects with all
applicable laws, rules and regulations of any Governmental Authority are made of
all dealings and transactions in relation to its business and activities. The
Borrower will, and will cause each of its Subsidiaries to, on an annual basis at
the request of the Administrative Agent (or at any time after the occurrence and
during the continuance of a Default), permit any representatives designated by
the Administrative Agent or any Lender, upon reasonable prior notice, to visit
and inspect its properties, to examine and make

                                       45

<PAGE>

extracts from its books and records, and to discuss its affairs, finances and
condition with its officers and independent accountants, all during reasonable
business hours.

            SECTION 5.07. Compliance with Laws. The Borrower will, and will
cause each of its Subsidiaries to, comply with all laws, rules, regulations and
orders of any Governmental Authority applicable to it or its property (including
without limitation Environmental Laws), except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.

            SECTION 5.08. Use of Proceeds and Letters of Credit. The proceeds of
the Loans will be used only to refinance certain existing credit facilities of
the Borrower and to finance the working capital needs, capital expenditures,
acquisitions (including Permitted Acquisitions), dividends, distributions and
stock repurchases, and for general corporate purposes of, the Borrower and its
Subsidiaries. No part of the proceeds of any Loan will be used, whether directly
or indirectly, for any purpose that entails a violation of any of the
Regulations of the Board, including Regulations T, U and X. Standby letters of
credit will be issued only to support insurance, utilities, workers'
compensation and lease obligations, in each case incurred in the ordinary course
of business by the Borrower or any Subsidiary.

            SECTION 5.09. Guaranties. As promptly as possible but in any event
within sixty (60) days (or such later date as may be agreed upon by the
Administrative Agent) after any Person becomes a Domestic Subsidiary (other than
an Excluded Subsidiary), the Borrower shall provide the Administrative Agent
with written notice thereof setting forth information in reasonable detail
describing the material assets of such Person and shall cause each such
Subsidiary which also qualifies as a Subsidiary Guarantor to execute and deliver
to the Administrative Agent a supplement to the Subsidiary Guaranty pursuant to
which such Subsidiary agrees to be bound by the terms and provisions of thereof,
such supplement to the Subsidiary Guaranty to be accompanied by appropriate
corporate resolutions, other corporate documentation and legal opinions to the
extent, and in form and substance reasonably satisfactory to, the Administrative
Agent and its counsel.

                                   ARTICLE VI

                               Negative Covenants

            Until the Commitments have expired or terminated and the principal
of and interest on each Loan and all fees payable hereunder have been paid in
full and all Letters of Credit have expired or terminated and all LC
Disbursements shall have been reimbursed, the Borrower covenants and agrees with
the Lenders that:

            SECTION 6.01. Indebtedness. The Borrower will not, and will not
permit any Subsidiary to, create, incur, assume or permit to exist any
Indebtedness, except:

            (a) Indebtedness created under the Loan Documents;

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<PAGE>

            (b) Indebtedness existing on the date hereof and set forth in
      Schedule 6.01 and extensions, renewals and replacements of any such
      Indebtedness with Indebtedness of a similar type that does not increase
      the outstanding principal amount thereof;

            (c) Indebtedness of the Borrower to any Subsidiary and of any
      Subsidiary to the Borrower or any other Subsidiary;

            (d) Guarantees (i) by the Borrower of (A) Indebtedness of any
      Subsidiary or (B) any lease obligations of any Subsidiary and (ii) by any
      Subsidiary of (A) Indebtedness of the Borrower or any other Subsidiary or
      (B) any lease obligations of the Borrower or any other Subsidiary;

            (e) Indebtedness of the Borrower or any Subsidiary incurred to
      finance the acquisition, construction or improvement of any fixed or
      capital assets, including Capital Lease Obligations and any Indebtedness
      assumed in connection with the acquisition of any such assets or secured
      by a Lien on any such assets prior to the acquisition thereof, and
      extensions, renewals and replacements of any such Indebtedness that do not
      increase the outstanding principal amount thereof; provided that (i) such
      Indebtedness is incurred prior to or within ninety (90) days after such
      acquisition or the completion of such construction or improvement and (ii)
      the aggregate principal amount of Indebtedness permitted by this clause
      (e) shall not exceed $25,000,000 at any time outstanding;

            (f) Indebtedness of the Borrower or any Subsidiary as an account
      party in respect of letters of credit;

            (g) Indebtedness of any Person that becomes a Subsidiary or merges
      into an existing Subsidiary after the date hereof or Indebtedness assumed
      by the Borrower or any Subsidiary in connection with an asset acquisition
      (and any extension, renewal, refinancing, replacement or refunding
      thereof); provided that such Indebtedness (other than such extension,
      renewal, refinancing, replacement or refunding thereof) exists at the time
      such Person becomes a Subsidiary or at the time of such asset acquisition
      and is not created in contemplation of or in connection with such Person
      becoming a Subsidiary or in connection with such asset acquisition;

            (h) Guarantees by the Borrower and any Subsidiary of sublessees of
      any subleases entered into by the Borrower or any Subsidiary as
      sublessors; and

            (i) Indebtedness of the Borrower or any of its Subsidiaries not
      otherwise permitted by this Section 6.01, in an aggregate principal amount
      at any time outstanding not exceeding $150,000,000; provided that the
      aggregate principal amount of Indebtedness permitted by this clause (i) to
      the extent constituting (x) Indebtedness of the Borrower or any Subsidiary
      secured by a Lien on any asset of the Borrower or any Subsidiary or (y)
      Indebtedness of any Subsidiary which is not a Subsidiary Guarantor shall
      not in the aggregate exceed $40,000,000 at any time outstanding.

      For purposes of this subsection 6.01, any Person becoming a Subsidiary of
the Borrower after the date of this Agreement shall be deemed to have incurred
all of its then outstanding Indebtedness at the time it becomes a Subsidiary,
and any Indebtedness assumed by the

                                       47

<PAGE>

Borrower or any of its Subsidiaries shall be deemed to have been incurred on the
date of assumption.

            SECTION 6.02. Liens. The Borrower will not, and will not permit any
Subsidiary to, create, incur, assume or permit to exist any Lien on any property
or asset now owned or hereafter acquired by it, or assign or sell any income or
revenues (including accounts receivable) or rights in respect of any thereof,
except:

            (a) Permitted Encumbrances;

            (b) any Lien on any property or asset of the Borrower or any
      Subsidiary existing on the date hereof and set forth in Schedule 6.02 or
      any Lien required by Section 2.06(j) of this Agreement;

            (c) any Lien existing on any property or asset prior to the
      acquisition thereof by the Borrower or any Subsidiary or existing on any
      property or asset of any Person that becomes a Subsidiary after the date
      hereof prior to the time such Person becomes a Subsidiary; provided that
      (i) such Lien is not created in contemplation of or in connection with
      such acquisition or such Person becoming a Subsidiary, as the case may be,
      (ii) such Lien shall not apply to any other property or assets of the
      Borrower or any Subsidiary and (iii) such Lien shall secure only those
      obligations which it secures on the date of such acquisition or the date
      such Person becomes a Subsidiary, as the case may be and extensions,
      renewals and replacements thereof that do not increase the outstanding
      principal amount thereof;

            (d) Liens on fixed or capital assets acquired, constructed or
      improved by the Borrower or any Subsidiary; provided that (i) such
      security interests secure Indebtedness permitted by clause (e) of Section
      6.01, (ii) such security interests and the Indebtedness secured thereby
      are incurred prior to or within ninety (90) days after such acquisition or
      the completion of such construction or improvement, (iii) the Indebtedness
      secured thereby does not exceed 100% of the cost of acquiring,
      constructing or improving such fixed or capital assets and (iv) such
      security interests shall not apply to any other property or assets of the
      Borrower or any Subsidiary;

            (e) Liens arising from precautionary Uniform Commercial Code
      financing statement filings with respect to leases entered into by the
      Borrower or any of its Subsidiaries in the ordinary course; and

            (f) Liens securing Indebtedness permitted under Section 6.01(i).

            SECTION 6.03. [Intentionally Omitted].

            SECTION 6.04. Fundamental Changes. (a) The Borrower will not, and
will not permit any Subsidiary (other than any Excluded Subsidiaries) to, merge
into or consolidate with any other Person, or permit any other Person to merge
into or consolidate with it, or sell, transfer, lease or otherwise dispose of
(in one transaction or in a series of transactions) all or substantially all of
its assets, or all or substantially all of the stock of any of its Subsidiaries
(in each case, whether now owned or hereafter acquired) (other than any Excluded
Subsidiaries), or liquidate or

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<PAGE>

dissolve, except that, if at the time thereof and immediately after giving
effect thereto no Default shall have occurred and be continuing (i) any Person
may merge into the Borrower in a transaction in which the Borrower is the
surviving corporation, (ii) any Subsidiary/Person may merge into any Subsidiary
in a transaction in which the surviving entity is a Subsidiary or in which the
surviving entity is a Person that will become a Subsidiary of the Borrower upon
the effectiveness of such merger, (iii) the Borrower or any Subsidiary may sell,
transfer, lease or otherwise dispose of its assets to the Borrower or to another
Subsidiary, (iv) any merger effected for the sole purpose of reincorporating the
Borrower in Delaware (other than through the formation of a holding company that
will own any portion of the Equity Interest of the Borrower following such
merger), and (v) any Subsidiary may liquidate or dissolve if the Borrower
determines in good faith that such liquidation or dissolution is in the best
interests of the Borrower and is not materially disadvantageous to the Lenders
and except that the Borrower or any Subsidiary may effect any acquisition
permitted by Section 6.05 by means of a merger of the Person that is the subject
of such acquisition with the Borrower or any of its Subsidiaries (provided that,
in the case of a merger with the Borrower, the Borrower is the survivor).

            (b) The Borrower will not, and will not permit any of its
Subsidiaries to, engage to any material extent in any business other than a
Related Line of Business.

            SECTION 6.05. Investments, Loans, Advances, Guarantees and
Acquisitions. The Borrower will not, and will not permit any of its Subsidiaries
to, purchase, hold or acquire (including pursuant to any merger with any Person
that was not a wholly owned Subsidiary prior to such merger) any capital stock,
evidences of indebtedness or other securities (including any option, warrant or
other right to acquire any of the foregoing) of, make or permit to exist any
loans or advances to, Guarantee any obligations of, or make or permit to exist
any investment or any other interest in, any other Person, or purchase or
otherwise acquire (in one transaction or a series of transactions) any assets of
any other Person constituting a business unit, except

            (a) Permitted Investments;

            (b) Permitted Acquisitions;

            (c) investments by the Borrower and its Subsidiaries in their
respective Subsidiaries or in the capital stock of their respective
Subsidiaries;

            (d) loans or advances made by the Borrower to, and Guarantees by the
Borrower of obligations of, any Subsidiary, and loans or advances made by any
Subsidiary to, and Guarantees by any Subsidiary of obligations of, the Borrower
or any other Subsidiary;

            (e) Guarantees constituting Indebtedness permitted by Section 6.01;

            (f) advances or loans made in the ordinary course of business to
non-executive officers and employees of the Borrower and its Subsidiaries;

            (g) Investments existing on the date hereof not otherwise permitted
under this Agreement and described in Schedule 6.05 hereto;

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<PAGE>

            (h) Investments received in connection with the bona fide settlement
of any defaulted Indebtedness or other liability owed to the Borrower or any
Subsidiary; and

            (i) joint ventures, loans to contractors, loans in connection with
retail development, deposits to landlords and other Investments in an aggregate
amount not exceeding $50,000,000 at any time.

            SECTION 6.06. Swap Agreements. The Borrower will not, and will not
permit any of its Subsidiaries to, enter into any Swap Agreement, except (a)
Swap Agreements entered into to hedge or mitigate risks to which the Borrower or
any Subsidiary has actual exposure (other than those in respect of Equity
Interests of the Borrower or any of its Subsidiaries), and (b) Swap Agreements
entered into in order to effectively cap, collar or exchange interest rates
(from fixed to floating rates, from one floating rate to another floating rate
or otherwise) with respect to any interest-bearing liability or investment of
the Borrower or any Subsidiary.

            SECTION 6.07. Transactions with Affiliates. The Borrower will not,
and will not permit any of its Subsidiaries to, sell, lease or otherwise
transfer any property or assets to, or purchase, lease or otherwise acquire any
property or assets from, or otherwise engage in any other transactions with, any
of its Affiliates, except (a) in the ordinary course of business at prices and
on terms and conditions not less favorable to the Borrower or such Subsidiary
than could be obtained on an arm's-length basis from unrelated third parties,
(b) transactions between or among the Borrower and its Subsidiaries (including
between and among Subsidiaries) not involving any other Affiliate, and (c) any
Equity Payment.

            SECTION 6.08. Financial Covenants.

            (a) Minimum Fixed Charge Coverage Ratio. The Borrower will not
permit the ratio, determined as of the end of each of its fiscal quarters ending
on and after October 29, 2005 for the period of 4 consecutive fiscal quarters
ending with the end of such fiscal quarter, of (i) Consolidated EBITDAR minus
Consolidated Capital Expenditures to (ii) Consolidated Interest Expense plus
Consolidated Rent Expense, all calculated for the Borrower and its Subsidiaries
on a consolidated basis, to be less than 1.5 to 1.0.

            (b) Maximum Leverage Ratio. The Borrower will not permit the ratio
(the "Leverage Ratio"), determined as of the end of each of its fiscal quarters
ending on and after October 29, 2005, of (i) Consolidated Total Indebtedness as
of such ending date to (ii) Consolidated EBITDA for the period of 4 consecutive
fiscal quarters ending with the end of such fiscal quarter, all calculated for
the Borrower and its Subsidiaries on a consolidated basis, to be greater than
2.5 to 1.0.

                                   ARTICLE VII

                                Events of Default

            If any of the following events ("Events of Default") shall occur:

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<PAGE>

            (a) the Borrower shall fail to pay (i) any principal of any Loan
when and as the same shall become due and payable, whether at the due date
thereof or at a date fixed for prepayment thereof or otherwise or (ii) any
reimbursement obligation in respect of any LC Disbursement when and as the same
shall become due and payable and such failure to pay such reimbursement
obligation shall continue unremedied for a period of two (2) Business Days;

            (b) the Borrower shall fail to pay any interest on any Loan or any
fee or any other amount (other than an amount referred to in clause (a) of this
Article) payable under this Agreement, when and as the same shall become due and
payable, and such failure shall continue unremedied for a period of five (5)
days;

            (c) any representation or warranty made or deemed made by or on
behalf of the Borrower or any Subsidiary in or in connection with this Agreement
or any other Loan Document or any amendment or modification thereof or waiver
thereunder, or in any report, certificate, financial statement or other document
furnished pursuant to or in connection with this Agreement or any other Loan
Document or any amendment or modification thereof or waiver thereunder, shall
prove to have been incorrect in any material respect when made or deemed made;

            (d) (i) the Borrower shall fail to observe or perform any covenant,
condition or agreement contained in Section 5.03 (with respect to the Borrower's
existence) or 5.08 or in Article VI or (ii) any Loan Document shall for any
reason not be or shall cease to be in full force and effect or is declared to be
null and void, or the Borrower or any Subsidiary takes any action for the
purpose of terminating, repudiating or rescinding any Loan Document or any of
its obligations thereunder;

            (e) the Borrower or any Subsidiary Guarantor, as applicable, shall
fail to observe or perform any covenant, condition or agreement contained in
this Agreement (other than those specified in clause (a), (b) or (d) of this
Article) or any other Loan Document, and such failure shall continue unremedied
for a period of thirty (30) days after notice thereof from the Administrative
Agent to the Borrower (which notice will be given at the request of any Lender);

            (f) the Borrower or any Subsidiary shall fail to make any payment
(whether of principal or interest and regardless of amount) in respect of any
Material Indebtedness, when and as the same shall become due and payable beyond
the period (without giving effect to any extensions, waivers, amendments or
other modifications of or to such period) of grace, if any, provided in the
instrument or agreement under which such Material Indebtedness was created;

            (g) any event or condition occurs (after giving effect to any
applicable grace periods and after giving effect to any extensions, waivers,
amendments or other modifications of any applicable provision or agreement) that
results in any Material Indebtedness becoming due prior to its scheduled
maturity or that enables or permits the holder or holders of any Material
Indebtedness or any trustee or agent on its or their behalf to cause, with the
giving of an acceleration or similar notice if required, any Material
Indebtedness to become due, or to require the prepayment, repurchase, redemption
or defeasance thereof, prior to its scheduled maturity; provided that this
clause (g) shall not apply to secured Indebtedness that becomes due as a result
of the voluntary sale or transfer of the property or assets securing such
Indebtedness;

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<PAGE>

            (h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other relief
in respect of the Borrower or any Subsidiary or its debts, or of a substantial
part of its assets, under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect or (ii) the appointment
of a receiver, trustee, custodian, sequestrator, conservator or similar official
for the Borrower or any Subsidiary or for a substantial part of its assets, and,
in any such case, such proceeding or petition shall continue undismissed for
sixty (60) days or an order or decree approving or ordering any of the foregoing
shall be entered;

            (i) the Borrower or any Subsidiary shall (i) voluntarily commence
any proceeding or file any petition seeking liquidation, reorganization or other
relief under any Federal, state or foreign bankruptcy, insolvency, receivership
or similar law now or hereafter in effect, (ii) consent to the institution of,
or fail to contest in a timely and appropriate manner, any proceeding or
petition described in clause (h) of this Article, (iii) apply for or consent to
the appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Borrower or any Subsidiary or for a substantial part of
its assets, (iv) file an answer admitting the material allegations of a petition
filed against it in any such proceeding, (v) make a general assignment for the
benefit of creditors or (vi) take any action for the purpose of effecting any of
the foregoing;

            (j) the Borrower or any Subsidiary shall become unable, admit in
writing its inability or fail generally to pay its debts as they become due;

            (k) one or more judgments for the payment of money in an aggregate
amount (not paid or covered by insurance) in excess of $10,000,000 shall be
rendered against the Borrower, any Subsidiary or any combination thereof and the
same shall remain undischarged for a period of thirty (30) consecutive days from
the entry thereof during which execution shall not be effectively stayed or
bonded, or any action shall be legally taken by a judgment creditor to attach or
levy upon any assets of the Borrower or any Subsidiary to enforce any such
judgment;

            (l) an ERISA Event shall have occurred that, when taken together
with all other ERISA Events that have occurred, could reasonably be expected to
result in a Material Adverse Effect; or

            (m) a Change in Control shall occur;

then, and in every such event (other than an event with respect to the Borrower
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to the Borrower, take either or
both of the following actions, at the same or different times: (i) terminate the
Commitments, and thereupon the Commitments shall terminate immediately, and (ii)
declare the Loans then outstanding to be due and payable in whole (or in part,
in which case any principal not so declared to be due and payable may thereafter
be declared to be due and payable), and thereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon and all
fees and other obligations of the Borrower accrued hereunder and under the other
Loan Documents, shall become due and payable immediately, without presentment,
demand, protest or other notice of any kind, all of which are hereby waived

                                       52

<PAGE>

by the Borrower; and in case of any event with respect to the Borrower described
in clause (h) or (i) of this Article, the Commitments shall automatically
terminate and the principal of the Loans then outstanding, together with accrued
interest thereon and all fees and other obligations of the Borrower accrued
hereunder and under the other Loan Documents, shall automatically become due and
payable, without presentment, demand, protest or other notice of any kind, all
of which are hereby waived by the Borrower.

                                  ARTICLE VIII

                            The Administrative Agent

            Each of the Lenders and the Issuing Banks hereby irrevocably
appoints the Administrative Agent as its agent and authorizes the Administrative
Agent to take such actions on its behalf and to exercise such powers as are
delegated to the Administrative Agent by the terms hereof, together with such
actions and powers as are reasonably incidental thereto.

            The bank serving as the Administrative Agent hereunder shall have
the same rights and powers in its capacity as a Lender as any other Lender and
may exercise the same as though it were not the Administrative Agent, and such
bank and its Affiliates may accept deposits from, lend money to and generally
engage in any kind of business with the Borrower or any Subsidiary or other
Affiliate thereof as if it were not the Administrative Agent hereunder.

            The Administrative Agent shall not have any duties or obligations
except those expressly set forth herein. Without limiting the generality of the
foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or
other implied duties, regardless of whether a Default has occurred and is
continuing, (b) the Administrative Agent shall not have any duty to take any
discretionary action or exercise any discretionary powers, except discretionary
rights and powers expressly contemplated hereby that the Administrative Agent is
required to exercise in writing as directed by the Required Lenders (or such
other number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 9.02), and (c) except as expressly set
forth herein, the Administrative Agent shall not have any duty to disclose, and
shall not be liable for the failure to disclose, any information relating to the
Borrower or any of its Subsidiaries that is communicated to or obtained by the
bank serving as Administrative Agent or any of its Affiliates in any capacity.
The Administrative Agent shall not be liable for any action taken or not taken
by it with the consent or at the request of the Required Lenders (or such other
number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 9.02) or in the absence of its own gross
negligence or willful misconduct. The Administrative Agent shall be deemed not
to have knowledge of any Default unless and until written notice thereof is
given to the Administrative Agent by the Borrower or a Lender, and the
Administrative Agent shall not be responsible for or have any duty to ascertain
or inquire into (i) any statement, warranty or representation made in or in
connection with this Agreement, (ii) the contents of any certificate, report or
other document delivered hereunder or in connection herewith, (iii) the
performance or observance of any of the covenants, agreements or other terms or
conditions set forth herein, (iv) the validity, enforceability, effectiveness or
genuineness of this Agreement or any other agreement, instrument or document, or
(v) the satisfaction of any condition set forth in Article IV or

                                       53

<PAGE>

elsewhere herein, other than to confirm receipt of items expressly required to
be delivered to the Administrative Agent.

            The Administrative Agent shall be entitled to rely upon, and shall
not incur any liability for relying upon, any notice, request, certificate,
consent, statement, instrument, document or other writing believed by it to be
genuine and to have been signed or sent by the proper Person. The Administrative
Agent also may rely upon any statement made to it orally or by telephone and
believed by it to be made by the proper Person, and shall not incur any
liability for relying thereon. The Administrative Agent may consult with legal
counsel (who may be counsel for the Borrower), independent accountants and other
experts selected by it, and shall not be liable for any action taken or not
taken by it in accordance with the advice of any such counsel, accountants or
experts.

            The Administrative Agent may perform any and all its duties and
exercise its rights and powers by or through any one or more sub-agents
appointed by the Administrative Agent. The Administrative Agent and any such
sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. The exculpatory provisions of the
preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of the Administrative Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.

            Subject to the appointment and acceptance of a successor
Administrative Agent as provided in this paragraph, the Administrative Agent may
resign at any time by notifying the Lenders, the Issuing Banks and the Borrower.
Upon any such resignation, the Required Lenders shall have the right, subject
to, so long as no Event of Default has occurred and is continuing, the consent
of the Borrower (such consent not to be unreasonably withheld), to appoint a
successor. If no successor shall have been so appointed by the Required Lenders
and shall have accepted such appointment within thirty (30) days after the
retiring Administrative Agent gives notice of its resignation, then the retiring
Administrative Agent may, on behalf of the Lenders and the Issuing Banks,
appoint a successor Administrative Agent which shall be a bank with an office in
New York, New York, or an Affiliate of any such bank. Upon the acceptance of its
appointment as Administrative Agent hereunder by a successor, such successor
shall succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Administrative Agent, and the retiring Administrative
Agent shall be discharged from its duties and obligations hereunder. The fees
payable by the Borrower to a successor Administrative Agent shall be the same as
those payable to its predecessor unless otherwise agreed between the Borrower
and such successor. After the Administrative Agent's resignation hereunder, the
provisions of this Article and Section 9.03 shall continue in effect for the
benefit of such retiring Administrative Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while it was acting as Administrative Agent.

            Each Lender (including each Issuing Bank) acknowledges that it has,
independently and without reliance upon the Administrative Agent or any other
Lender and based on such documents and information as it has deemed appropriate,
made its own credit analysis and decision to enter into this Agreement. Each
Lender also acknowledges that it will, independently and without reliance upon
the Administrative Agent or any other Lender and

                                       54

<PAGE>

based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement, any related agreement or any document
furnished hereunder or thereunder.

            None of the Lenders, if any, identified in this Agreement as a
Syndication Agent or Documentation Agent shall have any right, power,
obligation, liability, responsibility or duty under this Agreement other than
those applicable to all Lenders as such. Without limiting the foregoing, none of
such Lenders shall have or be deemed to have a fiduciary relationship with any
Lender. Each Lender hereby makes the same acknowledgments with respect to the
relevant Lenders in their capacity as Syndication Agents or Documentation Agents
as it makes with respect to the Administrative Agent in the preceding paragraph.

                                   ARTICLE IX

                                  Miscellaneous

            SECTION 9.01. Notices. (a) Except in the case of notices and other
communications expressly permitted to be given by telephone (and subject to
paragraph (b) below), all notices and other communications provided for herein
and in the other Loan Documents shall be in writing and shall be delivered by
hand or overnight courier service, mailed by certified or registered mail or
sent by telecopy, as follows:

            (i) if to the Borrower, to it at 3450 E. Miraloma Avenue, Anaheim,
      California 92806, Attention of Gerald M. Chaney, Senior Vice President and
      Chief Financial Officer (Telecopy No. (714) 414-4251);

            (ii) if to the Administrative Agent, to JPMorgan Chase Bank, N.A.,
      Loan and Agency Services Group, 1111 Fannin, 10th Floor, Houston, Texas
      77002, Attention of Rebecca Ybarra (Telecopy No. (713) 750-2228), with a
      copy to JPMorgan Chase Bank, N.A., 270 Park Avenue, 5th Floor, New York
      10017, Attention of Jay Droogan (Telecopy No. (212) 270-1063);

            (iii) if to an Issuing Bank, to it at (A) in the case of JPMorgan
      Chase Bank, N.A., to it at JPMorgan Chase Bank, N.A., Loan and Agency
      Services Group, 1111 Fannin, 10th Floor, Houston, Texas 77002, Attention
      of Rebecca Ybarra (Telecopy No. (713) 750-2228), with a copy to JPMorgan
      Chase Bank, N.A., 270 Park Avenue, 5th Floor, New York 10017, Attention of
      Jay Droogan (Telecopy No. (212) 270-1063), (B) in the case of Bank of
      America, N.A., to it at Bank of America, N.A., 40 Broad Street, 10th
      Floor, Boston, Massachusetts 02109, Attention of Stephen J. Garvin
      (Telecopy No. (617) 434-4312) and (C) in the case of any other Issuing
      Bank, to it at the address and telecopy number specified from time to time
      by such Issuing Bank to the Borrower and the Administrative Agent;

            (iv) if to the Swingline Lender, to it at JPMorgan Chase Bank, N.A.,
      Loan and Agency Services Group, 1111 Fannin, 10th Floor, Houston, Texas
      77002, Attention of Rebecca Ybarra (Telecopy No. (713) 750-2228), with a
      copy to JPMorgan Chase Bank,

                                       55

<PAGE>

      N.A., 270 Park Avenue, 5th Floor, New York 10017, Attention of Jay Droogan
      (Telecopy No. (212) 270-1063); and

            (v) if to any other Lender, to it at its address (or telecopy
      number) set forth in its Administrative Questionnaire.

            (b) Notices and other communications to the Lenders (including any
Issuing Bank) hereunder may be delivered or furnished to the Lenders through the
Administrative Agent by electronic communications pursuant to procedures
approved by the Administrative Agent; provided that the foregoing shall not
apply to notices pursuant to Article II unless otherwise agreed by the
Administrative Agent and the applicable Lender. The Administrative Agent or the
Borrower may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it; provided that approval of such procedures may be
limited to particular notices or communications.

            (c) Any party hereto may change its address or telecopy number for
notices and other communications hereunder by notice to the other parties hereto
(or, in the case of any Lender, by notice to the Administrative Agent and the
Borrower). All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been
given on the date of receipt.

            SECTION 9.02. Waivers; Amendments. (a) No failure or delay by the
Administrative Agent, any Issuing Bank or any Lender in exercising any right or
power hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Administrative Agent, the Issuing Banks and the Lenders
hereunder are cumulative and are not exclusive of any rights or remedies that
they would otherwise have. No waiver of any provision of this Agreement or
consent to any departure by the Borrower therefrom shall in any event be
effective unless the same shall be permitted by paragraph (b) of this Section,
and then such waiver or consent shall be effective only in the specific instance
and for the purpose for which given. Without limiting the generality of the
foregoing, the making of a Loan or issuance of a Letter of Credit shall not be
construed as a waiver of any Default, regardless of whether the Administrative
Agent, any Lender or any Issuing Bank may have had notice or knowledge of such
Default at the time.

            (b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Borrower and the Required Lenders or by the Borrower and the
Administrative Agent with the consent of the Required Lenders; provided that no
such agreement shall (i) increase the Commitment of any Lender without the
written consent of such Lender, (ii) reduce the principal amount of any Loan or
LC Disbursement or reduce the rate of interest thereon, or reduce any fees
payable hereunder, without the written consent of each Lender affected thereby,
(iii) postpone the scheduled date of payment of the principal amount of any Loan
or LC Disbursement, or any interest thereon, or any fees payable hereunder, or
reduce the amount of, waive or excuse any such payment, or postpone the
scheduled date of expiration of any Commitment, without the written consent of
each Lender affected thereby, (iv) change Section 2.18(b) or (c) in a manner

                                       56

<PAGE>

that would alter the pro rata sharing of payments required thereby, without the
written consent of each Lender, or (v) change any of the provisions of this
Section or the definition of "Required Lenders" or any other provision hereof
specifying the number or percentage of Lenders required to waive, amend or
modify any rights hereunder or make any determination or grant any consent
hereunder, without the written consent of each Lender; provided further that no
such agreement shall amend, modify or otherwise affect the rights or duties of
the Administrative Agent, any Issuing Bank or the Swingline Lender hereunder
without the prior written consent of the Administrative Agent, such Issuing Bank
or the Swingline Lender, as the case may be.

            SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a) The Borrower
shall pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent and its Affiliates, including the reasonable fees, charges
and disbursements of one counsel for the Administrative Agent, in connection
with the syndication of the credit facilities provided for herein, the
preparation and administration of this Agreement or any amendments,
modifications or waivers of the provisions hereof (whether or not the
transactions contemplated hereby or thereby shall be consummated), (ii) all
reasonable out-of-pocket expenses incurred by any Issuing Bank in connection
with the issuance, amendment, renewal or extension of any Letter of Credit or
any demand for payment thereunder and (iii) all out-of-pocket expenses incurred
by the Administrative Agent, any Issuing Bank or any Lender, including the fees,
charges and disbursements of any counsel for the Administrative Agent, any
Issuing Bank or any Lender, in connection with the enforcement or protection of
its rights in connection with this Agreement, including its rights under this
Section, or in connection with the Loans made or Letters of Credit issued
hereunder, including all such out-of-pocket expenses incurred during any
workout, restructuring or negotiations in respect of such Loans or Letters of
Credit.

            (b) The Borrower shall indemnify the Administrative Agent, each
Issuing Bank and each Lender, and each Related Party of any of the foregoing
Persons (each such Person being called an "Indemnitee") against, and hold each
Indemnitee harmless from, any and all losses, claims, damages, liabilities and
related expenses, including the fees, charges and disbursements of any counsel
for any Indemnitee, incurred by or asserted against any Indemnitee arising out
of, in connection with, or as a result of (i) the execution or delivery of this
Agreement or any agreement or instrument contemplated hereby, the performance by
the parties hereto of their respective obligations hereunder or the consummation
of the Transactions or any other transactions contemplated hereby, (ii) any Loan
or Letter of Credit or the use of the proceeds therefrom (including any refusal
by any Issuing Bank to honor a demand for payment under a Letter of Credit if
the documents presented in connection with such demand do not strictly comply
with the terms of such Letter of Credit), (iii) any actual or alleged presence
or release of Hazardous Materials on or from any property owned or operated by
the Borrower or any of its Subsidiaries, or any Environmental Liability related
in any way to the Borrower or any of its Subsidiaries, or (iv) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory and
regardless of whether any Indemnitee is a party thereto; provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses are determined by a
court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or willful misconduct of such Indemnitee.

                                       57

<PAGE>

            (c) To the extent that the Borrower fails to pay any amount required
to be paid by it to the Administrative Agent, any Issuing Bank or the Swingline
Lender under paragraph (a) or (b) of this Section, each Lender severally agrees
to pay to the Administrative Agent, any Issuing Bank or the Swingline Lender, as
the case may be, such Lender's Applicable Percentage (determined as of the time
that the applicable unreimbursed expense or indemnity payment is sought) of such
unpaid amount; provided that the unreimbursed expense or indemnified loss,
claim, damage, liability or related expense, as the case may be, was incurred by
or asserted against the Administrative Agent, any Issuing Bank or the Swingline
Lender in its capacity as such.

            (d) To the extent permitted by applicable law, the Borrower shall
not assert, and hereby waives, any claim against any Indemnitee, on any theory
of liability, for special, indirect, consequential or punitive damages (as
opposed to direct or actual damages) arising out of, in connection with, or as a
result of, this Agreement or any agreement or instrument contemplated hereby,
the Transactions, any Loan or Letter of Credit or the use of the proceeds
thereof.

            (e) All amounts due under this Section shall be payable promptly
after written demand therefor.

            SECTION 9.04. Successors and Assigns. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby (including any
Affiliate of an Issuing Bank that issues any Letter of Credit), except that (i)
the Borrower may not assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of each Lender (and any
attempted assignment or transfer by the Borrower without such consent shall be
null and void) and (ii) no Lender (including any Issuing Bank) may assign or
otherwise transfer its rights or obligations hereunder except in accordance with
this Section. Nothing in this Agreement, expressed or implied, shall be
construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby (including any Affiliate of
the Issuing Bank that issues any Letter of Credit), Participants (to the extent
provided in paragraph (c) of this Section) and, to the extent expressly
contemplated hereby, the Related Parties of each of the Administrative Agent,
the Issuing Banks and the Lenders) any legal or equitable right, remedy or claim
under or by reason of this Agreement.

            (b)(i) Subject to the conditions set forth in paragraph (b)(ii)
      below, any Lender may assign to one or more assignees all or a portion of
      its rights and obligations under this Agreement (including all or a
      portion of its Commitment and the Loans at the time owing to it) with the
      prior written consent (such consent not to be unreasonably withheld, it
      being understood that withholding of consent by the Borrower or the
      Administrative Agent with respect to an assignment (including any
      assignment to a Lender, an Affiliate of a Lender or an Approved Fund)
      because amounts that would become payable by the Borrower under Section
      2.15 or 2.17 (including amounts payable under Section 2.17 in respect of
      withholding taxes) are in excess of those that would be payable under such
      Section in respect of the amount assigned if such assignment were not
      made, will not be considered to be unreasonable) of:

                                       58

<PAGE>

                  (A) the Borrower, provided that no consent of the Borrower
            shall be required for an assignment to a Lender, an Affiliate of a
            Lender, an Approved Fund or, if an Event of Default has occurred and
            is continuing, any other assignee; and

                  (B) the Administrative Agent.

            (ii) Assignments shall be subject to the following additional
conditions:

                  (A) except in the case of an assignment to a Lender or an
            Affiliate of a Lender or an assignment of the entire remaining
            amount of the assigning Lender's Commitment or Loans of any Class,
            the amount of the Commitment or Loans of the assigning Lender
            subject to each such assignment (determined as of the date the
            Assignment and Assumption with respect to such assignment is
            delivered to the Administrative Agent) shall not be less than
            $5,000,000 unless each of the Borrower and the Administrative Agent
            otherwise consent;

                  (B) each partial assignment shall be made as an assignment of
            a proportionate part of all the assigning Lender's rights and
            obligations under this Agreement, provided that this clause shall
            not be construed to prohibit the assignment of a proportionate part
            of all the assigning Lender's rights and obligations in respect of
            one Class of Commitments or Loans;

                  (C) the parties to each assignment shall execute and deliver
            to the Administrative Agent an Assignment and Assumption, together
            with a processing and recordation fee of $3,500 payable by the
            assignor or the assignee; and

                  (D) the assignee, if it shall not be a Lender, shall deliver
            to the Administrative Agent an Administrative Questionnaire.

            For the purposes of this Section 9.04(b), the term "Approved Fund"
has the following meaning:

            "Approved Fund" means any Person (other than a natural person) that
is engaged in making, purchasing, holding or investing in bank loans and similar
extensions of credit in the ordinary course of its business and that is
administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an
entity or an Affiliate of an entity that administers or manages a Lender.

            (iii) Subject to acceptance and recording thereof pursuant to
paragraph (b)(iv) of this Section, from and after the effective date specified
in each Assignment and Assumption the assignee thereunder shall be a party
hereto and, to the extent of the interest assigned by such Assignment and
Assumption, have the rights and obligations of a Lender under this Agreement
(including, in the case of any Foreign Lender (including each Issuing Bank that
is a Foreign Lender), obligations under Section 2.17(e)), and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Assumption, be released from its obligations under this Agreement
(and, in the case of an Assignment and Assumption covering all of the assigning
Lender's rights and obligations under this Agreement, such Lender shall

                                       59

<PAGE>

cease to be a party hereto but shall continue to be entitled to the benefits of
Sections 2.15, 2.16, 2.17 and 9.03), provided, however, that no such assignment
or transfer shall be deemed to be a waiver of any rights which the Borrower, the
Administrative Agent or any other Lender shall have against such Lender. Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this Section 9.04 shall be treated for purposes of
this Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with paragraph (c) of this Section.

            (iv) The Administrative Agent, acting for this purpose as an agent
of the Borrower, shall maintain at one of its offices a copy of each Assignment
and Assumption delivered to it and a register for the recordation of the names
and addresses of the Lenders, and the Commitment of, and principal amount of the
Loans and LC Disbursements owing to, each Lender pursuant to the terms hereof
from time to time (the "Register"). The entries in the Register shall be
conclusive, and the Borrower, the Administrative Agent, the Issuing Banks 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, any Issuing Bank and any Lender, at
any reasonable time and from time to time upon reasonable prior notice.

            (v) Upon its receipt of a duly completed Assignment and Assumption
executed by an assigning Lender and an assignee, the assignee's completed
Administrative Questionnaire (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in paragraph (b) of
this Section and any written consent to such assignment required by paragraph
(b) of this Section, the Administrative Agent shall accept such Assignment and
Assumption and record the information contained therein in the Register;
provided that if either the assigning Lender or the assignee shall have failed
to make any payment required to be made by it pursuant to Section 2.05(c),
2.06(d) or (e), 2.07(b), 2.18(d) or 9.03(c), the Administrative Agent shall have
no obligation to accept such Assignment and Assumption and record the
information therein in the Register unless and until such payment shall have
been made in full, together with all accrued interest thereon. No assignment
shall be effective for purposes of this Agreement unless it has been recorded in
the Register as provided in this paragraph.

            (c) (i) Any Lender may, without the consent of the Borrower, the
Administrative Agent, the Issuing Banks or the Swingline Lender, sell
participations to one or more banks or other entities (a "Participant") in all
or a portion of such Lender's rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans owing to it);
provided that (A) such Lender's obligations under this Agreement shall remain
unchanged, (B) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations and (C) the Borrower, the
Administrative Agent, the Issuing Banks and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement. Any agreement or instrument
pursuant to which a Lender sells such a participation shall provide that such
Lender shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement; provided
that such agreement or instrument may provide that such Lender will not, without
the consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 9.02(b) that affects such Participant.
Subject to paragraph (c)(ii) of this Section, the Borrower agrees that each

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<PAGE>

Participant shall be entitled to the benefits of Sections 2.15, 2.16 and 2.17 to
the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to paragraph (b) of this Section. To the extent permitted by
law, each Participant also shall be entitled to the benefits of Section 9.08 as
though it were a Lender, provided such Participant agrees to be subject to
Section 2.18(c) as though it were a Lender.

            (ii) A Participant shall not be entitled to the benefits of Section
2.15, 2.16 or 2.17 unless such Participant shall have complied with the
requirements of such Section; provided, that in any case in which a Participant
is so entitled, any such Participant shall not be entitled to receive any
greater payment under Section 2.15, 2.16 or 2.17 than the applicable Lender
would have been entitled to receive with respect to the participation sold to
such Participant, unless the sale of the participation to such Participant is
made with the Borrower's prior written consent. A Participant that would be a
Foreign Lender if it were a Lender shall not be entitled to the benefits of
Section 2.17 unless the Borrower is notified of the participation sold to such
Participant and such Participant agrees, for the benefit of the Borrower, to
comply with Section 2.17(e) as though it were a Lender.

            (d) Any Lender may at any time pledge or assign a security interest
in all or any portion of its rights under this Agreement to secure obligations
of such Lender, including without limitation any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest; provided that no such pledge
or assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.

            SECTION 9.05. Survival. All covenants, agreements, representations
and warranties made by the Borrower herein and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement shall be
considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any Loans
and issuance of any Letters of Credit, regardless of any investigation made by
any such other party or on its behalf and shall continue in full force and
effect as long as the principal of or any accrued interest on any Loan or any
fee or any other amount payable under this Agreement is outstanding and unpaid
or any Letter of Credit is outstanding and so long as the Commitments have not
expired or terminated. The provisions of Sections 2.15, 2.16, 2.17 and 9.03 and
Article VIII shall survive and remain in full force and effect regardless of the
consummation of the transactions contemplated hereby, the repayment of the
Loans, the expiration or termination of the Letters of Credit and the
Commitments or the termination of this Agreement or any provision hereof.

            SECTION 9.06. Counterparts; Integration; Effectiveness. This
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. This Agreement and
any separate letter agreements with respect to fees payable to the
Administrative Agent constitute the entire contract among the parties relating
to the subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except
as provided in Section 4.01, this Agreement shall become effective when it shall
have been executed by the Administrative Agent and when the

                                       61

<PAGE>

Administrative Agent shall have received counterparts hereof which, when taken
together, bear the signatures of each of the other 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.

            SECTION 9.07. Severability. Any provision of this Agreement held to
be invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.

            SECTION 9.08. Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Lender and each of its Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other obligations at any time
owing by such Lender or Affiliate to or for the credit or the account of the
Borrower against any of and all the obligations of the Borrower now or hereafter
existing under this Agreement held by such Lender, irrespective of whether or
not such Lender shall have made any demand under this Agreement and although
such obligations may be unmatured. The rights of each Lender under this Section
are in addition to other rights and remedies (including other rights of setoff)
which such Lender may have.

            SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of
Process. (a) This Agreement shall be construed in accordance with and governed
by the law of the State of New York.

            (b) Each party hereto hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of the
Supreme Court of the State of New York sitting in New York County and of the
United States District Court of the Southern District of New York, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement, or for recognition or enforcement of any judgment,
and each of the parties hereto hereby irrevocably and unconditionally agrees
that all claims in respect of any such action or proceeding may be heard and
determined in such New York State or, to the extent permitted by law, in such
Federal court. Each of the parties hereto agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that any party hereto may
otherwise have to bring any action or proceeding relating to this Agreement
against any other party hereto or its properties in the courts of any
jurisdiction.

            (c) Each party hereto hereby irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection which
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement in any court referred to
in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.

                                       62

<PAGE>

            (d) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.

            SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

            SECTION 9.11. Headings. Article and Section headings and the Table
of Contents used herein are for convenience of reference only, are not part of
this Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.

            SECTION 9.12. Confidentiality. Each of the Administrative Agent, the
Issuing Banks and the Lenders agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its and its Affiliates' directors, officers, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority, (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party to this Agreement, (e) in
connection with the exercise of any remedies hereunder or any suit, action or
proceeding relating to this Agreement or the enforcement of rights hereunder,
(f) subject to an agreement containing provisions substantially the same as
those of this Section, to (i) any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations
under this Agreement or (ii) any actual or prospective counterparty (or its
advisors) to any swap or derivative transaction relating to the Borrower and its
obligations, (g) with the consent of the Borrower or (h) to the extent such
Information (i) becomes publicly available other than as a result of a breach of
this Section or (ii) becomes available to the Administrative Agent, any Issuing
Bank or any Lender on a nonconfidential basis from a source other than the
Borrower. For the purposes of this Section, "Information" means all information
received from the Borrower relating to the Borrower or its business, other than
any such information that is available to the Administrative Agent, any Issuing
Bank or any Lender on a nonconfidential basis prior to disclosure by the
Borrower; provided that, in the case of information received from the Borrower
after the date hereof, such information is clearly identified at the time of
delivery as confidential. Any Person required to maintain the confidentiality of
Information as provided in this Section shall be considered to have complied
with its obligation to do so if such Person has exercised the same degree of
care to maintain the confidentiality of such Information as such Person would
accord to its own confidential information.

                                       63

<PAGE>

            SECTION 9.13. USA PATRIOT Act. Each Lender that is subject to the
requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into
law October 26, 2001)) (the "Act") hereby notifies the Borrower that pursuant to
the requirements of the Act, it is required to obtain, verify and record
information that identifies the Borrower, which information includes the name
and address of the Borrower and other information that will allow such Lender to
identify the Borrower in accordance with the Act.

                            [Signature Pages Follow]

                                       64
<PAGE>

      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.

                                        PACIFIC SUNWEAR OF CALIFORNIA, INC.

                                        By /s/ Seth R. Johnson
                                           -------------------------------------
                                           Name: Seth R. Johnson
                                           Title: Chief Executive Officer

                                        By /s/ Gerald M. Chaney
                                           -------------------------------------
                                           Name: Gerald M. Chaney
                                           Title: Chief Financial Officer

                       Signature Page to Credit Agreement
                       Pacific Sunwear of California, Inc.

<PAGE>

                                         JPMORGAN CHASE BANK, N.A.,
                                         individually as a Lender, as the
                                         Swingline Lender,
                                         as an Issuing Bank and as
                                         Administrative Agent

                                        By: /s/ James A. Knight
                                            ------------------------------------
                                        Name: James A. Knight
                                        Title: Vice President

                       Signature Page to Credit Agreement
                       Pacific Sunwear of California, Inc.

<PAGE>

                                        BANK OF AMERICA, N.A.
                                        individually as a Lender, as an Issuing
                                        Bank and as Syndication Agent

                                        By: /s/ Stephen J. Garvin
                                            ------------------------------------
                                        Name: Stephen J. Garvin
                                        Title: Managing Director

                       Signature Page to Credit Agreement
                       Pacific Sunwear of California, Inc.

<PAGE>

                                        NATIONAL CITY BANK,
                                        individually as a Lender and as
                                        Co-Documentation Agent

                                        By: /s/ Ralph Kaparos
                                            ------------------------------------
                                        Name: Ralph Kaparos
                                        Title: Senior Vice President

<PAGE>

                                        U.S. BANK NATIONAL ASSOCIATION,
                                        individually as a Lender and as
                                        Co-Documentation Agent

                                        By: /s/ Janet E. Jordan
                                            ------------------------------------
                                        Name: Janet E. Jordan
                                        Title: Vice President

                       Signature Page to Credit Agreement
                       Pacific Sunwear of California, Inc.

<PAGE>

                                        PNC BANK, N.A.,
                                        as a Lender

                                        By: /s/ Philip K. Liebscher
                                            ------------------------------------
                                        Name: Philip K. Liebscher
                                        Title: Vice President

                       Signature Page to Credit Agreement
                       Pacific Sunwear of California, Inc.

<PAGE>

                                        UNION BANK OF CALIFORNIA, N.A.,
                                        as a Lender

                                        By: /s/ Margaret Furbank
                                            ------------------------------------
                                        Name: Margaret Furbank
                                        Title: Vice President

                       Signature Page to Credit Agreement
                      Pacific Sunwear of California, Inc.

<PAGE>

                                        WACHOVIA BANK, NATIONAL ASSOCIATION,
                                        as a Lender

                                        By: /s/ Susan T. Gallagher
                                            ------------------------------------
                                        Name: Susan T. Gallagher
                                        Title: Vice President

                       Signature Page to Credit Agreement
                       Pacific Sunwear of California, Inc.

<PAGE>

                                  SCHEDULE 2.01

                                   COMMITMENTS

<TABLE>
<CAPTION>
              LENDER                                                COMMITMENT
----------------------------------                                 ------------
<S>                                                                <C>
JPMORGAN CHASE BANK, N.A.                                          $ 40,000,000

BANK OF AMERICA, N.A.                                              $ 40,000,000

NATIONAL CITY BANK                                                 $ 30,000,000

U.S. BANK NATIONAL ASSOCIATION                                     $ 30,000,000

PNC BANK, N.A.                                                     $ 20,000,000

UNION BANK OF CALIFORNIA, N.A.                                     $ 20,000,000

WACHOVIA BANK NATIONAL ASSOCIATION                                 $ 20,000,000

TOTAL COMMITMENTS                                                  $200,000,000
</TABLE>

<PAGE>

                                    EXHIBIT A

                            ASSIGNMENT AND ASSUMPTION

            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 Standard 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 Standard Terms
and Conditions and the Credit Agreement, as of the Effective Date inserted by
the Administrative Agent as contemplated below (i) 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 to the extent related
to the amount and percentage interest identified below of all of such
outstanding rights and obligations of the Assignor under the respective
facilities identified below (including any letters of credit, guarantees, and
swingline loans included in such facilities) and (ii) to the extent permitted to
be assigned under applicable law, all claims, suits, causes of action and any
other right of the Assignor (in its capacity as a Lender) 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 or in any way based on or related to any of
the foregoing, including contract claims, tort claims, malpractice claims,
statutory claims and all other claims at law or in equity related to the rights
and obligations sold and assigned pursuant to clause (i) above (the rights and
obligations sold and assigned pursuant to clauses (i) and (ii) above being
referred to herein collectively as 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):              Pacific Sunwear of California, Inc.

4.    Administrative Agent:     JPMorgan Chase Bank, N.A., as the administrative
                                agent under the Credit Agreement

----------
(1)   Select as applicable.

<PAGE>

5.    Credit Agreement:         The $200,000,000 Credit Agreement dated as of
                                September 14, 2005 among Pacific Sunwear of
                                California, Inc., the Lenders parties thereto,
                                JPMorgan Chase Bank, N.A., as Administrative
                                Agent, and the other agents parties thereto

6.    Assigned Interest:

<TABLE>
<CAPTION>
  Aggregate Amount of             Amount of         Percentage Assigned
Commitment/Loans for all         Commitment/                of
        Lenders                Loans Assigned       Commitment/Loans(2)
------------------------       --------------       --------------------
<S>                            <C>                  <C>
         $                            $                      %
         $                            $                      %
         $                            $                      %
</TABLE>

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

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 Accepted:

JPMORGAN CHASE BANK, N.A., as
  Administrative Agent

By: ______________________________
    Title:

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

                                        2

<PAGE>

[Consented to:](3)

PACIFIC SUNWEAR OF CALIFORNIA, INC.

By: _______________________________
    Title:

----------
(3)   To be added only if the consent of the Borrower is required by the terms
      of the Credit Agreement.

                                        3

<PAGE>

                                                                         ANNEX I

                        STANDARD TERMS AND CONDITIONS FOR

                            ASSIGNMENT AND ASSUMPTION

            1. Representations and Warranties.

            1.1 Assignor. The Assignor (a) 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; and (b) assumes no responsibility with respect
to (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 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 or (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 Document.

            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) it
satisfies the requirements, if any, specified in the Credit Agreement that are
required to be satisfied by it in order to acquire the Assigned Interest and
become a Lender, (iii) 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,
(iv) it has received a copy of the Credit Agreement, together with copies of the
most recent financial statements delivered pursuant to Section 5.01 thereof, as
applicable, 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 (v) if it is a Foreign
Lender, attached to the Assignment and Assumption is any documentation required
to be delivered by it 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. 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

<PAGE>

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.

                                        2

<PAGE>

                                    EXHIBIT B

                     OPINION OF COUNSEL FOR THE LOAN PARTIES

                                                                [Effective Date]

To the Lenders and the Administrative
 Agent Referred to Below
c/o JPMorgan Chase Bank, N.A., as
 Administrative Agent
270 Park Avenue
New York, New York 10017

Ladies and Gentlemen:

            We have acted as counsel to Pacific Sunwear of California, Inc., a
California corporation (the "Borrower"), and Pacific Sunwear Stores Corp., a
California corporation ("Pac Sun Stores" and collectively with the Borrower, the
"Loan Parties"), in connection with the Credit Agreement dated as of September
14, 2005 (the "Credit Agreement"), among the Borrower, the banks and other
financial institutions identified therein as Lenders, and JPMorgan Chase Bank,
N.A., as Administrative Agent. We are providing this opinion to you at the
request of the Loan Parties pursuant to Section 4.01(b) of the Credit Agreement.
Terms defined in the Credit Agreement and not defined herein are used herein
with the same meanings.

            In our capacity as such counsel, we have examined originals or
copies of those corporate and other records and documents we considered
appropriate, including the following (the documents listed in clauses (i)
through (ii) below collectively being referred to herein as the "Loan
Documents"):

            1. the Credit Agreement; and

            2. the Subsidiary Guaranty.

            As to relevant factual matters, we have relied upon, among other
things, the Loan Parties' factual representations in the Borrower Certificate
(the "Borrower Certificate"). In addition, we have obtained and relied upon
those certificates of public officials we considered appropriate.

            We have assumed the genuineness of all signatures, the authenticity
of all documents submitted to us as originals and the conformity with originals
of all documents submitted to us as copies. To the extent the Loan Parties'
obligations depend on the enforceability of the Loan Documents against the other
parties to the Loan Documents, we have assumed that the Loan Documents are
enforceable against such other parties.

            On the basis of such examination, our reliance upon the assumptions
in this opinion and our consideration of those questions of law we considered
relevant, and subject to the limitations and qualifications in this opinion, we
are of the opinion that:

<PAGE>

            1. Each Loan Party is a corporation validly existing under the laws
of the State of California, with corporate power to enter into the Loan
Documents to which it is a party, and to perform its obligations under the Loan
Documents to which it is a party.

            2. The execution, delivery and performance of the Loan Documents
have been duly authorized by all necessary corporate action on the part of each
Loan Party party thereto, and each of the Loan Documents has been duly executed
and delivered by each of the Loan Parties party thereto.

            3. Each of the Loan Documents constitutes the legally valid and
binding obligation of each Loan Party party thereto, enforceable against such
Loan Party in accordance with their respective terms, except as may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws relating
to or affecting creditors' rights generally (including, without limitation,
fraudulent conveyance laws) and by general principles of equity, including,
without limitation, concepts of materiality, reasonableness, good faith and fair
dealing and the possible unavailability of specific performance or injunctive
relief, regardless of whether considered in a proceeding in equity or at law.

            4. The execution and delivery by each Loan Party of each Loan
Document to which it is a party do not, and each such Loan Party's performance
of its obligations under the Loan Documents to which it is a party on or prior
to the date hereof will not, (i) violate such Loan Party's articles of
incorporation or bylaws, (ii) violate, breach, or result in a default or result
in the creation or imposition of any lien upon any of the assets of such Loan
Party under, any existing obligation of or restriction on any such Loan Party
under any material agreement (the "Material Agreements") identified in Exhibit D
of the Borrower Certificate, or (iii) breach or otherwise violate any existing
obligation of or restriction on any Loan Party under any order, judgment or
decree of any California or federal court or governmental authority binding on
any Loan Party identified in the Borrower Certificate. If a Material Agreement
is governed by the laws of a jurisdiction other than California, we have assumed
such Material Agreement is governed by the laws of the State of California. We
express no opinion as to the effect of any Loan Parties' performance of its
obligations in the Loan Documents to which it is a party on any Loan Party's
compliance with financial covenants in the Material Agreements.

            5. The execution and delivery by each Loan Party of each Loan
Document to which it is a party do not, and each Loan Party's performance of its
obligations under each Loan Document to which it is a party on or prior to the
date hereof will not, violate any current New York, California or federal
statute, rule or regulation that we have, in the exercise of customary
professional diligence, recognized as applicable to such Loan Party or to
transactions of the type contemplated by such Loan Documents.

            6. No order, consent, permit or approval of any California, New York
or federal governmental authority that we have, in the exercise of customary
professional diligence, recognized as applicable to each Loan Party or to
transactions of the type contemplated by the Loan Documents is required on the
part of any Loan Party for the execution and delivery of, and performance of its
obligations on or prior to the date hereof under, the Loan Documents to which it
is a party, except for such as have been obtained.

                                        2

<PAGE>

            7. None of the Loan Parties is an investment company required to
register under the Investment Company Act of 1940, as amended.

            8. None of the Loan Parties is a "holding company" within the
meaning of the Public Utility Holding Company Act of 1935, as amended.

            Our opinion in paragraph 3 above as to the enforceability of the
Loan Documents is subject to:

            (i) public policy considerations, statutes or court decisions that
      may limit the rights of a party to obtain indemnification against its own
      negligence, willful misconduct or unlawful conduct;

            (ii) the unenforceability under certain circumstances of broadly or
      vaguely stated waivers or waivers of rights granted by law where the
      waivers are against public policy or prohibited by law;

            (iii) the unenforceability under certain circumstances of provisions
      imposing penalties, liquidated damages or other economic remedies;

            (iv) the unenforceability under certain circumstances of provisions
      appointing one party as trustee for an adverse party or provisions for the
      appointment of a receiver; and

            (vi) the unenforceability under certain circumstance of choice of
      law provisions.

            In addition, we call your attention to the fact that the California
Supreme Court in Grafton Partners v. Superior Court, 36 Cal. 4th 944 (2005),
recently held that, under California law, pre-dispute waivers of the right to
trial by jury are unenforceable. Although each Loan Document states it is
governed by the laws of the State of New York, a California court may not
enforce the choice of New York law with respect to the waiver of the right to
trial by jury in such Loan Document. Accordingly, we express no opinion as to
whether or not the waiver of such right would be given effect by a California
court.

            We express no opinion with respect to your ability to collect
attorneys' fees and costs in an action involving the Loan Documents if you are
not the prevailing party in that action (we call your attention to the effect of
Section 1717 of the California Civil Code, which provides that where a contract
permits one party thereto to recover attorneys' fees, the prevailing party in
any action to enforce any provision of the contract shall be entitled to recover
its reasonable attorneys' fees).

            We express no opinion as to any provision of any Loan Documents
requiring written amendments or waivers of such Loan Document insofar as they
suggest that oral or other modifications, amendments or waivers could not be
effectively agreed upon by the parties or that the doctrine of promissory
estoppel might not apply.

                                        3

<PAGE>

            As to our opinion in paragraph 3, we advise you of California
statutory provisions and case law to the effect that a guarantor may be
discharged if the beneficiary of the guaranty alters the original obligation of
the principal, fails to inform the guarantor of material information pertinent
to the principal or any collateral, elects remedies that may impair either the
subrogation or reimbursement rights of the guarantor against the principal or
the value of any collateral, fails to accord the guarantor the protections
afforded a debtor under Division 9 of the California Uniform Commercial Code or
otherwise takes any action that prejudices the guarantor, unless, in any such
case, the guarantor validly waives such rights or the consequences of any such
action. See, e.g., California Civil Code Sections 2799 through Section 2855;
California Commercial Code Section 9-602, Sumitomo Bank of California v.
Iwasaki, 70 Cal. 2d 81, 73 Cal. Rptr. 564 (1968); Union Bank v. Gradsky, 265
Cal. App. 2d 40, 71 Cal. Rptr. 64 (1968). While California Civil Code Section
2856 provides that express waivers of a guarantor's right to be discharged, such
as those contained in the Subsidiary Guaranty, are generally enforceable under
California law, we express no opinion with respect to the effectiveness of the
waivers in the Subsidiary Guaranty.

            We express no opinion as to the effect of non-compliance by you with
any state or federal laws or regulations applicable to the transactions
contemplated by the Loan Documents because of the nature of your business.

            We express no opinion as to any provision of the Loan Documents
insofar as it purports to grant a right of setoff in respect of any Loan Party's
assets to any person other than a creditor of such Loan Party.

            We advise you that Section 9.09(b) of the Credit Agreement, which
provides for non exclusive jurisdiction of the courts of the State of New York
and federal courts sitting in that State, may not be binding on the courts in
the forums selected or excluded.

            We advise you that if an action based on the Loan Documents were
commenced in a federal or state court in New York, a judgment for money relating
to the Loan Documents ordinarily would be enforced only in United States
dollars. The method used to determine the rate of conversion of foreign currency
into United States dollars will depend on various factors.

            We express no opinion concerning (i) federal or state securities
laws or regulations, (ii) federal or state antitrust, unfair competition or
trade practice laws or regulations, (iii) pension and employee benefit laws and
regulations, (iv) compliance with fiduciary requirements, (v) federal or state
environmental laws and regulations, (vi) federal or state land use or
subdivision laws or regulations (vii) the Trading with the Enemy Act, as
amended, the foreign assets control regulations of the United States Treasury
Department, the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism (USA PATRIOT Act) Act of 2001, as
amended, Executive Order No. 13,224 of September 24, 2001, Blocking Property and
Prohibiting Transactions with Persons Who Commit, Threaten to Commit or Support
Terrorism, as amended, and any enabling legislation, rules, regulations or
executive orders relating thereto, or (viii) federal or state laws and
regulations concerning filing requirements.

                                        4

<PAGE>

            The law covered by this opinion is limited to the present federal
law of the United States, the present law of the State of California and with
respect to our opinions in paragraphs 3, 5 and 6, the present law of the State
of New York. We express no opinion as to the laws of any other jurisdiction and
no opinion regarding the statutes, administrative decisions, rules, regulations
or requirements of any county, municipality, subdivision or local authority of
any jurisdiction.

            This opinion is furnished by us as counsel for the Loan Parties and
may be relied upon by you only in connection with the Loan Documents. It may not
be used or relied upon by you for any other purpose or by any other person, nor
may copies be delivered to any other person, without in each instance our prior
written consent. You may, however, deliver a copy of this opinion to your
accountants, attorneys, and other professional advisors, to governmental
regulatory agencies having jurisdiction over you, to permitted assignees of the
Loans in connection with such assignment and to participants in connection with
their purchase of a participation interest in the Loans. At your request, we
hereby consent to reliance on this opinion by such assignees (but not such
participants) to the same extent as the addressees hereof as if this opinion
were addressed and had been delivered to them on the date of this opinion, on
the condition and understanding that (i) we assume no responsibility or
obligation to consider the applicability or correctness of this opinion to any
person other than its addressee(s) and (ii) any such reliance by a future
assignee and by the Administrative Agent on behalf of such future assignee must
be actual and reasonable under the circumstances existing at the time of
assignment. This opinion is expressly limited to the matters set forth above,
and we render no opinion, whether by implication or otherwise, as to any other
matters. This letter speaks only as of the date hereof and we assume no
obligation to update or supplement this opinion to reflect any facts or
circumstances that arise after the date of this opinion and come to our
attention, or any future changes in laws.

                                        Respectfully submitted,

                                        5

<PAGE>

                                    EXHIBIT C

                      FORM OF INCREASING LENDER SUPPLEMENT

            INCREASING LENDER SUPPLEMENT, dated __________, 20___ (this
"Supplement"), by and among each of the signatories hereto, to the Credit
Agreement, dated as of September 14, 2005 (as amended, restated, supplemented or
otherwise modified from time to time, the "Credit Agreement"), among Pacific
Sunwear of California, Inc. (the "Borrower"), the Lenders party thereto and
JPMorgan Chase Bank, N.A., as administrative agent (in such capacity, the
"Administrative Agent").

                               W I T N E S S E T H

            WHEREAS, pursuant to Section 2.20 of the Credit Agreement, the
Borrower has the right, subject to the terms and conditions thereof, to
effectuate from time to time an increase in the aggregate Commitments under the
Credit Agreement by requesting one or more Lenders to increase the amount of its
Commitment;

            WHEREAS, the Borrower has given notice to the Administrative Agent
of its intention to increase the aggregate Commitments pursuant to such Section
2.20; and

            WHEREAS, pursuant to Section 2.20 of the Credit Agreement, the
undersigned Increasing Lender now desires to increase the amount of its
Commitment under the Credit Agreement by executing and delivering to the
Borrower and the Administrative Agent this Supplement;

            NOW, THEREFORE, each of the parties hereto hereby agrees as follows:

            1. The undersigned Increasing Lender agrees, subject to the terms
and conditions of the Credit Agreement, that on the date of this Supplement it
shall have its Commitment increased by $[__________], thereby making the
aggregate amount of its total Commitments equal to $[__________].

            2. The Borrower hereby represents and warrants that no Default or
Event of Default has occurred and is continuing on and as of the date hereof.

            3. Terms defined in the Credit Agreement shall have their defined
meanings when used herein.

            4. This Supplement shall be governed by, and construed in accordance
with, the laws of the State of New York.

            5. This Supplement may be executed in any number of counterparts and
by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same document.

<PAGE>

            IN WITNESS WHEREOF, each of the undersigned has caused this
Supplement to be executed and delivered by a duly authorized officer on the date
first above written.

                                        [INSERT NAME OF INCREASING LENDER]

                                        By: ____________________________________
                                        Name:
                                        Title:

Accepted and agreed to as of the date first written above:

PACIFIC SUNWEAR OF CALIFORNIA, INC.

By:______________________________________
Name:
Title:

Acknowledged as of the date first written above:

JPMORGAN CHASE BANK, N.A.
as Administrative Agent

By:______________________________________
Name:
Title:

                                        2

<PAGE>

                                    EXHIBIT D

                      FORM OF AUGMENTING LENDER SUPPLEMENT

            AUGMENTING LENDER SUPPLEMENT, dated __________, 20___ (this
"Supplement"), to the Credit Agreement, dated as of September 14, 2005 (as
amended, restated, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among Pacific Sunwear of California, Inc. (the "Borrower"),
the Lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent
(in such capacity, the "Administrative Agent").

                               W I T N E S S E T H

            WHEREAS, the Credit Agreement provides in Section 2.20 thereof that
any bank, financial institution or other entity may extend Commitments under the
Credit Agreement subject to the approval of the Borrower and the Administrative
Agent, by executing and delivering to the Borrower and the Administrative Agent
a supplement to the Credit Agreement in substantially the form of this
Supplement; and

            WHEREAS, the undersigned Augmenting Lender was not an original party
to the Agreement but now desires to become a party thereto;

            NOW, THEREFORE, each of the parties hereto hereby agrees as follows:

            1. The undersigned Augmenting Lender agrees to be bound by the
provisions of the Credit Agreement and agrees that it shall, on the date of this
Supplement, become a Lender for all purposes of the Credit Agreement to the same
extent as if originally a party thereto, with a Commitment of $[__________].

            2. The undersigned Augmenting Lender (a) represents and warrants
that it has full power and authority, and has taken all action necessary, to
execute and deliver this Supplement and to consummate the transactions
contemplated hereby and by the Credit Agreement and to become a Lender under the
Credit Agreement; (b) confirms that it has received a copy of the Credit
Agreement, together with copies of the most recent financial statements
delivered pursuant to Section 5.01 thereof, as applicable, and has reviewed such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Supplement; (c) agrees that it
will, independently and without reliance upon the Administrative Agent or any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Credit Agreement or any other instrument or document
furnished pursuant hereto or thereto; (d) appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise
such powers and discretion under the Credit Agreement or any other instrument or
document furnished pursuant hereto or thereto as are delegated to the
Administrative Agent by the terms thereof, together with such powers as are
incidental thereto; (e) agrees that it will be bound by the provisions of the
Credit Agreement and will perform in accordance with its terms all the
obligations which by the terms of the Credit Agreement are required to be
performed by it as a Lender; and (f) if it is a Foreign Lender,

<PAGE>

attached to this Supplement is any documentation required to be delivered by it
pursuant to the terms of the Credit Agreement, duly completed and executed by
the undersigned.

            3. The undersigned's address for notices for the purposes of the
Credit Agreement is as follows:

                  [__________]

            4. The Borrower hereby represents and warrants that no Default or
Event of Default has occurred and is continuing on and as of the date hereof.

            5. Terms defined in the Credit Agreement shall have their defined
meanings when used herein.

            6. This Supplement shall be governed by, and construed in accordance
with, the laws of the State of New York.

            7. This Supplement may be executed in any number of counterparts and
by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same document.

                [remainder of this page intentionally left blank]

                                        2

<PAGE>

            IN WITNESS WHEREOF, each of the undersigned has caused this
Supplement to be executed and delivered by a duly authorized officer on the date
first above written.

                                        [INSERT NAME OF AUGMENTING LENDER]

                                        By: ____________________________________
                                        Name:
                                        Title:

Accepted and agreed to as of the date first written above:

PACIFIC SUNWEAR OF CALIFORNIA, INC.

By:_____________________________________
Name:
Title:

Acknowledged as of the date first written above:

JPMORGAN CHASE BANK, N.A.
as Administrative Agent

By:_____________________________________
Name:
Title:

                                        3

<PAGE>

                                    EXHIBIT E

                            LIST OF CLOSING DOCUMENTS

                                   [Attached]exv10w1

 

Exhibit 10.1

EXECUTION COPY

$65,000,000 Principal Amount

MIDWAY GAMES INC.

6.0% Convertible Senior Notes due 2025

PURCHASE AGREEMENT

September 13,
2005

 

 

PURCHASE AGREEMENT

September 13, 2005

BANC OF AMERICA SECURITIES LLC

UBS SECURITIES LLC

as Initial Purchasers

c/o Banc of America Securities LLC

9 W. 57th Street, 22nd Floor

New York, New York 10019

Ladies and Gentlemen:

          Midway Games Inc., a Delaware corporation, (the “Company”), proposes to issue and sell
to the initial purchasers named in Schedule A hereto (the “Initial Purchasers”) $65,000,000
aggregate principal amount of its 6.0% Convertible Senior Notes due 2025 (the “Firm
Bonds”). In addition, the Company proposes to grant to the Initial Purchasers the option to
purchase from the Company up to an additional $10,000,000 aggregate principal amount of the
Company’s 6.0% Convertible Senior Notes due 2025 (the “Additional Bonds”). The Firm Bonds
and the Additional Bonds are hereinafter collectively sometimes referred to as the “Bonds.”

          The Bonds are to be issued pursuant to an indenture (the “Indenture”) to be dated as
of September 19, 2005 between the Company and Wells Fargo Bank, N.A., as trustee (the
“Trustee”). The Bonds will be convertible in accordance with their terms and the terms of
the Indenture into shares (the “Shares”) of the common stock of the Company, par value
$0.01 per share (the “Common Stock”).

          The Bonds and the Shares will be offered without being registered under the Securities Act of
1933, as amended (the “Securities Act”), to “qualified institutional buyers” in compliance
with the exemption from registration provided by Rule 144A under the Securities Act (“Rule
144A”).

          The Initial Purchasers and their direct and indirect transferees will be entitled to the
benefits of a Registration Rights Agreement to be entered into at or prior to the time of purchase
(as defined herein) between the Company and the Initial Purchasers (the “Registration Rights
Agreement”).

          In connection with the sale of the Bonds, the Company has prepared a preliminary offering
memorandum (the “Preliminary Memorandum”) and will prepare a final offering memorandum (the
“Final Memorandum” and, with the Preliminary Memorandum, each a

 

 

“Memorandum”) including or incorporating by reference a description of the terms of the Bonds and the Shares, the
terms of the offering and a description of the Company. As used herein, the term “Memorandum”
shall include in each case the documents incorporated by reference therein, if any. The terms
“supplement”, “amendment” and “amend” as used herein with respect to a Memorandum shall include all
documents deemed to be incorporated by reference in such Memorandum, if any, that are filed
subsequent to the date of such Memorandum with the Securities and Exchange Commission (the
“Commission”) pursuant to the Securities Exchange Act of 1934, as amended (the
“Exchange Act”). As used herein, “business day” shall mean a day on which the New York
Stock Exchange is open for trading.

          The Company and the Initial Purchasers agree as follows:

          1. Sale and Purchase: Upon the basis of the warranties and representations and
subject to the other terms and conditions herein set forth, the Company agrees to sell to the
Initial Purchasers, and each of the Initial Purchasers, severally and not jointly, agrees to
purchase from the Company, the aggregate principal amount of Firm Bonds set forth opposite the name
of such Initial Purchaser in Schedule A hereto at a purchase price of 97.0% of the principal amount
thereof.

          In addition, the Company hereby grants to the several Initial Purchasers the option to
purchase from time to time (but not more than once), and upon the basis of the representations and
warranties and subject to the other terms and conditions herein set forth, each Initial Purchaser
shall have the right to purchase from time to time (but not more than once) from the Company, at a
purchase price of 97.0% of the principal amount thereof, plus accrued interest, if any, from the
time of purchase (as hereinafter defined) to the additional time of purchase (as hereinafter
defined), Additional Bonds in an aggregate principal amount proportional to the aggregate principal
amount of Firm Bonds set forth opposite such Initial Purchaser’s name on Schedule A hereto. This
option may be exercised by Banc of America Securities LLC, on behalf of the Initial Purchasers, at
any time (but not more than once) on or before the thirtieth day following the date the Firm Bonds
are issued, by written notice to the Company. Such notice shall set forth the aggregate initial
principal amount of Additional Bonds as to which the option is being exercised, and the date and
time when the Additional Bonds are to be delivered (such date and time being herein referred to as
the “additional time of purchase”); provided, however, that the additional time of
purchase shall not be earlier than (i) the time of purchase or (ii) the second business day after
the date on which the option shall have been exercised nor later than the tenth business day after
the date on which the option shall have been exercised.

          2. Payment and Delivery: Payment of the purchase price for the Firm Bonds shall be
made to the Company by Federal (same day) funds, against delivery of the Firm Bonds to you, at the
offices of Cleary Gottlieb Steen & Hamilton LLP in New York, New York, or at such other place as
may be agreed upon by the parties hereto, for the respective accounts of the Initial Purchasers.
Such payment and delivery shall be made at 10:00 A.M., eastern time, on September 19, 2005 (unless
another time shall be agreed to by you and the Company). The time at which such payment and
delivery are actually made is herein sometimes called the “time of purchase.”

2

 

          Payment of the purchase price for the Additional Bonds shall be made at the additional time of
purchase in the same manner and at the same office and time of day as the payment for the Firm
Bonds.

          Certificates for the Bonds shall be in definitive form or global form, as specified by you,
and registered in the names and in such denominations as you shall request in writing not later
than one full business day prior to the time of purchase or the additional time of purchase, as the
case may be. For the purpose of expediting the checking of the certificates for the Bonds by you,
the Company agrees to make such certificates available to you for such purpose at least one full
business day preceding the time of purchase or the additional time of purchase, as the case may be.

          3. Representations and Warranties of the Company: The Company represents and warrants
to each of the Initial Purchasers that:

          (a) (i) Each document, if any, filed or to be filed pursuant to the Exchange Act and
incorporated by reference in any Memorandum complied or will comply when so filed in all
material respects with the Exchange Act and the applicable rules and regulations of the
Commission thereunder and (ii) the Preliminary Memorandum, as of its date did not and as of
the time of execution of this Agreement does not, and the Final Memorandum, as amended or
supplemented, prior to the time of purchase will not, contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading; provided,
however, that any representations and warranties set forth in this paragraph do not
apply to statements or omissions in any Memorandum based upon information relating to any
Initial Purchaser furnished to the Company in writing by or on behalf of such Initial
Purchaser expressly for use therein;

          (b) As of the date of this Agreement, the Company has an authorized and outstanding
capitalization as set forth under the column heading entitled “Actual” in the section of the
Final Memorandum entitled “Capitalization” and, as adjusted to give effect to the offering
of the Firm Bonds and the application of the net proceeds therefrom as described in the “Use
of Proceeds” section of the Final Memorandum, the Company would, as of September 13, 2005,
have had an authorized and outstanding capitalization as set forth under the column heading
entitled “As Adjusted” in the section of the Final Memorandum entitled “Capitalization”; all
of the issued and outstanding securities, including the Common Stock and Preferred Stock, of
the Company have been duly authorized and validly issued and are fully paid and
non-assessable, have been issued in compliance with all federal and state securities laws
and were not issued in violation of any statutory or contractual preemptive rights, resale
rights, rights of first refusal or similar rights; other than as described in the Final
Memorandum, no options, warrants or other rights to purchase, agreements or other
obligations to issue or other rights to convert any obligation into shares of capital stock
or ownership interests in the Company are outstanding;

3

 

          (c) The Company has been duly incorporated and is validly existing as a corporation in
good standing under the laws of the State of Delaware, with full corporate power and
authority to own, lease and operate its properties and to conduct its business as described
in the Memorandum;

          (d) The Company is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction where the ownership or leasing of its properties or the
conduct of its business requires such qualification, except where the failure to be so
qualified and in good standing would not, individually or in the aggregate, have a material
adverse effect on the business, properties, financial condition, results of operation or
prospects of the Company and the Subsidiaries (as hereinafter defined) taken as a whole (a
“Material Adverse Effect”); and the Company is in compliance in all respects with
the laws, orders, rules, regulations and directives issued or administered by such
jurisdictions, except where the failure to be in compliance would not have a Material
Adverse Effect;

          (e) The Company has no subsidiaries other than Midway Home Entertainment Inc., Midway
Amusements Games, LLC, Midway Games Sales Corporation, Midway Nintendo Inc., Midway
Interactive Inc., Midway Sales Company, LLC, Midway Games (Europe) GmbH, Surreal Software
Inc., Midway Studios – Austin Inc., Midway Studios – Los Angeles Inc., Midway Games Limited,
K.K. Midway Games, Midway Home Studios Inc., Midway Games GmbH, Midway Games Canada Corp,
Midway Games West Inc., (collectively, the “Subsidiaries”); the subsidiaries of the
Company, other than Midway Home Entertainment Inc., Midway Amusements Games, LLC, Surreal
Software Inc., Midway Studios – Austin Inc., Midway Studios – Los Angeles Inc., Midway Games
Limited and Midway Games West Inc., would not, individually or in the aggregate, be a
“significant subsidiary” of the Company as defined by Rule 1-02 of Regulation S-X; other
than the capital stock or other ownership interests of the Subsidiaries, the Company does
not own, directly or indirectly, any shares of stock or any other equity or long-term debt
securities of any corporation or have any equity interest in any firm, partnership, joint
venture, association or other entity; each Subsidiary has been duly organized and is validly
existing as a corporation or limited liability company in good standing under the laws of
the jurisdiction of its organization, with full corporate or limited liability company, as
applicable, power and authority to own, lease and operate its properties and to conduct its
business as described in the Memorandum; each Subsidiary is duly qualified to do business as
a foreign corporation or limited liability company and is in good standing in each
jurisdiction where the ownership or leasing of its properties or the conduct of its business
requires such qualification, except where the failure to be so qualified and in good
standing would not, individually or in the aggregate, have a Material Adverse Effect; each
of the Subsidiaries are in compliance in all respects with the laws, orders, rules,
regulations and directives issued or administered by such jurisdictions, except where the
failure to be in compliance would not have a Material Adverse Effect; other than
Midway/Nintendo Inc., of which the Company owns 50% of the outstanding capital stock, all of
the issued and outstanding shares of capital stock or other ownership interests of the
Subsidiaries have been duly and validly

4

 

authorized and issued, are fully paid and
non-assessable and are owned directly or indirectly by the Company, free and clear of all
liens, encumbrances, equities or claims, and no options, warrants, or other rights to
purchase, agreements or other obligations to issue or other rights to convert any obligation
into shares of capital stock or other ownership interests in any Subsidiary are outstanding;

          (f) Neither the Company nor any of the Subsidiaries is in breach or violation of, or in
default under (nor has any event occurred which with notice, lapse of time, or both would
result in any breach or violation of, constitute a default under) its respective charter or
by-laws or other organizational documents; neither the Company nor any of the Subsidiaries
is in breach or violation of, or in default under (nor has any event occurred which with
notice, lapse of time, or both would result in any breach or violation of, constitute a
default under or give the holder of any indebtedness (or person action on such holder’s
behalf), the right to require the repurchase, redemption or repayment of all or part of such
indebtedness under) any indenture, mortgage, deed of trust, bank loan or credit agreement or
other evidence of indebtedness, or any license, lease, contract or other agreement or
instrument to which the Company or any of the Subsidiaries is a party or by which any of
them or their respective properties may be bound or affected, or under any federal, state,
local or foreign law, regulation or rule or any decree, judgment or order applicable to the
Company or any of the Subsidiaries, except where such breach, violation or default would not
have a Material Adverse Effect; and the execution, delivery and performance of this
Agreement, the Registration Rights Agreement, the Indenture and the Bonds and consummation
of the transactions contemplated hereby and thereby including the issuance of the Bonds and
the issuance of the Shares upon conversion of the Bonds, will not conflict with, result in
any breach or violation of or constitute a default under (nor constitute any event which
with notice, lapse of time or both would result in any breach or violation of or constitute
a default under), the charter or by-laws or other organizational documents of the Company or
any of the Subsidiaries or any indenture, mortgage, deed of trust, bank loan or credit
agreement or other evidence of indebtedness, or any license, lease, contract or other
agreement or instrument to which the Company or any of the Subsidiaries is a party or by
which any of them or their respective properties may be bound or affected, or any federal,
state, local or foreign law, regulation or rule or any decree, judgment or order applicable
to the Company or any of the Subsidiaries;

          (g) The Indenture has been duly authorized by the Company and when duly executed and
delivered by the Company and duly authorized, executed and delivered by the Trustee will be
a legal, valid and binding agreement of the Company, enforceable in accordance with its
terms, except as the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or similar laws affecting creditors’ rights
generally and general principles of equity;

          (h) The Registration Rights Agreement has been duly authorized by the Company and when
executed and delivered by the Company and duly authorized, executed and delivered by the
Initial Purchasers will be a legal, valid and binding

5

 

agreement of the Company, enforceable
in accordance with its terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or similar laws
affecting creditors’ rights generally and general principles of equity;

          (i) The Bonds have been duly authorized by the Company and when executed and delivered
by the Company and duly authenticated by the Trustee in accordance with the terms of the
Indenture and delivered to and paid for by the Initial Purchasers in accordance with the
terms hereof will constitute legal, valid and binding obligations of the Company,
enforceable in accordance with their terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or
similar laws affecting creditors’ rights generally and general principles of equity, and
will be entitled to the benefits of the Indenture and the Registration Rights Agreement; the
Shares initially issuable upon conversion of the Bonds have been duly authorized and validly
reserved for issuance upon conversion of the Bonds, and upon conversion of the Bonds in
accordance with their terms and the terms of the Indenture will be issued free of statutory
and contractual preemptive rights and are sufficient in number to meet the current
conversion requirements, and such Shares, when so issued upon such conversion in accordance
with the terms of the Indenture, will be duly and validly issued and fully paid and
non-assessable;

          (j) This Agreement has been duly authorized, executed and delivered by the Company and
is a legal, valid and binding agreement of the Company enforceable in accordance with its
terms, except as rights to indemnification and contribution hereunder may be limited by
applicable law and except as enforceability may be limited by bankruptcy, insolvency or
other laws affecting the rights of creditors generally or by general equitable principles;

          (k) The terms of the Bonds, the Registration Rights Agreement, the Indenture and the
capital stock of the Company, including the Shares, conform in all material respects to the
description thereof contained or incorporated by reference in the Final Memorandum;

          (l) No approval, authorization, consent or order of or filing with any federal, state,
local or foreign governmental or regulatory commission, board, body, authority or agency, or
of or with the rules of the New York Stock Exchange, or approval of stockholders of the
Company, is required in connection with the issuance and sale by the Company of the Bonds or
the issuance of Shares upon conversion of the Bonds or the consummation of the transactions
as contemplated hereby and by the Indenture, the Registration Rights Agreement and the Bonds
other than (i) as may be required under the securities or blue sky laws of the various
jurisdictions in which the Bonds and the Shares are being offered by the Initial Purchasers
and (ii) as may be required by federal and state securities laws with respect to the
Company’s obligations under the Registration Rights Agreement and the listing of the Shares
on the New York Stock Exchange in connection therewith; there are no stamp or other issuance
or transfer taxes or duties or other similar

6

 

fees or charges required to be paid in connection with the execution and delivery of this Agreement or the issuance or
sale by the Company of the Bonds or upon the issuance of Shares upon the conversion thereof;

          (m) The Company has obtained for the benefit of the Initial Purchasers the agreement (a
“Lock-Up Agreement”), in the form set forth as Exhibit B hereto, of each of
its executive officers and directors;

          (n) Except as described in the Memorandum, (i) no person has the right, contractual or
otherwise, to cause the Company to issue or sell to it any securities of the Company, (ii)
no person has any preemptive rights, resale rights, rights of first refusal or other rights
to purchase any securities of the Company and (iii) no person has the right to act as an
initial purchaser or as a financial advisor to the Company in connection with the offer and
sale of the Bonds, in the case of each of the foregoing clauses, whether as a result of the
sale of the Bonds as contemplated hereby or otherwise; and except as described in the
Memorandum, no person has the right, contractual or otherwise, to cause the Company to
register under the Securities Act any securities of the Company or to include any shares of
Common Stock or shares of any other capital stock or other securities of the Company in the
registration statement to be filed with the Commission pursuant to the Registration Rights
Agreement, whether as a result of the sale of the Bonds as contemplated hereby or otherwise;

          (o) Ernst & Young LLP, whose reports on the consolidated financial statements of the
Company and the Subsidiaries are included or incorporated by reference in the Memorandum,
are independent, registered public accountants with respect to the Company as required by
the Securities Act, and the applicable published rules and regulations thereunder;

          (p) Each of the Company and the Subsidiaries has all necessary licenses,
authorizations, permits, consents and approvals (collectively, “Consents”) and has
made all necessary filings required under any federal, state, local or foreign law,
regulation or rule and has obtained all necessary Consents from other persons, in order to
conduct its respective business, except to the extent that failure to have any such Consents
or make any such filings would not, individually or in the aggregate, have a Material
Adverse Effect; neither the Company nor any of the Subsidiaries is in violation of, or in
default under, nor has the Company or any of the Subsidiaries received notice of any
proceedings relating to revocation or modification of any such Consent or any federal,
state, local or foreign law, regulation or rule or any decree, order or judgment applicable
to the Company or any of the Subsidiaries, except where such violation, default, revocation
or modification would not, individually or in the aggregate, have a Material Adverse Effect;
the Company, and each of its officers and directors in their capacities as such, is in
compliance in all respects with the provisions of the Sarbanes-Oxley Act of 2002 and the
rules and regulations promulgated thereunder, including without limitation Sections 302 and
906 related to certifications, and the Company is in compliance with all applicable listing
standards of the New York Stock Exchange;

7

 

          (q) Except as described in the Memorandum, there are no actions, suits, claims,
investigations or proceedings pending or threatened or, to the knowledge of the Company,
after due inquiry, contemplated to which the Company or any of the Subsidiaries or any of
their respective officers is or would be a party or of which any of their respective
properties is or would be subject at law or in equity, or before or by any federal, state,
local or foreign governmental or regulatory commission, board, body, court, authority or
agency, except any such action suit, claim, investigation or proceeding which would not
result in a judgment, decree or order either (A) having, individually or in the aggregate, a
Material Adverse Effect or (B) preventing the consummation of the transactions contemplated
hereby and by the Indenture, the Registration Rights Agreement and the Bonds;

          (r) All material tax returns required to be filed by the Company and each of the
Subsidiaries have been filed, and all material taxes and other assessments of a similar
nature (whether imposed directly or through withholding) including any interest, additions
to tax or penalties applicable thereto due or claimed to be due from such entities have been
paid, other than those being contested in good faith and for which adequate reserves have
been provided;

          (s) The Company and each of the Subsidiaries maintains insurance covering its
properties, operations, personnel and businesses as the Company deems adequate; such
insurance insures against such losses and risks to an extent which is adequate to protect
the Company and the Subsidiaries and their respective businesses; all such insurance is
fully in force on the date hereof and will be fully in force at the time of purchase and any
additional time of purchase;

          (t) Except as disclosed in the Memorandum, neither the Company nor any of the
Subsidiaries has sustained since the date of the last audited financial statements included
or incorporated by reference in the Memorandum any loss or interference with its respective
business from fire, explosion, flood or other calamity, whether or not covered by insurance,
or from any labor dispute or court or governmental action, order or decree;

          (u) The Company has not sent or received any communication regarding termination of, or
intent not to renew, any of the contracts or agreements that are, individually or in the
aggregate, material to the Company and that are referred to, described in or incorporated by
reference in the Memorandum, and no such termination or non-renewal has been threatened by
the Company or, to the Company’s knowledge after due inquiry, any other party to any such
contract or agreement;

          (v) Neither the Company nor the Subsidiaries are engaged in any unfair labor practice,
except as would not, individually or in the aggregate have a Material Adverse Effect; except
for matters which would not, individually or in the aggregate, have a Material Adverse
Effect, (i) there is (A) no unfair labor practice complaint pending or, to the Company’s
knowledge after due inquiry, threatened against

8

 

the Company or any of the Subsidiaries
before the National Labor Relations Board, and no grievance or arbitration proceeding
arising out of or under collective bargaining agreements is pending or threatened, (B) no
strike, labor dispute, slowdown or stoppage pending or, to the Company’s knowledge after due
inquiry, threatened against the Company or any of the Subsidiaries and (C) no union
representation dispute currently existing concerning the employees of the Company or any of
the Subsidiaries and (ii) to the Company’s knowledge after due inquiry, (A) no union
organizing activities are currently taking place concerning the employees of the Company or
any of the Subsidiaries and (B) there is no violation of any federal, state, local or
foreign law relating to discrimination in the hiring, promotion or pay of employees, any
applicable wage or hour laws or any provision of the Employee Retirement Income Security Act
of 1974 (“ERISA”) or the rules and regulations promulgated thereunder concerning the
employees of the Company or any of the Subsidiaries;

          (w) Each of the Company and the Subsidiaries owns or has obtained valid licenses for
the patents, patent applications, inventions, technology, know-how (including trade secrets
and other unpatented and/or unpatentable proprietary or confidential information systems or
procedures), trademarks, trademark registrations service marks, service mark registrations,
mask work rights, trade names, copyrights, and other rights which are described in the
Memorandum as being owned or used by or licensed to the Company or its Subsidiaries or which
are necessary or used for the conduct of their respective businesses as currently conducted
(collectively, the “Intellectual Property”), except as would not, individually or in the
aggregate, have a Material Adverse Effect; except as would not, individually or in the
aggregate, have a Material Adverse Effect, each of the Company and the Subsidiaries has
taken all customary and commercially reasonable steps to protect its trade secrets and to
ensure that it will own, or have rights sufficient for the conduct of its business in, the
work product (and all Intellectual Property relating thereto) of its employees and
consultants produced in the course of their work for the Company or any Subsidiary; except
as set forth in the Memorandum: (i) to the best knowledge of the Company, there are no
rights of third parties to any such Intellectual Property inconsistent with the rights of
the Company related to such Intellectual Property except as would not, individually or in
the aggregate, have a Material Adverse Effect, (ii) to the best knowledge of the Company,
there is no infringement by third parties of any such Intellectual Property owned or
licensed by the Company or any of the Subsidiaries except as would not, individually or in
the aggregate, have a Material Adverse Effect, (iii) there is no pending or, to the
knowledge of the Company, threatened action, suit, proceeding or claim by others challenging
the rights of the Company or any of the Subsidiaries in or to any Intellectual Property
except as would not, individually or in the aggregate, have a Material Adverse Effect, (iv)
there is no pending or, to the knowledge of the Company, threatened action, suit, proceeding
or claim by others challenging the validity or scope of any Intellectual Property except as
would not, individually or in the aggregate, have a Material Adverse Effect, (v) there is no
pending or, to the knowledge of the Company, threatened action, suit, proceeding or claim by
others that the Company or any of its Subsidiaries infringes or otherwise violates, or would
infringe or otherwise violate upon commercialization of

9

 

its products and product candidates
described in the Memorandum, any patent, trademark, copyright, trade secret or other
proprietary rights of others except as would not, individually or in the aggregate, have a
Material Adverse Effect, and (vi) to the best knowledge of the Company there is no patent or
patent application which contains claims that conflict or interfere with or may conflict or
interfere with any Intellectual Property except as would not, individually or in the
aggregate, have a Material Adverse Effect;

          (x) The financial statements included or incorporated by reference in the Memorandum,
together with the related notes and schedules, present fairly the consolidated financial
position of the Company and the Subsidiaries as of the dates indicated and the consolidated
results of operations and cash flows of the Company and the Subsidiaries for the periods
specified and have been prepared in compliance in all material respects with the
requirements of the Exchange Act and in compliance with the requirements of generally
accepted accounting principles applied on a consistent basis during the periods involved;
the other financial and statistical data set forth or incorporated by reference in the
Memorandum are accurately presented and prepared on a basis consistent with the financial
statements and books and records of the Company; and neither the Company nor the
Subsidiaries have any material liabilities or obligations, direct or contingent (including
any off-balance sheet obligations), not disclosed in the Memorandum; all disclosures
contained or incorporated by reference in the Memorandum regarding “non-GAAP financial
measures” (as such term is defined by the rules and regulations of the Commission) comply
with Regulation G of the Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder (collectively, the “Exchange Act”) and Item 10 of Regulation
S-K under the Act; except as disclosed in the Memorandum, there are no material off-balance
sheet transactions, arrangements, obligations (including contingent obligations) or any
other relationships with unconsolidated entities or other persons, that may have a material
current or future effect on the Company’s or any of its Subsidiaries’ financial condition,
changes in financial condition, results in operations, liquidity, capital expenditures,
capital resources, or significant components of revenues or expenses;

          (y) Subsequent to the respective dates as of which information is given in the
Memorandum, and except as may be otherwise stated or incorporated by reference in the
Memorandum, there has not been (A) any material adverse change, or any development involving
a prospective material adverse change, in the business, properties, prospects, regulatory
environment, management, financial condition or results of operations of the Company and the
Subsidiaries, taken as a whole, (B) any transaction which is material to the Company and the
Subsidiaries, taken as a whole, (C) any obligation, direct or contingent (including any
off-balance sheet obligations), incurred by the Company or any of the Subsidiaries, which is
material to the Company and the Subsidiaries, taken as a whole, (D) any change in the
capital stock or outstanding indebtedness of the Company or the Subsidiaries or (E) any
dividend or distribution of any kind declared, paid or made on the capital stock of the
Company;

10

 

          (z) The Company and the Subsidiaries and their properties, assets and operations are in
compliance with, and hold all permits, authorizations and approvals required under,
Environmental Laws (as defined below), except to the extent that failure to so comply or to
hold such permits, authorizations or approvals would not, individually or in the aggregate,
have a Material Adverse Effect; there are no past or present conditions, circumstances,
activities, practices, actions, omissions or plans that could reasonably be expected to give
rise to any material costs or liabilities to the Company or the Subsidiaries under, or to
interfere with or prevent compliance by the Company or the Subsidiaries with, Environmental
Laws; except as would not, individually or in the aggregate, have a Material Adverse Effect,
neither the Company nor any of the Subsidiaries (i) is the subject of any investigation,
(ii) has received any notice or claim, (iii) is a party to or, to its knowledge, affected by
any pending or threatened action, suit or proceeding, (iv) is bound by any judgment, decree
or order or (v) has entered into any agreement, in each case relating to any alleged
violation of any Environmental Law or any actual or alleged release or threatened release or
cleanup at any location of any Hazardous Materials (as defined below) (as used herein,
“Environmental Law” means any federal, state, local or foreign law, statute, ordinance,
rule, regulation, order, decree, judgment, injunction, permit, license, authorization or
other binding requirement, or common law, relating to health, safety or the protection,
cleanup or restoration of the environment or natural resources, including those relating to
the distribution, processing, generation, treatment, storage, disposal, transportation,
other handling or release or threatened release of Hazardous Materials, and “Hazardous
Materials” means any material (including, without limitation, pollutants, contaminants,
hazardous or toxic substances or wastes) that is regulated by or may give rise to liability
under any Environmental Law);

          (aa) When the Bonds are issued pursuant to this Agreement, the Bonds will not be of the
same class (within the meaning of Rule 144A) as securities that are listed on a national
securities exchange registered pursuant to Section 6 of the Exchange Act or quoted in a U.S.
automated inter-dealer quotation system;

          (bb) Neither the Company nor any Affiliate (as defined in Rule 501(b) of Regulation D
under the Securities Act) (i) sold, offered for sale, solicited offers to buy or otherwise
negotiated in respect of, any security (as defined in the Securities Act) which is or would
be integrated with the sale of the Bonds in a manner that would require the registration
under the Securities Act of the Bonds or (ii) offered, solicited offers to buy or sold the
Bonds by any form of general solicitation or general advertising (as those terms are used in
Regulation D under the Securities Act) or in any manner involving a public offering within
the meaning of Section 4(2) of the Securities Act;

          (cc) It is not necessary in connection with the offer, sale and delivery of the Bonds
to the Initial Purchasers pursuant to this Agreement to register the Bonds or the Shares
deliverable upon conversion of the Bonds under the Securities Act or to qualify the
Indenture under the Trust Indenture Act of 1939, as amended;

11

 

          (dd) Neither the Company nor any of the Subsidiaries is, nor after giving effect to the
offering and sale of the Bonds and the application of the proceeds thereof as described in
the Final Memorandum will any of them be, required to register as an “investment company” as
defined in the Investment Company Act of 1940, as amended;

          (ee) Except as described in the Final Memorandum, the Company and each of the
Subsidiaries has good and marketable title to all property (real and personal) described in,
or in a document incorporated by reference in, the Memorandum as being owned by each of
them, free and clear of all liens, claims, security interests or other encumbrances other
than minor encumbrances for easements and the like that do not interfere with the Company’s
use of the property or the value of the property to the Company; all the property described
in, or in a document incorporated by reference in, the Memorandum as being held under lease
by the Company or a Subsidiary is held thereby under valid, subsisting and enforceable
leases;

          (ff) Except for the Registration Rights Agreement, there are no contracts or agreements
between the Company and any person granting such person the right to require the Company to
register any securities with the SEC;

          (gg) The Company and each of the Subsidiaries maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management’s general or specific authorization; (ii) transactions are
recorded as necessary (x) to permit preparation of financial statements in conformity with
generally accepted accounting principles and (y) to maintain accountability for assets;
(iii) access to assets is permitted only in accordance with management’s general or specific
authorization; and (iv) the recorded accountability for assets is compared with existing
assets at reasonable intervals and appropriate action is taken with respect to any
differences;

          (hh) The Company does not have any significant deficiencies or material weaknesses in
the design or operation of the Company’s internal control over financial reporting; there
has not been any fraud, whether or not material, that involves management or other employees
of the Company who have a significant role in the Company’s internal control over financial
reporting; since the date of the most recent evaluation of the Company’s disclosure controls
and procedures, there have been no significant changes in internal controls or in other
factors that could significantly affect the Company’s internal control over financial
reporting, including any corrective actions with regard to significant deficiencies or
material weaknesses;

          (ii) The Company has established and maintains disclosure controls and procedures (as
such term is defined in Rule 13a-15 and 15d-15 under the Exchange Act); such disclosure
controls and procedures are designed to ensure that material information relating to the
Company, including its consolidated subsidiaries, is made known to the Company’s Principal
Executive Officer and its Principal Financial Officer

12

 

by others within those entities, have
been evaluated for effectiveness as of the end of the Company’s most recently completed
fiscal quarter, and such disclosure controls and procedures are effective to perform the
functions for which they were established;

          (jj) The Company has provided you true, correct, and complete copies of all
documentation pertaining to any extension of credit in the form of a personal loan made,
directly or indirectly, by the Company to any director or executive officer of the Company,
or to any family member or affiliate of any director or executive officer of the Company;
and since July 30, 2002, the Company has not, directly or indirectly, including through any
subsidiary: (i) extended credit, arranged to extend credit, or renewed any extension of
credit, in the form of a personal loan, to or for any director or executive officer of the
Company, or to or for any family member or affiliate of any director or executive officer of
the Company, or (ii) made any material modification, including any renewal thereof, to any
term of any personal loan to any director or executive officer of the Company, or any family
member or affiliate of any director or executive officer, which loan was outstanding on July
30, 2002, in each case in violation of the Sarbanes-Oxley Act of 2002;

          (kk) Any statistical and market-related data included or incorporated by reference in
the Memorandum are based on or derived from sources that the Company believes to be reliable
and accurate, and the Company has obtained the written consent to the use of such data from
such sources to the extent required;

          (ll) Neither the Company nor any of the Subsidiaries nor, to the Company’s knowledge
after due inquiry, any employee or agent of the Company or the Subsidiaries has made any
payment of funds of the Company or the Subsidiaries or received or retained any funds in
violation of any law, rule or regulation;

          (mm) Neither the Company nor any of the Subsidiaries nor any of their respective
directors or officers has taken or will take, directly or indirectly, any action designed,
or which has constituted or might reasonably be expected to cause or result in, under the
Exchange Act or otherwise, the stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Bonds or the Shares issued upon
conversion thereof;

          (nn) The Company is subject to the reporting requirements of either Section 13 or
Section 15(d) of the Exchange Act and files reports with the Commission via EDGAR;

          (oo) Except as disclosed in the Final Memorandum, there are no contracts, agreements or
understandings between the Company and any person that would give rise to a valid claim
against the Company or any Initial Purchaser for a brokerage commission, finder’s fee or
other like payment in connection with the offer or sale of the Bonds or the Shares by the
Company; and

13

 

          (pp) The agreements filed as exhibits to the Company’s most recent annual report on
Form 10-K and those filed as exhibits to any subsequent Form 8-K or 10-Q filed by the
Company constitute all agreements that are (i) material to the Company and the Subsidiaries,
taken as a whole, and (ii) required to be filed pursuant to clause (10) of paragraph (b) of
Item 601 of Regulation S-K under the Securities Act.

          In addition, any certificate signed by any officer of the Company or any of the Subsidiaries
and delivered to the Initial Purchasers or counsel for the Initial Purchasers in connection with
the offering of the Bonds shall be deemed to be a representation and warranty by the Company or
Subsidiary, as the case may be, as to matters covered thereby, to each Initial Purchaser.

          4. Representations and Warranties of the Initial Purchasers. The Initial Purchasers
propose to offer the Bonds for sale upon the terms and conditions set forth in this Agreement and
the Final Memorandum, and each Initial Purchaser hereby represents and warrants to and agrees with
the Company that:

          (a) It will offer and sell the Bonds only to persons whom it reasonably believes are
“qualified institutional buyers” (“QIBs”) within the meaning of Rule 144A in
transactions meeting the requirements of Rule 144A in purchasing such Bonds, are deemed to
have represented and agreed as provided in the Final Memorandum under the caption “Notice to
Investors”;

          (b) It is a QIB within the meaning of Rule 144A; and

          (c) It has not and will not directly or indirectly, solicit offers in the United States
for, or offer or sell, the Bonds by any form of general solicitation, general advertising
(as such terms are used in Regulation D) or in any manner involving a public offering within
the meaning of Section 4(2) of the Securities Act.

          5. Certain Covenants of the Company: The Company hereby agrees that:

          (a) The Company will prepare the Final Memorandum in a form approved by the Initial
Purchasers and will make no amendment or supplement to the Final Memorandum to which the
Initial Purchasers reasonably object;

          (b) Promptly from time to time, the Company will take such action as the Initial
Purchasers may reasonably request to qualify the Bonds and the Shares for offering and sale
under the securities laws of such jurisdictions as the Initial Purchasers may request and
will comply with such laws so as to permit the continuance of sales and dealing therein in
such jurisdictions for as long as may be necessary to complete the distribution of the
Bonds; provided, that in connection therewith the Company shall not be required to
qualify as a foreign corporation, to file a general consent to service of process or subject
itself to any tax in any such jurisdiction where it is not now so qualified or subject; and
to promptly advise you of the receipt by the Company of any notification with respect to the
suspension of the qualification of the Bonds or the Shares

14

 

for sale in any jurisdiction or
the initiation or threatening of any such proceeding for such
purpose;

          (c) The Company will furnish the Initial Purchasers with as many copies of the Final
Memorandum, any documents incorporated by reference therein and any amendment or supplement
thereto as the Initial Purchasers may from time to time reasonably request, and if, at any
time prior to the completion of the resale of the Bonds by the Initial Purchasers, any event
shall have occurred as a result of which the Final Memorandum as then amended or
supplemented would include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made when such Final Memorandum is delivered, not
misleading, or, if for any other reason it shall be necessary or desirable during such same
period to amend or supplement the Final Memorandum, the Company will notify the Initial
Purchasers and upon the request of the Initial Purchasers will prepare and furnish without
charge to the Initial Purchasers and to any dealer in securities as many copies as the
Initial Purchasers may from time to time reasonably request of an amended Final Memorandum
or a supplement to the Final Memorandum which will correct such statement or omission or
effect such compliance;

          (d) During the period beginning from the date hereof and continuing until the date 90
days after the date of the Final Memorandum, the Company will not, without the prior written
consent of Banc of America Securities LLC, issue, offer, sell, contract to sell,
hypothecate, pledge, grant or sell any option, right or warrant to purchase, or otherwise
dispose of, or contract to dispose of, any Common Stock, any securities substantially
similar to the Bonds or the Common Stock, any securities that are convertible into or
exchangeable for shares of Common Stock and debt securities or any securities that are
convertible into or exchangeable for the Bonds or such other debt securities (other than (i)
the issuance of the Bonds; (ii) the issuance of Shares upon conversion of the Bonds; (iii)
the issuance of shares of Common Stock upon conversion or exercise of convertible or
exercisable or exchangeable securities outstanding as of the date of this Agreement, (iv)
the issuance of shares of Common Stock or options pursuant to employee stock option or
employee stock purchase plans existing on, or upon exercise of warrants outstanding as of,
the date of this Agreement, or (v) up to 500,000 shares of Common Stock in connection with
the acquisition of other companies or businesses), or enter into any swap or other agreement
that transfers, in whole or in part, any of the economic consequences of ownership of the
Common Stock or Bonds irrespective of whether any transaction mentioned above is to be
settled by delivery of the Common Stock, the Bonds or other securities, in cash or
otherwise; in addition, if (1) during the period that begins on the date that is 15 calendar
days plus 3 business days before the last day of the 90-day restricted period and ends on
the last day of the 90-day restricted period, the Company issues an earnings release or
material news or a material event relating to the Company occurs, or (2) prior to the
expiration of the 90-day restricted period, the Company announces that it will release
earnings results during the 16-day period beginning on the last day of the 90-day period,
the restrictions imposed by this section shall continue to apply until the expiration of the
date that is 15 calendar days

15

 

plus 3 business days after the date on which the issuance of
the earnings release or the material news or material event occurs;

          (e) At any time when the Company is not subject to Section 13 or 15(d) of the Exchange
Act and so long as any of the Bonds (or Shares issued upon conversion thereof) are
“restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act, for
the benefit of holders from time to time of the Bonds, the Company will furnish at its
expense, upon request, to holders and beneficial owners of Bonds and prospective purchasers
of Bonds information satisfying the requirements of subsection (d)(4)(i) of Rule 144A;

          (f) The Company will use its reasonable best efforts to cause the Bonds to be eligible
for trading in PORTAL;

          (g) For so long as the Bonds remain outstanding, the Company will furnish to the
Initial Purchasers copies of all reports or other communications (financial or other)
furnished to stockholders of the Company, and will deliver to the Initial Purchasers (i) as
soon as they are available, copies of any reports and financial statements furnished to or
filed by the Company with the Commission or any securities exchange on which the Bonds or
any class of securities of the Company is listed; and (ii) such additional information
concerning the business and financial condition of the Company as the Initial Purchasers may
from time to time reasonably request (such financial information to be on a consolidated
basis to the extent the accounts of the Company and the Subsidiaries are consolidated in
reports furnished to its stockholders generally or to the Commission);

          (h) The Company will use the net proceeds received by it from the sale of the Bonds
pursuant to this Agreement in the manner specified in the Final Memorandum under the caption
“Use of Proceeds”;

          (i) The Company will reserve and keep available at all times free of preemptive rights,
Shares for the purpose of enabling the Company to satisfy any obligations to issue Shares
upon conversion of the Bonds;

          (j) Between the date hereof and the time of purchase, the Company will not do or
authorize any act or thing that would result in an adjustment of the conversion price;

          (k) The Company will use its reasonable best efforts to list, as promptly as
practicable but in no event later than the time that the registration statement is declared
effective in accordance with the Registration Rights Agreement, and subject to notice of
issuance, the Shares on the New York Stock Exchange;

          (l) Whether or not the transactions contemplated in this Agreement are consummated or
this Agreement is terminated, the Company will pay or cause to be paid all expenses incident
to the performance of its obligations under this Agreement,

16

 

including,
without limitation, (i) the fees, disbursements and expenses of the Company’s counsel and the Company’s accountants in connection with the issuance and sale of the Bonds and all other fees and
expenses in connection with the preparation of each Memorandum and all amendments and
supplements thereto, including all printing costs associated therewith, and the furnishing
of copies thereof to the Initial Purchasers and to dealers (including costs of mailing and
shipment), (ii) all costs related to the preparation, issuance, execution, authentication
and delivery of the Bonds and the Shares, (iii) all costs related to the transfer and
delivery of the Bonds to the Initial Purchasers, including any transfer or other taxes
payable thereon, (iv) all expenses in connection with the qualification of the Bonds and the
Shares for offering and sale under state laws and the cost of printing and furnishing of
copies of any blue sky or legal investment memorandum to the Initial Purchasers and to
dealers (including filing fees and the fees and disbursements of counsel for the Initial
Purchasers in connection with such qualification and in connection with such blue sky or
legal investment memorandum), (v) any fees payable to investment rating agencies with
respect to the rating of the Bonds, (vi) the costs and charges of the Trustee and any
transfer agent, registrar or depositary, (vii) the fees and expenses, if any, incurred in
connection with the admission of the Bonds for trading in PORTAL or any appropriate market
system, (viii) the costs and expenses of the Company relating to presentations on any “road
show” undertaken in connection with the marketing of the offering of the Bonds, including,
without limitation, expenses associated with the production of road show slides and
graphics, fees and expenses of any consultants engaged in connection with the road show
presentations, travel and lodging expenses of the representatives and officers of the
Company and any such consultants, and the cost of any aircraft chartered in connection with
the road show, and (ix) all other cost and expenses incident to the performance of the
Company’s obligations hereunder for which provision is not otherwise made in this Section
5(k);

          (m) Neither the Company nor any Affiliate will sell, offer for sale or solicit offers
to buy or otherwise negotiate in respect of any security (as defined in the Securities Act)
which could be integrated with the sale of the Bonds in a manner which would require the
registration under the Securities Act of the offer and sale of the Bonds pursuant to this
Agreement;

          (n) The Company will not to solicit any offer to buy or offer or sell the Bonds or the
Shares by means of any form of general solicitation or general advertising (as those terms
are used in Regulation D) or in any manner involving a public offering within the meaning of
Section 4(2) of the Securities Act;

          (o) During the period after the time of purchase or the additional time of purchase, if
later, the Company will not, and will not permit Affiliates, to resell any of the Bonds or
the Shares which constitute “restricted securities” under Rule 144 under the Securities Act
that have been reacquired by any of them except pursuant to an effective registration
statement under the Securities Act;

17

 

          (p) Neither the Company nor any of its directors or officers will take any action
prohibited by Regulation M under the Exchange Act in connection with the distribution of the
Bonds contemplated hereby; and

          (q) The Company and each Subsidiary will comply in all material respects with all
applicable securities and other laws, rules and regulations, including without limitation,
the Sarbanes-Oxley Act, and use its best efforts to cause the officers and directors of the
Company and each Subsidiary, as the case may be, in their capacities as such, to comply with
such laws, rules and regulations, including without limitation, the provisions of the
Sarbanes-Oxley Act.

          6. Reimbursement of Initial Purchasers Expenses: If the Firm Bonds are not delivered
for any reason other than the default by one or more of the Initial Purchasers in their obligations
hereunder, the Company will reimburse the Initial Purchasers for all of their out-of-pocket
expenses (including the reasonable fees and disbursements of their counsel) reasonably incurred by
the Initial Purchasers in connection with this Agreement or the offering contemplated hereunder.

          7. Conditions of Initial Purchasers Obligations: The several obligations of the
Initial Purchasers hereunder are subject to the accuracy of the representations and warranties on
the part of the Company on the date hereof and at the time of purchase. The several obligations of
the Initial Purchasers at the additional time of purchase are subject to the accuracy of the
representations and warranties on the part of the Company on the date hereof, at the time of
purchase (unless previously waived) and at the additional time of purchase, as the case may be.
Additionally, the several obligations of the Initial Purchasers hereunder are subject to
performance by the Company of its obligations hereunder and to the following conditions:

          (a) The Company shall furnish to Banc of America Securities LLC at the time of purchase
and at the additional time of purchase, as the case may be, an opinion of Jones Day, counsel
for the Company, addressed to the Initial Purchasers and dated the date of the time of
purchase or the date of the additional time of purchase, as the case may be, substantially
in the form set forth in Exhibit A hereto;

          (b) Banc of America Securities LLC shall have received on the date of this Agreement,
at the time of purchase and the additional time of purchase, as the case may be, from Ernst
& Young LLP customary comfort letters dated as of the date of this Agreement, the date of
the time of purchase and the date of the additional time of purchase, as the case may be,
and addressed to the Initial Purchasers, in form and substance satisfactory to counsel for
the Initial Purchasers;

          (c) Banc of America Securities LLC shall have received at the time of purchase and at
the additional time of purchase, as the case may be, the opinion of, counsel for the Initial
Purchasers, dated the date of the time of purchase and the date of the additional time of
purchase, as the case may be, in form and substance reasonably satisfactory to Banc of
America Securities LLC;

18

 

          (d) No amendment or supplement to the Final Memorandum, or any document which upon
filing with the Commission would be incorporated by reference in the Final Memorandum, shall
at any time have been made or filed to which Banc of America Securities LLC has reasonably
objected in writing;

          (e) At the time of purchase or the additional time of purchase, as the case may be, the
Final Memorandum shall not contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;

          (f) Between the time of execution of this Agreement and the time of purchase or the
additional time of purchase, as the case may be, (i) no material adverse change or any
development involving a prospective material adverse change in the business, prospects,
properties, management, financial condition or results of operations of the Company and the
Subsidiaries, taken as a whole shall occur or become known and (ii) no transaction which is
material and unfavorable to the Company (other than as disclosed in the Final Memorandum)
shall have been entered into by the Company or any of the Subsidiaries;

          (g) The Company will, at the time of purchase and, if applicable at the additional time
of purchase, deliver to you a certificate of its Chief Executive Officer and its Chief
Financial Officer in the form attached as Exhibit C hereto;

          (h) You shall have received copies, duly executed by the Company and the other parties
thereto, of the Registration Rights Agreement and the Indenture;

          (i) Each executive officer and director of the Company shall have entered into Lock-Up
Agreements in the form attached as Exhibit B hereto on or prior to the date hereof,
and each such Lock-Up Agreement shall have been delivered to you and shall be in full force
and effect at the time of purchase and the additional time of purchase, as the case may be;

          (j) The Company shall have furnished to you such other documents and certificates,
including documents and certificates as to the accuracy and completeness of any statement in
the Final Memorandum as of the time of purchase and, if applicable, the additional time of
purchase, as you may reasonably request;

          (k) The Bonds shall have been designated for trading on PORTAL, subject only to notice
of issuance at or prior to the time of purchase; and

          (l) Between the time of execution of this Agreement and the time of purchase or
additional time of purchase, as the case may be, there shall not have occurred any
downgrading, nor shall any notice have been given of (i) any intended or potential
downgrading or (ii) any review or possible change that does not indicate an improvement, in
the rating accorded any securities of or guaranteed by the Company or any Subsidiary

19

 

of
the Company by any “nationally recognized statistical rating organization”, as that term is
defined in Rule 436(g)(2) promulgated under the Securities
Act.

          8. Termination: The several obligations of the Initial Purchasers hereunder shall be
subject to termination in the absolute discretion of Banc of America Securities LLC or any group of
Initial Purchasers (which may include Banc of America Securities LLC) that has agreed to purchase
in the aggregate a majority of the Bonds, if, (x) since the time of execution of this Agreement or
the earlier respective dates as of which information is given in the Final Memorandum, there has
been any material adverse change or any development involving a prospective material adverse change
in the business, prospects, properties, management, financial condition or results of operations of
the Company and the Subsidiaries taken as a whole, which would, in the judgment of Banc of America
Securities LLC or in the judgment of such group of Initial Purchasers, make it impracticable or
inadvisable to proceed with the offering or the delivery of the Bonds on the terms and in the
manner contemplated in the Final Memorandum; (y) at any time prior to the time of purchase or, with
respect to the purchase of any Additional Bonds, the additional time of purchase, as the case may
be, there shall have occurred: (i) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange, the American Stock Exchange or the Nasdaq National
Market; (ii) a suspension or material limitation in trading in the Company’s securities on the New
York Stock Exchange; (iii) a general moratorium on commercial banking activities declared by either
federal or New York State authorities or a material disruption in commercial banking or securities
settlement or clearance services in the United States; (iv) an outbreak or escalation of
hostilities or acts of terrorism involving the United States or a declaration by the United States
of a national emergency or war; or (v) any other calamity or crisis or any change in financial,
political or economic conditions in the United States or elsewhere, if the effect of any such event
specified in clause (iv) or (v) in the judgment of Banc of America Securities LLC or in the
judgment of such group of Initial Purchasers makes it impracticable or inadvisable to proceed with
the offering or the delivery of the Bonds on the terms and in the manner contemplated in the Final
Memorandum; or (z) at any time prior to the time of purchase or, with respect to the purchase of
any Additional Bonds, the additional time of purchase, as the case may be, there shall have
occurred any downgrading, or any notice or announcement shall have been given or made of (i) any
intended or potential downgrading or (ii) any watch, review or possible change that does not
indicate an affirmation or improvement in the rating accorded any securities of or guaranteed by
the Company or any Subsidiary by any “nationally recognized statistical rating organization,” as
that term is defined in Rule 436(g)(2) under the Securities Act.

          If you elect to terminate this Agreement as provided in this Section 8, the Company shall be
notified as provided for herein.

          If the sale to the Initial Purchasers of the Bonds, as contemplated by this Agreement, is not
carried out by the Initial Purchasers for any reason permitted under this Agreement or if such sale
is not carried out because the Company shall be unable to comply and does not comply with any of
the terms of this Agreement, the Company shall not be under any obligation or liability under this
Agreement (except to the extent provided in Sections 5(k), 6 and 9 hereof), and the Initial
Purchasers shall be under no obligation or liability to the Company

20

 

under this
Agreement (except to the extent provided in Section 9 hereof) or to
one another hereunder.

          9. Indemnity by the Company and the Initial Purchasers:

          (a) The Company agrees to indemnify, defend and hold harmless each Initial Purchaser,
its partners, directors and officers, and any person who controls any Initial Purchaser
within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
(each, an “Initial Purchaser Indemnified Party”), and the successors and assigns of
all the foregoing persons, from and against any loss, damage, expense, liability or claim
(including the reasonable cost of investigation) which, jointly or severally, any such
Initial Purchaser Indemnified Party or any such person may incur under the Securities Act,
the Exchange Act, the common law or otherwise, insofar as such loss, damage, expense,
liability or claim arises out of or is based upon any untrue statement or alleged untrue
statement of a material fact contained in any Memorandum, as amended or supplemented, if
applicable, or arises out of or is based upon any omission or alleged omission to state a
material fact necessary to make the statements made therein, in the light of the
circumstances under which they were made, not misleading, except insofar as any such loss,
damage, expense, liability or claim arises out of or is based upon any untrue statement or
omission or alleged untrue statement or omission of a material fact contained in or omitted
from and in conformity with information furnished in writing by or on behalf of any Initial
Purchaser to the Company expressly for use therein.

          (b) Each Initial Purchaser severally agrees to indemnify, defend and hold harmless the
Company, its directors and officers and any person who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (each, a
“Company Indemnified Party”) from and against any loss, damage, expense, liability
or claim (including the reasonable cost of investigation) which such Company Indemnified
Party may incur under the Securities Act, the Exchange Act or otherwise, insofar as such
loss, damage, expense, liability or claim arises out of or is based upon any untrue
statement or alleged untrue statement of a material fact contained in information concerning
such Initial Purchaser furnished in writing by or on behalf of such Initial Purchaser to the
Company expressly for use in any Memorandum or arises out of or is based upon any omission
or alleged omission to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not misleading, in
connection with such information.

          (c) If any action, suit or proceeding (each, a “Proceeding”) is brought against
any person in respect of which indemnity may be sought pursuant to either subsection (a) or
(b) of this Section 9, such person (the “Indemnified Party”) shall promptly notify
the person against whom such indemnity may be sought (the “Indemnifying Party”) in
writing of the institution of such Proceeding and such Indemnifying Party shall assume the
defense of such Proceeding, including the employment of counsel reasonably satisfactory to
such Indemnified Party and payment of

21

 

all fees and expenses; provided,
however, that the omission to so notify such Indemnifying Party shall not relieve
such Indemnifying Party from any liability which it may have to such Indemnified Party or
otherwise. Such Indemnified Party shall have the right to employ its own counsel in any
such case, but the fees and expenses of such counsel shall be at the expense of such
Indemnified Party unless the employment of such counsel shall have been authorized in
writing by such Indemnifying Party in connection with the defense of such Proceeding or such
Indemnifying Party shall not have employed counsel to have charge of the defense of such
Proceeding within 30 days of the receipt of notice thereof or such Indemnified Party shall
have reasonably concluded that there may be defenses available to it that are different
from, additional to, or in conflict with those available to such Indemnifying Party (in
which case such Indemnifying Party shall not have the right to direct the defense of such
Proceeding on behalf of such Indemnified Party, but such Indemnifying Party may employ
counsel and conduct the defense thereof and the fees and expenses of such counsel shall be
at the expense of such Indemnifying Party), in any of which events such fees and expenses
shall be borne by such Indemnifying Party and paid as incurred (it being understood,
however, that such Indemnifying Party shall not be liable for the expenses of more than one
separate counsel in any one Proceeding or series of related Proceedings together with
reasonably necessary local counsel representing the Indemnified Parties who are parties to
such Proceeding). An Indemnifying Party shall not be liable for any settlement of any
Proceeding effected without its written consent, but if settled with the written consent of
such Indemnifying Party, such Indemnifying Party agrees to indemnify and hold harmless an
Indemnified Party from and against any loss or liability by reason of such settlement.
Notwithstanding the foregoing sentence, if at any time an Indemnified Party shall have
requested an Indemnifying Party to reimburse such Indemnified Party for fees and expenses of
counsel as contemplated by the second sentence of this paragraph, then such Indemnifying
Party agrees that it shall be liable for any settlement of any Proceeding effected without
its written consent if (i) such settlement is entered into more than 60 business days after
receipt by such Indemnifying Party of the aforesaid request, (ii) such Indemnifying Party
shall not have fully reimbursed such Indemnified Party in accordance with such request prior
to the date of such settlement and (iii) such Indemnified Party shall have given such
Indemnifying Party at least 30 days’ prior notice of its intention to settle. An
Indemnifying Party shall not, without the prior written consent of any Indemnified Party,
effect any settlement of any pending or threatened Proceeding in respect of which such
Indemnified Party is or could have been a party and indemnity could have been sought
hereunder by such Indemnified Party, unless such settlement includes an unconditional
release of such Indemnified Party from all liability on claims that are the subject matter
of such Proceeding and does not include an admission of fault, culpability or a failure to
act, by or on behalf of such Indemnified Party.

          (d) If the indemnification provided for in this Section 9 is unavailable to an
Indemnified Party under subsections (a) and (b) of this Section 9 or insufficient to hold an
indemnified party harmless in respect of any losses, damages, expenses, liabilities or
claims referred to therein, then each applicable Indemnifying Party, in lieu of indemnifying
such Indemnified Party, shall contribute to the amount paid or payable by

22

 

such Indemnified
Party as a result of such losses, damages, expenses, liabilities or claims (i) in such
proportion as is appropriate to reflect the relative benefits received by the Company on the
one hand and the Initial Purchasers on the other hand from the offering of the Bonds or (ii)
if the allocation provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company on the one hand and of the Initial
Purchasers on the other in connection with the statements or omissions which resulted in
such losses, damages, expenses, liabilities or claims, as well as any other relevant
equitable considerations. The relative benefits received by the Company on the one hand and
the Initial Purchasers on the other shall be deemed to be in the same proportion as the
total proceeds from the offering (net of the Initial Purchasers’ discounts and commissions
but before deducting expenses) received by the Company bear to the discounts and commissions
received by the Initial Purchasers. The relative fault of the Company on the one hand and
of the Initial Purchasers on the other shall be determined by reference to, among other
things, whether the untrue statement or alleged untrue statement of a material fact or
omission or alleged omission relates to information supplied by the Company or by the
Initial Purchasers and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount paid or payable by
a party as a result of the losses, damages, expenses, liabilities and claims referred to in
this subsection shall be deemed to include any reasonable legal or other fees or expenses
reasonably incurred by such party in connection with investigating, preparing to defend or
defending any Proceeding.

          (e) The Company and the Initial Purchasers agree that it would not be just and
equitable if contribution pursuant to this Section 9 were determined by pro rata allocation
or by any other method of allocation which does not take account of the equitable
considerations referred to in subsection (d) above. Notwithstanding the provisions of this
Section 9, no Initial Purchaser shall be required to contribute any amount in excess of the
amount by which the total price at which the Bonds resold by it in the initial placement of
such Bonds were offered to investors exceeds the amount of any damages which such Initial
Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent misrepresentation. The
Initial Purchasers’ respective obligations to contribute pursuant to this Section 9 are
several in proportion to the respective principal amount of Bonds they have purchased
hereunder, and not joint. The remedies provided for in this Section 9 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any indemnified
party at law or in equity.

          (f) The indemnity and contribution agreements contained in this Section 9 and the
covenants, warranties and representations of the Company and the Initial Purchasers
contained in this Agreement shall remain in full force and effect (regardless of any
investigation made by on behalf of any Initial Purchaser, its partners, directors or
officers or any person (including each partner, officer or director of such

23

 

person) who
controls such Initial Purchaser within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, or by or on behalf of the Company, its directors and
officers or any person who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act), and shall survive any termination of this
Agreement or the issuance and delivery of the Bonds. The Company and the Initial Purchasers
agree promptly to notify each other of the commencement of any litigation or proceeding
against it and, in the case of the Company, against any of the Company’s officers and
directors, in connection with the issuance and sale of the Bonds, or in connection with any
Memorandum.

          10. Effectiveness; Increase in Initial Purchasers’ Commitments: This Agreement shall
become effective upon the execution and delivery hereof by the parties hereto.

          Subject to Sections 7 and 8, if, at the time of purchase, or the additional time of purchase,
as the case may be, any Initial Purchaser shall default in its obligation to take up and pay for
the Bonds to be purchased by it at such time hereunder (otherwise than for a reason sufficient to
justify the termination of this Agreement under the provisions of Section 8 hereof) and if the
aggregate principal amount of Bonds which all Initial Purchasers so defaulting shall have agreed
but failed to take up and pay for at such time does not exceed 10% of the total aggregate principal
amount of Bonds to be purchased at such time, the non-defaulting Initial Purchasers shall take up
and pay for (in addition to the aggregate number of Bonds they are obligated to purchase at such
time pursuant to Section 1 hereof) the aggregate principal amount of Bonds agreed to be purchased
by all such defaulting Initial Purchasers at such time, as hereinafter provided. Such Bonds shall
be taken up and paid for by such non-defaulting Initial Purchaser or Initial Purchasers in such
amount or amounts as you may designate with the consent of each Initial Purchaser so designated or,
in the event no such designation is made, such Bonds shall be taken up and paid for by all
non-defaulting Initial Purchasers pro rata in proportion to the aggregate principal amount of Firm
Bonds set opposite the names of such non-defaulting Initial Purchasers in Schedule A.

          Without relieving any defaulting Initial Purchaser from its obligations hereunder, the Company
agrees with the non-defaulting Initial Purchasers that it will not sell any Firm Bonds hereunder
unless all of the Firm Bonds are purchased by the Initial Purchasers (or by substituted Initial
Purchasers selected by you with the approval of the Company or selected by the Company with your
approval).

          If a new Initial Purchaser or Initial Purchasers are substituted by the Initial Purchasers or
by the Company for a defaulting Initial Purchaser or Initial Purchasers in accordance with the
foregoing provision, the Company or you shall have the right to postpone the time of purchase for a
period not exceeding five business days in order that any necessary changes in the Final Memorandum
and other documents may be effected.

          The term “Initial Purchaser” as used in this Agreement shall refer to and include any Initial
Purchaser substituted under this Section 10 with like effect as if such substituted Initial
Purchaser had originally been named in Schedule A.

24

 

          If, at the time of purchase, the aggregate principal amount of Firm Bonds which the defaulting
Initial Purchaser or Initial Purchasers agreed to purchase exceeds 10% of the total principal
amount of Firm Bonds which all Initial Purchasers agreed to purchase hereunder, and if neither the
non-defaulting Initial Purchasers nor the Company shall make arrangements within the five business
day period stated above for the purchase of all the Firm Bonds which the defaulting Initial
Purchaser or Initial Purchasers agreed to purchase hereunder, this Agreement shall be terminated
without further act or deed and without any liability on the part of the Company to any
non-defaulting Initial Purchaser and without any liability on the part of any non-defaulting
Initial Purchaser to the Company. If, at the additional time of purchase, the aggregate principal
amount of Additional Bonds which the defaulting Initial Purchaser or Initial Purchasers agreed to
purchase exceeds 10% of the total principal amount of Additional Bonds which all Initial Purchasers
agreed to purchase hereunder, the non-defaulting Initial Purchasers shall have the option to (a)
terminate their obligation hereunder to purchase the Additional Bonds or (b) purchase not less than
the principal amount of Additional Bonds that such non-defaulting Initial Purchasers would have
been obligated to purchase in the absence of such default. Nothing in this paragraph, and no
action taken hereunder, shall relieve any defaulting Initial Purchaser from liability in respect of
any default of such Initial Purchaser under this Agreement.

          11. Information Furnished by the Initial Purchasers: The statements set forth in the
last paragraph on the cover page of the Final Memorandum and the statements set forth in the
eighteenth paragraph regarding overallotment and stabilization under the caption “Plan of
Distribution” in the Final Memorandum constitute the only information furnished by or on behalf of
the Initial Purchasers.

          12. Notices: Except as otherwise herein provided, all statements, requests, notices
and agreements shall be in writing or by facsimile and, if to the Initial Purchasers, shall be
sufficient in all respects if delivered or sent to c/o Banc of America Securities LLC, 9 W.
57th Street, 22nd Floor, New York, New York 10019, Attention: Syndicate
Department, Telecopy No.: (212) 933-2217, with a copy to (for informational purposes only):
Attention: Legal Department, Telecopy No.: (212) 457-3745, and, if to the Company, shall be
sufficient in all respects if delivered or sent to the Company at the offices of the Company at
2704 West Roscoe Street, Chicago, Illinois 60618, Attention: Deborah Fulton, Telecopy No. (773)
961-2299.

          13. Governing Law and Construction: THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF
LAWS PRINCIPLES. THE SECTION HEADINGS IN THIS AGREEMENT HAVE BEEN INSERTED AS A MATTER OF
CONVENIENCE OF REFERENCE AND ARE NOT A PART OF THIS AGREEMENT.

          14. Parties at Interest: The Agreement herein set forth has been and is made solely
for the benefit of the Initial Purchasers and the Company and the controlling persons, directors
and officers referred to in Section 9 hereof, and their respective successors, assigns, executors
and administrators. No other person, partnership, association or corporation (including

25

 

 a
purchaser, as such purchaser, from the Initial Purchasers) shall acquire or have any right under or
by virtue of this Agreement.

          15. Counterparts: This Agreement may be signed by the parties in counterparts which
together shall constitute one and the same agreement among the parties. Delivery of an executed
counterpart by facsimile shall be effective as delivery of a manually executed counterpart thereof.

          16. Submission to Jurisdiction: Except as set forth below, no Proceeding may be
commenced, prosecuted or continued in any court other than the courts of the State of New York
located in the City and County of New York or in the United States District Court for the Southern
District of New York, which courts shall have jurisdiction over the adjudication of such matters,
and the Company hereby consents to the jurisdiction of such courts and personal service with
respect thereto. The Company hereby consents to personal jurisdiction, service and venue in any
court in which any Proceeding arising out of or in any way relating to this Agreement is brought by
any third party against the Initial Purchasers. The Company hereby waives all right to trial by
jury in any Proceeding (whether based upon contract, tort or otherwise) in any way arising out of
or relating to this Agreement. The Company agrees that a final judgment in any such Proceeding
brought in any such court shall be conclusive and binding upon the Company and may be enforced in
any other courts in the jurisdiction of which the Company is or may be subject, by suit upon such
judgment.

          17. Relationship Between the Parties. The Company hereby acknowledges that the
Initial Purchasers are acting solely as initial purchasers in connection with the purchase and sale
of the Company’s securities; the Company further acknowledges that the Initial Purchasers are
acting pursuant to a contractual relationship created solely by this Purchase Agreement entered
into on an arm’s length basis and in no event do the parties intend that the Initial Purchasers act
or be responsible as a fiduciary to the Company, its management, stockholders, creditors or any
other person in connection with any activity that the Initial Purchasers may undertake or has
undertaken in furtherance of the purchase and sale of the Company’s securities, either before or
after the date hereof. The Initial Purchasers hereby expressly disclaim any fiduciary or similar
obligations to the Company, either in connection with the transactions contemplated by this
Purchase Agreement or any matters leading up to such transactions, and the Company hereby confirms
its understanding and agreement to that effect. The Company and the Initial Purchasers agree that
they are each responsible for making their own independent judgments with respect to any such
transactions, and that any opinions or views expressed by the Initial Purchasers to the Company
regarding such transactions, including but not limited to any opinions or views with respect to the
price or market for the Company’s securities, do not constitute advice or recommendations to the
Company. The Company hereby waives and releases, to the fullest extent permitted by law, any
claims that the Company may have against the Initial Purchasers with respect to any breach or
alleged breach of any fiduciary or similar duty to the Company in connection with the transactions
contemplated by this Purchase Agreement or any matters leading up to such transactions.

26

 

          If the foregoing correctly sets forth the understanding between the Company and the Initial
Purchasers, please so indicate in the space provided below for the purpose, whereupon this letter
and your acceptance shall constitute a binding agreement between the Company and the Initial
Purchasers.

	 	 	 	 	 
	 	Very truly yours,

MIDWAY GAMES INC.

 	 
	 	By:  	/s/ David F. Zucker
 	 
	 	 	Name:  	David F. Zucker 	 
	 	 	Title:  	President and Chief
Executive Officer 	 
	 

	 	 	 
	Accepted and agreed to as of the date first
above written on behalf of itself and the other
Initial Purchasers named in Schedule A hereto:
	 	 

	 	 	 
	BANC OF AMERICA SECURITIES LLC
	 
	 
	By:
	 	/s/ Derek
Dillion 
	
	 	 
Name:  Derek
Dillion

	

	 	Title:  Managing Director	 
	

	 	

27

 

SCHEDULE A

	 	 	 	 	 
	 	 	Principal Amount	 
	Initial Purchasers	 	of Firm Bonds	 
	 
	 	 	 	 
	BANC OF AMERICA SECURITIES LLC
	 	$	48,750,000	 
	UBS SECURITIES LLC
	 	 	16,250,000	 
	 
	 	 	 
	 
	 	 	 	 
	Total
	 	$	65,000,000	 
	 
	 	 	 

Sch-A-1

 

EXHIBIT A

OPINION OF COMPANY COUNSEL

	1.	 	The Company has been duly incorporated and is validly existing as a corporation under the
laws of the State of Delaware with full corporate power and authority to own lease and operate
its properties and conduct its business as described in the Final Memorandum, to execute and
deliver the Purchase Agreement, the Registration Rights Agreement and the Indenture, and to
issue, sell and deliver the Bonds and the Shares.

	2.	 	Each of the Company’s Subsidiaries has been duly incorporated and is validly existing as a
corporation in good standing under the laws of its respective jurisdiction of incorporation
with full corporate power and authority to own, lease and operate its respective properties
and to conduct its respective business; all of the issued shares of capital stock of each
Subsidiary of the Company have been duly and validly authorized and issued, are fully paid and
non-assessable and are owned directly or indirectly by the Company, free and clear of all
liens, encumbrances, equities or claims; and, to such counsel’s knowledge, no options,
warrants, or other rights to purchase, agreements or other obligations to issue or other
rights to convert any obligation into shares of capital stock or ownership interests in the
Subsidiaries are outstanding.

	3.	 	The Company and each of the Subsidiaries are duly qualified or licensed to do business as
foreign companies and are in good standing in each jurisdiction where the ownership or leasing
of their properties or the conduct of their respective businesses requires such qualification
or license, except where the failure, individually or in the aggregate, to be so qualified or
licensed or be in good standing would not have a Material Adverse Effect.

	4.	 	The Company has an authorized and outstanding capitalization as set forth in the Final
Memorandum; the outstanding shares of capital stock of the Company have been duly authorized
and validly issued and are fully paid and non-assessable, have been issued in compliance with
all federal and state securities laws and were not issued in violation of any statutory
preemptive rights or, to such counsel’s knowledge, any contractual preemptive rights, resale
rights, rights of first refusal or similar rights.

	5.	 	Each document, if any, filed pursuant to the Exchange Act and incorporated by reference in
the Final Memorandum (except for the financial statements and schedules and other financial
data as to which such counsel need not express any opinion) complied when so filed in all
material respects with the Exchange Act and the applicable rules and regulations of the
Commission thereunder.

	6.	 	The execution, delivery and performance of the Purchase Agreement, the Registration Rights
Agreement, the Indenture and the Bonds and consummation of the transactions contemplated
hereby and thereby including the issuance of the Bonds and the issuance of the Shares upon
conversion of the Bonds, will not conflict with, result in any breach or

A-1

 

	  	 	
	 	 	violation of or
constitute a default under (nor constitute any event which with notice, lapse of time or both
would result in any breach or violation of or constitute a default under), the charter or
by-laws or other organizational documents of the Company or any of the Subsidiaries or any
indenture, mortgage, deed of trust, bank loan or credit agreement or other evidence of
indebtedness, or any license, lease, contract or other agreement or instrument to which the
Company or any of the Subsidiaries is a party or by which any of them or their respective
properties may be bound or affected, or any federal, state, local or foreign law, regulation
or rule or any decree, judgment or order applicable to the Company or any of the Subsidiaries.

	7.	 	To such counsel’s knowledge, neither the Company nor any of the Subsidiaries is in breach or
violation of, or in default under (nor has any event occurred which with notice, lapse of
time, or both would result in any breach or violation of, constitute a default under or give
the holder of any indebtedness (or person acting on such holder’s behalf), the right to
require the repurchase, redemption or repayment of all or part of such indebtedness under) its
respective charter or by-laws or other organizational documents or any indenture, mortgage,
deed of trust, bank loan or credit agreement or other evidence of indebtedness, or any
license, lease, contract or other agreement or instrument to which the Company or any of the
Subsidiaries is a party or by which any of them or their respective properties may be bound or
affected, or under any federal, state, local or foreign law, regulation or rule or any decree,
judgment or order applicable to the Company or any of the Subsidiaries.

	8.	 	Except as described in the Final Memorandum, to such counsel’s knowledge, there are no
actions, suits claims, investigations or proceedings pending, threatened or contemplated to
which the Company or any of the Subsidiaries or any of their respective directors and officers
is or would be a party or of which any of their respective properties, is or would be subject
at law or in equity, or before or by any federal, state, local or foreign governmental or
regulatory commission, board, body, authority or agency, which could result in a judgment,
decree or order having, individually or in the aggregate, a Material Adverse Effect or prevent
consummation of the contemplated transactions or that are required to be disclosed in the
Company’s most recent annual report on Form 10-K or any subsequently filed quarterly report on
Form 10-Q and that were not so disclosed.

	9.	 	The Purchase Agreement has been duly authorized, executed and delivered by the Company and
constitutes a legal, valid and binding agreement of the Company, enforceable in accordance
with its terms except (a) as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium, or similar laws affecting creditors’ rights generally
and general principles of equity and (b) the rights to indemnity and contribution may be
limited by applicable law.

A-2

 

	10.	 	The Registration Rights Agreement has been duly authorized, executed and delivered by the
Company and constitutes a legal, valid and binding agreement of the Company, enforceable in
accordance with its terms except (a) as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or similar laws
affecting creditors’ rights generally and general principles of equity and (b) the rights to
indemnity and contribution may be limited by applicable law.

	11.	 	The Indenture has been duly authorized, executed and delivered by the Company and constitutes
a legal, valid and binding agreement of the Company, enforceable in accordance with its terms
except (a) as the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or similar laws affecting creditors’ rights
generally and general principles of equity and (b) the rights to indemnity and contribution
may be limited by applicable law.

	12.	 	The Bonds have been duly authorized, executed and delivered by the Company and when duly
authenticated in accordance with the terms of the Indenture and delivered to and paid for by
the Initial Purchasers in accordance with the terms of the Purchase Agreement will constitute
legal, valid and binding obligations of the Company, enforceable in accordance with their
terms, except as the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or similar laws affecting creditors’ rights
generally and general principles of equity, and will be entitled to the benefits of the
Indenture and the Registration Rights Agreement.

	13.	 	The Shares initially issuable upon conversion of the Bonds have been duly authorized and
reserved for issuance upon conversion of the Bonds, and upon conversion of the Bonds in
accordance with their terms and the terms of the Indenture will be issued free of statutory
and contractual preemptive rights and are initially sufficient in number to meet the
conversion requirements of the Bonds, and such Shares, when so issued in accordance with the
terms of the Indenture, will be duly and validly issued and fully paid and non-assessable.

	14.	 	No approval, authorization, consent or order of or filing with any national, state or local
governmental or regulatory commission, board, body, authority or agency, or of or with the
rules of the New York Stock Exchange, or approval of stockholders of the Company, is required
in connection with the issuance and sale by the Company of the Bonds or the issuance of Shares
upon conversion of the Bonds or the consummation of the transactions as contemplated in the
Purchase Agreement other than (i) as may be required under the securities or blue sky laws of
the various jurisdictions in which the Bonds and the Shares are being offered by the Initial
Purchasers and (ii) as may be required by Federal or state securities laws with respect to the
Company’s obligations under the Registration Rights Agreement and the listing of the Shares on
the New York Stock Exchange in connection therewith.

A-3

 

	15.	 	It is not necessary in connection with (i) the offer, sale and delivery of the Bonds to the
Initial Purchasers pursuant to the Purchase Agreement or (ii) the initial resales of the Bonds
by the Initial Purchasers in the manner contemplated in the Final Memorandum to register the
Bonds under the Securities Act or to qualify the Indenture in respect thereof under the Trust
Indenture Act of 1939, as amended, it being understood that no opinion is expressed as to any
subsequent resale of any Bond or Share.

	16.	 	Neither the Company nor any of the Subsidiaries is, nor after giving effect to the offering
and sale of the Bonds and the application of the proceeds thereof as described in the Final
Memorandum will any of them be, required to register as an “investment company” as defined in
the Investment Company Act of 1940, as amended.

	17.	 	The terms of the Bonds, the Registration Rights Agreement, the Indenture and the capital
stock of the Company, including the Shares, conform as to legal matters in all material
respects to the descriptions thereof contained in the Final Memorandum.

	18.	 	The statements in the Final Memorandum under the captions “Risk Factors – Risks Related to
this Offering – Effects of anti-takeover provisions could inhibit the acquisition of Midway,”
“Management – Stock Options,” “Certain relationships and related transactions,” “Description
of Convertible Bonds,” “Description of Capital Stock,” “Business—Legal Proceedings,”
“Business—Regulation,” “Plan of Distribution” and “Notice to Investors” and in “Item 3—Legal
Proceedings” of the Company’s most recent annual report on Form 10-K, in “Item 1—Legal
Proceedings” of Part II of any quarterly report on Form 10-Q and in “Item 5—Other Events” of
any current report on Form 8-K incorporated by reference in the Final Memorandum, in so far as
such statements constitute summaries of legal matters, documents or proceedings referred to
therein, fairly summarize the matters referred to therein.

	19.	 	The statements in the Final Memorandum under the caption “Material United States Federal
Income Tax Considerations” in so far as such statements constitute a summary of the United
States federal tax laws referred to therein, are accurate and fairly summarize in all material
respects the United States federal tax laws referred to therein.

	20.	 	To such counsel’s knowledge, there are no affiliate transactions, off-balance sheet
transactions, contracts, licenses, agreements, leases or documents of a character required to
be disclosed in or filed as an exhibit to the Company’s filings with the Commission that have
not been so disclosed or filed.

	21.	 	To such counsel’s knowledge, no person has the right, pursuant to the terms of any contract,
agreement or other instrument, to cause the Company to register under the Securities Act any
securities of the Company or to include any such securities in a registration statement to be
filed pursuant to the Registration Rights Agreement, whether

A-4

 

		 	as a result of the filing or
effectiveness of the registration statement or the sale of the Bonds or the issuance of the
Shares or otherwise.
	 
	22.	 	Based upon our participation in conferences with officers and other representatives of the
Company, counsel for the Company, representatives of the independent public accountants of the
Company and representatives of the Initial Purchasers at which the contents of the Final
Memorandum and related matters were discussed, although such counsel is not passing upon and
does not assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Final Memorandum (except to the extent stated in paragraphs 4, 17,
18 and 19 above) no facts have come to our attention which lead us to believe that the Final
Memorandum as of its date or as of the date hereof (except for the financial statements and
schedules and other financial data as to which we do not express any belief) contained or
contains an untrue statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.

 

EXHIBIT B

Midway Games Inc.

Common Stock

($0.01 Par Value)

September __, 2005

BANC OF AMERICA SECURITIES LLC

As representative of the Initial Purchasers

c/o Banc of America Securities LLC

9 W. 57th Street, 22nd Floor

New York, New York 10019

Ladies and Gentlemen:

This Lock-Up Letter Agreement is being delivered to you, as Representative of the Initial
Purchasers, in connection with the consummation of the transactions contemplated by the proposed
Purchase Agreement (the “Purchase Agreement”) to be entered into by Midway Games Inc. (or its
successor, the “Company”) and the Initial Purchasers named therein, relating to an offering without
registration under the Securities Act of 1933, as amended (the “Act”), in reliance on Rule 144A
under the Act (the “Offering”) of Convertible Senior Notes due 2025 of the Company (the “Notes”).

In order to induce the Initial Purchasers to enter into the Purchase Agreement, the undersigned
agrees that for a period from the date hereof until the end of a period of 90 days after the date
of the Final Memorandum (as defined in the Purchase Agreement) relating to the Offering the
undersigned will not, without the prior written consent of Banc of America Securities LLC, (i)
sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase
or otherwise dispose of or agree to dispose of, directly or indirectly, or file (or participate in
the filing of) a registration statement with the Securities and Exchange Commission (the
“Commission”) in respect of, or establish or increase a put equivalent position or liquidate or
decrease a call equivalent position within the meaning of Section 16 of the Securities Exchange Act
of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder with
respect to, any Common Stock of the Company or any securities convertible into or exercisable or
exchangeable for Common Stock, or warrants or other rights to purchase Common Stock, (ii) enter
into any swap or other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock, or warrants or other rights to purchase Common Stock,
whether any such transaction is to be settled by delivery of Common Stock or such other securities,
in cash or otherwise, or (iii) publicly announce an intention to effect any transaction specified
in clause (i) or (ii). The foregoing sentence shall not apply to (a) bona fide gifts, provided the
recipient thereof agrees in writing with Banc of America Securities LLC to be bound by the terms of
this Lock-Up Letter Agreement, (b) dispositions to any trust for the direct or indirect benefit of
the undersigned and/or the immediate family of the undersigned, provided that such trust agrees in
writing with Banc of America Securities LLC to be bound by the terms of this Lock-Up Letter
Agreement, or (c) transfers by will or intestate succession provided that the transferee agrees in
writing with Banc of America Securities LLC to
B-1

 

be bound
by the terms of this Lock-Up Letter Agreement. If

	 	(1)	 	during the period that begins on the date that is 15 calendar days plus 3
business days before the last day of the 90-day restricted period and ends on the last
day of the 90-day restricted period, the Company issues an earnings release or material
news or a material event relating to the Company occurs; or
	 
	 	(2)	 	prior to the expiration of the 90-day restricted period, the Company announces
that it will release earnings results during the 16-day period beginning on the last
day of the 90-day period,

the restrictions imposed by this letter shall continue to apply until the expiration of the date
that is 15 calendar days plus 3 business days after the date on which the issuance of the earnings
release or the material news or material event occurs.

In addition, the undersigned hereby waives any rights the undersigned may have to require
registration of Common Stock or any other securities in connection with the filing of a resale
registration statement pursuant to the proposed Registration Rights Agreement among the Company and
the Initial Purchasers relating to the securities sold in the Offering and any rights the
undersigned may have to notice of the proposed filing of such registration statement. The
undersigned further agrees that, for a period of 90 days after the date of the final offering
memorandum relating to the Offering, the undersigned will not, without the prior written consent of
Banc of America Securities LLC, make any demand for, or exercise any right with respect to, the
registration of Common Stock of the Company or any securities convertible into or exercisable or
exchangeable for Common Stock, or warrants or other rights to
purchase Common Stock.

The undersigned also consents and agrees to the entry of stop transfer instructions with the
Company’s transfer agent and registrar against the transfer of the undersigned’s securities of the
Company except in compliance with this Lock-Up Letter Agreement.

If (i) the Company notifies you in writing that it does not intend to proceed with the Offering or
(ii) for any reason the Purchase Agreement shall be terminated prior to the time of purchase (as
defined in the Purchase Agreement), this Lock-Up Letter Agreement shall be terminated and the
undersigned shall be released from its obligations hereunder. In addition, if the closing of the
Offering has not occurred prior to January 1, 2006, this Lock-Up Letter Agreement shall
automatically terminate on January 1, 2006 and the undersigned shall be released from its
obligations hereunder.

	 	 	 	 	 
	 	Yours very truly,

 	 
	 	 	 
	 	Name:  	 	 
	 	 	 	 

B-2

 

EXHIBIT C

OFFICERS’ CERTIFICATE

	1.	 	I have reviewed the Memorandum.
	 
	2.	 	The representations and warranties of the Company as set forth in the Purchase Agreement are
true and correct as of the time of purchase [and, if applicable, the additional time of
purchase].
	 
	3.	 	The Company has performed all of its obligations under the Purchase Agreement as are to be
performed at or before the time of purchase [and at or before the additional time of purchase,
as the case may be].
	 
	4.	 	The conditions set forth in paragraphs (e) and (f) of Section 7 of the Purchase Agreement
have been met.
	 
	5.	 	The financial statements and other financial information included in the Final Memorandum
fairly present in all material respects the financial condition, results of operations, and
cash flows of the Company as of, and for, the periods presented in the Final Memorandum.

C-1

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