Document:

exh2.htm

    EXHIBIT
10.2

     

    Execution
Copy

     

    

      PARTICIPATION
AGREEMENT

       

      THIS
PARTICIPATION AGREEMENT, among Carrizo (Marcellus) LLC, a Delaware limited
liability company (“Carrizo”), Carrizo Oil &
Gas, Inc., a Texas corporation (“COGI” and, together with
Carrizo, the “Carrizo
Parties”), Avista Capital Partners II, L.P., a Delaware limited
partnership (“Avista”),
and ACP II Marcellus LLC, a Delaware limited liability company (“Investor LLC” and, together
with Avista, the “Avista
Parties”), is entered into this 3rd day of November, 2008 (the “Execution Date”), effective as
of the 1st day of August, 2008 (except as otherwise expressly provided herein)
(the “Effective
Date”).  In this Agreement, Carrizo, COGI, Avista and Investor
LLC are collectively referred to as the “Parties” and each as a “Party.”

       

      RECITALS:

       

      A.           The
Carrizo Parties and Investor LLC have agreed to dedicate their respective
interests in certain Oil and Gas Interests for the mutual benefit of Carrizo and
Investor LLC.

       

      B.           COGI
and Investor LLC are parties to that certain Agreement, dated as of August 1,
2008 (the “Land Bank
Agreement”), whereby, among other things, COGI agreed to act as Investor
LLC’s agent with respect to the acquisition of oil, gas and mineral
interests/leases in the geologic play area commonly known as the Marcellus Shale
in Maryland, New York, Pennsylvania, Virginia and West Virginia (the “Designated Area”), and
Investor LLC agreed to purchase such leases for a total consideration not to
exceed, in any event, Thirty Million Dollars ($30,000,000) in the
aggregate.

       

      C.           Concurrently
with the execution hereof, Carrizo and Investor LLC are entering into that
certain Operating Agreement, effective as of the Effective Date (the “Operating Agreement”), which
governs, to the extent not otherwise provided in this Agreement, the joint
operation of the Properties and memorializes the agreement between Carrizo and
Investor LLC to share certain revenues and expenses related to the exploration,
development and operation of such dedicated Oil and Gas Interests.

       

      D.           Concurrently
with the execution hereof, Carrizo Marcellus Holding Inc., a Delaware
corporation and wholly owned Subsidiary of COGI (“Carrizo Holding”), ACP II AMS
LP, a Delaware limited partnership and wholly owned Subsidiary of Avista (“ACP II”), and ACP II AMS
(Offshore) LP, a Delaware limited partnership and wholly owned Subsidiary of
Avista (“ACP II
Offshore”), are entering into that certain Amended and Restated Limited
Liability Company Agreement of ACP II Marcellus LLC (the “Investor LLC Agreement”),
effective as of the Effective Date, whereby, among other things, Carrizo Holding
is being issued an interest in Investor LLC having the rights and preferences
described in the Investor LLC Agreement as the “Profit Interest.”

       

      E.           The
Parties intend that Investor LLC shall bear all the initial expenses under the
Operating Agreement and also receive a preferred return on capital contributed
by it to pay such expenses, and Carrizo shall contribute a portion of the
profits it would otherwise be entitled to receive under this Agreement in
exchange for the issuance of the Profit Interests.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Parties agree as follows:

       

      ARTICLE 1

       

      DEFINITIONS

       

      “ACP II” means ACP II AMS LP, a
Delaware limited partnership.

       

      “ACP II Offshore” means ACP II
AMS (Offshore) LP, a Delaware limited partnership.

       

      “Affiliate” means any Person
that, directly or indirectly, or through one or more intermediaries controls, is
controlled by, or is under common control with another Person.  For
the purposes of this Agreement, “control” means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management of a Person, whether through the ownership of voting securities or by
contract, agency, or otherwise.  Notwithstanding the foregoing, COGI
and its Subsidiaries and other Affiliates shall not be deemed to be Affiliates
of Avista or any of its Subsidiaries or its other Affiliates, and vice
versa.

       

      “Agreement” means this
Participation Agreement.

       

      “AMI” has the meaning set forth
in the Operating Agreement.

       

      “Avista” means Avista Capital
Partners II, L.P., a Delaware limited partnership.

       

      “Avista Allocation Threshold”
means the first time that (a) the aggregate amounts of Net Cash Flow From
Production allocated to Investor LLC pursuant to Section 3.1(a) and proceeds
allocated to Investor LLC pursuant to Section 3.2(a) equal (b) the Avista
Investments made through the end of the calendar month immediately preceding the
date of determination.

       

      “Avista Controlled
Entity”  means (a) any general partner or managing member of
ACP II or ACP II Offshore or any Affiliate of such general partner or managing
member (excluding portfolio companies), provided that such Person is
controlled by the same Persons (the “Avista Controlling Parties”)
that, as of the date hereof, control Avista GP, or (b) any Person organized,
formed or incorporated and managed or controlled by the Avista Controlling
Persons (excluding portfolio companies) as a vehicle for purposes of making
investments.

       

      “Avista GP” means Avista
Capital Partners II GP, LLC, a Delaware limited liability company.

       

      “Avista Investments” means the
sum of the Investor Asset Basis and the expenditures under the Operating
Agreement funded by Investor LLC pursuant to
Section 2.2(a)(i).

       

      “Avista Offshore” means Avista
Capital Partners (Offshore) II LP, a Delaware limited partnership.

       

      
        
           

        

        
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      “Avista Parties” means Avista
and Investor LLC.

       

      “Business Day” means any day
other than a Saturday, a Sunday or a day on which banks are closed for business
in Houston, Texas.

       

      “Carrizo” means Carrizo
(Marcellus) LLC, a Delaware limited liability company.

       

      “Carrizo Adjusted Investment
Amount” means the Carrizo Investments less the Increased Land
Value.

       

      “Carrizo Allocation Threshold”
means the first time that (a) the aggregate amounts of Net Cash Flow From
Production allocated to Carrizo pursuant to Section 3.1(b) and proceeds
allocated to Carrizo pursuant to Section 3.2(b) equal (b) the Increased Land
Value.

       

      “Carrizo Asset Basis” means the
sum of the Initial Carrizo Assets Market Value and the aggregate acquisition
cost for the Carrizo Parties’ interest in any Oil and Gas Interests dedicated
under Section 2.1(a)(ii), which, for the avoidance of doubt, does not
include acquisition costs for Oil and Gas Interests acquired pursuant to the
Land Bank Agreement without Carrizo Party funds.

       

      “Carrizo Cap” means One Hundred
Fifty Million Dollars ($150,000,000), including the Carrizo Asset Basis, but
excluding any payments by Carrizo to Investor LLC under Section 5.2(b) and
expenditures by Carrizo in connection with Exclusive Operations conducted by it
in which Investor LLC does not participate.

       

      “Carrizo Equalization Share”
means 100% minus the Investor Equalization Share.

       

      “Carrizo Holding” means Carrizo
Marcellus Holding Inc., a Delaware corporation.

       

      “Carrizo Investments” means the
sum of the Carrizo Asset Basis and any expenditures under the Operating
Agreement funded by Carrizo pursuant to Sections 2.2(b) or
2.2(c).

       

      “Carrizo Parties” means COGI
and Carrizo.

       

      “Cash Call” has the meaning set
forth in Exhibit D of the Operating Agreement.

       

      “Catch-Up Period” means the
period beginning on the Effective Date and ending on the first date that the
Avista Investments equal the Carrizo Asset Basis.

       

      “Change of Control” means, with
respect to any Person, a transaction or event (including a Transfer of
securities), or series of related transactions or events, that causes such
Person to cease to be controlled by the same Person or Persons who controlled
such Person prior to the occurrence of such transaction or event; provided, that a transaction
or event affecting the control of any wholly owned Subsidiary of COGI or any
Avista Controlled Entity that is undertaken for internal restructuring or
reorganization purposes will not constitute a Change of

       

      
        
           

        

        
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      Control
of such Person, provided,
further that such Person remains a wholly owned Subsidiary of COGI or an
Avista Controlled Entity, as the case may be, following such transaction or
event.

       

      “COGI” means Carrizo Oil &
Gas, Inc., a Texas corporation.

       

      “Designated Area” has the
meaning set forth in the recitals to this Agreement.

       

      “Drilling Unit” has the meaning
set forth in the Operating Agreement.

       

      “Entitlement” means that
quantity of Hydrocarbons (excluding all quantities used or lost in Joint
Operations) of which a Party has the right and obligation to take delivery
pursuant to the terms of the Operating Agreement, as such rights and obligations
may be adjusted by the terms of any lifting, balancing or other disposition
agreements entered into pursuant to Article 9 of the Operating
Agreement.

       

      “Equity Offeror” has the
meaning set forth in Section 4.3(b)(i).

       

      “Equity Purchase Rights” has
the meaning set forth in Section 4.2(b).

       

      “Equity ROFR Initiator” has the
meaning set forth in Section 4.2(b).

       

      “Equity Tag-Along Initiator”
has the meaning set forth in Section 4.3(b)(i).

       

      “Equity Tag-Along Interest”
means, with respect to Carrizo or Investor LLC, as applicable, such Party’s
interest in the Properties (expressed as a percentage of all of such Party’s
interest in the Properties) that is equal to the product of (x) such Party’s
Participation Interest in all of the Properties and (y) the Indirect Beneficial
Ownership Interest in the other Party that is subject to the Proposed Equity
Tag-Along Sale.

       

      “Equity Tag-Along Notice” has
the meaning set forth in Section 4.3(b)(ii).

       

      “Equity Tag-Along Rights” has
the meaning set forth in Section 4.3(b)(i).

       

      “Exclusive Operations” has the
meaning set forth in the Operating Agreement and includes any Subsequent
Exclusive Operation described in Section 5.2(b).

       

      “Governmental Authority” or
“Governmental
Authorities” means any nation or state and any political subdivision
thereof and any governmental, regulatory or administrative agency, commission,
body or other authority exercising or entitled to exercise any administrative,
executive, judicial, legislative, police, regulatory or taxing authority or
power; and any court or governmental tribunal.

       

      “Hydrocarbons” means oil,
condensate, gas, casinghead gas and other liquid or gaseous
hydrocarbons.

       

      “Increased Land Value” means
$33,503,238.89, which represents the difference between the Initial Carrizo
Assets Market Value and the aggregate acquisition cost (as reflected on COGI’s
books) of the Initial Carrizo Assets.

       

       

      
        
          
          

        

        
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      “Indirect Beneficial Ownership
Interest” means Carrizo’s or Investor LLC’s, as applicable, interest in
the Properties (expressed as a percentage of all of such Party’s interest in the
Properties) represented by limited liability company interests in such Party,
which the Parties acknowledge and agree shall be in the same proportion that a
Person’s aggregate ownership of limited liability company interests bears to all
of the issued and outstanding limited liability company interests in such Party;
provided that the
Profit Interest shall be disregarded for purposes of such
calculation.

       

      “Initial Carrizo Assets” has
the meaning set forth in Section 2.1(a)(i).

       

      “Initial Carrizo Assets Market
Value” means the agreed value for Initial Carrizo Assets as set forth on
Exhibit 2.1(a) and totaling $98,977,561.73.

       

      “Initial Members” has the
meaning set forth in the Investor LLC Agreement.

       

      “Investor Asset Basis” means
the aggregate amount funded by Investor LLC pursuant to the Land Bank Agreement
for the purchase of the Investor Assets.

       

      “Investor Assets” has the
meaning set forth in Section 2.1(b).

       

      “Investor Equalization Share”
means the quantity obtained (expressed as a percentage) by dividing (a) the
Avista Investments by (b) the sum of the Avista Investments and the Carrizo
Adjusted Investment Amount, in each case as of the last day of the month
immediately preceding the date of calculation.

       

      “Investor LLC” means ACP II
Marcellus LLC, a Delaware limited liability company.

       

      “Investor LLC Agreement” means
the limited liability company agreement of Investor LLC, dated the Execution
Date, but effective as of the Effective Date.

       

      “Investor LLC Cap” means One
Hundred Fifty Million Dollars ($150,000,000), including the Investor Asset
Basis, but excluding any payments by Investor LLC to Carrizo under Section
5.2(b) and expenditures by Investor LLC in connection with Exclusive Operations
conducted by it in which Carrizo does not participate.

       

      “JOA Trigger Date” has the
meaning set forth in Section 5.2(a).

       

      “Joint Account” has the meaning
set forth in the Operating Agreement.

       

      “Joint Operations” has the
meaning set forth in the Operating Agreement.

       

      “Joint Properties” has the
meaning set forth in the Operating Agreement.

       

      “Knowledge” means, with respect
to a Party, the actual knowledge of any officer of such Party or other Person
with primary responsibility for the particular subject matter.

       

      
        
          
          

        

        
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      “Land Bank Agreement” means the
Agreement, dated as of August 1, 2008, by and between COGI and Investor
LLC.

       

      “Laws” means all laws,
statutes, rules, regulations, ordinances, orders, decrees, requirements,
judgments and codes of Governmental Authorities.

       

      “Management Services Agreement”
means the Management Services Agreement dated the Execution Date, by and between
COGI and Investor LLC.

       

      “Membership Interest” means the
interest in Investor LLC designated as such in the Investor LLC Agreement,
having the rights and preferences set forth therein.

       

      “Minimum Commitment Date” means
the date on which the aggregate contributions of the Carrizo Parties, on the one
hand, and the Avista Parties, on the other hand, pursuant to Section 2.1 and 2.2
have satisfied the Carrizo Cap and the Investor LLC Cap.

       

      “Net Cash Flow From Production”
means the positive amount, if any, shown on the Cash Call for a given calendar
month (e.g., March)
that is calculated as (a) the proceeds from the sale of the Parties’
Entitlements to Hydrocarbons from Operations conducted on the Properties
actually received by the Operator in respect of joint marketing conducted
pursuant to Section 2.4 during the calendar month immediately preceding the date
of such Cash Call (e.g.,
February) plus the positive adjustment, if any, by which estimated
operating and capital expenditures for Operations of the Parties reflected on
the Cash Call for the second calendar month immediately preceding the date of
such Cash Call (e.g.,
January) exceeded actual or accrued operating and capital expenditures
for Operations of the Parties during such second preceding calendar month, less
(b) the total amount of estimated operating and capital expenditures for
Operations of the Parties during the calendar month immediately following the
date of such Cash Call (e.g., April) less the
negative adjustment, if any, by which actual or accrued operating and capital
expenditures for Operations of the Parties reflected on the Cash Call for the
second calendar month immediately preceding the date of such Cash Call (e.g., January) exceeded the
estimated operating and capital expenditures for Operations of the Parties
reflected on the Cash Call for such second preceding calendar
month.  Notwithstanding the foregoing, both the proceeds from the sale
of Entitlements and the operating and capital expenditures attributable to
Properties that either (i) Carrizo has Transferred to a wholly-owned Subsidiary
of COGI or (ii) Investor LLC has Transferred to an Avista Controlled Entity in
accordance with Section 4.1(b), shall be included in this definition of “Net
Cash Flow From Production.”  However, neither the proceeds from the
sale of Entitlements, nor the operating and capital expenditures attributable to
Exclusive Operations where either Carrizo or Investor LLC is a Non-Consenting
Party pursuant to (i) Article 7.4(B)(1) of the Operating Agreement or Section
5.2(b) or (ii) Article 7.4(B)(2), (3) or (4) of the Operating Agreement until
the termination of the Non-Consenting Party’s relinquishment of its rights in
the affected Property, shall be included in this definition of “Net Cash Flow
From Production.”

      “Non-Consenting Party” means
either Carrizo or Investor LLC, if such Party elects not to participate in an
Exclusive Operation as described in the Operating Agreement.  For the
avoidance of doubt, as used herein, the term “Non-Consenting Party” shall not
include any other party that may be subject to the Operating
Agreement.

       

      
        
          
          

        

        
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      “Offered Equity Interest” has
the meaning set forth in Section 4.3(b)(ii).

       

      “Offered Property Interest” has
the meaning set forth in Section 4.3(a)(ii).

       

      “Oil and Gas Interests” means
(a) interests in and rights with respect to oil, gas, mineral, and related
properties and assets of any kind and nature, direct or indirect, including
working, leasehold and mineral interests and operating rights and royalties,
overriding royalties, production payments, net profit interests and other
nonworking interests and nonoperating interests; (b) all interests in
rights with respect to Hydrocarbons and other minerals or revenues therefrom,
all contracts in connection therewith and claims and rights thereto (including
all oil and gas leases, operating agreements, unitization and pooling agreements
and orders, division orders, transfer orders, mineral deeds, royalty deeds, oil
and gas sales, exchange and processing contracts and agreements, and in each
case, interests thereunder), surface interests, fee interests, reversionary
interests, reservations, and concessions; (c) all easements, rights of way,
licenses, permits, leases, and other interests associated with, appurtenant to,
or necessary for the operation of any of the foregoing; and (d) all
interests in equipment and machinery (including wells, well equipment and
machinery), oil and gas production, gathering, transmission, treating,
processing, and storage facilities (including tanks, tank batteries, pipelines,
and gathering systems), pumps, water plants, electric plants, gasoline and gas
processing plants, refineries, and other tangible personal property and fixtures
associated with, appurtenant to, or necessary for the operation of any of the
foregoing.

       

      “Operator” has the meaning set
forth in the Operating Agreement.

       

      “Operating Agreement” means the
Operating Agreement, dated the Execution Date, but effective as of the Effective
Date, by and between Carrizo and Investor LLC.

       

      “Operating Committee” has the
meaning set forth in the Operating Agreement.

       

      “Operation” means any Joint
Operation or Exclusive Operation in which both Investor LLC and Carrizo
participate.

       

      “Participation Interest” means
as to any Party, the undivided interest of such Party (expressed as a percentage
of the total interests of all the Parties) in the rights and obligations derived
from the Parties’ respective interests in each of the Properties and each
Operation thereon.

       

      “Party” means Carrizo, COGI,
Avista, Investor LLC, or any of their respective permitted successors and
assigns.

       

      “Permitted Pledge” means the
pledge, hypothecation or other voluntary encumbrance of a Party’s direct or
indirect interest (including the securities of any of its Affiliates) in the
Properties; provided
that (a) each pledge, hypothecation or encumbrance of a Party’s
direct interest in the Properties complies with the Operating Agreement, and (b)
with respect to each pledge, hypothecation or other voluntary encumbrance of the
limited liability company interests of Carrizo or Investor LLC, any Transfer of
such limited liability company interests in connection with a secured party’s
exercise of remedies under such pledge, 

       

      
        
          
          

        

        
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      hypothecation
or encumbrance is subject to the other Party’s rights under Sections 4.2(b) and
4.3(b) of this Agreement.

       

      “Permitted Pledge Transfer”
means, subject to Section 4.1(c), any Transfer made in connection with a secured
party’s exercise of remedies under a Permitted Pledge or any Transfer made after
commencement of a bankruptcy or insolvency proceeding respecting the Party bound
by the Permitted  Pledge and approved by the court or tribunal having
jurisdiction over such proceeding.

       

      “Person” means any individual,
firm, corporation, partnership, limited liability company, joint venture,
association, trust, unincorporated organization, Governmental Authority, or any
other entity.

       

      “Profit Interest” means the
interest in Investor LLC designated as such in the Investor LLC Agreement,
having the rights and preferences set forth therein.

       

      “Properties” means all Oil and
Gas Interests dedicated pursuant to Sections 2.1(a) and 2.1(b); provided that any Oil and Gas
Interests in Properties  relinquished by Carrizo or Investor LLC
pursuant to Exclusive Operations under Article 7 of the Operating Agreement or
as set forth in Section 5.2(b)shall not be deemed “Properties” hereunder from
and after such event, except to the extent otherwise expressly provided
herein.

       

      “Property Offeror” has the
meaning set forth in Section 4.3(a)(ii).

       

      “Property Tag-Along Initiator”
has the meaning set forth in Section 4.3(a)(i).

       

      “Property Tag-Along Interest”
has the meaning set forth in Section 4.3(a)(iii).

       

      “Property Tag-Along Notice” has
the meaning set forth in Section 4.3(a)(ii).

       

      “Property Tag-Along Rights” has
the meaning set forth in Section 4.3(a)(i).

       

      “Property Transfer Effective
Date” has the meaning set forth in Section 2.3(c).

       

      “Proposed Forecast” has the
meaning set forth in Section 5.2(c).

       

      “Proposed Equity Tag-Along
Sale” means (a) the Transfer of limited liability company interests
(expressed as a percentage), other than the Profit Interest, in either Carrizo
or Investor LLC, as applicable, to, in the case of Carrizo, any Person other
than a wholly owned Subsidiary of COGI, or in the case of Investor LLC, any
Person other than an Avista Controlled Entity, in one transaction or a series of
related transactions, that constitutes a Transfer of an Indirect Beneficial
Ownership Interest in Carrizo’s or Investor LLC’s, as applicable, interests in
the Properties that is equal to or greater than the Tag-Along Threshold or (b) a
Change of Control, direct or indirect, of Carrizo or Investor LLC, except that
any such Change of Control that
occurs as a result of a Change of Control of COGI will not constitute a Proposed
Equity Tag-Along Sale, and Investor LLC will have no right to participate in any
such Change of Control pursuant to Section 4.3(b) or otherwise.

       

      
        
          
          

        

        
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      “Proposed Property Tag-Along
Sale” has the meaning set forth in Section 4.3(a)(i).

       

      “Proposing Party” has the
meaning set forth in Section 5.2(b).

       

      “Prospect” has the meaning set
forth in the Operating Agreement.

       

      “Qualifying Equity Interests”
has the meaning set forth in Section 4.2(b).

       

      “Qualifying Equity Transfer”
has the meaning set forth in Section 4.2(b).

       

      “Selling Member” has the
meaning set forth in Section 4.2(b).

       

      “Subsequent Exclusive
Operation” has the meaning set forth in the Operating
Agreement.

       

      “Subsidiary” of a Person means
a corporation, partnership, joint venture, limited liability company or other
business entity of which a majority of the shares of securities or other
interests having ordinary voting power for the election of directors or other
governing body (other than securities or interests having such power only by
reason of the happening of a contingency) are at the time beneficially owned, or
the management of which is otherwise controlled, directly or indirectly through
one or more intermediaries, or both, by such Person.

       

      “Tag-Along Threshold” means,
with respect to Carrizo or Investor LLC, (a) 10% of such Party’s interest in the
proved reserves (based on the most recent independent reserve report) in the
Properties, (b) 10% of the aggregate acquisition cost of such Party’s net
mineral leasehold interests in the Properties or (c) 10% of such Party’s book
value in the Joint Properties.

       

      “Taxes” means all income,
profits, franchise, sales, use, ad valorem, property, severance, production,
excise, stamp, documentary, real property transfer or gain, gross receipts,
goods and services, registration, capital, transfer, or withholding taxes or
other governmental fees or charges imposed by any Governmental Authority,
including any interest, penalties, or additional amounts that may be imposed
with respect thereto.

       

      “Transaction Documents” means
this Agreement, the Operating Agreement, the Investor LLC Agreement and the
Management Services Agreement.

       

      “Transfer” means any sale,
assignment, conveyance, transfer or other disposition, voluntary or involuntary,
by operation of law (including without limitation by merger or other business
combination transaction) or otherwise; provided that unless
otherwise specified herein, a Party’s entry into a Permitted Pledge shall not
constitute a Transfer.  When used as a verb, the term “Transfer” shall
have a correlative meaning.

      “Transfer Taxes” means any
Transfer, documentary, sales, use, registration, value-added, and other similar
Taxes, including interest, fines, penalties or additional amounts which may be
imposed with respect thereto, incurred in connection with the execution,
delivery or performance of this Agreement or the transactions contemplated
hereby.

       

      
        
          
          

        

        
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      “Voting Securities” means any
securities which at present or upon conversion entitle the owner or holder
thereof to vote for the election of directors of the entity who issued such
securities or, with respect to unincorporated entities, Persons exercising
similar functions.

       

      “Work Program and Budget” has
the meaning set forth in the Operating Agreement.

       

      ARTICLE 2

       

      DEDICATIONS; EXPENSE
ALLOCATION;

      INTEREST TRANSFERS; JOINT
MARKETING

       

      2.1 Dedication of Oil and Gas
Interests.

       

      (a) The
Carrizo Parties hereby dedicate, for the joint benefit of Carrizo and Investor
LLC, (i) 100% of their interests in and to the properties described on
Exhibit 2.1(a), and all of their Oil and Gas Interests associated with such
properties (the “Initial
Carrizo Assets”), (ii) 100% of their interests in any Oil and Gas
Interests within the AMI acquired on or prior to the Effective Date that are not
the Initial Carrizo Assets, and (iii) 100% of their interests in the Oil and Gas
Interests that the parties to the Operating Agreement agree to acquire pursuant
to the Operating Agreement.  

       

      (b) Investor
LLC hereby dedicates, for the joint benefit of Investor LLC and Carrizo, (i)
100% of its interests in and to the properties described on Exhibit 2.1(b),
as well as all of its Oil and Gas Interests associated with such properties,
(ii) 100% of its interest in the Oil and Gas Interests acquired in the
Designated Area pursuant to the Land Bank Agreement following the Effective Date
and (iii) 100% of its interest in the Oil and Gas Interests that the parties to
the Operating Agreement agree to acquire pursuant to the Operating Agreement
(the “Investor
Assets”).  Prior to dedicating any Oil and Gas Interests
pursuant to Section 2.1(b)(i)-(ii), Investor LLC will not create or allow to
exist any overriding royalty interest, burdens or other obligations with respect
to such Oil and Gas Interests other than those existing at the time such Oil and
Gas Interests were acquired.

       

      (c) The
Parties acknowledge that, following the Effective Date, activities and
operations with respect to certain Oil and Gas Interests dedicated pursuant to
Sections 2.1(a) and 2.1(b) may constitute Exclusive Operations whereby Carrizo
or Investor LLC elect not to participate in such activities or operations in
accordance with the Operating Agreement.  In such case, the Parties
agree that notwithstanding Sections 2.1(a) and 2.1(b), the Oil and Gas Interests
associated with Operations relinquished by Carrizo or Investor LLC pursuant to
Exclusive Operations (i) under Article 7.4(B)(1) of the Operating Agreement or
as set forth in Section 5.2(b) shall no longer constitute Properties hereunder
and (ii) under Article 7.4(B)(2), (3) or (4) of the Operating Agreement shall
not
constitute Properties hereunder unless and until the Non-Consenting Party has
reinstated its rights pursuant to Article 7.4(C)(2) of the Operating
Agreement.

       

      2.2 Capital
Commitments

       

      
        
          
          

        

        
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      (a) Investor
LLC shall fund (i) until the Property Transfer Effective Date, 100% of all
expenditures and amounts allocated to or required to be paid by either Investor
LLC or Carrizo under the Operating Agreement, and (ii) thereafter, all
expenditures and amounts allocated to or required to be paid by Investor LLC
under the Operating Agreement, up to the Investor LLC Cap.

       

      (b) From and
after the Property Transfer Effective Date, Carrizo shall fund all expenditures
and amounts allocated to or required to be paid by it under the Operating
Agreement, up to the Carrizo Cap.

       

      (c) From and
after the satisfaction of the funding obligations provided for in Sections
2.2(a) and (b) above, Carrizo’s and Investor LLC’s funding obligations shall be
governed by the Operating Agreement.  At Carrizo’s election, the
funding of expenditures and other amounts provided for in Sections 2.2(a) and
(b) above may be accomplished by net cash calls in accordance with the Operating
Agreement.

       

      (d) Carrizo
may, in its sole discretion, elect from time to time to fund expenditures or
amounts allocated to it under the Operating Agreement prior to the Property
Transfer Effective Date in accordance with Article 1.6 of Exhibit D to the
Operating Agreement (even though such amounts are required to be funded by
Investor LLC pursuant to Section 2.2(a)(i)).  In the event that
Carrizo so elects, Investor LLC shall promptly reimburse Carrizo for any such
amounts and, upon Carrizo’s receipt of such reimbursements, such amounts will
not be aggregated in respect of the Carrizo Cap but shall instead be aggregated
in respect of the Investor LLC Cap.

       

      (e) Notwithstanding
anything to the contrary herein or in the Operating Agreement, if either Party
fails to make any capital commitments as required by Section 2.2(a)(i) or
Section 2.2(b), as applicable, and such failure is not cured within ten (10)
Business Days of notice provided by the non-defaulting Party, at the option of
the non-defaulting Party the provisions in Article 20.3 of the Operating
Agreement (regarding the AMI) shall terminate and be of no further effect as
between Carrizo and Investor LLC.

       

      2.3 Transfer of Properties
Between the Parties.

       

      (a) Until the
termination of the Catch-Up Period, record title to the Oil and Gas Interests
dedicated pursuant to Sections 2.1(a) and 2.1(b) shall not be Transferred
between Carrizo and Investor LLC, and the Carrizo Parties or Investor LLC, as
the case may be, will hold record title to the Oil and Gas Interests dedicated
by such Party pursuant to Section 2.1 notwithstanding Carrizo’s or Investor
LLC’s beneficial ownership interest in such Oil and Gas Interests as set forth
below.

       

      (b) The
Carrizo Parties and Investor LLC agree and acknowledge that, during the Catch-Up
Period, Carrizo shall own and hold an undivided beneficial ownership
interest
in the Properties, as it may be adjusted from time to time, in the same
proportion that the Carrizo Investments bear to the sum of the Avista
Investments and the Carrizo Investments, and Investor LLC shall own and hold an
undivided beneficial ownership interest in the Properties, as it may be adjusted
from time to time, in the same proportion 

       

      
        
          
          

        

        
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      that the
Avista Investments bear to the sum of the Avista Investments and the Carrizo
Investments.  The Carrizo Parties and Investor LLC further agree and
acknowledge that, upon the making of any investment pursuant to the terms hereof
during the Catch-Up Period, undivided beneficial ownership interests in the
Properties necessary to adjust Carrizo’s and Investor LLC’s beneficial ownership
interests in accordance with the preceding sentence shall be simultaneously
assigned, transferred and conveyed from Carrizo to Investor LLC or from Investor
LLC to Carrizo, as the case may be, automatically and without further act or
deed of any such Party.

       

      (c) Effective
as of the date that the Catch-Up Period terminates (the “Property Transfer Effective
Date”), (i) Carrizo, or in the case Carrizo does not hold record title,
the Carrizo Parties, shall assign to Investor LLC, and Investor LLC shall accept
from Carrizo or the Carrizo Parties (as the case may be), record title to an
undivided 50% interest in the Carrizo Parties’ Oil and Gas Interests dedicated
pursuant to Section 2.1(a); and (ii) Investor LLC shall assign to
Carrizo, and Carrizo shall accept from Investor LLC, record title to an
undivided 50% interest in Investor LLC’s Oil and Gas Interests dedicated
pursuant to Section 2.1(b).  As soon as reasonably practicable
following the Property Transfer Effective Date, the Carrizo Parties and Investor
LLC shall execute and deliver, in recordable form reasonably acceptable to such
Parties, conveyances to effect the cross-assignments described in this
paragraph.  To the extent the Transfer of any Oil and Gas Interest is
subject to a third Person consent or preferential purchase right triggered by
the Transfers contemplated hereunder, and consent or waiver is not received,
such Party holding record title shall hold the Property for the benefit of such
other Party, and the intended Party shall pay all amounts due and be responsible
for the performance of all obligations as if record title and beneficial
ownership had been held by the intended Party, until such consent is obtained or
preferential purchase right waived.

       

      2.4 Joint
Marketing.  Notwithstanding
anything to the contrary in Article 9 of the Operating Agreement, until the
provisions of Section 3.1(a) and 3.1(b) are no longer applicable, Carrizo, in
its capacity as Operator under the Operating Agreement, shall use commercially
reasonable efforts, and Investor LLC hereby irrevocably designates Carrizo as
agent for such purpose, to market on behalf of Investor LLC all of Investor
LLC’s Entitlement to Hydrocarbons from the Properties, together with Carrizo’s
Entitlement to Hydrocarbons from the Properties, as a single
stream.  Investor LLC shall not market and shall cause its Affiliates
not to market any of its Entitlement without the prior written consent of
Carrizo.  Investor LLC acknowledges and agrees that Carrizo does not
warrant or guarantee any market or price that it will be able to procure for the
Parties’ collective Entitlement.

       

      ARTICLE 3

      ALLOCATIONS
OF NET CASH FLOW FROM PRODUCTION

      AND
PROPERTY SALE PROCEEDS

       

      
        3.1 Allocation of Net Cash Flow From
Production.  Within
twenty (20) days following the end of each calendar month, Net Cash Flow From
Production shall be allocated between Investor LLC and Carrizo as
follows:

      

       

      
        
          
          

        

        
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        (a) the
Investor Equalization Share thereof to Investor LLC, and the Carrizo
Equalization Share thereof to Carrizo, until the Avista Allocation Threshold is
reached;

         
(b) thereafter,
100% to Carrizo, until the Carrizo Allocation Threshold is reached;
and

       

      (c) thereafter,
with respect to each Operation from which such Net Cash Flow From Production
arises, in accordance with their respective Participation Interests in that
Operation.

       

      
        3.2 Allocation of Proceeds from
Property Dispositions.  Except
as provided in Section 3.3, proceeds received in the preceding calendar
month from the Transfer of any Oil and Gas Interest in the Properties shall be
allocated at the same time as allocations are being made pursuant to
Section 3.1, except that proceeds from a single Property Transfer in excess
of One Million Dollars ($1,000,000) shall be allocated promptly after receipt
thereof, in either case, between Investor LLC and Carrizo as
follows:

         

        (a) the
Investor Equalization Share thereof to Investor LLC and the Carrizo Equalization
Share thereof to Carrizo, until the Avista Allocation Threshold is
reached;

         

        (b) thereafter,
100% to Carrizo, until the Carrizo Allocation Threshold is reached;
and

         

        (c) thereafter,
in accordance with the Parties’ respective Participation Interests in the Oil
and Gas Interests disposed of.

         

        3.3 Special Allocation of
Proceeds from Certain Property Dispositions.  Proceeds
from any Transfer of Oil and Gas Interests in the Properties (i) by Carrizo to a
wholly owned Subsidiary of COGI, (ii) by Avista to an Avista Controlled Entity
in accordance with Section 4.1(b), (iii) attributable to Operations relinquished
by Carrizo or Investor LLC pursuant to Exclusive Operations under Article
7.4(B)(1) of the Operating Agreement or as set forth in Section 5.2(b) or (iv)
effected pursuant to Sections 4.2(a), 4.3(a)(v) or 4.3(b), shall not be
subject to Section 3.2 and shall be allocated 100% to the Transferring
Party.  Proceeds from any Transfer of Oil and Gas Interests in
Properties pursuant to which Exclusive Operations were conducted by a Party in
which the other Party did not participate pursuant to Article 7.4(B)(2), (3) or
(4) of the Operating Agreement shall be allocated 100% to the Party
participating in such Exclusive Operations to the extent required to terminate
the relinquishment of the Non-Consenting Party’s rights in the affected Property
or Properties pursuant to Article 7.4(C)(2) of the Operating Agreement and
shall not be subject to Section 3.2; provided, if such allocation
results in termination of such relinquishment, any remaining proceeds shall be
allocated to the Parties as otherwise contemplated by Section 3.2,

         

        3.4 Coordination With Operating
Agreement.  Nothing
in this Article 3 shall change or affect any Party’s obligation to pay its
proportionate share of all costs and liabilities incurred in Operations on or in
connection with the Properties, as its share thereof is set forth in the
Operating Agreement, remaining subject, however, to modifications under
Section 2.2.

         

        
          
            
            

          

          
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        ARTICLE 4

        TRANSFER OF OIL AND GAS
INTERESTS IN PROPERTIES

         

        4.1 Prohibition
on Certain Transfers.

         

        (a) During
the Catch-Up Period, Carrizo may not Transfer any of its interest in the
Properties dedicated pursuant to Section 2.1 to any Person without the
prior written consent of Investor LLC, except to any wholly owned Subsidiary of
COGI or any Permitted Pledge Transfer.  Following the Catch-Up Period,
Transfers by Carrizo shall be subject to Sections 4.2(a) and 4.3(a), except for
Transfers to any wholly owned Subsidiary of COGI or in the case of a Permitted
Pledge Transfer.  Transfers of limited liability company interests in
Carrizo and other transactions that constitute a Proposed Equity Tag-Along Sale
shall be subject to Section 4.2(b) or Section 4.3(b), as
applicable.

         

        (b) During
the Catch-Up Period, Investor LLC may not Transfer any of its interest in the
Properties dedicated pursuant to Section 2.1 to any Person without the
prior written consent of the Carrizo Parties, except in the case of a Permitted
Pledge Transfer.  Without the prior written consent of the Carrizo
Parties (which may not be unreasonably withheld), Investor LLC may not Transfer
any of its interest in the Properties to any Avista Controlled
Entity.  Following the Catch-Up Period, Transfers by Investor LLC
shall be subject to Sections 4.2(a) and 4.3(a), except for Transfers to any
Avista Controlled Entity with the prior written consent of the Carrizo Parties
(which may not be unreasonably withheld) or any Permitted Pledge
Transfer.  Transfers of limited liability company interests in
Investor LLC and other transactions that constitute a Proposed Equity Tag-Along
Sale shall be subject to Section 4.2(b) or Section 4.3(b), as
applicable.

         

        (c) Prior
to the Property Transfer Effective Date, any encumbrance or security interest
created by the Carrizo Parties or Investor LLC in the Properties (including any
Permitted Pledge) shall provide that the lienholder’s rights are expressly
subordinated to the beneficial interest of the Carrizo Parties or Investor LLC,
as the case may be, in the Properties as set forth in Section
2.3(b).  Promptly following receipt, the Carrizo Parties shall provide
Investor LLC a copy of any notification of default under any agreement governing
any material funded debt of Carrizo or any of its Affiliates that are
“Restricted Subsidiaries” (as such term may be defined in COGI's senior secured
revolving credit facility or other similar commercial financing agreement), the
result of which default is to cause, or permit the holder or holders thereof to
cause, such debt to be accelerated.  Following Carrizo’s default under
the terms of any Permitted Pledge of Carrizo’s interest in the Properties but
prior to the secured party’s exercise of remedies with respect to such interest,
Carrizo agrees to designate Investor LLC (or its designee) as “co-operator”
under the Operating Agreement for any Operations with respect to such
Properties.

         

        (d) Notwithstanding
any provision of this Agreement to the contrary, any Transfer of a Party’s
interest in the Properties (including, for purposes of this Section 4.1(d) only,
a Party’s entry into a Permitted Pledge) is subject to the restrictions on
Transfer in the event of such Party’s default set forth in Article 8.2(A)(5) of
the Operating Agreement.

         

        
          
            
            

          

          
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      4.2 Transfers Below the
Tag-Along Threshold.

       

      (a) Following
termination of the Catch-Up Period, Carrizo and Investor LLC may Transfer their
respective interests in the Properties (in a single transaction or series of
related transactions) constituting less than the Tag-Along Threshold, subject to
applicable preferential purchase rights and other Transfer restrictions set
forth in the Operating Agreement; provided that the Parties
hereby agree that any exclusion in the Operating Agreement from such
preferential purchase rights and other Transfer restrictions with respect to
Affiliate transactions shall not apply to Transfers by Carrizo to any Affiliate
other than a wholly owned Subsidiary of COGI or by Investor LLC to any of its
Affiliates.

       

      (b) In
connection with any Transfer of limited liability company interests in Carrizo
or Investor LLC (in such capacity, the “Equity ROFR Initiator”) that
does not constitute a Proposed Equity Tag-Along Sale (except Transfers to, in
the case of Carrizo, any wholly owned Subsidiary of COGI, or in the case of
Investor LLC, any Avista Controlled Entity), in one transaction or a series of
related transactions (a “Qualifying Equity Transfer”),
the other Party shall be entitled to exercise a right of first refusal (the
“Equity Purchase
Rights”) to purchase the limited liability company interests that are
subject to the Qualifying Equity Transfer (the “Qualifying Equity Interests”)
in accordance with this Section 4.2(b).  Once the final terms and
conditions of a Qualifying Equity Transfer have been fully negotiated, the
Person that proposes to Transfer (the “Selling Member”) the
Qualifying Equity Interests shall disclose all the final terms and conditions as
are relevant to the Equity ROFR Initiator, and the Equity ROFR Initiator shall
forward such notice to the Party that has the Equity Purchase Rights hereunder
(Carrizo or Investor LLC, as applicable), which notice shall be accompanied by a
copy of all instruments or relevant portions of instruments establishing such
terms and conditions.  The Party having the Equity Purchase Rights
shall have the right to acquire the Qualifying Equity Interests from the Selling
Member on the same final terms and conditions as such Selling Member negotiated
with the proposed transferee if, within thirty (30) days of the Selling Member’s
notice, such Party delivers to the Equity ROFR Initiator a counter-notification
that it accepts such terms and conditions without reservations or
conditions.  If Carrizo or Investor LLC, as applicable, does not
deliver such counter-notification, the Selling Member may complete the Transfer
of the Qualifying Equity Interests to the proposed transferee under terms and
conditions no more favorable to the Selling Member than those set forth in the
notice to the Parties, provided that such Transfer
is concluded within one hundred eighty (180) days from the date of the
notice.

      
        4.3 Other
Transfers.  Preferential
purchase rights and other Transfer restrictions set forth in the Operating
Agreement and otherwise applicable shall not apply to any Transfer (including
indirect Transfers described under Section 4.3(b)) of a Party’s direct or
indirect interests in the Properties to any Person (in a single transaction or
series of related transactions), if such Oil and Gas Interests equal or exceed
the Tag-Along Threshold; provided that any such
Transfer not otherwise excepted in this Article IV shall be subject to the
restrictions set forth in this Section 4.3:

         

        
          
            
            

          

          
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      (a) Tag-Along Rights in Sales of
the Properties.

       

      (i) If
Carrizo or Investor LLC (such Party, the “Property Tag-Along Initiator”)
desires to Transfer all or a part of its interests in the Properties to, in the
case of Carrizo, a Person that is not a wholly owned Subsidiary of COGI, or in
the case of Investor LLC, any Person, in a single transaction or series of
related transactions, equal to or greater than the Tag-Along Threshold (a “Proposed Property Tag-Along
Sale”),  then the other Party shall be entitled to exercise
tag-along rights to participate in such Proposed Property Tag-Along Sale (in
accordance with this Section 4.3(a)) at the same price and on the same
terms and conditions as those offered to the Property Tag-Along Initiator
(“Property Tag-Along
Rights”).

       

      (ii) No later
than ten (10) Business Days following the Property Tag-Along Initiator’s receipt
of an offer constituting a Proposed Property Tag-Along Sale, the Property
Tag-Along Initiator shall deliver a written notice (a “Property Tag-Along Notice”) to
the other Party stating that it desires to effect a Proposed Property Tag-Along
Sale, which notice shall set forth (A) the identity of the Person (the
“Property Offeror”) that
desires to acquire the Property Tag-Along Initiator’s interest in the
Properties, (B) a summary in reasonable detail of the representations,
warranties, covenants, conditions and indemnification proposed by the Offeror,
(C) the Property Tag-Along Initiator’s interest in the Properties (the
“Offered Property
Interest”) that the Property Offeror proposes to acquire (expressed as a
percentage of all of the Property Tag-Along Initiator’s interest of such type in
the Properties), (D) the proposed total purchase price for the Offered
Property Interest and (E) any other material terms governing the
offer.

       

      (iii) Within
twenty (20) Business Days of its receipt of a Property Tag-Along Notice, Carrizo
or Investor LLC, as applicable, shall have the right, but not the obligation, to
elect, by written notice to the Property Tag-Along Initiator, to include a
portion of its interest in the Properties constituting the same type of interest
as the Offered Interest in the Proposed Property Tag-Along Sale (expressed as a
percentage of all of such Party’s interest of such type in the Properties) that
is equal to the product of (x) its Participation Interest in the Properties and
(y) the Offered Property Interest (the “Property Tag-Along
Interest”).  Such Party’s failure to give unconditional written
notice of such election within such period shall be deemed an election by such
Party not to exercise its Property Tag-Along Rights.

      (iv) If
Carrizo or Investor LLC, as applicable, exercises its Property Tag-Along Rights,
then both Parties shall participate in the Proposed Property Tag-Along Sale, and
the Offered Property Interest shall be reduced to the extent of the Property
Tag-Along Interest.

       

      (v) If
Carrizo or Investor LLC, as applicable, does not elect to exercise its Property
Tag-Along Rights, then the Property Tag-Along Initiator may, for a period of
sixty (60) days from the date of the Property Tag-Along Notice, 

       

      
        
          
          

        

        
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      consummate
the Proposed Property Tag-Along Sale upon terms and conditions that are no more
favorable to the Property Tag-Along Initiator than those set forth in the
Property Tag-Along Notice.  Immediately after the closing of the
Proposed Property Tag-Along Sale, the Property Tag-Along Initiator shall provide
the other Party true and complete copies of all agreements relating to such
Transfer.

       

      (vi) In the
event that the Property Offeror fails to purchase the Property Tag-Along
Interest for which Property Tag-Along Rights have been properly exercised from
Carrizo or Investor LLC, as applicable, in accordance with Section 4.3(a)(iv)
and the Property Tag-Along Initiator consummates the Proposed Property Tag-Along
Sale in violation of this Section 4.3(a), then the Property Tag-Along Initiator
shall be required to purchase the other Party’s Property Tag-Along Interest in
the Properties in accordance with the provisions of Section
4.3(a)(iv).

       

      (b) Sales of Membership
Interests in Carrizo or Investor LLC.  In addition to the
Property Tag-Along Rights of Carrizo and Investor LLC described in
Section 4.3(a), the limited liability company agreements of Carrizo and
Investor LLC shall prohibit Transfers of limited liability company interests in
such Party and other transactions that constitute a Proposed Equity Tag-Along
Sale, except in accordance with Section 4.2(b) and this
Section 4.3(b).

       

      (i) In
connection with any Proposed Equity Tag-Along Sale with respect to Carrizo or
Investor LLC (in such capacity, the “Equity Tag-Along Initiator”),
the other Party shall be entitled to exercise tag-along rights to sell to the
proposing acquiror (the “Equity
Offeror”) the Equity Tag-Along Interest of its interest in the Properties
(the “Equity Tag-Along
Rights”) as determined by Section 4.3(b)(iii).

       

      (ii) No later
than ten (10) Business Days following the Equity Tag-Along Initiator’s receipt
of a notice from one of its members of (x) such member’s intent to Transfer an
amount of limited liability company interests in the Equity Tag-Along Initiator
constituting a Proposed Equity Tag-Along Sale or (y) any other transaction that
may, if consummated, constitute a Proposed Equity Tag-Along Sale, the Equity
Tag-Along Initiator shall deliver a written notice (an “Equity Tag-Along Notice”) to
Carrizo or Investor LLC, as applicable, stating that a member of the Equity
Tag-Along Initiator or one of its Affiliates desires to effect a Proposed Equity
Tag-Along Sale, which notice shall set forth (A) the identity of the Equity
Offeror, (B) a summary in reasonable detail of the representations, warranties,
covenants, conditions and indemnification proposed by the
Equity Offeror, (C) the amount of such member’s limited liability company
interests in the Equity Tag-Along Initiator (the “Offered Equity Interest”) that
the Equity Offeror is willing to acquire, directly or indirectly (expressed as a
percentage of all outstanding limited liability company interests in the Equity
Tag-Along Initiator), (D) the proposed total purchase price for the Offered
Equity Interest and (E) any other material terms governing the
offer.

       

      
        
          
          

        

        
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      (iii) Within
twenty (20) Business Days of its receipt of an Equity Tag-Along Notice, Carrizo
or Investor LLC, as applicable, shall have the right, but not the obligation, to
elect, by written notice to the Equity Tag-Along Initiator, to require that the
Equity Offeror acquire such Party’s Equity Tag-Along Interest in the Properties
concurrently with its consummation of the Proposed Equity Tag-Along Sale; provided that in the case of
a direct or indirect Change of Control of the Equity Tag-Along Initiator
constituting a Proposed Equity Tag-Along Sale under clause (b) of the definition
of Proposed Equity Tag-Along Sale, such Party’s Equity Tag-Along Interest shall
equal all of its right, title and interest in the Properties.  Such
Party’s failure to give unconditional written notice of such election within
such period shall be deemed an election by such Party not to exercise its Equity
Tag-Along Rights.

       

      (iv) If
Carrizo or Investor LLC, as applicable, exercises its Equity Tag-Along Rights,
then the Equity Offeror shall be required, as a condition to its acquisition of
the Offered Equity Interest, to purchase such Party’s Equity Tag-Along Interest
in the Properties for the market value (expressed in U.S. dollars) of such
interest, based upon the amount in cash a willing buyer would pay a willing
seller in an arm’s length transaction.

       

      (v) If
Carrizo or Investor LLC, as applicable, does not elect to exercise its Equity
Tag-Along Rights, then the Equity Offeror may, for a period of sixty (60) days
from the date of the Equity Tag-Along Notice, consummate the Proposed Equity
Tag-Along Sale upon terms and conditions that are no more favorable to the
member of the Equity Tag-Along Initiator selling the Offered Equity Interest
than those set forth in the Equity Tag-Along Notice.  Immediately
after the closing of the Proposed Equity Tag-Along Sale, the Equity Tag-Along
Initiator shall provide Carrizo or Investor LLC, as applicable, true and
complete copies of all agreements relating to such Transfer.

       

      (vi) In the
event that the Equity Offeror fails to purchase the Equity Tag-Along Interest in
the Properties from Carrizo or Investor LLC, as applicable, in accordance with
Section 4.3(b)(iv) and the Equity Offeror consummates the Proposed Equity
Tag-Along Sale in violation of this Section 4.3(b), then the Equity
Tag-Along Initiator shall be required to purchase the other Party’s Equity
Tag-Along Interest in the Properties in accordance with the provisions of
Section 4.3(b)(iv).

       

      (c) Certain Transfers of
Membership Interests and Investor LLC’s Interest in the
Properties.  The Parties agree that (a) at the time of the
Transfer of all Membership Interests in Investor LLC to an unAffiliated third
Person, or (b) the sale of all or substantially
all of the assets of Investor LLC to an unAffiliated third Person, Investor LLC
may, by written notice delivered no later than simultaneously with the notice
required under Section 4.3(a)(ii) or 4.3(b)(ii), as applicable, require, as
a condition to any such Transfer and in accordance with Article 4.9(B) of the
Operating Agreement, that the Parties jointly operate the Properties by either
(x) entering into a mutually acceptable new joint operating agreement or
series of joint operating agreements on a well by well or 

       

      
        
          
          

        

        
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      Prospect
area by Prospect area basis, each of which will be based upon the AAPL model
form attached hereto as Exhibit 4.3(c) naming Investor LLC as “co-operator”
or (y) Carrizo designating Investor LLC (or its designee) as “co-operator”
under the Operating Agreement.  The division of rights, duties and
responsibilities of the Parties as “co-operator” shall be negotiated in good
faith with the goal of developing a mutually satisfactory and workable mechanism
by which the Parties shall jointly operate the Properties.  If the
Parties are unable to reach mutual agreement on alternative (x) or (y) above,
the Parties shall work together in good faith to develop an alternative
solution.

       

      ARTICLE 5

      OPERATING AGREEMENT AND
CERTAIN RESTRICTIONS

       

      5.1 Operations Subject to Laws,
Contract and Operating Agreement.  The
activities of Carrizo and Investor LLC with respect to the Designated Area shall
be conducted subject to applicable Laws and the terms of this Agreement and the
Operating Agreement.

       

      5.2 Operating
Agreement.  Investor
LLC and Carrizo are parties to the Operating Agreement, which governs the Joint
Operations with respect to the exploration and development of the
Properties.  Notwithstanding any provision of the Operating Agreement
to the contrary, Investor LLC and Carrizo agree as follows:

       

      (a) The AMI
shall not be reduced to the Prospect areas in accordance with Article 20.3(A) of
the Operating Agreement until the first to occur of:  (i)
December 31, 2010; (ii) the Minimum Commitment Date; (iii) Carrizo
designates Investor LLC (or its designee) as “co-operator” of the Properties
pursuant to Section 4.1(c); and (iv) a request by Investor LLC that it (or its
designee) be designated as “co-operator” of the Properties pursuant to Section
4.3(c) (such date, the “JOA
Trigger Date”).

       

      (b) Until the
Minimum Commitment Date, if either Carrizo or Investor LLC is a Non-Consenting
Party in a Subsequent Exclusive Operation proposed by the other Party pursuant
to Article 7.4(B)(2) of the Operating Agreement (the “Proposing Party”), then the
consequence for such Non-Consenting Party’s election not to participate in such
Subsequent Exclusive Operation shall not be as set forth in Article 7.4(C)(2)(a)
of the Operating Agreement, but shall consist of the following:  (i)
the Proposing Party shall designate a Drilling Unit consisting of 320 acres
around the proposed location of the wellbore as part of the proposal to conduct
such Subsequent Exclusive Operation, and (ii) the Non-Consenting Party shall
permanently sell, transfer and convey to the Proposing Party all of such
Non-Consenting Party’s Participation Interest within such Drilling Unit at a
price equal to the aggregate acquisition cost actually paid by the
Non-Consenting Party for its Participation Interest in the Drilling Unit, plus
the aggregate amount of all direct costs actually paid by the Non-Consenting
Party under the Operating Agreement attributable to the Drilling Unit after the
acquisition thereof.  Any Transfer under this Section
5.2(b) will be subject to the preemptive rights, excluding rights otherwise
entitled to the Non-Consenting Party, set forth in Article 12.2(G) of the
Operating Agreement.

       

      (c) Attached
hereto as Exhibit 5.2(c) is a proposed budget for the period from October 1,
2008 through December 31, 2009 (the “Proposed
Forecast”).  Until the 

       

      
        
          
          

        

        
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      Minimum
Commitment Date, Carrizo shall not propose any Work Program and
Budget  pursuant to Article 6.1(B) of the Operating Agreement that
(when added to expenditures proposed under any prior Work Program and Budget)
would include expenditures for:

       

      (i) the
“G&G” and “drilling and completion” categories that would exceed the total
amount shown for each such category for each Prospect area identified in the
Proposed Forecast by more than 15% for the period covered by the Proposed
Forecast; and

       

      (ii) land
acquisitions for the Joint Account that, in the aggregate, exceed the total
shown for the “land” category for each Prospect area identified in the Proposed
Forecast at price ranges (on a per acre basis) agreed to by the Operating
Committee for the period covered by the Proposed Forecast.

       

      (d) Until the
Minimum Commitment Date, Carrizo agrees that the aggregate expenditures under
each six-month Work Program and Budget it proposes pursuant to Article 6.1(B) of
the Operating Agreement, commencing with the Work Program and Budget it proposes
for the six-month period that begins October 1, 2009, will not exceed 115% of
the aggregate expenditures under the six-month Work Program and Budget proposed
by it for the calendar quarter immediately preceding each such proposed Work
Program and Budget.

       

      (e) Until the
Minimum Commitment Date, with respect to each Prospect for which any drilling
Operations are proposed in a Work Program and Budget, the Operating Committee
will vote on a well-by-well basis with respect thereto.  Until the
Minimum Commitment Date, Investor LLC shall cause each of its representatives on
the Operating Committee to vote in favor of any Exploration Well and associated
items as proposed by Carrizo in the Work Program and Budget.

       

      (f) Until
Investor LLC (or its designee) is designated as “co-operator” of the Properties
pursuant to Section 4.1(c) or 4.3(c), any amounts payable to the Operator by
Investor LLC in respect of proposals approved by Investor LLC under Article 5.12
of the Operating Agreement (Voting by Notice) that are in excess of the amounts
that would otherwise be payable by Investor LLC as contemplated by the Work
Program and Budget in effect at such time shall be due by the later of (i)
fifteen (15) Business Days from Investor LLC’s approval and (ii) the first
Business Day of the Calendar Quarter immediately following such approval
notwithstanding any other time limit set forth in Article 1.6 of Exhibit D to
the Operating Agreement (Payments and Advances).

       

      (g) The
minimum percent of Participating Interest necessary to approve decisions of the
Operating Committee shall not be modified as provided in Article 5.9(B) under
the Operating Agreement until the JOA Trigger Date.

      (h) In
the event of a conflict between the provisions of this Agreement and the
provisions of the Operating Agreement, the provisions of this Agreement shall
prevail.

       

      5.3 Restrictions on Avista’s
Investments in the AMI.  Without
the prior written consent of COGI, which may not be unreasonably withheld,
Avista shall not (and shall 

       

      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

       

      cause its
controlled Affiliates not to), directly or indirectly, make any controlling
investment in any third Person engaged or that engages in the exploration,
exploitation or development of Hydrocarbons within the AMI, except as provided
in this Agreement and except for such activities that are de minimis or incidental
to activities in the AMI other than exploration, exploitation or development of
Hydrocarbons.

       

      5.4 Termination of Land Bank
Agreement.  Carrizo
and Investor LLC hereby agree that the Land Bank Agreement is terminated as of
the Execution Date.

       

      ARTICLE 6

      INFORMATION
RIGHTS

       

      Within
forty-five (45) days following each calendar quarter after the Execution Date,
Carrizo shall provide Investor LLC with a written report discussing the results
of Joint Operations with respect to the Properties that is in substantial
compliance with the substantive requirements of Item 303 under Regulation S-K
(17 CFR Part 229.310) (but reduced to take into account the matters for which
such report will be used).  The Avista Parties shall provide COGI with
such information concerning the Avista Parties as COGI may reasonably request in
order to timely comply with COGI’s reporting obligations under the Securities
Exchange Act of 1934, as amended, or COGI’s disclosure obligations with respect
to any registration statement it files under the Securities Act of 1933, as
amended.

       

      ARTICLE 7

      REPRESENTATIONS

       

      7.1 Representations and
Warranties of the Carrizo Parties.  The
Carrizo Parties hereby represent and warrant to the Avista Parties as of the
Execution Date that:

       

      (a) Ownership of
Carrizo.  COGI owns, directly or indirectly, all of the issued
and outstanding securities of Carrizo.

       

      (b) Organization and Good
Standing.  Each of the Carrizo Parties is an entity duly
incorporated or otherwise organized, validly existing and in good standing under
the Laws of the jurisdiction of its incorporation or organization (as
applicable), with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently conducted.
Neither of the Carrizo Parties is in violation of any of the provisions of its
respective certificate or articles of incorporation, bylaws or other
organizational, charter or equivalent documents. Each of the Carrizo Parties is
duly qualified to conduct business and is in good standing as a foreign
corporation or other entity in each jurisdiction in which the nature of the
business conducted or property owned by it makes such qualification necessary,
except where the failure to be so qualified or in good standing, as the case may
be, would not reasonably be expected to have a
material and adverse affect on the ability of such Carrizo Party to perform its
obligations under this Agreement.

       

      (c) Authorization of
Agreement.  Each of the Carrizo Parties has the requisite power
and authority to enter into and to consummate the transactions contemplated by
this Agreement and otherwise to carry out its obligations hereunder. The
execution and 

       

      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      

       

      delivery
of this Agreement by each of the Carrizo Parties and the consummation by such
Carrizo Party of the transactions contemplated hereby have been duly authorized
by all necessary action on the part of such Carrizo Party and no further action
is required by such Carrizo Party, its board of directors or other governing
body or shareholders, members or partners in connection
herewith.  This Agreement has been duly executed by each Carrizo Party
and, when executed and delivered by the Avista Parties in accordance with the
terms hereof, will constitute the valid and binding obligation of such Carrizo
Party, enforceable against such Carrizo Party in accordance with its terms,
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other Laws of general application affecting enforcement of
creditors’ rights generally and (ii) as limited by Laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies.  COGI has delivered to Avista a certified copy of
resolutions of COGI’s Board of Directors approving the transactions contemplated
by this Agreement and authorizing COGI to fund Carrizo to meet its commitments
hereunder.

       

      (d) No
Violation.  The execution, delivery and performance of this
Agreement by the Carrizo Parties and the consummation by the Carrizo Parties of
the transactions contemplated hereby do not (i) conflict with or violate any
provision of either of the Carrizo Parties’ certificate or articles of
incorporation, bylaws or other organizational, charter or equivalent documents,
or (ii) conflict with, or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of, any agreement, credit facility, debt or
instrument (evidencing a Carrizo Party’s debt or otherwise) or other
understanding to which either of the Carrizo Parties is a party or by which any
property or asset of either Carrizo Party is bound or affected, or (iii) subject
to any approvals which are expressly required under the terms of any applicable
Law, in order to consummate the transactions contemplated by this Agreement,
result in a violation of any Law, rule, regulation, order, judgment, injunction,
decree or other restriction of any court or Governmental Authority to which
either Carrizo Party is subject; except in the case of each of clauses (ii) and
(iii), such as would not, individually or in the aggregate, reasonably be
expected to have a material and adverse affect on the ability of either Carrizo
Party to perform its obligations under this Agreement.

       

      (e) Brokers.  No
broker, finder or investment banker is entitled to any brokerage, finder’s or
other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Carrizo
Parties.

       

      (f) All AMI Oil and Gas
Interests.  The Oil and Gas Interests described in Exhibit
2.1(a) comprise all of the Carrizo Parties’ Oil and Gas Interests within the AMI
through July 31, 2008.

       

      7.2 Representations and
Warranties of the Avista Parties.  The
Avista Parties represent and warrant to the Carrizo Parties as of the date of
the Execution Date that:

       

      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

      

       

      (a) Ownership of Investor
LLC.  Avista owns, directly or indirectly, all of the issued
and outstanding securities of ACP II; Avista Offshore owns, directly or
indirectly, all of the issued and outstanding securities of ACP II
Offshore; and except for the Profit Interest, ACP II and ACP II Offshore own all
of the issued and outstanding securities of Investor LLC.  Avista GP
is the sole general partner of and controls each of Avista and Avista
Offshore.

       

      (b) Organization and Good
Standing.  Each of the Avista Parties is an entity duly
incorporated or otherwise organized, validly existing and in good standing under
the Laws of the jurisdiction of its incorporation or organization (as
applicable), with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently conducted.
Neither of the Avista Parties is in violation of any of the provisions of its
respective certificate or articles of incorporation, bylaws or other
organizational, charter or equivalent documents. Each of the Avista Parties is
duly qualified to conduct business and is in good standing as a foreign
corporation or other entity in each jurisdiction in which the nature of the
business conducted or property owned by it makes such qualification necessary,
except where the failure to be so qualified or in good standing, as the case may
be, would not reasonably be expected to have a material and adverse affect on
the ability of such Avista Party to perform its obligations under this
Agreement.

       

      (c) Authorization of
Agreement.  Each of the Avista Parties has the requisite power
and authority to enter into and to consummate the transactions contemplated by
this Agreement and otherwise to carry out its obligations hereunder. The
execution and delivery of this Agreement by each of the Avista Parties and the
consummation by such Avista Party of the transactions contemplated hereby have
been duly authorized by all necessary action on the part of such Avista Party
and no further action is required by such Avista Party, its board of directors
or other governing body or shareholders, members or partners in connection
herewith.  This Agreement has been duly executed by each Avista Party
and, when executed and delivered by the Carrizo Parties in accordance with the
terms hereof, will constitute the valid and binding obligation of such Avista
Party, enforceable against such Avista Party in accordance with its terms,
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other Laws of general application affecting enforcement of
creditors’ rights generally and (ii) as limited by Laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies. The Avista Parties have delivered to COGI a certified copy of minutes
from a meeting of the Investment Committee of Avista and Avista Offshore,
approving the transactions contemplated by this Agreement and authorizing Avista
and Avista Offshore to fund Investor LLC to meet its commitments
hereunder.

       

      (d) No
Violation.  The execution, delivery and performance of this
Agreement by the Avista Parties and the consummation by the Avista Parties of
the transactions contemplated hereby do not (i) conflict with or violate any
provision of either of the Avista Parties’ certificate or articles of
incorporation, bylaws or other organizational, charter or equivalent documents,
or (ii) conflict with, or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation (with or
without

       

      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

      

       

      notice,
lapse of time or both) of, any agreement, credit facility, debt or instrument
(evidencing a Avista Party’s debt or otherwise) or other understanding to which
either of the Avista Parties is a party or by which any property or asset of
either Avista Party is bound or affected, or (iii) subject to any approvals
which are expressly required under the terms of any applicable Law, in order to
consummate the transactions contemplated by this Agreement, result in a
violation of any Law, rule, regulation, order, judgment, injunction, decree or
other restriction of any court or Governmental Authority to which either Avista
Party is subject; except in the case of each of clauses (ii) and (iii), such as
would not, individually or in the aggregate, reasonably be expected to have a
material and adverse affect on the ability of either Avista Party to perform its
obligations under this Agreement.

       

      (e) Brokers.  No
broker, finder or investment banker is entitled to any brokerage, finder’s or
other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Avista
Parties.

       

      (f) All AMI Oil and Gas
Interests.  The Oil and Gas Interests described in Exhibit
2.1(b) comprise all of Investor LLC’s Oil and Gas Interests within the AMI as of
the Execution Date.

       

      7.3 Disclaimer of Other
Representations.  Except for
the representations and warranties set forth in Sections 7.1 and
7.2 hereof or
representations and warranties expressly set forth in any of the other
Transaction Documents, the Carrizo Parties and the Avista Parties make no, and
disclaim any, warranty or representation of any kind, either express, implied,
statutory, or otherwise, including any representation or warranty as to
(a) title, (b) merchantability of all or any part of the Properties
dedicated or Transferred hereunder, (c) fitness for all or any part of the
Properties for any particular purpose, or (d) conformity of all or any part
of the Properties dedicated or Transferred hereunder to models or samples of
materials.  Except as set forth in Sections 7.1 and
7.2, the
Carrizo Parties and the Avista Parties make no warranty or representation,
express, implied, statutory, or otherwise, as to the accuracy or completeness of
any data, reports, records, projections, information, or materials now,
heretofore, or hereafter furnished or made available to the other Parties in
connection with the Properties dedicated or transferred hereunder, including any
description of the Properties dedicated or transferred hereunder, pricing
assumptions, or quality or quantity of Hydrocarbon reserves (if any)
attributable to the Properties dedicated or Transferred hereunder, or the
ability or potential of the properties dedicated or Transferred hereunder to
produce Hydrocarbons.

       

      ARTICLE
8

      RELATIONSHIP
OF THE PARTIES

       

      8.1 Independent
Co-Owners.  Except
as provided in Exhibit 8.1, it is not the intention of the Parties to create,
nor shall this Agreement be construed as creating a relationship 

       

      
        
          
          

        

        
          24

          
            

          

        

        
          
          

        

      

       

      of
partnership, association, principal and agent, joint venture or a mining or
other association, or otherwise render the Parties liable as
partners.  The liability of the Parties hereto shall be several and
not joint or collective.

       

      8.2 Right of
Competition.  Except
as expressly set forth in Sections 5.3 and the Operating Agreement, nothing
in this Agreement shall preclude any Party, or its Affiliates, from engaging in
any business or purchasing any property of any sort whatsoever, whether or not
in competition with Operations under this Agreement, without consulting the
other Party or inviting or allowing the other Party to participate therein, and
the doctrine of corporate opportunity, or any analogous doctrine, shall not
apply.  Except as expressly set forth in the Transaction Documents, no
Carrizo Party shall have any duty, including any fiduciary duty, to any Avista
Party, and vice versa.

       

      ARTICLE 9

      GOVERNING LAW;
DISPUTE

      RESOLUTION AND LIMITATION OF
LIABILITY

       

      9.1 Governing
Law.  This
Agreement and the legal relations between the Parties shall be governed by and
construed in accordance with the Laws of the State of Texas, USA without regard
to principles of conflicts of Laws.

       

      9.2 Dispute
Resolution.

       

      (a) Any
dispute, controversy or claim arising out of or in relation to or in connection
with this Agreement, including without limitation any dispute as to the
construction, validity, interpretation, enforceability or breach of this
Agreement, shall be mediated by a mutually acceptable mediator, which shall
commence within thirty (30) days after written notice by one Party to the other
demanding mediation.  No Party may unreasonably withhold consent to
the selection of a mediator.  The mediation shall be held in Honolulu,
Hawaii.  The Carrizo Parties and the Avista Parties shall share the
costs of the mediation equally, except that each Party shall bear its own costs
and expenses, including attorneys’ fees, witness fees, travel expenses and
preparation costs.

       

      (b) If the Parties are unable
to resolve such dispute, controversy or claim pursuant to the provisions in
Section 9.2(a) within thirty (30) days after the commencement of such mediation,
a Party may seek relief from a court of competent
jurisdiction.  The Parties
hereby irrevocably submit to the exclusive jurisdiction of the state courts of
Texas located in Houston, Texas or the federal courts of the United States of
America located in Houston, Texas and appropriate appellate courts therefrom,
and each Party hereby irrevocably agrees that all claims in respect of such
dispute, controversy or claim may be heard and determined in such
courts.  The Parties hereby irrevocably waive, to the fullest extent
permitted by applicable Laws, any objection which they may now or hereafter have
to the laying of venue of any such dispute, 

       

      
        
          
          

        

        
          25

          
            

          

        

        
          
          

        

      

       

      controversy
or claim brought in any such court or any defense of inconvenient forum for the
maintenance of such dispute, controversy or claim. Each of the
Parties hereby irrevocably waives all right to trial by jury in any action,
proceeding or counterclaim arising out of or relating to this
Agreement.

       

      9.3 Actual
Damages.  No Party
shall be liable or have any responsibility to any other Party for any indirect,
special, consequential or punitive damages including lost earnings or
profits.  Such limitation on liability shall apply to any claim or
action, whether it is based in whole or in part on contract, negligence, strict
liability, tort, statute or any other theory of liability.

       

      ARTICLE 10

      MISCELLANEOUS

       

      10.1 Counterparts.  This
Agreement may be executed in counterparts, and by different Parties in separate
counterparts, each of which shall be deemed an original instrument, but all such
counterparts together shall constitute one agreement.

       

      10.2 Notice.  All
notices, requests, demands, claims, and other communications hereunder will be
in writing.  Any notice, request, demand, claim, or other
communication hereunder shall be deemed duly given if (and then two (2) Business
Days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:

       

      
        
          	
                  If to either of the Avista
      Parties:

                	 
      	
                  If to either of the Carrizo
      Parties:

                
	 
      	 
      	 
      
	
                  ACP
      II Marcellus LLC

                	 
      	
                  Carrizo
      Oil & Gas, Inc.

                
	
                  1000
      Louisiana, Suite 1200

                	 
      	
                  1000
      Louisiana St., Suite 1500

                
	
                  Houston,
      Texas  77002

                	 
      	
                  Houston,
      Texas  77002

                
	
                  Telephone:  713-328-1085

                	 
      	
                  Telephone:  713-328-1073

                
	
                  Fax:  713-328-1097

                	 
      	
                  Fax:  713-328-1060

                
	
                  Attn.:  Robert
      Cabes

                	 
      	
                  Attn.:  Gerry
      Morton

                

        

      

       

      Any Party
may send any notice, request, demand, claim, or other communication hereunder to
the intended recipient at the address set forth above using any other means
(including personal delivery, expedited courier, messenger service, facsimile,
ordinary mail, or electronic mail), but no such notice, request, demand, claim,
or other communication shall be deemed to have been duly given unless and until
it actually is received by the intended recipient.  Any Party may
change the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Party notice in
the manner herein set forth.

       

      10.3 Expenses.  Each
Party shall pay its own legal fees and other costs and expenses incurred by it
in connection with the negotiation, execution and delivery of this Agreement and
the Operating Agreement.

       

      10.4
Transfer Taxes.  All
Transfer Taxes payable with respect to the Properties, including those that may
be incurred in connection with the Property Transfers contemplated by

       

      
        
          
          

        

        
          26

          
            

          

        

        
          
          

        

      

       

      Section 2.3(c)
hereof, shall be considered a joint interest expense and allocated in accordance
with the Operating Agreement.

       

      10.5 Captions.  The
captions in this Agreement are for convenience only and shall not be considered
a part of or affect the construction or interpretation of any provision of this
Agreement.

       

      10.6 Waivers.  Any
failure by any Party to comply with any of its obligations, agreements, or
conditions herein contained may only be waived in writing in an instrument
specifically identified as a waiver and signed by the Party to whom such
compliance is owed.  No waiver of, or consent to a change in, any
provision of this Agreement shall be deemed or shall constitute a waiver of, or
consent to a change in, any other provisions hereof, nor shall such waiver
constitute a continuing waiver unless expressly provided in the
waiver.

       

      10.7 Assignment.  Except
for assignments for the benefit of lenders in connection with commercial
financing activities (in which case the assigning Party shall not be relieved of
its obligations hereunder) and as provided in Article 4, no Party may assign all
or any part of its rights and obligations under this Agreement without the prior
written approval of each other Party.  This Agreement shall be binding
upon and inure to the benefit of the Parties and their respective permitted
successors and assigns.

       

      10.8 Amendment.  This
Agreement may be amended or modified only by an agreement in writing executed by
all Parties expressly identifying it as an amendment or modification
hereof.

       

      10.9 No Third Person
Beneficiaries.  Nothing
in this Agreement shall entitle any Person other than the Parties to any claim,
cause of action, remedy, or right of any kind.

       

      10.10 Entire
Agreement.  This
Agreement and the Operating Agreement constitute the entire agreement between
the Parties pertaining to the subject matter hereof and supersede all prior
agreements, understandings, negotiations, and discussions, whether oral or
written, of the Parties with respect thereto.

       

      10.11 Term.  This
Agreement is effective as of the Effective Date and shall continue in effect
until the Operating Agreement terminates, at which time this Agreement shall
terminate except as to rights and obligations previously accrued.

       

      10.12 Survival.  Articles 8
and 9 and Sections 10.2, 10.3, 10.12 and 10.13 shall survive the
termination of this Agreement.

       

      10.13 References and
Construction.  In
this Agreement:

       

      (a) References
to any gender includes a reference to all other genders;

       

      (b) References
to the singular includes the plural, and vice versa;

       

      (c)
Reference to any Article or Section means an Article or Section of this
Agreement;

       

      
        
          
          

        

        
          27

          
            

          

        

        
          
          

        

      

       

      (d) Reference
to any Exhibit means an Exhibit to this Agreement, all of which are incorporated
into and made a part of this Agreement;

       

      (e) Unless
expressly provided to the contrary, “hereunder”, “hereof”, “herein”, and words
of similar import are references to this Agreement as a whole and not any
particular Section or other provision of this Agreement;

       

      (f) “Include”
and “including” shall mean include or including without limiting the generality
of the description preceding such term and are used in an illustrative sense and
not a limiting sense;

       

      (g) “Or” is
not exclusive unless the context requires otherwise;

       

      (h) No
consideration shall be given to the fact or presumption that one party had a
greater or lesser hand in drafting this Agreement; and

       

      (i) Capitalized
terms used in this Agreement that are not otherwise defined are used with the
respective meanings given thereto in the Operating Agreement.

       

      [Signature
Page Follows]

       

      
        
           

        

        
          28

          
            

          

        

        
           

        

      

       

      IN
WITNESS WHEREOF, the Parties have caused this Agreement to be executed on the
Execution Date and effective as of the Effective Date.

       

      
        
          
            
              
                
                  	
                          ACP
      II MARCELLUS LLC

                        	
                          CARRIZO
      OIL & GAS, INC.

                        
	 
      	 
      
	
                          By:       ACP
      II AMS LP,

                        	 
      
	
                          its Manager

                        	
                          By:       /s/ S.P. Johnson,
      IV

                        
	 
      	
                          Name:  S.P. Johnson,
      IV

                        
	
                          By:    Avista
      Capital Partners II, L.P.,

                        	
                          Title:  President
      and Chief Executive

                        
	
                          its General
    Partner

                        	
                                     Officer

                        
	 
      	 
      
	
                          By:    Avista
      Capital Partners II GP, LLC

                        	
                          CARRIZO
      (MARCELLUS) LLC

                        
	
                          its General
      Partner

                        	 
      
	 
      	 
      
	
                          By:    /s/ Robert L. Cabes,
      Jr.

                        	
                          By:       /s/ S.P. Johnson,
      IV

                        
	
                          Name:  Robert L.
      Cabes, Jr.

                        	
                          Name:  S.P. Johnson,
      IV

                        
	
                          Title:  Partner

                        	
                          Title:  President
      and Chief Executive

                        
	 
      	
                                     Officer

                        
	
                          AVISTA
      CAPITAL PARTNERS II, L.P.

                        	 
      
	 
      	 
      
	
                          By:    Avista
      Capital Partners II GP, LLC,

                        	 
      
	
                          its General
    Partner

                        	 
      
	 
      	 
      
	
                          By:    /s/ Robert L. Cabes,
      Jr.

                        	 
      
	
                          Name:  Robert L. Cabes,
      Jr.

                        	 
      
	
                          Title:  Partner

                        	 
      

                

              

            

          

        

      

       

      
        
          [Signature
Page to the Participation Agreement]

          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Exhibit
2.1(a)

       

      Properties
Dedicated by the Carrizo Parties

       

      [See
Attached]

       

       

      
        
          Exhibit
2.1(a)

          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Exhibit
2.1(b)

       

      Properties
Dedicated by Investor LLC

       

      [See
Attached]

       

      
        
          Exhibit
2.1(b)

          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Exhibit
4.3(c)

       

      AAPL
Form 610 U.S. Onshore Model Form Operating Agreement (1989)

       

      [See
Attached]

       

      

       

      
        
          Exhibit
4.3(c)

          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Exhibit
5.2(c)

       

      Proposed
Forecast Expenditures through December 31, 2009

       

      [See
Attached]

       

      
        
          Exhibit
5.2(c)

          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Exhibit
8.1

       

      Tax
and Ownership Interest Adjustment Provisions

       

      [See
Attached]

      

      
        
          Exhibit
8.1ex10-2tosept302008form10q.htm

    Exhibit
      10.2

    CREDIT
      AGREEMENT

    

    

    DATED
      AS
      OF NOVEMBER 3, 2008

    

    

    AMONG

    

    

    RC2
      CORPORATION,

    LEARNING
      CURVE BRANDS, INC.,

    LEARNING
      CURVE CANADA LIMITED,

    RC2
      (ASIA) LIMITED

    RC2
      (AUSTRALIA) PTY., LTD.,

    RC2
      DEUTSCHLAND GMBH,

    RACING
      CHAMPIONS INTERNATIONAL LIMITED,

    RACING
      CHAMPIONS WORLDWIDE LIMITED

    

    THE
      GUARANTORS FROM TIME TO TIME PARTIES HERETO,

    

    

    THE
      LENDERS FROM TIME TO TIME PARTIES HERETO,

    

    

    AND

    

    

    BANK
      OF
      MONTREAL,

    AS
      ADMINISTRATIVE AGENT

     

    
      	 

    

     

    BMO
      CAPITAL MARKETS, AS SOLE LEAD ARRANGER AND SOLE BOOK RUNNER

    NATIONAL
      CITY BANK, AS SYNDICATION AGENT

    

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      TABLE
        OF CONTENTS

       

      
        	 SECTION	 HEADING	 PAGE
	 	 	 
	 SECTION 1.	
                THE
                  CREDIT FACILITIES

                 

              	
                1

              
	 	
                Section 1.1.

              	
                Term
                  Loan Commitments

              	
                1

              
	 	
                Section 1.2.

              	
                Revolving
                  Credit Commitments

              	
                1

              
	 	
                Section 1.3.

              	
                Letters
                  of Credit

              	
                2

              
	 	
                Section 1.4.

              	
                Applicable
                  Interest Rates

              	
                5

              
	 	
                Section 1.5.

              	
                Minimum
                  Borrowing Amounts; Maximum Eurocurrency Loans

              	
                6

              
	 	
                Section 1.6.

              	
                Manner
                  of Borrowing Loans and Designating Applicable Interest
                  Rates

              	
                6

              
	 	
                Section 1.7.

              	
                Interest
                  Periods

              	
                8

              
	 	
                Section 1.8.

              	
                Maturity
                  of Loans

              	
                9

              
	 	
                Section 1.9.

              	
                Prepayments

              	
                10

              
	 	
                Section 1.10.

              	
                Default
                  Rate

              	
                11

              
	 	
                Section 1.11.

              	
                Evidence
                  of Indebtedness

              	
                12

              
	 	
                Section 1.12.

              	
                Funding
                  Indemnity

              	
                12

              
	 	
                Section 1.13.

              	
                Commitment
                  Terminations

              	
                13

              
	 	
                Section 1.14.

              	
                Substitution
                  of Lenders

              	
                14

              
	 	
                Section 1.15.

              	
                Appointment
                  of the Company as Agent for Borrowers

              	
                14

              
	 	
                Section 1.16.

              	
                Swing
                  Loans

              	
                14

              
	 	
                Section 1.17.

              	
                Increase
                  in Revolving Credit Commitments, Additional Term Loans

              	
                16

              
	 	
                Section 1.18.

              	
                Defaulting
                  Lenders

                
                

                 

              	
                17

              
	
                SECTION 2.

              	
                FEES

                 

                
                

              	
                17

              
	 	
                Section 2.1.

              	
                Fees

                 

                
                

                 

              	
                17

              
	
                SECTION 3.

              	
                PLACE
                  AND APPLICATION OF PAYMENTS

                 

                
                

              	
                18

              
	 	
                Section 3.1.

              	
                Place
                  and Application of Payments

              	
                18

              
	 	
                Section 3.2.

              	
                Account
                  Debit

                 

                
                

                 

              	
                20

              
	
                SECTION 4.

              	
                THE
                  COLLATERAL AND  GUARANTIES

                 

                
                

              	
                20

              
	 	
                Section 4.1.

              	
                Collateral

              	
                20

              
	 	
                Section 4.2.

              	
                Guaranties

              	
                21

              
	 	
                Section 4.3

              	
                Joint
                  and Several Obligors

              	
                21

              
	 	
                Section 4.4.

              	
                Further
                  Assurances

                 

                 

              	
                21

              
	
                SECTION 5.

              	
                DEFINITIONS;
                  INTERPRETATION

                 

                
                

              	
                21

              
	 	
                Section 5.1.

              	
                Definitions

              	
                21

              
	 	
                Section 5.2.

              	
                Interpretation

              	
                37

              
	 	
                Section 5.3.

              	
                Change
                  in Accounting Principles

                 

                
                

              	
                37

              

      

      

      
        
          
          

        

        
          ii

          
            

          

        

        
          
          

        

      

      
        	
                SECTION 6.

              	
                REPRESENTATIONS
                  AND WARRANTIES

                 

                
                

              	
                38

              
	 	
                Section 6.1.

              	
                Organization
                  and Qualification

              	
                38

              
	 	
                Section 6.2.

              	
                Subsidiaries

              	
                38

              
	 	
                Section 6.3.

              	
                Authority
                  and Validity of Obligations

              	
                39

              
	 	
                Section 6.4.

              	
                Use
                  of Proceeds; Margin Stock

              	
                39

              
	 	
                Section 6.5.

              	
                Financial
                  Reports

              	
                39

              
	 	
                Section 6.6.

              	
                No
                  Material Adverse Change

              	
                40

              
	 	
                Section 6.7.

              	
                Full
                  Disclosure

              	
                40

              
	 	
                Section 6.8.

              	
                Trademarks,
                  Franchises, and Licenses

              	
                40

              
	 	
                Section 6.9.

              	
                Governmental
                  Authority and Licensing

              	
                40

              
	 	
                Section 6.10.

              	
                Good
                  Title

              	
                40

              
	 	
                Section 6.11.

              	
                Litigation
                  and Other Controversies

              	
                40

              
	 	
                Section 6.12.

              	
                Taxes

              	
                41

              
	 	
                Section 6.13.

              	
                Approvals

              	
                41

              
	 	
                Section 6.14.

              	
                Affiliate
                  Transactions

              	
                41

              
	 	
                Section 6.15.

              	
                Investment
                  Company

              	
                41

              
	 	
                Section 6.16.

              	
                ERISA

              	
                41

              
	 	
                Section 6.17.

              	
                Compliance
                  with Laws

              	
                41

              
	 	
                Section 6.18.

              	
                Other
                  Agreements

              	
                42

              
	 	
                Section
                  6.19.

              	
                Solvency

              	
                42

              
	 	
                Section 6.20.

              	
                No
                  Default

              	
                42

              
	 	
                Section 6.21.

              	
                No
                  Broker Fees.

                 

                
                

                 

              	
                42

              
	
                SECTION 7.

              	
                CONDITIONS
                  PRECEDENT

                 

                
                

              	
                42

              
	 	
                Section 7.1.

              	
                All
                  Credit Events

              	
                42

              
	 	
                Section
                  7.2.

              	
                Initial
                  Credit Event

                 

                
                

              	
                43

              
	
                SECTION 8.

              	
                COVENANTS

                 

                
                

                 

              	
                45

              
	 	
                Section 8.1.

              	
                Maintenance
                  of Business

              	
                45

              
	 	
                Section 8.2.

              	
                Maintenance
                  of Properties

              	
                46

              
	 	
                Section 8.3.

              	
                Taxes
                  and Assessments

              	
                46

              
	 	
                Section 8.4.

              	
                Insurance

              	
                46

              
	 	
                Section 8.5.

              	
                Financial
                  Reports

              	
                46

              
	 	
                Section 8.6.

              	
                Inspection

              	
                48

              
	 	
                Section 8.7.

              	
                Borrowings
                  and Guaranties

              	
                48

              
	 	
                Section 8.8.

              	
                Liens

              	
                49

              
	 	
                Section 8.9.

              	
                Investments,
                  Acquisitions, Loans and Advances

              	
                50

              
	 	
                Section 8.10.

              	
                Mergers,
                  Consolidations and Sales

              	
                52

              
	 	
                Section 8.11.

              	
                Maintenance
                  of Subsidiaries

              	
                52

              
	 	
                Section 8.12.

              	
                Dividends
                  and Certain Other Restricted Payments

              	
                53

              
	 	
                Section 8.13.

              	
                ERISA

              	
                53

              
	 	
                Section 8.14.

              	
                Compliance
                  with Laws

              	
                53

              
	 	
                Section 8.15.

              	
                Burdensome
                  Contracts With Affiliates

              	
                54

              
	 	
                Section 8.16.

              	
                No
                  Changes in Fiscal Year

              	
                54

              
	 	
                Section 8.17.

              	
                Formation
                  of Subsidiaries

              	
                54

              

      

      

      
        
          
          

        

        
          iii

          
            

          

        

        
          
          

        

      

      
        	 	
                Section 8.18.

              	
                Change
                  in the Nature of Business

              	
                54

              
	 	
                Section 8.19.

              	
                Use
                  of Loan Proceeds

              	
                54

              
	 	
                Section 8.20.

              	
                No
                  Restrictions

              	
                54

              
	 	
                Section 8.21.

              	
                Financial
                  Covenants

              	
                54

              
	 	Section
                8.22.	
                Post
                  Closing Covenants.

                 

                 

              	55
	
                SECTION 9.

              	
                EVENTS
                  OF DEFAULT AND REMEDIES

                 

                
                

              	55
	 	
                Section 9.1.

              	
                Events
                  of Default

              	
                55

              
	 	
                Section 9.2.

              	
                Non-Bankruptcy
                  Defaults

              	
                57

              
	 	
                Section 9.3.

              	
                Bankruptcy
                  Defaults

              	
                58

              
	 	
                Section 9.4.

              	
                Collateral
                  for Undrawn Letters of Credit

              	
                58

              
	 	
                Section 9.5.

              	
                Notice
                  of Default

              	
                59

              
	 	
                Section 9.6.

              	
                Expenses

                 

                
                

              	
                59

              
	
                SECTION 10.

              	
                CHANGE
                  IN CIRCUMSTANCES

                 

                
                

              	
                59

              
	 	
                Section 10.1.

              	
                Change
                  of Law

              	
                59

              
	 	
                Section 10.2.

              	
                Unavailability
                  of Deposits or Inability to Ascertain, or Inadequacy of,
                  LIBOR

              	
                59

              
	 	
                Section 10.3.

              	
                Increased
                  Cost and Reduced Return

              	
                60

              
	 	
                Section 10.4.

              	
                Lending
                  Offices

              	
                61

              
	 	
                Section 10.5.

              	
                Discretion
                  of Lender as to Manner of Funding

                 

                
                

              	
                61

              
	
                SECTION 11.

              	
                THE
                  ADMINISTRATIVE AGENT

                 

                
                

              	
                62

              
	 	
                Section 11.1.

              	
                Appointment
                  and Authorization of Administrative Agent

              	
                62

              
	 	
                Section 11.2.

              	
                Administrative
                  Agent and its Affiliates

              	
                62

              
	 	
                Section 11.3.

              	
                Action
                  by Administrative Agent

              	
                62

              
	 	
                Section 11.4.

              	
                Consultation
                  with Experts

              	
                63

              
	 	
                Section 11.5.

              	
                Liability
                  of Administrative Agent; Credit Decision

              	
                63

              
	 	
                Section 11.6.

              	
                Indemnity

              	
                63

              
	 	
                Section 11.7.

              	
                Resignation
                  of Administrative Agent and Successor Administrative Agent

              	
                64

              
	 	
                Section 11.8.

              	
                L/C
                  Issuer and Swing Line Lender.

              	
                64

              
	 	
                Section 11.9.

              	
                Hedging
                  Liability and Funds Transfer and Deposit Account Liability
                  Arrangements

              	
                65

              
	 	
                Section 11.10.

              	
                Designation
                  of Additional Agents

              	
                65

              
	 	
                Section 11.11.

              	
                Authorization
                  to Release or Subordinate or Limit Liens

              	
                65

              
	 	
                Section 11.12.

              	
                Authorization
                  to Enter into, and Enforcement of, the Collateral Documents

                 

                
                

              	
                66

              
	
                SECTION 12.

              	
                THE
                  GUARANTEES; JOINT AND SEVERAL OBLIGATIONS

                 

                
                

              	
                66

              
	 	
                Section 12.1.

              	
                The
                  Guarantees

              	
                66

              
	 	
                Section 12.2.

              	
                Guarantee
                  Unconditional

              	
                67

              
	 	
                Section 12.3.

              	
                Discharge
                  Only upon Payment in Full; Reinstatement in Certain
                  Circumstances

              	
                67

              
	 	
                Section 12.4.

              	
                Subrogation

              	
                68

              

      

      

      
        
          
          

        

        
          iv

          
            

          

        

        
          
          

        

      

      
        	 	
                Section 12.5.

              	
                Waivers

              	
                68

              
	 	
                Section 12.6.

              	
                Limit
                  on Recovery

              	
                68

              
	 	
                Section 12.7.

              	
                Stay
                  of Acceleration

              	
                68

              
	 	
                Section 12.8.

              	
                Benefit
                  to Guarantors

              	
                68

              
	 	
                Section
                  12.9.

              	
                Guarantor
                  Covenants

              	
                69

              
	 	
                Section 12.10.

              	
                Joint
                  and Several Obligors

                 

                
                

              	
                69

              
	
                SECTION 13.

              	
                MISCELLANEOUS

                 

                
                

              	
                70

              
	 	
                Section 13.1.

              	
                Withholding
                  Taxes

              	
                70

              
	 	
                Section 13.2.

              	
                No
                  Waiver, Cumulative Remedies

              	
                71

              
	 	
                Section 13.3.

              	
                Non-Business
                  Days

              	
                71

              
	 	
                Section 13.4.

              	
                Documentary
                  Taxes

              	
                71

              
	 	
                Section 13.5.

              	
                Survival
                  of Representations

              	
                71

              
	 	
                Section 13.6.

              	
                Survival
                  of Indemnities

              	
                72

              
	 	
                Section 13.7.

              	
                Sharing
                  of Set-Off

              	
                72

              
	 	
                Section 13.8.

              	
                Notices

              	
                72

              
	 	
                Section 13.9.

              	
                Counterparts

              	
                73

              
	 	
                Section 13.10.

              	
                Successors
                  and Assigns

              	
                73

              
	 	
                Section 13.11.

              	
                Participants

              	
                73

              
	 	
                Section 13.12.

              	
                Assignments

              	
                74

              
	 	
                Section 13.13.

              	
                Amendments

              	
                76

              
	 	
                Section 13.14.

              	
                Headings

              	
                77

              
	 	
                Section 13.15.

              	
                Costs
                  and Expenses; Indemnification

              	
                77

              
	 	
                Section 13.16.

              	
                Set-off

              	
                78

              
	 	
                Section 13.17.

              	
                Entire
                  Agreement

              	
                78

              
	 	
                Section 13.18.

              	
                Governing
                  Law

              	
                78

              
	 	
                Section 13.19.

              	
                Severability
                  of Provisions

              	
                79

              
	 	
                Section 13.20.

              	
                Excess
                  Interest

              	
                79

              
	 	
                Section 13.21.

              	
                Construction

              	
                79

              
	 	
                Section 13.22.

              	
                Lender’s
                  and L/C Issuer’s Obligations Several; Lenders and their
                  Affiliates

              	
                80

              
	 	
                Section 13.23.

              	
                Intentionally
                  Omitted

              	
                80

              
	 	
                Section 13.24.

              	
                Submission
                  to Jurisdiction; Waiver of Jury Trial

              	
                80

              
	 	
                Section 13.25.

              	
                USA
                  Patriot Act

              	
                80

              
	 	
                Section 13.26.

              	
                Confidentiality

              	
                80

              
	 	 	 	 
	 	 Signature
                Page	 	 S-1 

      

       

      
        	
                
                

                Exhibit A

              	
                
                

                —

              	
                
                

                Notice
                  of Payment Request

              
	
                Exhibit B

              	
                —

              	
                Notice
                  of Borrowing

              
	
                Exhibit C

              	
                —

              	
                Notice
                  of Continuation/Conversion

              
	
                Exhibit D-1

              	
                —

              	
                Term Note

              
	
                Exhibit D-2

              	
                —

              	
                Revolving
                  Note

              
	
                Exhibit D-3

              	
                —

              	
                Swing
                  Note

              
	
                Exhibit E

              	
                —

              	
                Compliance
                  Certificate

              
	
                Exhibit F

              	
                —

              	
                Additional
                  Guarantor Supplement

              

      

      
        	
                Exhibit G

              	
                —

              	
                Assignment
                  and Acceptance

              
	
                Exhibit
                  H

              	
                —

              	
                Commitment
                  Amount Increase Request

              
	
                Schedule
                  1

              	
                —

              	
                Commitments

              
	
                Schedule 6.2

              	
                —

              	
                Subsidiaries

              

      

    
      
        
        

      

      
        v

        
          

        

      

      
        
        

      

    

    CREDIT
      AGREEMENT

    

    This
      Credit Agreement is entered into as of November 3, 2008 by and among RC2
      Corporation, a Delaware corporation (the “Company”), Learning Curve
      Brands, Inc., a Delaware corporation (“LCBI”), Learning Curve
      Canada Limited, a corporation incorporated under the laws of Ontario, Canada
      (“LCCL”), RC2 (Asia)
      Limited, a company incorporated in Hong Kong (“RC2 Asia”), RC2 (Australia)
      Pty., Ltd., a proprietary company duly incorporated in Victoria, Australia
      (“RC2 Australia”), RC2
      Deutschland GmbH, a private company duly incorporated and registered under
      the
      laws of Germany (“RC2
      Germany”), Racing Champions International Limited, a corporation
      organized under the laws of England and Wales  (“RC2 UK”), Racing Champions
      Worldwide Limited, a corporation organized under the laws of England and Wales
      (“Racing Champions”;
      and together with the Company, LCBI, LCCL, RC2 Asia, RC2 Australia, RC2 Germany,
      RC2 UK, and Racing Champions collectively, the “Borrowers” and individually,
      a “Borrower”), the
      Subsidiaries of the Company from time to time party to this Agreement, as
      Guarantors, the several financial institutions from time to time party to this
      Agreement, as Lenders, and Bank of Montreal, as Administrative Agent as provided
      herein.  All capitalized terms used herein without definition shall
      have the same meanings herein as such terms are defined in Section 5.1
      hereof.

     

    PRELIMINARY
      STATEMENT

     

    The
      Borrowers have requested, and the Lenders have agreed to extend, certain credit
      facilities on the terms and conditions of this Agreement.

     

    Now,
      Therefore, in consideration of the mutual agreements contained herein, and
      other
      good and valuable consideration, the receipt and sufficiency of which are hereby
      acknowledged, the parties hereto hereby agree as follows:

     

    Section 1.  The
      Credit Facilities

     

    Section 1.1.  Term
      Loan Commitments.  Subject to the terms and conditions hereof,
      each Lender, by its acceptance hereof, severally agrees to make a loan
      (individually a “Term
      Loan” and collectively for all the Lenders the “Term Loans”) in
      U.S. Dollars to the Borrowers in the amount of such Lender’s Term Loan
      Commitment.  The Term Loans shall be advanced in a single Borrowing on
      the Closing Date and shall be made ratably by the Lenders in proportion to
      their
      respective Term Loan Percentages, at which time the Term Loan Commitments shall
      expire.  As provided in Section 1.6(a) hereof, the Company, on
      behalf of the Borrowers, may elect that the Term Loans be outstanding as Base
      Rate Loans or Eurocurrency Loans.  No amount repaid or prepaid on any
      Term Loan may be borrowed again.

     

    Section 1.2.  Revolving
      Credit Commitments.  Subject to the terms and conditions
      hereof, each Lender, by its acceptance hereof, severally agrees to make a loan
      or loans (individually a “Revolving Loan” and
      collectively the “Revolving
      Loans”) in U.S. Dollars to the Borrowers from time to time on a revolving
      basis up to the amount of such Lender’s Revolving Credit Commitment, subject to
      any reductions thereof pursuant to the terms hereof, before the Revolving Credit
      Termination Date.  The sum of the aggregate principal amount of
      Revolving Loans,Swing Loans, and L/C Obligations
      at
      any time outstanding shall not exceed the Revolving Credit Commitments in effect
      at such time. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     Each
      Borrowing of Revolving Loans shall be made ratably by the Lenders in proportion
      to their respective Revolver Percentages.  As provided in
      Section 1.6(a) hereof, the Company, on behalf of the applicable Borrower,
      may elect that each Borrowing of Revolving Loans be either Base Rate Loans
      or
      Eurocurrency Loans.  Revolving Loans may be repaid and the principal
      amount thereof reborrowed before the Revolving Credit Termination Date, subject
      to the terms and conditions hereof.

     

    Section 1.3.  Letters
      of Credit.  (a)  General
      Terms.  Subject to the terms and conditions hereof, as part of
      the Revolving Credit, the L/C Issuer shall issue standby letters of credit
      (each
      a “Letter of Credit”)
      for the account of the applicable Borrower of an aggregate undrawn
      face
      amount up to the L/C Sublimit.  Each Letter of Credit shall be issued
      by the L/C Issuer, but each Lender shall be obligated to reimburse the L/C
      Issuer for such Lender’s Revolver Percentage of the amount of each drawing
      thereunder and, accordingly, each Letter of Credit shall constitute usage of
      the
      Revolving Credit Commitment of each Lender pro rata in an amount equal to its
      Revolver Percentage of the L/C Obligations then
      outstanding.  Notwithstanding anything contained herein to the
      contrary, each of the Existing L/Cs shall constitute a “Letter of Credit” herein for
      all purposes of this Agreement to the same extent, and with the same force
      and
      effect, as if the Existing L/Cs had been issued at the request of the Company
      hereunder.

     

    (b)
Applications.  At
      any time before the Revolving Credit Termination Date, the L/C Issuer shall,
      at
      the request of the Company, which is acting on behalf of the Borrowers, issue
      one or more Letters of Credit in U.S. Dollars, in a form satisfactory
      to the L/C Issuer, with expiration dates no later than the earlier of 12 months
      from the date of issuance (or which are cancelable not later than 12 months
      from
      the date of issuance and each renewal) or 30 days prior to the Revolving
      Credit Termination Date, in an aggregate face amount as set forth above, upon
      the receipt of an application duly executed by the Company, on behalf of the
      applicable Borrower, for the relevant Letter
      of Credit in the form then customarily prescribed by the L/C Issuer for the
      Letter of Credit requested (each an “Application”).  Notwithstanding
      anything contained in any Application to the contrary:  (i) the
      Borrowers shall pay fees in connection with each Letter of Credit as set forth
      in Section 2.1 hereof, (ii) except as otherwise provided in
      Section 1.9 or 1.18 hereof, before the occurrence
      of
      a Default or an Event of Default, the L/C Issuer will not call for the funding
      by the Borrowers of any amount under a Letter of Credit before being presented
      with a drawing thereunder, and (iii) if the L/C Issuer is not timely
      reimbursed for the amount of any drawing under a Letter of Credit on the date
      such drawing is paid, the Borrowers’ obligation to reimburse the L/C Issuer for
      the amount of such drawing shall bear interest (which the Borrowers hereby
      promise to pay) from and after the date such drawing is paid at a rate per
      annum, equal to the sum of the Base Rate from time to time in effect (computed
      on the basis of a year of 365 or 366 days, as the case may be, and the actual
      number of days elapsed) plus the Applicable Margin
      for Base Rate Loans.  If the L/C Issuer issues any Letter of Credit
      with an expiration date that is automatically extended unless the L/C Issuer
      gives notice that the expiration date will not so extend beyond its then
      scheduled expiration date, unless the Required Lenders instruct the L/C Issuer
      otherwise, the L/C Issuer will give such notice of non-renewal before the time
      necessary to prevent such automatic extension if before such required notice
      date:  (i) the expiration date of such Letter of Credit if so
      extended would be after the Revolving Credit Termination Date, (ii) the
      Revolving Credit Commitments have been terminated, or (iii) a Default or an
      Event of Default exists and the Administrative Agent, at the request or with
      the
      consent of the Required Lenders, has given the L/C Issuer instructions not
      to so
      permit the extension of the expiration date of such Letter of
      Credit. 

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

     

    The
      L/C
      Issuer agrees to issue amendments to the Letter(s) of Credit increasing the
      amount, or extending the expiration date, thereof at the request of the Company,
      on behalf of the applicable Borrower, subject to the conditions of
      Section 7 hereof and the other terms of this
      Section 1.3.  Notwithstanding anything contained herein to the
      contrary, the L/C Issuer shall be under no obligation to issue, extend or amend
      any Letter of Credit if a default of any Lender’s obligations to fund under
      Section 1.3(e) exists or any Lender is at such time a Defaulting Lender
      hereunder, unless the L/C Issuer has entered into arrangements with Borrower
      or
      such Lender satisfactory to the L/C Issuer to eliminate the L/C Issuer’s risk
      with respect to such Lender.

     

    (c)
The
      Reimbursement
      Obligations.  Subject to Section 1.3(b) hereof, the
      obligation of the Borrowers to reimburse the L/C Issuer for all drawings under
      a
      Letter of Credit (such obligation of the Borrowers being herein referred to
      as a
“Reimbursement
      Obligation”) shall be governed by the Application related to such Letter
      of Credit, except that reimbursement shall be made in immediately available
      funds by no later than 12:00 Noon (Chicago time) on the date when each drawing
      is to be paid if the Company, on behalf of the applicable Borrower, has been
      informed of such drawing by the L/C Issuer on or before 9:00 a.m. (Chicago
      time) (including the day before such drawing is to be paid) on the date when
      such drawing is to be paid or, if notice of such drawing is given to the
      Company, on behalf of the applicable Borrower, after 9:00 a.m. (Chicago
      time) on the date when such drawing is to be paid, by the end of such day in
      immediately available funds, at the Administrative Agent’s principal office in
      Chicago, Illinois or such other office as the Administrative Agent may designate
      in writing to the Company, on behalf of the applicable Borrower (and the
      Administrative Agent shall thereafter cause to be distributed to the L/C Issuer
      such amount(s) in like funds).  If the Borrowers do not make any such
      reimbursement payment on the date due and the Participating Lenders fund their
      participations therein in the manner set forth in Section 1.3(e) below,
      then all payments thereafter received by the Administrative Agent in discharge
      of any of the relevant Reimbursement Obligations shall be distributed in
      accordance with Section 1.3(e) below.

     

    (d)  Obligations
      Absolute.  The Borrowers’ obligation to reimburse L/C
      Obligations as provided in subsection (c) of this Section shall be
      absolute, unconditional and irrevocable, and shall be performed strictly in
      accordance with the terms of this Agreement and the relevant Application 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 the L/C Issuer under a Letter of Credit against presentation of a draft
      or other document that does not strictly 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 Borrowers obligations hereunder. None of the Administrative
      Agent, the Lenders, or the L/C Issuer shall have any liability or
      responsibility by reason 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

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    technical
      terms or any consequence arising from causes beyond the control of the
      L/C Issuer; provided that the foregoing
      shall not be construed to excuse the L/C Issuer from liability to the
      Borrowers to the extent of any direct damages (as opposed to consequential
      damages, claims in respect of which are hereby waived by the Borrowers to the
      extent permitted by applicable law) suffered by a Borrower that are caused
      by
      the L/C Issuer ’s failure to exercise care when determining whether drafts
      and other documents presented under a Letter of Credit comply with the terms
      thereof.  The parties hereto expressly agree that, in the absence of
      gross negligence or willful misconduct on the part of the L/C Issuer (as
      finally determined by a court of competent jurisdiction), the L/C Issuer
      shall be deemed to have exercised care in each such determination.  In
      furtherance of the foregoing and without limiting the generality thereof, the
      parties agree that, with respect to documents presented which appear on their
      face to be in substantial compliance with the terms of a Letter of Credit,
      the
      L/C Issuer 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.

     

    (e)
The
      Participating
      Interests.  Each Lender (other than the Lender acting as L/C
      Issuer in issuing the relevant Letter of Credit), by its acceptance hereof,
      severally agrees to purchase from the L/C Issuer, and the L/C Issuer hereby
      agrees to sell to each such Lender (a “Participating Lender”), an
      undivided percentage participating interest (a “Participating Interest”), to
      the extent of its Revolver Percentage, in each Letter of Credit issued by,
      and
      each Reimbursement Obligation owed to, the L/C Issuer.  Upon any
      failure by a Borrower to pay any Reimbursement Obligation at the time required
      on the date the related drawing is to be paid, as set forth in
      Section 1.3(c) above, or if the L/C Issuer is required at any time to
      return to any Borrower or to a trustee, receiver, liquidator, custodian or
      other
      Person any portion of any payment of any Reimbursement Obligation, each
      Participating Lender shall, not later than the Business Day it receives a
      certificate in the form of Exhibit A hereto from the L/C Issuer (with a
      copy to the Administrative Agent) to such effect, if such certificate is
      received before 1:00 p.m. (Chicago time), or not later than 1:00 p.m.
      (Chicago time) the
      following Business Day, if such certificate is received after such time, pay
      to
      the Administrative Agent for the account of the L/C Issuer an amount equal
      to
      such Participating Lender’s Revolver Percentage of such unpaid or recaptured
      Reimbursement Obligation together with interest on such amount accrued from
      the
      date the related payment was made by the L/C Issuer to the date of such payment
      by such Participating Lender at a rate per annum equal
      to:  (i) from the date the related payment was made by the L/C
      Issuer to the date 2 Business Days after payment by such Participating
      Lender is due hereunder, the Federal Funds Rate for each day and (ii) from
      the date 2 Business Days after the date such payment is due from such
      Participating Lender to the date such payment is made by such Participating
      Lender, the Base Rate in effect for each such day.  Each such
      Participating Lender shall thereafter be entitled to receive its Revolver
      Percentage of each payment received in respect of the relevant Reimbursement
      Obligation and of interest paid thereon, with the L/C Issuer retaining its
      Revolver Percentage thereof as a Lender hereunder.  The several
      obligations of the Participating Lenders to the L/C Issuer under this
      Section 1.3 shall be absolute, irrevocable, and unconditional under any and
      all circumstances whatsoever and shall not be subject to any set-off,
      counterclaim or defense to payment which any Participating Lender may have
      or
      have had against the Borrower, the L/C Issuer, the Administrative Agent, any
      Lender or any other Person whatsoever.  Without limiting the
      generality of the foregoing, such obligations shall not be affected by any
      Default or Event of Default or by any reduction or termination of the Commitment
      of any Lender after the issuance of the applicable Letter of Credit, and each
      payment by a Participating Lender under this Section 1.3 shall be made
      without any offset, abatement, withholding or reduction whatsoever.

     

    
      
        
        

      

      
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    (f)  Indemnification.  The
      Participating Lenders shall, to the extent of their respective Revolver
      Percentages, indemnify the L/C Issuer (to the extent not reimbursed by the
      applicable Borrower) against any cost, expense (including reasonable counsel
      fees and disbursements), claim, demand, action, loss or liability (except such
      as result from the L/C Issuer’s gross negligence or willful misconduct) that the
      L/C Issuer may suffer or incur in connection with any Letter of Credit issued
      by
      it.  The obligations of the Participating Lenders under this
      Section 1.3(f) and all other parts of this Section 1.3 shall survive
      termination of this Agreement and of all Applications, Letters of Credit, and
      all drafts and other documents presented in connection with drawings
      thereunder.

     

    (g)  Manner
      of Requesting a Letter of
      Credit.  The Company, on behalf of the applicable Borrower,
      shall provide at least five (5) Business Days’ advance written notice to
      the Administrative Agent of each request for the issuance of a Letter of Credit,
      such notice in each case to be accompanied by an Application for such Letter
      of
      Credit properly completed and executed by the Company, on behalf of the
      applicable Borrower, and, in the case of an extension or an increase in the
      amount of a Letter of Credit, a written request therefor, in a form acceptable
      to the Administrative Agent and the L/C Issuer, in each case, together with
      the fees called for by this Agreement.  The Administrative Agent shall
      promptly notify the L/C Issuer of the Administrative Agent’s receipt of
      each such notice (and the L/C Issuer
      shall be entitled to assume that the conditions precedent to any such issuance,
      extension, amendment or increase have been satisfied unless notified to the
      contrary by the Administrative Agent or the Required Lenders) and the
      L/C Issuer shall promptly notify the Administrative Agent and the Lenders
      of the issuance of the Letter of Credit so requested.

     

    (h)  Replacement
      of the
      L/C Issuer.  The L/C Issuer may be replaced at any
      time by written agreement among the Company, on behalf of the Borrowers, the
      Administrative Agent, the replaced L/C Issuer and the successor
      L/C Issuer.  The Administrative Agent shall notify the Lenders of
      any such replacement of the L/C Issuer.  At the time any such
      replacement shall become effective, the Borrowers shall pay all unpaid fees
      accrued for the account of the replaced L/C Issuer.  From and
      after the effective date of any such replacement (i) the successor
      L/C Issuer shall have all the rights and obligations of the L/C Issuer
      under this Agreement with respect to Letters of Credit to be issued thereafter
      and (ii) references herein to the term “L/C Issuer ” shall be deemed
      to refer to such successor or to any previous L/C Issuer, or to such
      successor and all previous L/C Issuer s, as the context shall
      require.  After the replacement of a L/C Issuer hereunder, the
      replaced L/C Issuer shall remain a party hereto and shall continue to have
      all the rights and obligations of a L/C Issuer 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.

     

    Section 1.4.  Applicable
      Interest Rates.  (a) Base Rate
      Loans.  Each Base Rate Loan made or maintained by a Lender
      shall bear interest during each Interest Period it is outstanding (computed
      on
      the basis of a year of 365 or 366 days, as the case may be, and the actual
      days elapsed) on the unpaid principal amount thereof from the date such Loan
      is
      advanced, continued or created by conversion from a Eurocurrency Loan, until
      maturity (whether by acceleration or otherwise) at a rate per annum equal to
      the
      sum of the Applicable Margin plus the Base Rate from time to time in effect,
      payable by the Borrowers on the last day of each Interest Period and at maturity
      (whether by acceleration or otherwise).

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

     

    (b)  Eurocurrency
      Loans.  Each Eurocurrency Loan made or maintained by a Lender
      shall bear interest during each Interest Period it is outstanding (computed
      on
      the basis of a year of 360 days and actual days elapsed) on the unpaid principal
      amount thereof from the date such Loan is advanced, continued or created by
      conversion from a Base Rate Loan until maturity (whether by acceleration or
      otherwise) at a rate per annum equal to the sum of the Applicable Margin plus
      the Adjusted LIBOR applicable for such Interest Period, payable on the last
      day
      of the Interest Period and at maturity (whether by acceleration or otherwise),
      and, if the applicable Interest Period is longer than three months, on each
      day
      occurring every three months after the commencement of such Interest
      Period.

     

    (c)  Rate
      Determinations. The
      Administrative Agent shall determine each interest rate applicable to the Loans
      and the Reimbursement Obligations hereunder, and its determination thereof
      shall
      be conclusive and binding except in the case of manifest error.

     

    Section 1.5.  Minimum
      Borrowing Amounts; Maximum Eurocurrency
      Loans.    Each Borrowing of Base Rate Loans shall be
      in an amount not less than $2,000,000 or such greater amount which is an
      integral multiple of $100,000.  Each Borrowing of Eurocurrency Loans
      shall be in an amount not less than $4,000,000 or such greater amount which
      is
      an integral multiple of $100,000.  Without the Administrative Agent’s
      consent, there shall not be more than ten (10) Borrowings of
      Eurocurrency Loans outstanding hereunder at any one
      time.

     

    Section 1.6.  Manner
      of Borrowing Loans and Designating Applicable Interest
      Rates.  (a) Notice to the Administrative
      Agent.  The Company, on behalf of the Borrowers, shall give
      notice to the Administrative Agent by no later
      than
      12:00 noon (Chicago time):  (i) at least 3 Business
      Days before the date on which the Company, on behalf of the applicable Borrower,
      requests the Lenders to advance a Borrowing of Eurocurrency Loans and
      (ii) on the date the Company, on behalf of the applicable Borrower,
      requests the Lenders to advance a Borrowing of Base Rate Loans.  The
      Loans included in each Borrowing shall bear interest initially at the type
      of
      rate specified in such notice of a new Borrowing.  Thereafter, subject
      to the terms and conditions hereof, the Company, on behalf of the applicable
      Borrower, may from time to time elect to change or continue the type of interest
      rate borne by each Borrowing or, subject to the minimum amount requirement
      contained in Section 1.5 for each outstanding Borrowing, a portion thereof,
      as
      follows:  (i) if such Borrowing is of Eurocurrency Loans, on the
      last day of the Interest Period applicable thereto, the Company, on behalf
      of
      the applicable Borrower, may (subject to the notice requirement set forth
      herein) continue part or all of such Borrowing as Eurocurrency Loans or convert
      part or all of such Borrowing into Base Rate Loans or (ii) if such
      Borrowing is of Base Rate Loans, on any Business Day, the Company, on behalf
      of
      the applicable Borrower, may convert all or part of such Borrowing into
      Eurocurrency Loans for an Interest Period or Interest Periods specified by
      the
      Company.  

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    The
      Company, on behalf of the applicable Borrower, shall give all such notices
      requesting the advance, continuation or conversion of a Borrowing to the
      Administrative Agent by telephone
      or
      telecopy (which notice shall be irrevocable once given and, if by telephone,
      shall be promptly confirmed in writing), substantially in the form attached
      hereto as Exhibit B (Notice of Borrowing) or Exhibit C (Notice of
      Continuation/Conversion), as applicable, or in such other form acceptable to
      the
      Administrative Agent.  Notice
      of the continuation of a Borrowing of Eurocurrency Loans for an additional
      Interest Period or of the conversion of part or all of a Borrowing of Base
      Rate
      Loans into Eurocurrency Loans must be given by no later than 10:00 a.m.
      (Chicago time) at least 3 Business Days before the date of the requested
      continuation or conversion.  All such notices concerning the advance,
      continuation or conversion of a Borrowing shall specify the date of the
      requested advance, continuation or conversion of a Borrowing (which shall be
      a
      Business Day), the amount of the requested Borrowing to be advanced, continued
      or converted, the type of Loans to comprise such new, continued or converted
      Borrowing and, if such Borrowing is to be comprised of Eurocurrency Loans,
      the
      currency and the Interest Period applicable thereto.  Upon notice to
      the Company by the Administrative Agent or the Required Lenders, no Borrowing
      of
      Eurocurrency Loans shall be advanced, continued, or created by conversion if
      any
      Default or Event of Default then exists.  The Borrowers agree that the
      Administrative Agent may rely on any such telephonic or telecopy notice given
      by
      any person the Administrative Agent in good faith believes is an Authorized
      Representative of the Company without the necessity of independent
      investigation, and in the event any such notice by telephone conflicts with
      any
      written confirmation such telephonic notice shall govern if the Administrative
      Agent has acted in reliance thereon.

     

    (b)
Notice
      to the
      Lenders.  The Administrative Agent shall give prompt telephonic
      or telecopy notice to each Lender of any notice from the Company received
      pursuant to Section 1.6(a) above and, if such notice requests the Lenders
      to make Eurocurrency Loans, the Administrative Agent shall give notice to the
      Company and each Lender by like means of the interest rate applicable thereto
      promptly after the Administrative Agent has made such
      determination.

     

    (c)
Company’s
      Failure to Notify;
      Automatic Continuations and Conversions.  Any outstanding
      Borrowing of Base Rate Loans shall automatically be continued for an additional
      Interest Period on the last day of its then current Interest Period unless
      the
      Company, on behalf of the applicable Borrower, has notified the Administrative
      Agent within the period required by Section 1.6(a) that such Borrower
      intends to convert such Borrowing into a Borrowing of Eurocurrency Loans or
      such
      Borrowing is prepaid in accordance with Section 1.9(a).  If the
      Company, on behalf of the applicable Borrower, fails to give notice pursuant
      to
      Section 1.6(a) above of the continuation or conversion of any outstanding
      principal amount of a Borrowing of Eurocurrency Loans before the last day of
      its
      then current Interest Period within the period required by Section 1.6(a)
      and such Borrowing is not prepaid in accordance with Section 1.9(a), such
      Borrowing shall automatically be converted into a Borrowing of Base Rate
      Loans.  In the event the Company, on behalf of the applicable
      Borrower, fails to give notice pursuant to Section 1.6(a) above of a
      Borrowing equal to the amount of a Reimbursement Obligation and has not notified
      the Administrative Agent by 12:00 noon (Chicago time) on the day such
      Reimbursement Obligation becomes due that it intends to repay such Reimbursement
      Obligation through funds not borrowed under this Agreement, the relevant
      Borrower shall be deemed to have requested a Borrowing of Base Rate Loans under
      the Revolving Credit (or, at the option of the Administrative Agent, under
      the
      Swing Line) on such day in the amount of theReimbursement
      Obligation then due, which Borrowing shall be applied to pay the Reimbursement
      Obligation then due.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (d)
Disbursement
      of
      Loans.  Not later than 1:00 p.m. (Chicago time) on the
      date of any requested advance of a new Borrowing, subject to Section 7
      hereof, each Lender shall make available its Loan comprising part of such
      Borrowing in funds immediately available at the principal office of the
      Administrative Agent (or its Affiliate’s) in Chicago, Illinois.  The
      Administrative Agent shall make the proceeds of each new Borrowing available
      to
      the relevant Borrower at the Administrative Agent’s principal office in Chicago,
      Illinois, by depositing such proceeds to the credit of such Borrower’s
      Designated Disbursement Account or as the Company, on behalf of the relevant
      Borrower, and the Administrative Agent may otherwise agree.

     

    (e)
Administrative
      Agent Reliance on
      Lender Funding.  Unless the Administrative Agent shall have
      been notified by a Lender prior to (or, in the case of a Borrowing of Base
      Rate
      Loans, by 1:00 p.m. (Chicago time) on the date on which such Lender is
      scheduled to make payment to the Administrative Agent of the proceeds of a
      Loan
      (which notice shall be effective upon receipt) that such Lender does not intend
      to make such payment, the Administrative Agent may assume that such Lender
      has
      made such payment when due and the Administrative Agent may in reliance upon
      such assumption (but shall not be required to) make available to the applicable
      Borrower the proceeds of the Loan to be made by such Lender and, if any Lender
      has not in fact made such payment to the Administrative Agent, such Lender
      shall, on demand, pay to the Administrative Agent the amount made available
      to
      the applicable Borrower attributable to such Lender together with interest
      thereon in respect of each day during the period commencing on the date such
      amount was made available to the applicable Borrower and ending on (but
      excluding) the date such Lender pays such amount to the Administrative Agent
      at
      a rate per annum equal to:  (i) from the date the related advance
      was made by the Administrative Agent to the date 2 Business Days after payment
      by such Lender is due hereunder, the Federal Funds Rate in effect for each
      such
      day and (ii) from the date 2 Business Days after the date such payment is
      due from such Lender to the date such payment is made by such Lender, the Base
      Rate in effect for each such day.  If such amount is not received from
      such Lender by the Administrative Agent immediately upon demand, the Borrowers
      will, on demand, repay to the Administrative Agent the proceeds of the Loan
      attributable to such Lender with interest thereon at a rate per annum equal
      to
      the interest rate applicable to the relevant Loan, but without such payment
      being considered a payment or prepayment of a Loan under Section 1.12
      hereof so that the Borrowers will have no liability under such Section with
      respect to such payment.

     

    Section 1.7.  Interest
      Periods.  As provided in Section 1.6(a) hereof, at the
      time of each request to advance, continue or create by conversion a Borrowing
      of
      Eurocurrency Loans or Swing Loans, the Company, on behalf of the applicable
      Borrower, shall select an Interest Period applicable to such Loans from among
      the available options.  The term “Interest Period” means the
      period commencing on the date a Borrowing of Loans is advanced, continued or
      created by conversion and ending:  (a) in the case of Base Rate
      Loans and Swing Loans bearing interest at the Base Rate, on the last day of
      the
      calendar quarter (i.e.,
      the last day of March, June, September or December, as applicable) in which
      such
      Borrowing is advanced, continued or created by conversion (or on the last day
      of
      the following calendar quarter if such Loan is advanced, continued or created
      by
      conversion on the last day of a calendar quarter), (b) in the case of a
      Eurocurrency Loan, one, two, three or six months thereafter, and (c) in the
      case of a Swing Loan bearing
      interest at the Swing Loan Lender’s Quoted Rate, on the date one to five days
      thereafter as mutually agreed to by the Company, on behalf of the applicable
      Borrower, and the Administrative Agent; provided, however,
that:

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    (i)  any
      Interest Period for a Borrowing of Revolving Loans consisting of Base Rate
      Loans
      that otherwise would end after the Revolving Credit Termination Date shall
      end
      on the Revolving Credit Termination Date, and any Interest Period for a
      Borrowing of Term Loans consisting of Base Rate Loans that otherwise would
      end
      after the final maturity date of the Term Loans shall end on the final maturity
      date of the Term Loans;

     

    (ii)  no
      Interest Period with respect to any portion of the Revolving Loans consisting
      of
      Eurocurrency Loans shall extend beyond the Revolving Credit Termination Date
      and
      no Interest Period with respect to any portion of the Term Loans shall extend
      beyond the final maturity date of the Term Loans;

     

    (iii)  no
      Interest Period with respect to any portion of the Term Loans consisting of
      Eurocurrency Loans shall extend beyond a date on which the Borrowers are
      required to make a scheduled payment of principal on the Term Loans unless
      the
      sum of (a) the aggregate principal amount of Term Loans that are Base Rate
      Loans plus (b) the
      aggregate principal amount of Term Loans that are Eurocurrency Loans with
      Interest Periods expiring on or before such date equals or exceeds the principal
      amount to be paid on the Term Loans on such payment date;

     

    (iv)  whenever
      the last day of any Interest Period would otherwise be a day that is not a
      Business Day, the last day of such Interest Period shall be extended to the
      next
      succeeding Business Day, provided that, if such extension would cause the last
      day of an Interest Period for a Borrowing of Eurocurrency Loans to occur in
      the
      following calendar month, the last day of such Interest Period shall be the
      immediately preceding Business Day; and

     

    (v)  for
      purposes of determining an Interest Period for a Borrowing of Eurocurrency
      Loans, a month means a period starting on one day in a calendar month and ending
      on the numerically corresponding day in the next calendar month; provided,
      however, that if there is no numerically corresponding day in the month in
      which
      such an Interest Period is to end or if such an Interest Period begins on the
      last Business Day of a calendar month, then such Interest Period shall end
      on
      the last Business Day of the calendar month in which such Interest Period is
      to
      end.

     

    Section 1.8.  Maturity
      of Loans.   (a) Scheduled
      Payments of Term
      Loans.  The Borrowers shall make principal payments on the Term
      Loans in quarterly installments on the last day of each March, June, September,
      and December in each year, commencing with the quarter ending
      March 31, 2009, with the amount of each such principal installment to
      equal the amount set forth in Column B below shown opposite of the relevant
      due date as set forth in Column A below:

     

    
      	
              Column A

              
              

              Payment
                Date 

            	
              Column B

              Scheduled
                Principal

              Payment
                on Term Loans 

            
	
              03/31/09 

            	
              $3,750,000 

            
	
              06/30/09 

            	
              $3,750,000 

            
	
              09/30/09 

            	
              $3,750,000 

            
	
              12/31/09 

            	
              $3,750,000 

            
	
              03/31/10 

            	
              $3,750,000 

            
	
              06/30/10 

            	
              $3,750,000 

            
	
              09/30/10 

            	
              $3,750,000 

            
	
              12/31/10 

            	
              $3,750,000

            
	
              03/31/11 

            	
              $3,750,000 

            
	
              06/30/11 

            	
              $3,750,000 

            
	
              09/30/11 

            	
              $3,750,000 

            
	
              11/01/11 
                

            	
              $33,750,000 

            

    

     

    ;
      it
      being agreed that the final payment of both principal and interest not sooner
      paid on the Term Loans shall be due and payable on November 1, 2011 the
      final maturity thereof.  Each such principal payment shall be applied
      to the Lenders holding the Term Loans pro rata based upon their
      Term Loan Percentages; provided,however,
      that if any
      additional Term Loans are advanced pursuant to Section 1.17 hereof, each
      scheduled installment due from and after the date of such advance through
      September 30, 2011 shall be increased by an amount equal to the product of
      (A)
      such additional Term Loan advance multiplied by (b) an amount (expressed as
      a percentage), the numerator of which is the amount of the scheduled installment
      for such period (without giving effect to such additional Term Loan) and the
      denominator of which is the outstanding principal balance of the Term Loans
      (without giving effect to such additional Term Loans).

     

    (b)  Revolving
      Loans and Swing
      Loans.  Each Revolving Loan and Swing Loan, both for principal
      and interest not sooner paid, shall mature and become due and payable by the
      Borrowers on the Revolving Credit Termination Date.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    
      Section 1.9.  Prepayment.s  (a) Optional.   The
        Borrowers may prepay in whole or in part (but, if in part,
        then:  (i) if such Borrowing is of Base Rate Loans, in an amount
        not less than $500,000, (ii) if such Borrowing is of Eurocurrency Loans, in
        an amount not less than $1,000,000, and (iii) in each case, in an amount
        such that the minimum amount required for a Borrowing pursuant to
        Sections 1.5 and 1.16 hereof remains outstanding) any Borrowing of
        (y) Eurocurrency Loans at any time upon 3 Business Days prior notice
        by the Company, on behalf of the Borrowers, to the Administrative Agent,
        or
        (z) Base Rate Loans, at any time upon notice delivered by the Company, on
        behalf of the Borrowers, to the Administrative Agent no later than
        10:00 a.m. (Chicago time) on the date of prepayment (or, in any case, such
        shorter period of time then agreed to by the Administrative Agent), such
        prepayment to be made by the payment of the principal amount to be prepaid
        and,
        in the case of any Term Loans or Eurocurrency Loans or Swing Loans, accrued
        interest thereon to the date fixed for prepayment plus any amounts due the
        Lenders under Section 1.12 hereof.

    

     

    (b)  Mandatory.  (i) Dispositions
      or Event of
      Loss.  If the Company or any Subsidiary shall at any time or
      from time to time make or agree to make a Disposition or shall suffer an Event
      of Loss resulting in Net Cash Proceeds in excess of $10,000,000 individually
      or
      on a cumulative basis in any fiscal year of the Borrowers, then (x) the
      Company shall promptly notify the Administrative Agent of such proposed
      Disposition or Event of Loss (including the amount of the estimated Net
      Cash  Proceeds to be received by such Person in respect thereof) and
      (y) promptly upon receipt by such Person of such Net Cash Proceeds in
      excess of $10,000,000 from such Disposition or Event of Loss, the Company shall
      cause such Person to prepay the Term Loans (or all outstanding Loans and
      L/C Obligations if an Event of Default exists) in an aggregate amount equal
      to 100% of the amount of all such Net Cash Proceeds in excess of $10,000,000;
      provided that in the
      case of each Disposition or Event of Loss, if the Company states in its notice
      of such event that such Person intends to reinvest, within 360 days of the
      applicable Disposition or Event of Loss, the Net Cash Proceeds thereof in assets
      similar to the assets which were subject to such Disposition or Event of Loss,
      then so long as no Default or Event of Default then exists, such Person shall
      not be required to make a mandatory prepayment under this Section in respect
      of
      such Net Cash Proceeds to the extent such Net Cash Proceeds are actually
      reinvested in such similar assets with such 360-day period.  The
      amount of each such prepayment shall be applied first to the outstanding Term
      Loans until paid in full, then to the outstanding principal amount of Revolving
      Loans until paid in full and then to cash collateralized Letters of Credit
      in
      accordance with Section 9.4 hereof.

     

    (ii)  Debt
      Issuance.  If
      after the Closing Date the Company or any Subsidiary shall issue any
      Indebted­ness for Borrowed Money, other than Indebtedness for Borrowed Money
      permitted by Section 8.7 hereof, the Company shall promptly notify the
      Administrative Agent of the estimated Net Cash Proceeds of such issuance to
      be
      received by or for the account of such Person in respect
      thereof.  Promptly upon receipt by such Person of Net Cash Proceeds of
      such issuance, the Company shall cause such Person to prepay the Term Loans
      (or
      all outstanding Loans and L/C Obligations if an Event of Default exists) in
      an
      aggregate amount equal to 100% of the amount of such Net Cash
      Proceeds.  The amount of each such prepayment shall be applied first
      to the outstanding Term Loans until paid in full, then to the outstanding
      principal amount of Revolving Loans until paid in full and then to cash
      collateralized Letters of Credit in accordance with Section 9.4
      hereof.  The Borrowers and Guarantors acknowledge that their
      performance hereunder shall not limit the rights and remedies of the Lenders
      for
      any breach of Section 8.7 hereof or any other terms of this
      Agreement.

     

    
      
        
        

      

      
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    (iii)  Commitment
      Terminations.  The Borrowers shall, on each date the Revolving
      Credit Commitments are reduced pursuant to Section 1.13 hereof, prepay the
      Revolving Credit Loans and Swing Loans, and, if necessary, prefund the L/C
      Obligations by the amount, if any, necessary to reduce the sum of the aggregate
      principal amount of Revolving Credit Loans and Swing Loans and L/C Obligations
      then outstanding to the amount to which the Revolving Credit Commitments have
      been so reduced.

     

    (iv)  Application
      of
      Prepayments.  Unless the Company, on behalf of the Borrowers,
      otherwise directs, prepayments made under this Section 1.9(b) shall be applied first
      to
      Borrowings of Base Rate Loans until payment in full thereof with any balance
      applied to Borrowings of Eurocurrency Loans in the order in which their Interest
      Periods expire.  Each prepayment of Loans under this
      Section 1.9(b) shall be made by the payment of the principal amount to be
      prepaid and, in the case of any Term Loans or Eurocurrency Loans or Swing Loans,
      accrued interest thereon to the date of prepayment together with any amounts
      due
      the Lenders under Section 1.12 hereof.  Each prefunding of L/C
      Obligations shall be made in accordance with Section  9.4
      hereof.

     

    (c)  Notice;
      Reborrowing.  The Administrative Agent will promptly advise
      each Lender of any notice of prepayment it receives from the
      Borrowers.  Any amount of Revolving Loans and Swing Loans paid or
      prepaid before the Revolving Credit Termination Date may, subject to the terms
      and conditions of this Agreement, be borrowed, repaid and borrowed again. No
      amount of the Term Loans paid or prepaid may be reborrowed, and, in the case
      of
      any partial prepayment, such prepayment shall be applied to the remaining
      amortization payments on the Term Loans on a ratable basis among all such
      remaining amortization payments based on the principal amounts
      thereof.

     

    Section 1.10.  Default
      Rate.  Notwithstanding anything to the contrary contained in
      Section 1.3 hereof, while any Event of Default exists or after
      acceleration, the Borrowers shall, jointly and severally, pay interest (after
      as
      well as before entry of judgment thereon to the extent permitted by law) on
      the
      principal amount of all Loans and Reimbursement Obligations and letter of credit
      fees at a rate per annum equal to:

     

    (a)  for
      any Base Rate Loan or Swing Loans bearing interest at the Base Rate, the sum
      of
      2.0% plus the Applicable Margin plus the Base Rate from time to time in
      effect;

     

    (b)  for
      any Eurocurrency Loan or Swing Loans bearing interest at the Swing Line Lender’s
      Quoted Rate, the sum of 2.0% plus the rate of interest
      in
      effect thereon at the time of such default until the end of the Interest Period
      applicable thereto and, thereafter, at a rate per annum equal to the sum of
      2.0%
plus the Applicable
      Margin for Base Rate Loans plus the Base Rate from
      time
      to time in effect;

     

    (c)  for
      any Reimbursement Obligation, the sum of 2.0% plus the amounts due
      under
      Section 1.3 with respect to such Reimbursement Obligation; and

     

    (d)
      for
      any Letter of Credit, the sum of 2.0% plus the letter of credit
      fee
      due under Section  2.1 with respect to such Letter of Credit;

     

    provided,
      however,
that in the absence of acceleration, any adjustments pursuant to
      this Section shall be made at the election of the Administrative Agent, acting
      at the request or withthe consent of the Required Lenders,
      with written notice to the Borrowers.  While any Event of Default
      exists or after acceleration, interest shall be paid on demand of the
      Administrative Agent at the request or with the consent of the Required
      Lenders.

     

    
      
        
        

      

      
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    Section 1.11.  Evidence
      of Indebtedness.  (a) Each Lender shall maintain in
      accordance with its usual practice an account or accounts evidencing the
      indebtedness of the Borrowers to such Lender resulting from each Loan made
      by
      such Lender from time to time, including the amounts of principal and interest
      payable and paid to such Lender from time to time hereunder.

     

    (b)  The
      Administrative Agent shall also maintain accounts in which it will record
      (i) the amount of each Loan made hereunder, the type thereof and the
      Interest Period with respect thereto, (ii) the amount of any principal or
      interest due and payable or to become due and payable from the Borrowers to
      each
      Lender hereunder and (iii) the amount of any sum received by the
      Administrative Agent hereunder from the Borrowers and each Lender’s share
      thereof.

     

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

     

    (d)  Any
      Lender may request that its Loans be evidenced by a promissory note or notes
      in
      the forms of Exhibit D-1 (in the case of its Term Loan and referred to herein
      as
      a “Term Note”), D-2 (in
      the case of its Revolving Loans and referred to herein as a “Revolving Note”), or D-3 (in
      the case of its Swing Loans and referred to herein as a “Swing Note”), as applicable
      (the Term Notes, Revolving Notes, and Swing Note being hereinafter referred
      to
      collectively as the “Notes” and individually
      as a
“Note”).  In
      such event, the Borrowers shall execute and deliver to such Lender a Note
      payable to such Lender or its registered assigns in the amount of the Term
      Loan,
      Commitment, or Swing Line Sublimit, as applicable.  Thereafter, the
      Loans evidenced by such Note or Notes and interest thereon shall at all times
      (including after any assignment pursuant to Section 13.12) be represented
      by one or more Notes payable to the order of the payee named therein or any
      assignee pursuant to Section 13.12, except to the extent that any such
      Lender or assignee subsequently returns any such Note for cancellation and
      requests that such Loans once again be evidenced as described in
      subsections (a) and (b) above.

     

    Section 1.12.  Funding
      Indemnity.  If any Lender shall incur any loss, cost or expense
      (including, without limitation, any loss of profit, and any loss, cost or
      expense incurred by reason of the liquidation or re-employment of deposits
      or
      other funds acquired by such Lender to fund or maintain any Eurocurrency Loan
      or
      Swing Loan or the
      relending or reinvesting of such deposits or amounts paid or prepaid to such
      Lender) as a result of:

     

    (a)  any
      payment, prepayment or conversion of a Eurocurrency Loan or Swing Loan on a
      date
      other than the last day of its Interest Period,

     

    (b)  any
      failure (because of a failure to meet the conditions of Section 7 or
      otherwise) by any Borrower to borrow or continue a Eurocurrency Loan or Swing
      Loan,or to convert a Base Rate Loan into a Eurocurrency
      Loan or Swing Loan
      on the date specified in a notice given pursuant to Section 1.6(a) or
      1.16 hereof,

     

    
      
        
        

      

      
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    (c)  any
      failure by a Borrower to make any payment of principal on any Eurocurrency
      Loan or Swing Loan
      when due (whether by acceleration or otherwise), or

     

    (d)  any
      acceleration of the maturity of a Eurodollar Loan or Swing Loan as a result
      of
      the occurrence of any Event of Default hereunder,

     

    then,
      within 15 days after the demand by such Lender, the Borrowers shall pay to
      such
      Lender such amount as will reimburse such Lender for such loss, cost or
      expense.  If any Lender makes such a claim for compensation, it shall
      provide to the Company, on behalf of the Borrowers, with a copy to the
      Administrative Agent, a certificate setting forth the amount of such loss,
      cost
      or expense in reasonable detail (including an explanation of the basis for
      and
      the computation of such loss, cost or expense) and the amounts shown on such
      certificate shall be deemed prime facie correct, absent
      manifest error.

     

    Section 1.13.  Commitment
      Terminations.  (a) Optional Revolving
      Credit
      Terminations.  The Borrowers shall have the right at any time
      and from time to time, upon 5 Business Days prior written notice given by
      the Company to the Administrative Agent (or such shorter period of time agreed
      to by the Administrative Agent), to terminate the Revolving Credit Commitments
      without premium or penalty and in whole or in part, any partial termination
      to
      be (i) in an amount not less than $5,000,000 and (ii) allocated
      ratably among the Lenders in proportion to their respective Revolver
      Percentages, provided that the Revolving Credit Commitments may not be reduced
      to an amount less than the sum of the aggregate principal amount of Revolving
      Loans, Swing Loans, and all L/C Obligations then
      outstanding.  Any termination of the Revolving Credit Commitments
      below the L/C Sublimit or Swing Line Sublimit then in effect shall reduce
      the L/C Sublimit and Swing Line Sublimit, as applicable, to an amount equal
      to the reduced aggregate amount of the Revolving Credit
      Commitments.  The Administrative Agent shall give prompt notice to
      each Lender of any such termination of the Revolving Credit
      Commitments.

     

    (b)  Mandatory
      Revolving Credit
      Termination.  If at any time Net Cash Proceeds or other amounts
      remain after the prepayment of the Term Loans in full pursuant to
      Section 1.9(b)(i) or (ii) hereof, the Revolving Credit Commitments shall
      ratably terminate by an amount equal to 100% of such excess (i) to the
      extent the Revolving Credit Commitments in effect at such time exceed
      $50,000,000; provided,
that in the absence
      of an Event of Default that has occurred and is
      continuing, such termination shall not reduce the Revolving Credit Commitments
      below $50,000,000 and (ii) to the extent that the Revolving Credit
      Commitments in effect at such time are $50,000,000 or less, then the Revolving
      Credit Commitments shall only be terminated if an Event of Default has occurred
      and is continuing.

     

     

    
      
        
        

      

      
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      (c)  No
        Reinstatement.  Any termination of the Revolving Credit
        Commitments pursuant to this Section 1.13 may not be
        reinstated.

       

      Section 1.14.  Substitution
        of Lenders.  In the event (a) the Borrowers receive a
        claim from any Lender for compensation under Section 10.3 or 13.1 hereof,
        (b) the Borrowers receive a notice from any Lender of any illegality
        pursuant to Section 10.1 hereof, (c) any Lender is then a Defaulting
        Lender or such Lender is a Subsidiary or Affiliate of a Person who has been
        deemed insolvent or becomes the subject of a bankruptcy or insolvency proceeding
        or a receiver or conservator has been appointed for any such Person, or
        (d) a Lender fails to consent to an amendment or waiver requested under
        Section 13.13 hereof at a time when the Required Lenders have approved such
        amendment or waiver (any such Lender referred to in clause (a), (b), (c) or
        (d) above being hereinafter referred to as an “Affected
        Lender”), the Borrowers may, in addition to any other rights the
        Borrowers may have hereunder or under applicable law, require, at the Borrowers’
expense, any such Affected Lender to assign, at par plus accrued interest
        and
        fees, without recourse, all of its interest, rights, and obligations hereunder
        (including all of its Commitments and the Loans and participation interests
        in
        Letters of Credit and other amounts at any time owing to it hereunder and
        the
        other Loan Documents) to an Eligible Assignee, provided
        that (i) such assignment shall not conflict with or violate any law, rule
        or regulation or order of any court or other governmental authority,
        (ii) the Borrowers shall have received the written consent of the
        Administrative Agent, which consent shall not be unreasonably withheld, to
        such
        assignment, (iii) the Borrowers shall have paid to the Affected Lender all
        monies (together with amounts due such Affected Lender under Section 1.12
        hereof as if the Loans owing to it were prepaid rather than assigned except
        if
        such Lender is being replaced pursuant to clause (c) above) other than such
        principal owing to it hereunder, and (iv) the assignment is entered into in
        accordance with the other requirements of Section 13.12 hereof (provided
        any assignment fees and reimbursable expenses due thereunder shall be paid
        by
        the Borrower).

    

     

    Section 1.15.  Appointment
      of the Company as Agent for Borrowers.  Each Borrower hereby
      irrevocably appoints the Company as its agent hereunder to make requests on
      such
      Borrower’s behalf under Section 1 hereof for Borrowings, to request on such
      Borrower’s behalf Letters of Credit and to execute all Applications therefor,
      and to take any other action contemplated by the Loan Documents with respect
      to
      the credit extended hereunder to such Borrower.  The Administrative
      Agent and the Lenders shall be entitled to conclusively presume that any action
      by the Company under the Loan Documents is taken on behalf of all of the
      Borrowers whether or not the Company so indicates.

     

    Section 1.16.  Swing
      Loans. (a) Generally.  Subject
      to the terms and conditions hereof, as part of the Revolving Credit, the Swing
      Line Lender may, in its discretion, make loans in U.S. Dollars to the
      Borrowers, or any of them, under the Swing Line (individually a “Swing Loan” and collectively
      the “Swing Loans”)
      which shall not in the aggregate at any time outstanding exceed the Swing Line
      Sublimit.  Swing Loans may be availed by the Borrowers from time to
      time and borrowings thereunder may be repaid and used again during the period
      ending on the Revolving Credit Termination Date; provided, that each Swing
      Loan must be repaid on the last day of the Interest Period applicable
      thereto.  Each Swing Loan shall be in a minimum amount of $250,000 or
      such greater amount which is an integral multiple of $50,000.

     

    (b)  Interest
      on Swing
      Loans.  Each Swing Loan shall bear interest until maturity
      (whether by acceleration or otherwise) at a rate per annum equal to (i) the
      sum of the Base Rate plus the Applicable Margin for Base Rate Loans as from
      time
      to time in effect (computed on the basis of a year of 365 or 366 days, as the
      case may be, for the actual number of days elapsed) or (ii) the Swing Line
      Lender’s Quoted Rate (computed on the basis of a year of 360 days for
      theactual
      number of days elapsed).  Interest on each Swing Loan shall be due and
      payable on the last day of its Interest Period and at maturity (whether by
      acceleration or otherwise).

     

    
      
        
        

      

      
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    (c)  Requests
      for Swing
      Loans.  The Company, on behalf of the applicable Borrower,
      shall give the Administrative Agent prior notice (which may be written or oral)
      no later than 12:00 Noon (Chicago time) on the date upon which a Borrower
      requests that any Swing Loan be made, of the amount and date of such Swing
      Loan,
      and the Interest Period requested therefor.  The Administrative Agent
      shall promptly advise the Swing Line Lender of any such notice received from
      the
      Company, on behalf of the applicable Borrower.  After receiving such
      notice, the Swing Line Lender shall in its discretion quote an interest rate
      (which shall never be less than the Administrative Agent’s cost of funds) to the
      Company, on behalf of the applicable Borrower, at which the Swing Line Lender
      would be willing to make such Swing Loan available to such Borrower for the
      Interest Period so requested (the rate so quoted for a given Interest Period
      being herein referred to as “Swing Line Lender’s Quoted
      Rate”).  The Borrowers acknowledge and agree that the interest
      rate quote is given for immediate and irrevocable acceptance.  If the
      Company, on behalf of the applicable Borrower, does not so immediately accept
      the Swing Line Lender’s Quoted Rate for the full amount requested by such
      Borrower for such Swing Loan, the Swing Line Lender’s Quoted Rate shall be
      deemed immediately withdrawn and such Swing Loan shall bear interest at the
      rate
      per annum determined by adding the Applicable Margin for Base Rate Loans under
      the Revolving Credit to the Base Rate as from time to time in
      effect.  Subject to the terms and conditions hereof, the proceeds of
      each Swing Loan extended to the Borrowers shall be deposited or otherwise wire
      transferred to such Borrower’s Designated Disbursement Account or as the
      Company, on behalf of the relevant Borrower, the Administrative Agent, and
      the
      Swing Line Lender may otherwise agree.  Anything contained in the
      foregoing to the contrary notwithstanding, the undertaking of the Swing Line
      Lender to make Swing Loans shall be subject to all of the terms and conditions
      of this Agreement (provided that the Swing Line Lender shall be entitled to
      assume that the conditions precedent to an advance of any Swing Loan have been
      satisfied unless notified to the contrary by the Administrative Agent or the
      Required Lenders).

     

    (d)  Refunding
      Loans.  In its sole and absolute discretion, the Swing Line
      Lender may at any time, on behalf of the Borrowers (which hereby irrevocably
      authorize the Swing Line Lender to act on their behalf for such purpose) and
      with notice to the Company, on behalf of the Borrowers, and the Administrative
      Agent, request each Lender to make a Revolving Loan in the form of a Base Rate
      Loan in an amount equal to such Lender’s Revolver Percentage of the amount of
      the Swing Loans outstanding on the date such notice is given.  Unless
      an Event of Default described in Section 9.1(j) or 9.1(k) exists with
      respect to any Borrower, regardless of the existence of any other Event of
      Default, each Lender shall make the proceeds of its requested Revolving Loan
      available to the Administrative Agent for the account of the Swing Line Lender),
      in immediately available funds, at the Administrative Agent’s (or its
      Affiliate’s) office in Chicago, Illinois (or such other location designated by
      the Administrative Agent), before 12:00 Noon (Chicago time) on the Business
      Day
      following the day such notice is given.  The Administrative Agent
      shall promptly remit the proceeds of such Borrowing to the Swing Line Lender
      to
      repay the outstanding Swing Loans

     

     

     

    
      
        
        

      

      
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    (e)  Participations.  If
      any Lender refuses or otherwise fails to make a Revolving Loan when requested
      by
      the Swing Line Lender pursuant to Section 1.16(d) above (because anEvent of
      Default described in Section 9.1(j) or 9.1(k) exists with respect to a
      Borrower or otherwise), such Lender will, by the time and in the manner such
      Revolving Loan was to have been funded to the Swing Line Lender, purchase from
      the Swing Line Lender an undivided participating interest in the outstanding
      Swing Loans in an amount equal to its Revolver Percentage of the aggregate
      principal amount of Swing Loans that were to have been repaid with such
      Revolving Loans.  Each Lender that so purchases a participation in a
      Swing Loan shall thereafter be entitled to receive its Revolver Percentage
      of
      each payment of principal received on the Swing Loan and of interest received
      thereon accruing from the date such Lender funded to the Swing Line Lender
      its
      participation in such Loan.  The several obligations of the Lenders
      under this Section shall be absolute, irrevocable, and unconditional under
      any
      and all circumstances whatsoever and shall not be subject to any set-off,
      counterclaim or defense to payment which any Lender may have or have had against
      any Borrower, any other Lender, or any other Person
      whatsoever.  Without limiting the generality of the foregoing, such
      obligations shall not be affected by any Default or Event of Default or by
      any
      reduction or termination of the Commitments of any Lender, and each payment
      made
      by a Lender under this Section shall be made without any offset, abatement,
      withholding, or reduction whatsoever.

     

    Section 1.17.  Increase
      in Revolving Credit Commitments, Additional Term Loans..  The
      Company, on behalf of the Borrowers, may from time to time in consultation
      with
      the Administrative Agent, on any Business Day prior to the Revolving Credit
      Termination Date so long as no Event of Default exists, increase the aggregate
      outstanding amount of the Revolving Credit Commitments and/or increase the
      aggregate outstanding principal amount of the Term Loans, by delivering a
      Commitment Amount Increase Request substantially in the form attached hereto
      as
      Exhibit H or in such other form reasonably acceptable to the Administrative
      Agent at least ten (10) Business Days prior to the stated effective date of
      such
      increase (the “Commitment
      Amount Increase”) identifying any additional Lender(s) (or additional
      Revolving Credit Commitment or Term Loans for existing Lender(s)) and the amount
      of its Revolving Credit Commitment or Term Loans (or additional amount of its
      Revolving Credit Commitment(s) or Term Loans); provided, however, that
      (i) any increase shall be in an amount not less than $10,000,000 and for
      all such increases shall not exceed $50,000,000 in the aggregate, (ii) any
      additional Term Loans advanced hereunder shall be on the same terms and
      conditions as the Term Loans except that the Borrowers and the Lenders providing
      such additional Term Loans may determine the interest rate applicable to such
      additional Term Loans, and (iii) if the Borrowers invite additional Lenders
      to
      join this Agreement, such additional Lenders shall enter into such joinder
      agreements to give effect thereto as the Administrative Agent may reasonably
      request.  The effective date of any Commitment Amount Increase shall
      be agreed upon by the Borrowers and the Administrative Agent.  It
      shall be a condition to such effectiveness that either no Eurocurrency Loans
      be
      outstanding on the date of such effectiveness or the Borrowers pay any
      applicable breakage cost under Section 1.12 incurred by any Lender
      resulting from the repayment of the applicable Loans.  The Borrowers
      agree to pay any reasonable expenses of the Administrative Agent relating to
      any
      Commitment Amount Increase.  Notwithstanding anything herein to the
      contrary, no Lender shall have any obligation to increase its Revolving Credit
      Commitment or advance additional Term Loans and no Lender’s Revolving Credit
      Commitment shall be increased without its consent thereto, and each Lender
      may
      at its option, unconditionally and without cause, decline to increase its
      Revolving Credit Commitment or advance additional Term Loans.  Any
      additional Term Loan advanced under this Section 1.17 shall be a “Term Loan” for all purposes
      of this Agreement.

     

    
      
        
        

      

      
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    Section 1.18.  Defaulting
      Lenders.  Anything contained herein to the contrary
      notwithstanding, in the event that any Lender at any time is a Defaulting
      Lender, then (a) during any Default Period with respect to such Defaulting
      Lender, such Defaulting Lender shall be deemed not to be a “Lender” for purposes of
      voting on any matters (including the granting of any consents or waivers) with
      respect to any of the Loan Documents; (b) to the extent permitted by applicable
      law, until such time as the Default Excess with respect to such Defaulting
      Lender shall have been reduced to zero, any voluntary prepayment of the Loans
      shall, if the Administrative Agent so directs at the time of receiving such
      voluntary prepayment, be applied to the Loans of the other Lenders as if such
      Defaulting Lender had no Loans outstanding; (c) such Defaulting Lender’s
      Commitments and outstanding Loans shall be excluded for purposes of calculating
      any commitment fee payable to Lenders pursuant to Section 2.1 in respect of
      any day during any Default Period with respect to such Defaulting Lender, and
      such Defaulting Lender shall not be entitled to receive any fee pursuant to
      Section 2.1 with respect to such Defaulting Lender’s Commitment in respect
      of any Default Period with respect to such Defaulting Lender (and any Letter
      of
      Credit fee otherwise payable to a Lender who is a Defaulting Lender shall
      instead be paid to the Company in the event that the Company has delivered
      to
      the L/C Issuer cash collateral pursuant to clause (e) below or, if such cash
      collateral has not been delivered, to the L/C Issuer for its use and benefit);
      (d) the utilization of Commitments as at any date of determination shall be
      calculated as if such Defaulting Lender had funded all Loans of such Defaulting
      Lender; and (e) if so requested by the L/C Issuer at any time during the
      Default Period with respect to such Defaulting Lender, the Borrowers shall
      deliver to the Administrative Agent cash collateral in an amount equal to such
      Defaulting Lender’s Percentage of L/C Obligations then outstanding (to be held
      by the Administrative Agent as set forth in Section 9.4
      hereof).  No Commitment of any Lender shall be increased or otherwise
      affected, and, except as otherwise expressly provided in this Section 1.18,
      performance by the Borrowers of their obligations hereunder and the other Loan
      Documents shall not be excused or otherwise modified as a result of the
      operation of this Section 1.18.  The rights and remedies against
      a Defaulting Lender under this Section 1.18 are in addition to other rights
      and remedies which the Borrowers may have against such Defaulting Lender and
      which the Administrative Agent or any Lender may have against such Defaulting
      Lender.

     

    SECTION 2. 
      FEES.

     

    Section 2.1.  Fees.  (a) Revolving
      Credit Commitment
      Fee.  The Borrowers shall pay to the Administrative Agent for
      the ratable account of the Lenders in accordance with their Revolver Percentages
      a commitment fee at the rate per annum equal to the Applicable Margin (computed
      on the basis of a year of 360 days and the actual number of days elapsed)
      on the average daily Unused Revolving Credit Commitments.  Such
      commitment fee shall be payable quarter-annually in arrears on the last day
      of
      each March, June, September, and December in each year (commencing on the first
      such date occurring after the date hereof) and on the Revolving Credit
      Termination Date, unless the Revolving Credit Commitments are terminated in
      whole on an earlier date, in which event the commitment fee for the period
      to
      the date of such termination in whole shall be paid on the date of such
      termination.

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    
      (b)  Letter
        of Credit Fees.  On the date of issuance or extension, or
        increase in the amount, of any Letter of Credit pursuant to Section 1.3
        hereof, the applicable Borrower shall pay to the L/C Issuer for its own account
        a fronting fee equal to 0.25% of the face amount of (or of the increase
        in the face amount of) such Letter of Credit.  Quarterly in arrears,
        on the last day of each March, June, September, and December, commencing
        on the
        first such date occurring after the date hereof, the Borrower shall pay to
        the
        Administrative Agent, for the ratable benefit of the Lenders in accordance
        with
        their Revolver Percentages, a letter of credit fee at a rate per annum equal
        to
        the Applicable Margin (computed on the basis of a year of 360 days and the
        actual number of days elapsed) in effect during each day of such quarter
        applied
        to the daily average face amount of Letters of Credit outstanding during
        such
        quarter.  In addition, the applicable Borrower shall pay to the L/C
        Issuer for its own account the L/C Issuer’s standard issuance, drawing,
        negotiation, amendment, assignment, and other administrative fees for each
        Letter of Credit established by the L/C Issuer from time to
        time.

    

     

    (c)  Upfront
      Fees.  On
      the Closing Date, the Borrowers shall pay to the Administrative Agent, for
      the
      account of the Lenders, upfront fees in the amounts previously agreed to by
      the
      Borrowers, the Lenders and the Administrative Agent.

     

    (d)  Administrative
      Agent
      Fees.  The Borrowers shall pay to the Administrative Agent, for
      its own use and benefit, the arrangement fees and administrative fees agreed
      to
      between the Administrative Agent and the Borrowers in a fee letter dated as
      of
      October 17, 2008 or as otherwise agreed to in writing between them.

     

    (e)  Audit
      Fees.  The
      Borrowers shall pay to the Administrative Agent for its own use and benefit
      charges for audits of the Collateral performed by the Administrative Agent
      or
      its agents or representatives in such amounts as the Administrative Agent may
      from time to time request (the Administrative Agent acknowledging and agreeing
      that such charges shall be computed in the same manner as it at the time
      customarily uses for the assessment of charges for similar collateral audits);
      provided, however, that
      in the absence of any Default and Event of Default, the Borrowers shall not
      be
      required to pay the Administrative Agent for more than one such audit per
      calendar year.

     

    SECTION 3. 
      PLACE AND APPLICATION OF PAYMENTS.

     

    Section 3.1.  Place
      and Application of Payments.  All payments of principal of and
      interest on the Loans and the Reimbursement Obligations, and of all other
      Obligations payable by the Borrowers under this Agreement and the other Loan
      Documents, shall be made by the Borrowers to the Administrative Agent by no
      later than 12:00 Noon (Chicago time) on the due date thereof at the office
      of the Administrative Agent in Chicago, Illinois (or such other location as
      the
      Administrative Agent may designate to the Company, on behalf of the
      Borrowers), for the benefit of the Lender
      or Lenders entitled thereto.  Any payments received after such time
      shall be deemed to have been received by the Administrative Agent on the next
      Business Day.  All such payments shall be made in U.S. Dollars, in
      immediately available funds at the place of payment, in each case without set-off or
      counterclaim.  The Administrative Agent will promptly thereafter cause
      to be distributed like funds relating to the payment of principal or interest
      on
      Loans and on Reimbursement Obligations in which the Lenders have purchased
      Participating Interests ratably to the Lenders and like funds relating to the
      payment of any other amount payable to any Lender to such Lender, in each case
      to be applied in accordance with the terms of this Agreement.  If the
      Administrative Agent causes amounts to be distributed to the Lenders in reliance
      upon the assumption that the Borrowers will make a scheduled payment and such
      scheduled payment isnot so made, each Lender shall, on
      demand, repay to the Administrative Agent the amount distributed to such Lender
      together with interest thereon in respect of each day during the period
      commencing on the date such amount was distributed to such Lender and ending
      on
      (but excluding) the date such Lender repays such amount to the Administrative
      Agent, at a rate per annum equal to:  (i) from the date the
      distribution was made to the date 2 Business Days after payment by such Lender
      is due hereunder, the Federal Funds Rate for each such day and (ii) from
      the date 2 Business Days after the date such payment is due from such Lender
      to
      the date such payment is made by such Lender, the Base Rate in effect for each
      such day.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    Anything
      contained herein to the contrary notwithstanding (including, without limitation,
      Section 1.9(b) hereof), all payments and collections received in respect of
      the Obligations and all proceeds of the Collateral received, in each instance,
      by the Administrative Agent or any of the Lenders after acceleration or the
      final maturity of the Obligations or termination of the Commitments as a result
      of an Event of Default shall be remitted to the Administrative Agent and
      distributed as follows:

     

    (a)  first,
      to the payment of any outstanding costs and expenses incurred by the
      Administrative Agent, and any security trustee therefor, in monitoring,
      verifying, protecting, preserving or enforcing the Liens on the Collateral, in protecting,
      preserving or enforcing rights under the Loan Documents, and in any event
      including all costs and expenses of a character which the Borrowers have agreed
      to pay the Administrative Agent or the Lenders under Section 13.15 hereof
      (such funds to be retained by the Administrative Agent for its own account
      unless it has previously been reimbursed for such costs and expenses by the
      Lenders, in which event such amounts shall be remitted to the Lenders to
      reimburse them for payments theretofore made to the Administrative
      Agent);

     

    (b)  second,
      to the payment of the Swing Loans, both for principal and accrued but unpaid
      interest;

     

    (c)  third,
      to the payment of any outstanding interest and fees due under the Loan Documents
      to be allocated pro rata in accordance with the aggregate unpaid amounts owing
      to each holder thereof;

     

    (d)  fourth,
      to the payment of principal on the Loans (other than Swing Loans), unpaid
      Reimbursement Obligations, together with amounts to be held by the
      Administrative Agent as collateral security for any outstanding
      L/C Obligations pursuant to Section 9.4 hereof (until the
      Administrative Agent is holding an amount of cash equal to the then outstanding
      amount of all such L/C Obligations), and Hedging Liability, the aggregate
      amount paid to, or held as collateral security for, the Lenders and
      L/C Issuer and, in the case of Hedging Liability, their Affiliates to be
      allocated pro rata in accordance with the aggregate unpaid amounts owing to
      each
      holder thereof;

     

    (e)  fifth,
      to the payment of all other unpaid Obligations and all other indebtedness,
      obligations, and liabilities of the Borrowers and their Subsidiaries secured
      by
      the Loan Documents (including, without limitation, Funds Transfer and
      DepositAccount Liability) to be allocated pro rata in
      accordance with the aggregate unpaid amounts owing to each holder thereof;
      and

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    (f)  finally,
      to the Company, on behalf of the Borrowers, or whoever else may be lawfully
      entitled thereto.

     

    Section 3.2.  Account
      Debit.  Each Borrower hereby irrevocably authorizes the
      Administrative Agent to charge any of such Borrower’s deposit accounts
      maintained with the Administrative Agent for the amounts from time to time
      necessary to pay any then due Obligations; provided that the
      Borrowers
      acknowledge and agree that the Administrative Agent shall not be under an
      obligation to do so and the Administrative Agent shall not incur any liability
      to the Borrowers or any other Person for the Administrative Agent’s failure to
      do so.

     

    SECTION 4. 
      THE COLLATERAL AND GUARANTIES.

     

    Section 4.1.  Collateral.  The
      Obligations, Hedging Liability, and Funds Transfer and Deposit Account Liability
      shall be secured by (a) valid, perfected and enforceable Liens on all
      right, title, and interest of the Company and each Subsidiary in all capital
      stock and other equity interests held by such Person in each of its
      Subsidiaries, whether now owned or hereafter formed or acquired, and all
      proceeds thereof, and (b) valid, perfected, and enforceable Liens on all
      right, title, and interest of the Company and each Domestic Subsidiary in all
      of
      their accounts, chattel paper, instruments, documents, general intangibles,
      letter-of-credit rights, supporting obligations, deposit accounts, investment
      property, inventory, equipment, fixtures, commercial tort claims and certain
      other Property, whether now owned or hereafter acquired or arising, and all
      proceeds thereof (the “Collateral”); provided,
      however,
that:  (i) until a Default or Event of Default has
      occurred and is continuing and thereafter until otherwise required by the
      Administrative Agent or the Required Lenders, Liens on local petty cash accounts
      maintained by the Company and its Subsidiaries in proximity to their operations
      need not be perfected, provided that the total
      amount on deposit at any one time not so perfected shall not exceed $1,000,000
      in the aggregate and Liens on payroll accounts maintained by the Company and
      its
      Subsidiaries need not be perfected provided the total amount on deposit at
      any
      time does not exceed the current amount of their payroll obligations,
      (ii) unless otherwise required by the Administrative Agent or the Required
      Lenders during the existence of any Event of Default, Liens on the Voting Stock
      of a Foreign Subsidiary which, if granted, would cause a material adverse effect
      on the Company’s federal income tax liability shall be limited to 65% of the
      total outstanding Voting Stock of such Foreign Subsidiary, (iii) unless
      otherwise required by the Administrative Agent or the Required Lenders during
      the existence of any Event of Default, Liens need not be granted on the
      Collateral of a Foreign Subsidiary which, if granted, would cause a material
      adverse effect on the Company’s federal income tax liability, (iv) unless
      otherwise required by the Administrative Agent or the Required Lenders, Foreign
      Subsidiaries need not grant to the Administrative Agent Liens on the capital
      stock or other equity interests held by such Foreign Subsidiary in another
      Foreign Subsidiary, and (v) until a Default or Event of Default has
      occurred and is continuing and thereafter until otherwise required by the
      Administrative Agent or the Required Lenders, Liens on U.S. general intangibles,
      to the extent perfected by recording an instrument with the U.S. Patent and
      Trademark Office, need only be perfected on material U.S. general
      intangibles.  The Borrowers and Guarantors acknowledge and agree that
      the Liens on the Collateral shall begranted to the
      Administrative Agent for the benefit of the holders of the Obligations, the
      Hedging Liability, and the Funds Transfer and Deposit Account Liability and
      shall be valid and perfected first priority Liens subject however, to the
      proviso appearing at the end of the preceding sentence and to Liens permitted
      by
      Section 8.8 hereof, in each case, pursuant to one or more Collateral
      Documents from such Persons, each in form and substance satisfactory to the
      Administrative Agent.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    Section 4.2.  Guaranties.  The
      payment and performance of the Obligations, Hedging Liability, and Funds
      Transfer and Deposit Account Liability shall at all times be guaranteed by
      each
      direct and indirect Subsidiary of the Company (other than the Borrowers)
      pursuant to Section 12 hereof or pursuant to one or more guaranty
      agreements in form and substance acceptable to the Administrative Agent, as
      the
      same may be amended, modified, or supplemented from time to time (individually
      a
“Guaranty” and
      collectively, the “Guaranties”, and the Company
      and each such Subsidiary executing and delivering this Agreement as a Guarantor
      (including any Subsidiary hereafter executing and delivering an Additional
      Guarantor Supplement in the form called for by Section 12 hereof) or a separate
      Guaranty being referred to herein as a “Guarantor” and collectively
      the “Guarantors”);
provided,
      however, that
      unless otherwise required by the Administrative Agent or the Required Lenders
      during the existence of any Event of Default, a Foreign Subsidiary shall not
      be
      required to be a guarantor hereunder if providing such Guaranty would cause
      a
      material adverse effect on the Company’s federal income tax
      liability.

     

    Section 4.3.  Joint
      and Several Obligors.  The payment and performance of the
      Obligations, Hedging Liability and Funds Transfer and Deposit Account Liability
      shall at all times be a joint and several obligation of each Borrower pursuant
      to Section 12.10 hereof.

     

    Section 4.4.  Further
      Assurances.  The Company and each other Borrower agree that
      each shall, and shall cause each of its Subsidiaries to, from time to time
      at
      the request of the Administrative Agent or the Required Lenders, execute and
      deliver such documents and do such acts and things as the Administrative Agent
      or the Required Lenders may reasonably request in order to provide for and
      maintain the guarantees contemplated by this Section 4.  In the
      event the Company, any other Borrower or any other Subsidiary of the Company
      forms or acquires any Subsidiary after the date hereof, except as otherwise
      provided in Section 4.1 and 4.2 above, the Company and the other Borrowers
      shall promptly upon such formation or acquisition cause such newly formed or
      acquired Subsidiary to execute a Guaranty and such Collateral Documents as
      are
      required by this Section 4 and as the Administrative Agent may then
      require, and the Company and the Borrowers shall also deliver to the
      Administrative Agent, or cause such Subsidiary to deliver to the Administrative
      Agent, at the Borrowers’ cost and expense, such other instruments, documents,
      certificates, and opinions reasonably required by the Administrative Agent
      in
      connection therewith.

     

    SECTION 5. 
      DEFINITIONS; INTERPRETATION

     

    Section 5.1.  Definitions.  The
      following terms when used herein shall have the following meanings:

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    “Acquired
      Business” means the
      entity or assets acquired by the Company or any Subsidiary in an Acquisition
      after the date hereof.

     

    “Acquisition”
      means any
      transaction or series of related transactions for the purpose of or resulting,
      directly or indirectly, in (a) the acquisition of all or substantially all
      of the assets of a Person, or of any business or division of a Person,
      (b) the acquisition of in excess of 50% of the capital stock, partnership
      interests, membership interests or equity of any Person (other than a Person
      that is a Subsidiary), or otherwise causing any Person to become a Subsidiary,
      or (c) a merger or consolidation or any other combination with another
      Person (other than a Person that is a Subsidiary) provided that a Borrower
      or a
      Subsidiary of a Borrower is the surviving entity.

     

    “Additional
      Guarantor
      Supplement” means a letter to the Administrative Agent in the form
      attached hereto as Exhibit F executed by a Subsidiary of the Company after
      the date hereof whereby it acknowledges that it is a party hereto as a Guarantor
      and is liable for the Obligations pursuant to Section 12
      hereof.

     

    “Adjusted
      EBITDA” means, with
      reference to any period, the sum of (a) the EBITDA of the Company and its
      Subsidiaries for such period, plus(without
      duplication)
(b) EBITDA of any Person and its subsidiaries acquired pursuant to
      Section 8.9(k) hereof for such period (as if any such Permitted Acquisition
      had occurred on the first day of such period), plus (c) adjustments
      associated with any Permitted Acquisition to the extent reasonably acceptable
      to
      the Administrative Agent, plus
(d) non-recurring
      costs and extraordinary expenses incurred during the
      fiscal year ended December 31, 2007 in connection with the recall of specific
      components from the Thomas and Friends product line in an aggregate amount
      not
      to exceed $28,300,000, plus
(e) other fees, costs
      and expenses incurred or provided for (minus
      rebates and other reimbursements) related to the recall of specific components
      from the Thomas and Friends product line not to exceed $5,000,000 during the
      fiscal year ending December 31, 2008,
plus (f) non-recurring
      costs in connection with the settlement of claims with HIT Entertainment in
      an
      aggregate amount not to exceed $15,000,000, plus (g) losses on the
      sale, transfer or disposition of Property during such period, plus (h) non-recurring
      costs in connection with the termination of the purchase agreement for the
      children’s book division of Publications International, Limited in an aggregate
      amount not to exceed $2,000,000, plus (i)
      non-cash charges
      relating to the write-down of the Company’s investment in Meteor the Monster
      Truck, Inc. not to exceed $2,100,000 in the aggregate, minus (j) gains on the
      sale
      or transfer of Property during such period, minus (k) EBITDA of any
      Person and its subsidiaries sold, transferred or otherwise disposed of during
      such period (as if any such sale, transfer or disposition had occurred on the
      first day of such period).

     

    “Adjusted
      LIBOR” means, for
      any Borrowing of Eurocurrency Loans, a rate per annum determined in accordance
      with the following formula:

     

    Adjusted
      LIBOR     =
                               LIBOR                     

    1
      -
      Eurocurrency Reserve Percentage

    

    “Administrative
      Agent” means
      Bank of Montreal and any successor pursuant to Section 11.7
      hereof.

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

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

     

    “Affiliate”
      means any Person
      directly or indirectly controlling or controlled by, or under direct or indirect
      common control with, another Person.  A Person shall be deemed to
      control another Person for the purposes of this definition if such Person
      possesses, directly or indirectly, the power to direct, or cause the direction
      of, the management and policies of the other Person, whether through the
      ownership of voting securities, common directors, trustees or officers, by
      contract or otherwise; provided that, in any event
      for purposes of this definition, any Person that owns, directly or indirectly,
      10% or more of the securities having the ordinary voting power for the election
      of directors or governing body of a corporation or 10% or more of the
      partnership or other ownership interest of any other Person (other than as
      a
      limited partner of such other Person) will be deemed to control such corporation
      or other Person.

     

    “Agreement”
      means this Credit
      Agreement, as the same may be amended, modified, restated or supplemented from
      time to time pursuant to the terms hereof.

     

    “Applicable
      Margin” means,
      with respect to Loans, Reimbursement Obligations, and the commitment fees and
      letter of credit fees payable under Section 2.1 hereof until the first
      Pricing Date, the rates per annum shown opposite Level IV below, and
      thereafter from one Pricing Date to the next the Applicable Margin means the
      rates per annum determined in accordance with the following
      schedule:

     

    
      	
              Level

              
              

            	
              Leverage
                Ratio for Such Pricing Date

               

            	
              Applicable
                Margin for Base Rate Loans under revolving credit and Term Credit
                and
                Reimbursement Obligations shall be:

              
              

            	
              Applicable
                Margin for Eurodollar Loans under Revolving credit and Term Credit
                and
                Letter of credit Fee Shall Be:

              
              

            	
              Applicable
                Margin for Commitment Fee Shall Be:

              
              

            
	 	 	 	 	 
	
              V

              
              

            	
              Greater
                than or equal to 2.25 to 1.0

              
              

            	
              2.25%

              
              

            	
              3.25%

              
              

            	
              0.50%

              
              

            
	
              IV

              
              

            	
              Less
                than 2.25 to 1.0, but greater than or equal to 1.75 to 1.0

              
              

            	
              2.00%

              
              

            	
              3.00%

              
              

            	
              0.50%

              
              

            
	
              III

              
              

            	
              Less
                than 1.75 to 1.0, but greater than or equal to 1.25 to 1.0

              
              

            	
              1.75%

              
              

            	
              2.75%

              
              

            	
              0.50%

              
              

            
	
              II

              
              

            	
              Less
                than 1.25 to 1.0, but greater than or equal to 0.75 to 1.0

              
              

            	
              1.50%

              
              

            	
              2.50%

              
              

            	
              0.50%

              
              

            
	
              I

              
              

            	
              Less
                than 0.75 to 1.0

              
              

            	
              1.25%

              
              

            	
              2.25%

              
              

            	
              0.45%

              
              

            
	 	 	 	 	 

    

    For
      purposes hereof, the term “Pricing Date” means, for any
      fiscal quarter of the Borrowers ending on or after December 31, 2008, the date
      on which the Administrative Agent is in receipt of the Borrowers’ most recent
      financial statements (and, in the case of the year-end financial statements,
      audit report) for the fiscal quarter then ended, pursuant to
      Section 8.5 hereof.  The Applicable Margin shall be
      established based on the Leverage Ratio for the most recently completed fiscal
      quarter and the Applicable Margin established on a Pricing Date shall remain
      in
      effect until the next Pricing Date.  If the Borrowers have not
      delivered their financial statements by the date such financial statements
      (and,
      in the case of the year-end financial statements, audit report) are required
      to
      be delivered under Section 8.5 hereof, until such financial statements and
      audit report are delivered, the Applicable Margin shall be the highest
      Applicable Margin (i.e., Level V shall
      apply).  If the Borrowers subsequently deliver such financial
      statements before the next Pricing Date, the Applicable Margin established
      by
      such late delivered financial statements shall take effect from the date of
      delivery until the next Pricing Date.  In all other circumstances, the
      Applicable Margin established by such financial statements shall be in effect
      from the Pricing Date that occurs immediately after the end of the fiscal
      quarter covered by such financial statements until the next Pricing
      Date.  Each determination of the Applicable Margin made by the
      Administrative Agent in accordance with the foregoing shall be conclusive and
      binding on the Borrowers and the Lenders if reasonably determined.

     

    Notwithstanding
      the foregoing, in the event that any financial statement or compliance
      certificate delivered pursuant to Section 8.5(j) hereof is shown to be
      inaccurate at any time this Agreement is in effect (due to an error made by
      the
      Company, and not as a result of a change in GAAP) and as a result of such
      inaccuracy the Company is required to restate such financial statements
      (regardless of whether (i) the Revolving Credit Commitments are in effect
      or (ii) any Loan or other extension of credit is outstanding when such
      inaccuracy is discovered or such financial statement or compliance certificate
      was delivered), and such inaccuracy, if corrected, would have led to the
      application of a higher Applicable Margin for any period (an “Applicable Period”) than the
      Applicable Margin applied for such Applicable Period, then (x) the
      Borrowersshall promptly deliver to the Administrative Agent
      a correct compliance certificate for such Applicable Period, (y) the
      Applicable Margin for such Applicable Period shall be determined as if the
      Leverage Ratio in the corrected compliance certificate were applicable for
      such
      Applicable Period, and (z) the Borrowers shall promptly, but in any event
      within five (5) Business Days, pay to the Lenders the accrued additional
      interest (but not overdue interest) owing as a result of such increased
      Applicable Margin for such Applicable Period.

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    “Application”
      is defined in
      Section 1.3(b) hereof.

     

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

     

    “Assignment
      and Acceptance”
      means an assignment and acceptance entered into by a Lender and an Eligible
      Assignee (with the consent of any party whose consent is required by
      Section 13.12 hereof), and accepted by the Administrative Agent, in
      substantially the form of Exhibit G or any other form approved by the
      Administrative Agent.

     

    “Authorized
      Representative”
      means those persons shown on the list of officers provided by the Borrowers
      pursuant to Section 7.2 hereof or on any update of any such list provided
      by the Borrowers to the Administrative Agent, or any further or different
      officers of any Borrower so named by any Authorized Representative of such
      Borrower in a written notice to the Administrative Agent.

     

    “Base
      Rate” means for any day
      the greatest of:  (i) the rate of interest announced or otherwise
      established by the Administrative Agent from time to time as its prime
      commercial rate, or its equivalent, for U.S. Dollar loans to borrowers located
      in the United States as in effect on such
      day, with any change in the Base Rate resulting from a change in said prime
      commercial rate to be effective as of the date of the relevant change in said
      prime commercial rate (it being acknowledged and agreed that such rate may
      not
      be the Administrative Agent’s best or lowest rate), (ii) the sum of
      (x) the rate determined by the Administrative Agent to be the average
      (rounded upward, if necessary, to the next higher 1/100 of 1%) of the rates
      per
      annum quoted to the Administrative Agent at approximately 10:00 a.m.
      (Chicago time) (or as soon thereafter as is practicable) on such day (or, if
      such day is not a Business Day, on the immediately preceding Business Day)
      by
      two or more Federal funds brokers selected by the Administrative Agent for
      sale
      to the Administrative Agent at face value of Federal funds in the secondary
      market in an amount equal or comparable to the principal amount for which such
      rate is being determined, plus (y) 1/2 of 1%, and
      (iii) the LIBOR Quoted Rate for such day plus 1.00%.  As
      used herein, the term “LIBOR
      Quoted Rate” means, for any date, the rate per annum determined by a
      fraction, the numerator of which is the rate per annum (rounded upwards, if
      necessary, to the next higher one hundred-thousandth of a percentage point)
      for
      deposits in U.S. Dollars for an Interest Period equal to one month, which
      appears on the LIBOR01 Page as of 11:00 a.m. (London, England time) on such
      date
      and the denominator of which is 1 minus the Eurodollar Reserve
      Percentage.

     

    “Base
      Rate Loan” means a Loan
      bearing interest at a rate specified in Section 1.4(a) hereof.

     

    
      
        
        

      

      
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    “Borrowers”
      is defined in the
      introductory paragraph of this Agreement.

     

    “Borrowing”
      means the total
      of Loans of a single type advanced, continued for an additional Interest Period,
      or converted from a different type into such type by the Lenders under a Credit
      on a single date and, in the case of Eurocurrency Loans, for a single Interest
      Period.  Borrowings of Loans are made and maintained ratably from each
      of the Lenders under a Credit according to their Percentages of such
      Credit.  A Borrowing is “advanced” on the day Lenders
      advance funds comprising such Borrowing to the applicable Borrower, is “continued” on the date a new
      Interest Period for the same type of Loans commences for such Borrowing, and
      is
“converted” when such
      Borrowing is changed from one type of Loans to the other, all as requested
      by
      the Company, on behalf of the Borrowers, pursuant to Section 1.6(a)
      hereof.  Borrowings of Swing Loans are made by the Swing Line Lender
      in accordance with the procedures set forth in Section 1.16
      hereof.

     

    “Business
      Day”means any day (other
      than a Saturday or Sunday) on which banks are not authorized or required to
      close in Chicago, Illinois and, if the applicable Business Day relates to
      the advance or continuation of, or conversion into, or payment of a Eurocurrency
      Loan, on which banks are dealing in U.S. Dollar deposits in the interbank
      Eurocurrency market in London, England and Nassau, Bahamas.

     

    “Capital
      Expenditures” means,
      with respect to any period, the aggregate amount of all expenditures (whether
      paid in cash or accrued as a liability) by the Company and its Subsidiaries
      during that period for the acquisition or leasing (pursuant to a Capital Lease)
      of fixed or capital assets or additions to property, plant, or equipment
      (including replacements, capitalized repairs, and improvements) which should
      be
      capitalized on the balance sheet of the Company and its Subsidiaries in
      accordance with GAAP.

     

    “Capital
      Lease” means any
      lease of Property which in accordance with GAAP is required to be capitalized
      on
      the balance sheet of the lessee.

     

    “Capitalized
      Lease
      Obligation” means, for any Person, the amount of the liability shown on
      the balance sheet of such Person in respect of a Capital Lease determined in
      accordance with GAAP.

     

    “CERCLA”
means
      the
      Comprehensive Environmental Response, Compensation and Liability Act of 1980,
      as
      amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C.
      §§9601 et
      seq., and any future
      amendments.

     

    “Change
      of Control” means any
      of (a) the acquisition by any “person” or “group”
      (as such terms are
      used in sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
      amended) at any time of beneficial ownership of 33-1/3% or more of the
      outstanding capital stock or other equity interest of the Company on a
      fully-diluted basis, (b) the failure of the Company to own 100% of the
      Voting Stock of any Borrower, (c) the failure of individuals who are
      members of the board of directors (or similar governing body) of the Company
      or
      any Borrower on the Closing Date (together with any new or replacement directors
      whose initial nomination for election was approved by a majority of the
      directors who were either directors on the Closing Date or previously so
      approved) to constitute a majority of the board of directors (orsimilar governing body) of the Company or such Borrower,
      as the case may
      be, or (d) any “Change of Control” (or words of like import), as defined in
      any agreement or indenture relating to any issue of Indebtedness for Borrowed
      Money shall occur.

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

    “Closing
      Date” means the date
      of this Agreement or such later Business Day upon which each condition described
      in Section 7.2 shall be satisfied or waived in a manner acceptable to the
      Administrative Agent in its discretion.

     

    “Code”
      means the Internal
      Revenue Code of 1986, as amended, and any successor statute
      thereto.

     

    “Collateral”
      means all
      properties, rights, interests, and privileges from time to time subject to
      the
      Liens granted to the Administrative Agent, or any security trustee therefor,
      by
      the Collateral Documents.

     

    “Collateral
      Account” is
      defined in Section 9.4 hereof.

     

    “Collateral
      Documents” means
      the Security Agreement, and all other security agreements, pledge agreements,
      assignments, financing statements and other documents as shall from time to
      time
      secure or relate to the Obligations, the Hedging Liability, and the Funds
      Transfer and Deposit Account Liability or any part thereof.

     

    “Commitment
      Amount Increase”
      is defined in Section 1.17 hereof.

     

    “Commitment
      Amount Increase
      Request” means a Commitment Amount Increase Request in the form of
      Exhibit H hereto.

     

    “Commitments”
      means the
      Revolving Credit Commitments and Term Loan Commitments.

     

    “Company”
      is defined in the
      introductory paragraph of this Agreement.

     

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

     

    “Credit”
      means any of the
      Revolving Credit, the Term Credit or the Swing Line.

     

    “Credit
      Event” means the
      advancing of any Loan, or extension of the expiration date or increase in the
      amount of, any Letter of Credit.

     

    “Credit
      Parties” means,
      collectively, the Borrowers and the Guarantors.

     

    “Default”
      means any event or
      condition the occurrence of which would, with the passage of time or the giving
      of notice, or both, constitute an Event of Default.

     

    “Designated
      Disbursement
      Account” means collectively, the accounts of each Borrower maintained
      with the Administrative Agent or its Affiliate and designated in writing to
      theAdministrative Agent as such Borrower’s Designated
      Disbursement Account (or such other account as the Company, on behalf of such
      Borrower, and the Administrative Agent may otherwise agree).

     

    
      
        
        

      

      
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    “Defaulting
      Lender” means any
      Lender that (a) has failed to fund any portion of the Loans, participations
      in L/C Obligations or participations in Swing Loans required to be funded by
      it
      hereunder (herein, a “Defaulted Loan”) within
      two (2) Business Days of the date required to be funded by it hereunder
      unless such failure has been cured, (b) has otherwise failed to pay over to
      the Administrative Agent or any other Lender any other amount required to paid
      by it hereunder within two (2) Business Days of the date when due, unless
      the subject of a good faith dispute or unless such failure has been cured,
      or
      (c) has been deemed insolvent or become the subject of a bankruptcy or
      insolvency proceeding or a receiver or conservator has been appointed for such
      Lender.

     

    “Default
      Excess” means, with
      respect to any Defaulting Lender, the excess, if any, of such Defaulting
      Lender’s Percentage of the aggregate outstanding principal amount of Loans of
      all Lenders (calculated as if all Defaulting Lenders other than such Defaulting
      Lender had funded all of their respective Defaulted Loans) over the aggregate
      outstanding principal amount of all Loans of such Defaulting
      Lender.

     

    “Defaulting
      Lender” has the
      meaning set forth in Section 1.18.

     

    “Default
      Period” means, with
      respect to any Defaulting Lender, the period commencing on the date upon which
      such Lender first became a Defaulting Lender and ending on the earliest of
      the
      following dates:  (i) the date on which all Commitments are
      cancelled or terminated and/or the Obligations are declared or become
      immediately due and payable and (ii) the date on which (a) the Default
      Excess with respect to such Defaulting Lender shall have been reduced to zero
      (whether by the funding by such Defaulting Lender of any Defaulted Loans of
      such
      Defaulting Lender or otherwise) and (b) such Defaulting Lender shall have
      delivered to the Company and the Administrative Agent a written reaffirmation
      of
      such Defaulting Lender’s intention to honor its obligations hereunder with
      respect to its Commitments.

     

    “Disposition”
      means the sale,
      lease, conveyance or other disposition of Property, other than sales or other
      dispositions expressly permitted under subsections (a) through (f) of
      Section 8.10 hereof.

     

    “Domestic
      Borrower” means
      collectively the Company and each Borrower that is a Domestic
      Subsidiary.

     

    “Domestic
      Subsidiary” means
      each Subsidiary that is not a Foreign Subsidiary.

     

    “EBITDA”
      means, for any
      Person and with reference to any period, Net Income of such Person and its
      subsidiaries for such period plus the sum of all amounts
      deducted in arriving at such Net Income amount in respect of (a) Interest
      Expense of such Person and its subsidiaries for such period, (b) federal,
      state, and local income taxes for such period of such Person and its
      subsidiaries for such period, (c) depreciation of fixed assets and
      amortization of intangible assets of such Person and its subsidiaries for such
      period, and (d) non-cash expenses related to equity awards.

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

    “Eligible
      Assignee” means
      (a) a Lender, (b) an Affiliate of a Lender, (c) an Approved Fund,
      and (d) any other Person (other than a natural person) approved by
      (i) the Administrative Agent, (ii) in the case of any assignment of a
      Revolving Credit Commitment, the L/C Issuer, and (iii) unless an Event
      of Default has occurred and is continuing, the Borrowers (each such approval
      not
      to be unreasonably withheld or delayed); provided that notwithstanding
      the foregoing, “Eligible Assignee” shall not include any Borrower or Guarantor
      or any of such Borrower’s or Guarantor’s Affiliates or
      Subsidiaries.

     

    “Eligible
      Line of Business”
      means any business engaged in as of the date of this Agreement by the Credit
      Parties or any of their Subsidiaries or any business substantially similar
      thereto.

     

    “Environmental
      Law” means any
      current or future Legal Requirement pertaining to (a) the protection of health,
      safety and the indoor or outdoor environment, (b) the conservation, management
      or use of natural resources and wildlife, (c) the protection or use of surface
      water or groundwater, (d) the management, manufacture, possession, presence,
      use, generation, transportation, treatment, storage, disposal, release,
      threatened release, abatement, removal, remediation or handling of, or exposure
      to, any Hazardous Material or (e) pollution (including any release to air,
      land,
      surface water or groundwater), and any amendment, rule, regulation, order or
      directive issued thereunder.

     

    “ERISA”
      means the Employee
      Retirement Income Security Act of 1974, as amended, or any successor statute
      thereto.

     

    “Eurocurrency
      Loan” means a
      Loan bearing interest at the rate specified in Section 1.4(b)
      hereof.

     

    “Eurocurrency
      Reserve
      Percentage” means, for any Borrowing of Eurocurrency Loans, the daily
      average for the applicable Interest Period of the maximum rate, expressed as
      a
      decimal, at which reserves (including, without limitation, any supplemental,
      marginal, and emergency reserves) are imposed during such Interest Period by
      the
      Board of Governors of the Federal Reserve System (or any successor) on “eurocurrency liabilities”,
      as defined in such Board’s Regulation D (or in respect of any other
      category of liabilities that includes deposits by reference to which the
      interest rate on Eurocurrency Loans is determined or any category of extensions
      of credit or other assets that include loans by non-United States offices of
      any
      Lender to United States residents), subject to any amendments of such reserve
      requirement by such Board or its successor, taking into account any transitional
      adjustments thereto.  For purposes of this definition, the
      Eurocurrency Loans shall be deemed to be “eurocurrency liabilities” as
      defined in Regulation D without benefit or credit for any prorations,
      exemptions or offsets under Regulation D.

     

    “Event
      of Default” means any
      event or condition identified as such in Section 9.1 hereof.

     

    “Event
      of Loss” means, with
      respect to any Property consisting of real estate, furniture, fixtures,
      equipment or other fixed assets, any of the following:  (a) any
      loss, destruction or damage of such Property or (b) any condemnation,
      seizure, or taking, by exercise of the power ofeminent
      domain or otherwise, of such Property, or confiscation of such Property or
      the
      requisition of the use of such Property.

     

    
      
        
        

      

      
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     “Existing
      Credit Agreement”
      means that certain Amended and Restated Credit Agreement dated as of September
      15, 2004, as amended, by and among LCBI, Learning Curve International, Inc.,
      The
      First Years Inc., Racing Champions Worldwide Limited, the Guarantors party
      thereto, the lenders party thereto and Harris N.A., as administrative
      agent.

     

    “Existing
      L/Cs” means the
      letters of credit issued and outstanding under the Existing Credit
      Agreement.

     

    “Federal
      Funds Rate” means
      the fluctuating interest rate per annum described in part (x) of clause (ii)
      of
      the definition of Base Rate.

     

    “Fixed
      Charge Coverage Ratio”
      means, at any time the same is to be determined, the ratio of (a) Adjusted
      EBITDA of the Company for the four consecutive fiscal quarters of the Company
      then ended minus
      Capital Expenditures during the same four fiscal quarters then ended to
      (b) Fixed Charges made during the same four fiscal quarters then
      ended.

     

    “Fixed
      Charges” means, with
      reference to any period, the sum of (a) all scheduled payments of principal
      during such period with respect to Indebtedness for Borrowed Money of the
      Company and its Subsidiaries, (b) cash Interest Expense for the Company and
      its Subsidiaries for such period, (c) federal, state, and local income
      taxes paid or payable in cash by the Company and its Subsidiaries during such
      period, net of cash refunds received or receivable by the Company or any
      Subsidiary during such period, all as disclosed on the Company’s cash flow
      statement, and (d) Restricted Payments permitted by Section 8.12(iii) hereof paid in cash
      during such period.

     

    “Foreign
      Borrower” means each
      Borrower that is a Foreign Subsidiary.

     

    “Foreign
      Subsidiary” means
      each Subsidiary which (a) is organized under the laws of a jurisdiction
      other than the United States of America or any state thereof or the District
      of
      Columbia, (b) conducts substantially all of its business outside of the
      United States of America, and (c) has substantially all of its assets
      outside of the United States of America.

     

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

     

    “Funds
      Transfer and Deposit Account
      Liability” means the liability of a Borrower or any of its Subsidiaries
      owing to any of the Lenders, or any Affiliates of such Lenders, arising out
      of
      (a) the execution or processing of electronic transfers of funds by
      automatic clearing house transfer, wire transfer or otherwise to or from the
      deposit accounts of a Borrower and/or any Subsidiary now or hereafter maintained
      with any of the Lenders or their Affiliates, (b) the acceptance for deposit
      or the honoring for payment of any check, draft or other item with respect
      to
      any such deposit accounts, and (c) any other deposit, disbursement, and
      cash management services afforded to a Borrower or any Subsidiary by any of
      such
      Lenders or their Affiliates.

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

    “GAAP”
      means generally
      accepted accounting principles set forth from time to time in the opinions
      and
      pronouncements of the Accounting Principles Board and the American Institute
      of
      Certified Public Accountants and statements and pronouncements of the Financial
      Accounting Standards Board (or agencies with similar functions of comparable
      stature and authority within the U.S. accounting profession), which are
      applicable to the circumstances as of the date of determination.

     

    “Guarantor”
and
“Guarantors”
      each is defined
      in Section 4.2 hereof.

     

    “Guaranty”
      and “Guaranties” each is defined
      in Section 4.2 hereof.

     

    “Hazardous
      Material” means
      any substance, chemical, compound, product, solid, gas, liquid, waste,
      byproduct, pollutant, contaminant or material which is hazardous or toxic,
      and
      includes, without limitation, (a) asbestos, polychlorinated biphenyls and
      petroleum (including crude oil or any fraction thereof) and (b) any material
      classified or regulated as “hazardous” or “toxic” or words of like import
      pursuant to an Environmental Law.

     

    “Hedging
      Liability” means the
      liability of a Borrower or any Subsidiary to any of the Lenders, or any
      Affiliates of such Lenders, in respect of any interest rate swap agreements,
      interest rate cap agreements, interest rate collar agreements, interest rate
      floor agreements, interest rate exchange agreements, foreign currency contracts,
      currency swap contracts, or other similar interest rate or currency hedging
      arrangements as such Borrower or such Subsidiary, as the case may be, may from
      time to time enter into with any one or more of the Lenders party to this
      Agreement or their Affiliates.

     

    “Hostile
      Acquisition” means
      the acquisition of the capital stock or other equity interests of a Person
      through a tender offer or similar solicitation of the owners of such capital
      stock or other equity interests which has not been approved (prior to such
      acquisition) by resolutions of the Board of Directors of such Person or by
      similar action if such Person is not a corporation, and as to which such
      approval has not been withdrawn.

     

    “Indebtedness
      for Borrowed
      Money” means for any Person (without duplication) (a) all
      indebtedness of such Person for borrowed money, whether current or funded,
      or
      secured or unsecured, (b) all indebtedness for the deferred purchase price
      of Property or services, (c) all indebtedness created or arising under any
      conditional sale or other title retention agreement with respect to Property
      acquired by such Person (even though the rights and remedies of the seller
      or
      lender under such agreement in the event of a default are limited to
      repossession or sale of such Property), (d) all indebtedness secured by a
      purchase money mortgage or other Lien to secure all or part of the purchase
      price of Property subject to such mortgage or Lien, (e) all obligations
      under leases which shall have been or must be, in accordance with GAAP, recorded
      as Capital Leases in respect of which such Person is liable as lessee,
      (f) any liability in respect of banker’s acceptances or letters of credit,
      and (g) any indebtedness, whether or not assumed, secured by Liens on
      Property acquired by such Person at the time of acquisition thereof, it being
      understood that the term “Indebtedness for Borrowed Money” shall not include
      trade payables arising in the ordinary course of business.

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

    “Interest
      Expense” means, for
      any Person with reference to any period, the sum of all interest charges
      (including imputed interest charges with respect to Capitalized Lease
      Obligations and all amortization of debt discount and expense) of such Person
      and its subsidiaries for such period determined on a consolidated basis in
      accordance with GAAP.

     

    “Interest
      Period” is defined
      in Section 1.7 hereof.

     

    “L/C
      Issuer” means (i) with
      respect to the Existing L/Cs, Harris N.A. and (ii) with respect to all other
      L/Cs, the Administrative Agent, or any other Lender requested by the Company,
      on
      behalf of the Borrowers, and approved by the Administrative Agent in its
      reasonable discretion with respect to any Letter of Credit.

     

    “L/C
      Obligations”means the
      aggregate undrawn face
      amounts of all outstanding Letters of Credit and all unpaid Reimbursement
      Obligations.

     

    “L/C
      Sublimit” means
      $20,000,000, as reduced pursuant to the terms hereof.

     

    “Legal
      Requirement” means any
      treaty, convention, statute, law, regulation, ordinance, license, permit,
      governmental approval, injunction, judgment, order, consent decree or other
      requirement of any governmental authority, whether federal, state, or
      local.

     

    “Lenders”
      means and includes
      each financial institution party hereto and the other financial institutions
      from time to time party to this Agreement, including each assignee Lender
      pursuant to Section 13.12 hereof and, unless the context otherwise
      requires, the Swing Line Lender.

     

    “Lending
      Office” is defined
      in Section 10.4 hereof.

     

    “Letter
      of Credit” is defined
      in Section 1.3(a) hereof.

     

    “Leverage
      Ratio” means, at
      any time the same is to be determined, the ratio of (i) Total Funded Debt
      of the Company and its Subsidiaries as of the last day of the most recently
      completed fiscal quarter of the Company to (ii) Adjusted EBITDA of the
      Company and its Subsidiaries for the period of four fiscal quarters then
      ended.

     

    “LIBOR”
      means, for an
      Interest Period for a Borrowing of Eurocurrency Loans, (a) the LIBOR Index
      Rate for such Interest Period, if such rate is available, and (b) if the
      LIBOR Index Rate cannot be determined, the arithmetic average of the rates
      of
      interest per annum (rounded upwards, if necessary, to the nearest 1/100 of
      1%)
      at which deposits in U.S. Dollars in immediately available funds are offered
      to
      the Administrative Agent at 11:00 a.m. (London, England time) two
      (2) Business Days before the beginning of such Interest Period by three (3)
      or more major banks in the interbank eurocurrency market selected by the
      Administrative Agent for delivery on the first day of and for a period equal
      to
      such Interest Period and in an amount equal or comparable to the principal
      amount of the Eurodollar Loan scheduled to be made as part of such
      Borrowing.

     

    “LIBOR
      Index Rate” means, for
      any Interest Period, the rate per annum (rounded upwards, if necessary, to
      the
      next higher one hundred-thousandth of a percentage point) fordeposits in U.S. Dollars for a period equal to such
      Interest Period,
      which appears on the appropriate page on the Reuters Service in the relevant
      currency (London, England time) on the day 2 Business Days before the
      commencement of such Interest Period.

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

     

    “Lien”
means
      any mortgage,
      lien, security interest, pledge, charge or encumbrance of any kind in respect
      of
      any Property, including the interests of a vendor or lessor under any
      conditional sale, Capital Lease or other title retention
      arrangement.

     

    “Loan”
      means any Revolving
      Loan, Swing Loan or Term Loan, whether outstanding as a Base Rate Loan or
      Eurocurrency Loan or otherwise, each of which is a “type” of Loan
      hereunder.

     

    “Loan
      Documents” means this
      Agreement, the Notes (if any), the Applications, the Collateral Documents,
      the
      Guaranties and each other instrument or document to be delivered hereunder
      or
      thereunder or otherwise in connection therewith.

     

    “Material
      Adverse Effect”
      means (a) a material adverse change in, or material adverse effect upon, the
      operations, business, Property or, condition (financial or otherwise) of any
      Borrower or of the Borrowers and their Subsidiaries taken as a whole, (b) a
      material impairment of the ability of any Credit Party to perform its
      obligations under any Loan Document or (c) a material adverse effect upon
      (i) the legality, validity, binding effect or enforceability against any Credit
      Party of any Loan Document or the rights and remedies of the Administrative
      Agent and the Lenders thereunder or (ii) the perfection or priority of any
      Lien
      granted under any Collateral Document.

     

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

     

    “Net
      Cash Proceeds” means, as
      applicable, (a) with respect to any Disposition by a Person, cash and cash
      equivalent proceeds received by or for such Person’s account, net of (i)
      reasonable direct costs relating to such Disposition and (ii) sale, use or
      other
      transactional taxes paid or payable by such Person as a direct result of such
      Disposition; (b) with respect to any Event of Loss of a Person, cash and
      cash equivalent proceeds received by or for such Person’s account (whether as a
      result of payments made under any applicable insurance policy therefor or in
      connection with condemnation proceedings or otherwise), net of
      (i) reasonable direct costs incurred in connection with the collection of
      such proceeds, awards or other payments, (ii) sale or other transactional
      taxes paid or payable by such Person as a direct result of such Event of Loss,
      and (iii) amounts required to be applied to repay principal of, premium, if
      any, and interest on any Indebtedness for Borrowed Money secured by a Lien
      on
      the Property (or portion thereof) so damaged or taken (other than the
      Obligations hereunder) which is required to be and is repaid in connection
      with
      such Event of Loss; and (c) with respect to any offering of equity
      securities of a Person or the issuance of any Indebtedness for Borrowed Money
      by
      a Person,  cash and cash equivalent proceeds received by or for such
      Person’s account, net of reasonable legal, underwriting, and other fees and
      expenses incurred as a direct result thereof.

     

    “Net
      Income” means, for any
      Person and with reference to any period, the net income (or net loss) of such
      Person and its subsidiaries for such period computed on a consolidated basis
      in
      accordance with GAAP; provided that there shall
      be
      excluded from Net Income (a) the netincome (or net
      loss) of any Person accrued prior to the date it becomes a subsidiary of, or
      has
      merged into or consolidated with, such Person or another subsidiary of such
      Person, and (b) the net income (or net loss) of any other Person (other
      than a subsidiary of such Person) in which such Person or any subsidiary of
      such
      Person has an equity interest in, except to the extent of the amount of
      dividends or other distributions actually paid to such Person or such subsidiary
      during such period.

     

    
      
        
        

      

      
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     “Note”
      and “Notes” each is defined
      in
      Section 1.11 hereof.

     

    “Obligations”
      means all
      obligations of the Borrowers, or any of them, to pay principal and interest
      on
      the Loans, all Reimbursement Obligations owing under the Applications, all
      fees
      and charges payable hereunder, and all other payment obligations of any Credit
      Party arising under or in relation to any Loan Document, in each case whether
      now existing or hereafter arising, due or to become due, direct or indirect,
      absolute or contingent, and howsoever evidenced, held or acquired.

     

    “Participating
      Interest” is
      defined in Section 1.3(e) hereof.

     

    “Participating
      Lender” is
      defined in Section 1.3(e) hereof.

     

    “PBGC”
      means the Pension
      Benefit Guaranty Corporation or any Person succeeding to any or all of its
      functions under ERISA.

     

    “Percentage”
      means for any
      Lender its Revolver Percentage or Term Loan Percentage, as applicable; and
      where
      the term “Percentage”
is applied on an
      aggregate basis (including, without limitation,
      Section 11.6 hereof), such aggregate percentage shall be calculated by
      aggregating the separate components of the Revolver Percentage and Term Loan
      Percentage, and expressing such components on a single percentage
      basis.

     

    “Permitted
      Acquisition” means
      any Acquisition with respect to which all of the following conditions shall
      have
      been satisfied:

     

    (a)  the
      Total Consideration for the Acquired Business does not exceed $15,000,000 and
      the Total Consideration for all Acquired Businesses does not exceed $30,000,000
      in the aggregate for all Acquisitions completed after the Closing
      Date;

     

    (b)  the
      Acquired Business is an Eligible Line of Business;

     

    (c)  the
      Acquisition shall not be a Hostile Acquisition;

     

    (d)  the
      financial statements of the Acquired Business shall have been audited by a
      nationally recognized accounting firm or such financial statements shall have
      undergone review of a scope satisfactory to the Administrative
      Agent;

     

    (e)  in
      the event of a merger involving the Company, the Company must be the entity
      surviving the merger;

     

    
      
        
        

      

      
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    (f)  if
      a new Subsidiary is formed or acquired as a result of or in connection with
      the
      Acquisition, the Borrowers shall have complied with the requirements of
      Section 4 hereof in connection therewith;

     

    (g)  the
      Borrowers shall have delivered to the Administrative Agent evidence reasonably
      satisfactory to the Administrative Agent that the Borrowers would have a
      Leverage Ratio as of the last day of the last fiscal quarter for which financial
      statements have been delivered on a pro forma basis that is at
      least 0.25:1.00 below the then maximum Leverage Ratio permitted by
      Section 8.21(i) (assuming the indebtedness incurred at the time of such
      Acquisition was incurred on the first day of such 12-month period and on a
pro forma basis after giving
      effect to such Acquisition);

     

    (h)  immediately
      prior to and after giving effect to the Acquisition and any Credit Event in
      connection therewith, no Default or Event of Default shall exist, including
      with
      respect to the financial covenants contained in Section 8.21 hereof on a
pro forma basis;
      and

     

    (i)  after
      giving effect to the Acquisition and any Credit Event in connection therewith,
      the Borrower shall have not less than $35,000,000 of Unused Revolving Credit
      Commitments.

     

    “Person”
      means an individual,
      partnership, corporation, limited liability company, association, trust,
      unincorporated organization or any other entity or organization, including
      a
      government or agency or political subdivision thereof.

     

    “Plan”
      means any employee
      pension benefit plan covered by Title IV of ERISA or subject to the minimum
      funding standards under Section 412 of the Code that either (a) is
      maintained by a member of the Controlled Group for employees of a member of
      the
      Controlled Group or (b) is maintained pursuant to a collective bargaining
      agreement or any other arrangement under which more than one employer makes
      contributions and to which a member of the Controlled Group is then making
      or
      accruing an obligation to make contributions or has within the preceding five
      plan years made contributions.

     

    “Property”
      means, as to any
      Person, all types of real, personal, tangible, intangible or mixed property
      owned by such Person whether or not included in the most recent balance sheet
      of
      such Person and its subsidiaries under GAAP.

     

    “Reimbursement
      Obligation” is
      defined in Section 1.3(c) hereof.

     

    “Required
      Lenders” means, as
      of the date of determination thereof, Lenders whose outstanding Loans and
      interests in Letters of Credit and Unused Revolving Credit Commitments
      constitute more than 50% of the sum of the total outstanding Loans, interests
      in
      Letters of Credit, and Unused Revolving Credit Commitments of the
      Lenders.

     

    “Restricted
      Payments” is
      defined in Section 8.12 hereof.

     

    “Revolver
      Percentage” means,
      for each Lender, the percentage of the Revolving Credit Commitments represented
      by such Lender’s Revolving Credit Commitment or, if the Revolving Credit
      Commitments have been terminated, the percentage held by such Lender
      (includingthrough participation interests in Reimbursement
      Obligations) of the aggregate principal amount of all Revolving Credit Loans
      and
      L/C Obligations then outstanding.

     

    
      
        
        

      

      
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    “Revolving
      Credit” means the
      credit facility for making Revolving Loans and Swing Loans and issuing Letters
      of Credit described in Sections 1.2, 1.3 and 1.16 hereof.

     

    “Revolving
      Credit Commitment”
      means, as to any Lender, the obligation of such Lender to make Revolving Loans
      and to participate in Swing Loans and Letters of Credit issued for the account
      of any Borrower hereunder in an aggregate principal or face amount at any one
      time outstanding not to exceed the amount set forth opposite such Lender’s name
      on Schedule 1 attached hereto and made a part hereof, as the same may be
      increased, reduced or modified at any time or from time to time pursuant to
      the
      terms hereof.  The Borrowers and the Lenders acknowledge and agree
      that the Revolving Credit Commitments of the Lenders aggregate $70,000,000
      on
      the date hereof.

     

    “Revolving
      Credit Termination
      Date” means November 1, 2011, or such earlier date on which the
      Revolving Credit Commitments are terminated in whole pursuant to
      Section 1.13, 9.2 or 9.3 hereof.

     

    “Revolving
      Loan” is defined
      in Section 1.2 hereof and, as so defined, includes a Base Rate Loan or a
      Eurocurrency Loan, each of which is a “type” of Revolving Loan
      under the Revolving Credit.

     

    “Revolving
      Note” is defined
      in Section 1.11 hereof.

     

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

     

    “SEC”
      means the U.S.
      Securities and Exchange Commission or any successor agency.

     

    “Security
      Agreement” means
      that certain Security Agreement dated the date of this Agreement among the
      Domestic Borrowers, the Guarantors and the Administrative Agent, as the same
      may
      be amended, modified, supplemented or restated from time to time.

     

    “Subsidiary”
      means, as to any
      particular parent corporation or organization, any other corporation or
      organization more than 50% of the outstanding Voting Stock of which is at the
      time directly or indirectly owned by such parent corporation or organization
      or
      by any one or more other entities which are themselves subsidiaries of such
      parent corporation or organization.  Unless otherwise expressly noted
      herein, the term “Subsidiary” means a
      subsidiary of the Company or any other Credit Party or of any of their direct
      or
      indirect Subsidiaries, as applicable.

     

    “Swing
      Line” means the
      credit facility for making one or more Swing Loans described in
      Section 1.16 hereof.

     

    “Swing
      Line Lender” means BMO
      Capital Markets Financing, Inc., acting in its capacity as the Lender of Swing
      Loans hereunder, or any successor Lender acting in such capacity appointed
      pursuant to Section 13.12 hereof.

     

    
      
        
        

      

      
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    “Swing
      Line Lender’s Quoted
      Rate” is defined in Section 1.16(c) hereof.

     

    “Swing
      Line Sublimit” means
      $10,000,000, as reduced pursuant to the terms hereof.

     

    “Swing
      Loan” and “Swing Loans” each is defined
      in Section 1.16 hereof.

     

    “Swing
      Note” is defined in
      Section 1.11 hereof.

     

    “Term
      Credit” means the
      credit facility for the Term Loans described in Section 1.1(a)
      hereof.

     

    “Term
      Loan” is defined in
      Section 1.1(a) hereof and, as so defined, includes a Base Rate Loan or a
      Eurocurrency Loan, each of which is a “type” of Term Loan
      hereunder.

     

    “Term
      Loan Commitment” means,
      as to any Lender, the obligation of such Lender to make its Term Loan on the
      Closing Date or thereafter pursuant to Section 1.17 hereof in the principal
      amount not to exceed the amount set forth opposite such Lender’s name on
      Schedule 1 attached hereto and made a part hereof.  The Borrowers
      and the Lenders acknowledge and agree that the Term Loan Commitments of the
      Lenders aggregate $75,000,000 on the date hereof.

     

    “Term
      Loan Percentage” means,
      for each Lender, the percentage of the Term Loan Commitments represented by
      such
      Lender’s Term Loan Commitment or, if the Term Loan Commitments have been
      terminated or have expired, the percentage held by such Lender of the aggregate
      principal amount of all Term Loans then outstanding.

     

    “Term
      Note” is defined in
      Section 1.11 hereof.

     

    “Total
      Consideration” means
      the total amount (but without duplication) of (a) cash paid in connection
      with any Acquisition, plus (b) indebtedness payable to the seller in
      connection with such Acquisition, plus (c) the fair market value of any
      equity securities, including any warrants or options therefor, delivered in
      connection with any Acquisition, plus (d) the present value of covenants
      not to compete entered into in connection with such Acquisition or other future
      payments which are required to be made over a period of time and are not
      contingent upon the Company or any Subsidiary meeting financial performance
      objectives (exclusive of salaries paid in the ordinary course of business)
      (discounted at the Base Rate), but only to the extent not included in
      clause (a), (b) or (c) above, plus (e) the amount of indebtedness
      assumed in connection with such Acquisition.

     

    “Total
      Funded Debt” means, at
      any time the same is to be determined, the aggregate of (but without
      duplication) all Indebtedness for Borrowed Money of the Company and its
      Subsidiaries at such time, including all Indebtedness for Borrowed Money of
      any
      other Person which is directly or indirectly guaranteed by the Company or any
      Subsidiary or which the Company or any Subsidiary has agreed (contingently
      or
      otherwise) to purchase or otherwise acquire or in respect of which the Company
      or any Subsidiary has otherwise assured a creditor against loss.

     

    “Unfunded
      Vested
      Liabilities” means,
      for any Plan at any time, the amount (if any) by which the present value of
      all
      vested nonforfeitable accrued benefits under such Plan exceeds thefair market value of all Plan assets allocable to such
      benefits, all
      determined as of the then most recent valuation date for such Plan, but only
      to
      the extent that such excess represents a potential liability of a member of
      the
      Controlled Group to the PBGC or the Plan under Title IV of
      ERISA.

     

    
      
        
        

      

      
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    “Unused
      Revolving Credit
      Commitments” means, at any time, the difference between the Revolving
      Credit Commitments then in effect and the aggregate outstanding principal amount
      of Revolving Loans and L/C Obligations.

     

    “U.S.
      Dollars” and “$” each means
      the lawful
      currency of the United States of America.

     

    “Voting
      Stock” of any Person
      means capital stock or other equity interests of any class or classes (however
      designated) having ordinary power for the election of directors or other similar
      governing body of such Person, other than stock or other equity interests having
      such power only by reason of the happening of a contingency.

     

    “Welfare
      Plan” means a
“welfare plan” as defined in Section 3(1) of ERISA.

     

    “Wholly-owned
      Subsidiary”
      means a Subsidiary of which all of the issued and outstanding shares of capital
      stock (other than directors’ qualifying shares as required by law) or other
      equity interests are owned by any Borrower and/or one or more Wholly-owned
      Subsidiaries within the meaning of this definition.

     

    Section 5.2.  Interpretation.  The
      foregoing definitions are equally applicable to both the singular and plural
      forms of the terms defined.  The words “hereof”, “herein”,
      and “hereunder” and words of like
      import when used in this Agreement shall refer to this Agreement as a whole
      and
      not to any particular provision of this Agreement.  All references to
      time of day herein are references to Chicago, Illinois, time unless otherwise
      specifically provided.  Where the character or amount of any asset or
      liability or item of income or expense is required to be determined or any
      consolidation or other accounting computation is required to be made for the
      purposes of this Agreement, it shall be done in accordance with GAAP except
      where such principles are inconsistent with the specific provisions of this
      Agreement.

     

    Section 5.3.  Change
      in Accounting Principles.  If, after the date of this
      Agreement, there shall occur any change in GAAP from those used in the
      preparation of the financial statements referred to in Section 6.5 hereof
      and such change shall result in a change in the method of calculation of any
      financial covenant, standard or term found in this Agreement, either the
      Borrowers or the Required Lenders may by notice to the Lenders and the
      Borrowers, respectively, require that the Lenders and the Borrowers negotiate
      in
      good faith to amend such covenants, standards, and term so as equitably to
      reflect such change in accounting principles, with the desired result being
      that
      the criteria for evaluating the financial condition of the Borrowers and their
      Subsidiaries shall be the same as if such change had not been
      made.  No delay by the Borrowers or the Required Lenders in requiring
      such negotiation shall limit their right to so require such a negotiation at
      any
      time after such a change in accounting principles.  Until any such
      covenant, standard, or term is amended in accordance with this Section 5.3,
      financial covenants shall be computed and determined in accordance with GAAP
      in
      effect prior to such change in accounting principles.  Without
      limiting the generality of the foregoing, theBorrowers shall
      neither be deemed to be in compliance with any financial covenant hereunder
      nor
      out of compliance with any financial covenant hereunder if such state of
      compliance or noncompliance, as the case may be, would not exist but for the
      occurrence of a change in accounting principles after the date
      hereof.

     

    
      
        
        

      

      
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    SECTION 6. 
      REPRESENTATIONS AND WARRANTIES.

     

    To
      induce
      the Lenders to enter into this Agreement and to make the extensions of credit
      contemplated hereby, each of the Credit Parties represents and warrants to
      the
      Administrative Agent and the Lenders as follows:

     

    Section 6.1.  Organization
      and Qualification.  Each Credit Party is duly organized,
      validly existing and in good standing under the laws of the jurisdiction of
      its
      organization, has full and adequate power to own its Property and conduct its
      business as now conducted, and is duly licensed or qualified and in good
      standing in each jurisdiction in which the nature of the business conducted
      by
      it or the nature of the Property owned or leased by it requires such licensing
      or qualifying, except where the failure to do so would not have a Material
      Adverse Effect.

     

    Section 6.2.  Subsidiaries.  The
      Company holds 100% of the issued and outstanding stock of each of the other
      Borrowers.  Each Subsidiary of the Borrowers is duly organized,
      validly existing and in good standing under the laws of the jurisdiction in
      which it is organized has full and adequate power to own its Property and
      conduct its business as now conducted, and is duly licensed or qualified and
      in
      good standing in each jurisdiction in which the nature of the business conducted
      by it or the nature of the Property owned or leased by it requires such
      licensing or qualifying, except where the failure to do so would not have a
      Material Adverse Effect.  Schedule 6.2 hereto 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 any 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 of its
      authorized capital stock and other equity interests and the number of shares
      of
      each class issued and outstanding.  All of the outstanding shares of
      capital stock and other equity interests of each Subsidiary are validly issued
      and outstanding and fully paid and nonassessable and all such shares and other
      equity interests indicated on Schedule 6.2 as owned by a Borrower or
      another Subsidiary are owned, beneficially and of record, by such Borrower
      or
      such Subsidiary, as the case may be, free and clear of all Liens other than
      the
      Liens granted in favor of the Administrative Agent pursuant to the Collateral
      Documents.  There are no outstanding commitments or other obligations
      of any Subsidiary to issue, and no options, warrants or other rights of any
      Person to acquire, any shares of any class of capital stock or other equity
      interests of any Subsidiary.

     

     

     

    
      
        
        

      

      
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    Section 6.3.  Authority
      and Validity of Obligations.  Each Borrower has full right and
      authority to enter into this Agreement and the other Loan Documents executed
      by
      it, to make the borrowings herein provided for, to issue its Notes in evidence
      thereof, to grant to the Administrative Agent the Liens described in the
      Collateral Documents executed by it, and to perform all of its obligations
      hereunder and under the other Loan Documents executed by it.  Each
      Guarantor has full right and authority to enter into the Loan Documents executed
      by it, to guarantee the Obligations, Hedging Liability, and Funds Transfer
      and
      Deposit Account Liability, to grant to the Administrative Agent the Liens
      described in the Collateral Documents executed by it, and to perform all of
      its
      obligations under the Loan Documents executed by it.  The Loan
      Documents delivered by each Credit Party have been duly authorized, executed,
      and delivered by such Credit Party and constitute valid and binding obligations
      of such Credit Party enforceable against it in accordance with their terms,
      except as enforceability may be limited by bankruptcy, insolvency, fraudulent
      conveyance or similar laws affecting creditors’ rights generally and general
      principles of equity (regardless of whether the application of such principles
      is considered in a proceeding in equity or at law); and this Agreement and
      the
      other Loan Documents do not, nor does the performance or observance by any
      Credit Party of any of the matters and things herein or therein provided for,
      (a) contravene or constitute a default under any provision of law or any
      judgment, injunction, order or decree binding upon any Credit Party or any
      provision of the organizational documents (e.g., charter, certificate or
      articles of incorporation and by-laws, certificate or articles of association
      and operating agreement, partnership agreement or other organizational document)
      of any Credit Party, (b) contravene or constitute a default under any covenant,
      indenture or agreement of or affecting any Credit Party or any of its Property,
      in each case where such contravention or default, individually or in the
      aggregate,  could reasonably be expected to have a Material Adverse
      Effect or (c) result in the creation or imposition of any Lien on any
      Property of any Credit Party other than the Liens granted in favor of the
      Administrative Agent pursuant to the Collateral Documents.

     

    Section 6.4.  Use
      of
      Proceeds; Margin Stock.  The Borrowers shall use the proceeds
      of the Term Loans and the Revolving Credit to refinance existing indebtedness
      and to fund a portion of the fees and expenses incurred or otherwise required
      to
      be paid in connection with the consummation of the transactions contemplated
      by
      this Agreement; and the Borrowers shall use the proceeds of the Revolving Credit
      to finance Permitted Acquisitions, to finance Capital Expenditures, to finance
      Restricted Payments permitted by Section 8.12 hereof (other than Restricted
      Payments permitted by Section 8.12(iii)), for its general working capital
      purposes, and for such other legal and proper purposes as are consistent with
      all applicable laws.  None of the Borrowers or Subsidiaries are
      engaged in the business of extending credit for the purpose of purchasing or
      carrying margin stock (within the meaning of Regulation U of the Board of
      Governors of the Federal Reserve System), and no part of the proceeds of any
      Loan or any other extension of credit made hereunder will be used to purchase
      or
      carry any such margin stock or to extend credit to others for the purpose of
      purchasing or carrying any such margin stock.  Margin stock (as
      hereinabove defined) constitutes less than 25% of the assets of each Borrower
      and its Subsidiaries which are subject to any limitation on sale, pledge or
      other restriction hereunder.

     

    Section 6.5.  Financial
      Reports.   The consolidated balance sheet of the Company
      and its Subsidiaries as at December 31, 2007, and the related consolidated
      statements of income, retained earnings and cash flows of the Company and its
      Subsidiaries for the fiscal year then ended, and accompanying notes thereto,
      which financial statements are accompanied by the audit report of KPMG LLP,
      independent public accountants, and the unaudited interim consolidated balance
      sheet of the Company and its Subsidiaries as at September 30, 2008, and the
      related consolidated statements of income, retained earnings and cash flows
      of
      the Company and its Subsidiaries for the three months then ended, heretofore
      furnished to the Administrative Agent and the Lenders, fairly present the
      consolidated financial condition of the Company and its Subsidiaries as at
      said
      dates and the consolidated results of their operations and cash flows
      forthe periods then ended in conformity with GAAP applied
      on
      a consistent basis.  None of the Borrowers or Subsidiaries have
      contingent liabilities which are material to it other than as indicated on
      such
      financial statements or, with respect to future periods, on the financial
      statements furnished pursuant to Section 8.5 hereof.

     

    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    

     

    Section 6.6.  No
      Material Adverse Change.  Since December 31, 2007, there has
      been no change in the condition (financial or otherwise) of the Company or
      any
      Subsidiary except those occurring in the ordinary course of business, none
      of
      which individually or in the aggregate have had a Material Adverse
      Effect.

     

    Section 6.7.  Full
      Disclosure.  The statements and information furnished to the
      Administrative Agent and the Lenders in connection with the negotiation of
      this
      Agreement and the other Loan Documents and the commitments by the Lenders to
      provide all or part of the financing contemplated hereby do not contain any
      untrue statements of a material fact or omit a material fact necessary to make
      the material statements contained herein or therein not misleading, the
      Administrative Agent and the Lenders acknowledging that as to any projections
      furnished to the Administrative Agent and the Lenders, the Credit Parties only
      represent that the same were prepared on the basis of information and estimates
      the Credit Parties believed to be reasonable.

     

    Section 6.8.  Trademarks,
      Franchises, and Licenses.  Each Credit Party and its
      Subsidiaries own, possess, or have the right to use all necessary patents,
      licenses, franchises, trademarks, trade names, trade styles, copyrights, trade
      secrets, know how, and confidential commercial and proprietary information
      to
      conduct their businesses as now conducted, without known conflict with any
      patent, license, franchise, trademark, trade name, trade style, copyright or
      other proprietary right of any other Person.

     

    Section 6.9.  Governmental
      Authority and Licensing.  Each Credit Party and its
      Subsidiaries have received all licenses, permits, and approvals of all federal,
      state, and local governmental authorities, if any, necessary to conduct their
      businesses, in each case where the failure to obtain or maintain the same could
      reasonably be expected to have a Material Adverse Effect.  No
      investigation or proceeding which, if adversely determined, could reasonably
      be
      expected to result in revocation or denial of any material license, permit
      or
      approval is pending or, to the knowledge of any Credit Party,
      threatened.

     

    Section 6.10.  Good
      Title.  Each Credit Party and its Subsidiaries have good and
      defensible title (or valid leasehold interests) to their assets as reflected
      on
      the most recent consolidated balance sheet furnished to the Administrative
      Agent
      and the Lenders (except for sales of assets in the ordinary course of business),
      subject to no Liens other than such thereof as are permitted by
      Section 8.8 hereof.

     

    Section 6.11.  Litigation
      and Other Controversies.  There is no litigation or arbitration
      or governmental proceeding or labor controversy pending, nor to the knowledge
      of
      any Credit Party threatened, against any Credit Party or any Subsidiary which
      if
      adversely determined, individually or in the aggregate, could reasonably be
      expected to have a Material Adverse Effect.

     

    
      
        
        

      

      
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    Section 6.12.  Taxes.  All
      tax returns required to be filed by any Credit Party (to the best of such Credit
      Party’s knowledge with respect to any local tax returns) or any Subsidiary in
      any jurisdiction have, in fact, been filed, and all taxes, assessments, fees,
      and other governmental charges upon any Credit Party or any Subsidiary or upon
      any of its Property, income or franchises, which are shown to be due and payable
      in such returns, have been paid, except such taxes, assessments, fees and
      governmental charges, if any, as are being contested in good faith and by
      appropriate proceedings which prevent enforcement of the matter under contest
      and as to which adequate reserves established in accordance with GAAP have
      been
      provided.  No Credit Party knows of any proposed additional tax
      assessment against it or its Subsidiaries for which adequate provisions in
      accordance with GAAP have not been made on their accounts.  Adequate
      provisions in accordance with GAAP for taxes on the books of each Credit Party
      and its Subsidiaries have been made for all open years, and for each such
      Person’s current fiscal period.

     

    Section 6.13.  Approvals.  No
      authorization, consent, license or exemption from, or filing or registration
      with, any court or governmental department, agency or instrumentality, nor
      any
      approval or consent of any other Person, is or will be necessary to the valid
      execution, delivery or performance by any Credit Party of any Loan Document,
      except for such approvals which have been obtained prior to the date of this
      Agreement and remain in full force and effect and except where failure to obtain
      such authorization, consent, license, exemption, registration or approval would
      not have a Material Adverse Effect.

     

    Section 6.14.  Affiliate
      Transactions.  Neither any Credit Party nor any Subsidiary is a
      party to any contracts or agreements with any of its Affiliates (other than
      with
      Wholly-owned Subsidiaries) on terms and conditions
      which are less favorable to such Credit Party or such Subsidiary than would
      be
      usual and customary in similar contracts or agreements between Persons not
      affiliated with each other.

     

    Section 6.15.  Investment
      Company.  Neither any Credit Party nor any Subsidiary is an
“investment company” or a company “controlled” by an “investment company” within
      the meaning of the Investment Company Act of 1940, as amended.

     

    Section 6.16.  ERISA.  Each
      Credit Party and each other member of its Controlled Group has fulfilled its
      obligations under the minimum funding standards of and is in compliance in
      all
      material respects with ERISA and the Code to the extent applicable to it and
      has
      not incurred any liability to the PBGC or a Plan under Title IV of ERISA
      other than a liability to the PBGC for premiums under Section 4007 of
      ERISA.  Neither any Credit Party nor any Subsidiary has any contingent
      liabilities with respect to any post-retirement benefits under a Welfare Plan,
      other than liability for continuation coverage described in article 6 of
      Title I of ERISA.

     

    Section 6.17.  Compliance
      with Laws.  The Credit Parties and their Subsidiaries are in
      compliance with the requirements of all federal, state and local laws, rules
      and
      regulations applicable to or pertaining to their Property or business operations
      (including, without limitation, the Occupational Safety and Health Act of 1970,
      the Americans with Disabilities Act of 1990, and Environmental Laws), where
      any
      such non-compliance, individually or in the aggregate, could reasonably be
      expected to have a Material Adverse Effect.  Neither any Credit Party
      nor any Subsidiary has received notice to the effect that its operations are
      not
      in compliance with any of the requirements of applicable federal, state or
      local
      environmental, health, and safety statutesand regulations or
      is the subject of any governmental investigation evaluating whether any remedial
      action is needed to respond to a release of any toxic or hazardous waste or
      substance into the environment, where any such non-compliance or remedial
      action, individually or in the aggregate, could reasonably be expected to have
      a
      Material Adverse Effect.

     

    
      
        
        

      

      
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    Section 6.18.  Other
      Agreements.  Neither any Credit Party nor any Subsidiary is in
      default under the terms of any covenant, indenture or agreement of or affecting
      such Person or any of its Property, which default if uncured could reasonably
      be
      expected to have a Material Adverse Effect.

     

    Section
      6.19.  Solvency.  Each Credit Party and its
      Subsidiaries are solvent, able to pay their debts as they become due, and have
      sufficient capital to carry on their business and all businesses in which they
      are about to engage.

     

    Section 6.20. 
      No
      Default.  No Default or Event of Default has occurred and is
      continuing.

     

    Section 6.21.  No
      Broker Fees.  No broker’s or finder’s fee or commission will be
      payable by the Credit Parties with respect hereto or any of the transactions
      contemplated hereby; and the Credit Parties hereby agree to indemnify the
      Administrative Agent and the Lenders against, and agree that they will hold
      the
      Administrative Agent and the Lenders harmless from, any claim, demand, or
      liability for any such broker’s or finder’s fees alleged to have been incurred
      in connection herewith or therewith and any expenses (including reasonable
      attorneys’ fees) arising in connection with any such claim, demand, or
      liability.

     

    SECTION 7. 
      CONDITIONS PRECEDENT.

     

    Section 7.1.  All
      Credit Events.  At the time of each Credit Event
      hereunder:

     

    (a)  each
      of the representations and warranties set forth herein shall be and remain
      true
      and correct as of said time, except to the extent the same expressly relate
      to
      an earlier date;

     

    (b)  each
      Credit Party and each Subsidiary shall be in compliance with all of the terms
      and conditions hereof and of the other Loan Documents, and no Default or Event
      of Default shall have occurred and be continuing or would occur as a result
      of
      such Credit Event;

     

    (c)  in
      the case of a Borrowing, the Administrative Agent shall have received the notice
      required by Section 1.5 hereof, in the case of the issuance of any Letter
      of Credit the L/C Issuer shall have received a duly completed Application
      for such Letter of Credit together with any fees called for by Section 2.1
      hereof, and, in the case of an extension or increase in the amount of a Letter
      of Credit, a written request therefor in a form acceptable to the
      L/C Issuer together with fees called for by Section 2.1 hereof;
      and

     

    (d)  such
      Credit Event shall not violate any order, judgment or decree of any court or
      other authority or any provision of law or regulation applicable to
      theAdministrative Agent or any Lender (including, without
      limitation, Regulation U of the Board of Governors of the Federal Reserve
      System) as then in effect.

     

    
      
        
        

      

      
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    Each
      request for a Borrowing hereunder and each request for the issuance of, increase
      in the amount of, or extension of the expiration date of, a Letter of Credit
      shall be deemed to be a representation and warranty by the Borrowers on the
      date
      of such Credit Event as to the facts specified in subsections (a) through
      (c), both inclusive, of this Section; provided, however, that the
      Lenders may continue to make advances under the Revolving Credit, in the sole
      discretion of the Lenders with Revolving Credit Commitments, notwithstanding
      the
      failure of any Borrower to satisfy one or more of the conditions set forth
      above
      and any such advances so made shall not be deemed a waiver of any Default or
      Event of Default or other condition set forth above that may then
      exist.

     

    Section
      7.2.  Initial
      Credit Event.  Before or concurrently with the initial Credit
      Event:

     

    (a)  the
      Administrative Agent shall have received for each Lender this Agreement duly
      executed by the Borrowers, the Guarantors party hereto and the
      Lenders;

     

    (b)  if
      requested by any Lender, the Administrative Agent shall have received for such
      Lender such Lender’s duly executed Notes of the Borrowers dated the date hereof
      and otherwise in compliance with the provisions of Section 1.11
      hereof;

     

    (c)  the
      Administrative Agent shall have received the Security Agreement duly executed
      by
      each Credit Party party thereto, together with (i) original stock
      certificates or other similar instruments or securities representing the issued
      and outstanding shares of capital stock or other equity interests in each
      Subsidiary to the extent required by Section 4.1 hereof, (ii) stock
      powers for the Collateral consisting of the stock or other equity interest
      in
      each Subsidiary executed in blank and undated, (iii) UCC financing
      statements to be filed against the Company and each Subsidiary, as debtor,
      in
      favor of the Administrative Agent, as secured party, (iv) patent,
      trademark, and copyright collateral assignments to the extent requested by
      the
      Administrative Agent, (v) deposit account, securities account, and
      commodity account control agreements to the extent requested by the
      Administrative Agent and (vi) landlord’s and warehouseman’s lien waivers to
      the extent required by the Security Agreement;

     

    (d)  the
      Administrative Agent shall have received evidence of insurance required to
      be
      maintained under the Loan Documents, naming the Administrative Agent as lender’s
      loss payee;

     

    (e)  the
      Administrative Agent shall have received copies of each Credit Party’s articles
      of incorporation and bylaws (or comparable organizational documents) and any
      amendments thereto, certified in each instance by its Secretary or Assistant
      Secretary (or officer or manager holding a comparable office);

     

    (f)  the
      Administrative Agent shall have received copies of resolutions of each Credit
      Party’s Board of Directors (or similar governing body) authorizing the
      execution,delivery and performance of this Agreement and the
      other Loan Documents to which it is a party and the consummation of the
      transactions contemplated hereby and thereby, together with specimen signatures
      of the persons authorized to execute such documents on such Credit Party’s
      behalf, all certified in each instance by its Secretary or Assistant Secretary
      (or officer or manager holding a comparable office);

     

    
      
        
        

      

      
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     (g)  the
      Administrative Agent shall have received copies of the certificates of good
      standing for each Credit Party (dated no earlier than 30 days prior to the
      date
      hereof) from the office of the secretary of the state of its incorporation
      or
      organization and of each state in which it is qualified to do business as a
      foreign corporation or organization;

     

    (h)  the
      Administrative Agent shall have received a list of the Borrowers’ Authorized
      Representatives;

     

    (i)  there
      shall be no injunction, temporary restraining order or other legal action in
      effect which would prohibit the consummation of the transaction contemplated
      under this Agreement and the initial Credit Event;

     

    (j)  the
      Administrative Agent shall have received a certificate regarding the solvency
      of
      the Company and its Subsidiaries, after giving effect to the initial Credit
      Event, executed by the chief financial officer of the Company;

     

    (k)  the
      Administrative Agent shall have received for itself and for the Lenders the
      initial fees called for by Section 2.1 hereof;

     

    (l)  the
      Administrative Agent shall have a confirmation that (i) the Company’s
      Adjusted EBITDA for the twelve-month period ended September 30, 2008 was at
      least $64,000,000 and (ii) the Leverage Ratio is not greater than 2.2 to
      1.0, for the period ended September 30, 2008, each calculated based on
pro forma consolidated
      Adjusted EBITDA for the twelve-month period ended September 30, 2008, and
      after giving effect to the initial Credit Event;

     

    (m)  no
      material adverse change in the business, condition (financial or otherwise),
      operations, performance, Properties or prospects of any Borrower or Subsidiary
      from that reflected in the financial statements as December 31, 2007 shall
      have
      occurred;

     

    (n)  each
      Lender shall have received such evaluations and certifications as it may
      reasonably require in order to satisfy itself as to the financial condition
      of
      the Borrowers and their Subsidiaries, and the lack of material contingent
      liabilities of the Borrowers and their Subsidiaries;

     

    (o)  the
      Administrative Agent shall have received financing statement, tax, and judgment
      lien search results against the Property of the Company, LCBI and each Guarantor
      evidencing the absence of Liens on its Property except as permitted by
      Section 8.8 hereof;

     

    
      
        
        

      

      
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    (p)  the
      Administrative Agent shall have received pay-off and lien release letters from
      secured creditors of each Credit Party setting forth, among other things, the
      total amount of indebtedness outstanding and owing to them (or outstanding
      letters of credit issued for their account) and containing an undertaking to
      cause to be delivered to the Administrative Agent (or authorizing the
      Administrative Agent to file) UCC termination statements and any other lien
      release instruments necessary to release such secured creditor’s Liens on the
      assets of each Credit Party, which pay-off and lien release letters shall be
      in
      form and substance acceptable to the Administrative Agent;

     

    (q)  the
      Administrative Agent shall have received for each Lender the favorable written
      opinion of counsel to each of the Credit Parties, in form and substance
      satisfactory to the Administrative Agent;

     

    (r)  the
      Administrative Agent shall have received an Internal Revenue Service Form W-9,
      or Form W-8, as applicable, duly executed by each Credit Party in form
      and  substance acceptable to the Administrative Agent;

     

    (s)  after
      giving effect to the initial Credit Event hereunder, the aggregate amount of
      Loans and L/C Obligations outstanding shall not exceed
      $130,000,000;

     

    (t)  the
      Administrative Agent shall have received certificates of merger evidencing
      the
      merger of (i) The First Years, Inc., a Delaware corporation with and into The
      First Years, Inc., a Massachusetts corporation (“TFY(MA)”) with TFY(MA) as
      the surviving corporation and (ii) TFY(MA) with and into LCBI with LCBI being
      the surviving corporation; and

     

    (u)  the
      Administrative Agent shall have received for the account of the Lenders such
      other agreements, instruments, documents, certificates, and opinions as the
      Administrative Agent may reasonably request.

     

    SECTION 8. 
      COVENANTS.

     

    The
      Credit Parties agree that, so long as any credit is available to or in use
      by
      the Borrowers, or any of them, hereunder, except to the extent compliance in
      any
      case or cases is waived in writing pursuant to the terms of Section 13.13
      hereof:

     

    Section 8.1.  Maintenance
      of Business.  (a)   Each Credit Party shall, and
      shall cause each Subsidiary to, preserve and maintain its existence, except
      as
      otherwise provided in Section 8.10(c) hereof.

     

    (b)  Each
      Credit Party shall, and shall cause each Subsidiary to, preserve and keep in
      force and effect all licenses, permits, franchises, approvals, patents,
      trademarks, trade names, trade styles, copyrights, and other proprietary rights
      necessary to the proper conduct of itsbusiness where the
      failure to do so could reasonably be expected to have a Material Adverse
      Effect.

     

    
      
        
        

      

      
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    Section 8.2.  Maintenance
      of Properties.  Each Credit Party shall, and shall cause each
      Subsidiary to, maintain, preserve, and keep its Property, plant, and equipment
      used or useful in its business in good repair, working order and condition
      (ordinary wear and tear excepted), and shall from time to time make all needful
      and proper repairs, renewals, replacements, additions, and betterments thereto
      so that at all times the efficiency thereof shall be fully preserved and
      maintained.

     

    Section 8.3.  Taxes
      and Assessments.  Each Credit Party shall duly pay and
      discharge, and shall cause each Subsidiary to duly pay and discharge, all taxes,
      rates, assessments, fees, and governmental charges upon or against it or its
      Property, in each case before the same become delinquent and before penalties
      accrue thereon, unless and to the extent that the same are being contested
      in
      good faith and by appropriate proceedings which prevent enforcement of the
      matter under contest and adequate reserves are provided therefor and except
      to
      the extent that failure to so pay or discharge would not have a Material Adverse
      Effect.

     

    Section 8.4.  Insurance.  Each
      Credit Party shall insure and keep insured, and shall cause each Subsidiary
      to
      insure and keep insured, with good and responsible insurance companies, all
      insurable Property owned by it which is of a character usually insured by
      Persons similarly situated and operating like Properties against loss or damage
      from such hazards and risks, and in such amounts, as are insured by Persons
      similarly situated and operating like Properties; and each Credit Party shall
      insure, and shall cause each Subsidiary to insure, such other hazards and risks
      (including, without limitation, employers’ and public liability risks) with good
      and responsible insurance companies as and to the extent usually insured by
      Persons similarly situated and conducting similar businesses. The Credit Parties
      shall in any event maintain, and cause each Subsidiary to maintain, insurance
      on
      the Collateral to the extent required by the Collateral
      Documents.  Each Credit Party shall, upon the request of the
      Administrative Agent, furnish to the Administrative Agent and the Lenders a
      certificate setting forth in summary form the nature and extent of the insurance
      maintained pursuant to this Section.

     

    Section 8.5.  Financial
      Reports.  The Company shall, and shall cause each Subsidiary
      to, maintain a standard system of accounting in accordance with
      GAAP.  The Company and each Borrower shall furnish to the
      Administrative Agent, each Lender and each of their duly authorized
      representatives such information respecting the business and financial condition
      of the Borrowers and their respective Subsidiaries as the Administrative Agent
      or such Lender may reasonably request; and without any request, the Company
      and
      the Borrowers shall furnish to the Administrative Agent and the
      Lenders:

     

    (a)  as
      soon as available, and in any event within 45 days after the close of each
      fiscal quarter of each fiscal year of the Company (or such shorter period as
      may
      be required by the SEC for filing quarterly reports with the SEC), a copy of
      the
      consolidated and consolidating balance sheet of the Company and its Subsidiaries
      as of the last day of such fiscal quarter and the consolidated and consolidating
      statements of income, retained earnings, and cash flows of the Company and
      its
      Subsidiaries for the fiscal quarter and for the fiscal year-to-date period
      then
      ended, each in reasonable detail showing incomparative form
      the figures for the corresponding date and period in the previous fiscal year,
      prepared by the Company in accordance with GAAP (subject to the absence of
      footnote disclosures and year-end audit adjustments) and certified to by its
      chief financial officer or another officer of the Company acceptable to the
      Administrative Agent;

     

    
      
        
        

      

      
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    (b)  as
      soon as available, and in any event within 90 days after the close of each
      fiscal year of the Company (or such shorter period as may be required by the
      SEC
      for filing annual reports with the SEC), a copy of the consolidated and
      consolidating balance sheet of the Company and its Subsidiaries as of the last
      day of the fiscal year then ended and the consolidated and consolidating
      statements of income, retained earnings, and cash flows of the Company and
      its
      Subsidiaries for the fiscal year then ended, and accompanying notes thereto,
      each in reasonable detail showing in comparative form the figures for the
      previous fiscal year, accompanied by an unqualified opinion of a firm of
      independent public accountants of recognized national standing, selected by
      the
      Company and reasonably satisfactory to the Administrative Agent and the Required
      Lenders, to the effect that the consolidated financial statements have been
      prepared in accordance with GAAP and present fairly in accordance with GAAP
      the
      consolidated financial condition of the Company and its Subsidiaries as of
      the
      close of such fiscal year and the results of their operations and cash flows
      for
      the fiscal year then ended and that an examination of such accounts in
      connection with such financial statements has been made in accordance with
      generally accepted auditing standards and, accordingly, such examination
      included such tests of the accounting records and such other auditing procedures
      as were considered necessary in the circumstances;

     

    (c)  within
      the period provided in subsection (b) above, the written statement of the
      accountants who certified the audit report thereby required that in the course
      of their audit they have obtained no knowledge of any Default or Event of
      Default, or, if such accountants have obtained knowledge of any such Default
      or
      Event of Default, they shall disclose in such statement the nature and period
      of
      the existence thereof;

     

    (d)  promptly
      after receipt thereof, any additional written reports, management letters or
      other detailed information contained in writing concerning significant aspects
      of the Company’s or any Subsidiary’s operations and financial affairs given to
      it by its independent public accountants;

     

    (e)  promptly
      after the sending or filing thereof, copies of each financial statement, report,
      notice or proxy statement sent by the Company or any Subsidiary to its
      stockholders or other equity holders, and copies of each regular, periodic
      or
      special report, registration statement or prospectus (including all Form 10-K,
      Form 10-Q and Form 8-K reports) filed by the Company or any Subsidiary with
      any
      securities exchange or the SEC;

     

    (f)  promptly
      after receipt thereof, a copy of each audit made by any regulatory agency of
      the
      books and records of the Company or any Subsidiary or of notice of any material
      noncompliance with any applicable law, regulation or guideline relating to
      the
      Company or any Subsidiary, or its business;

     

    
      
        
        

      

      
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    (g)  as
      soon as available, and in any event within 60 days after the end of each fiscal
      year of the Company, a copy of the Company’s consolidated and consolidating
      operating budget for the following fiscal year, in reasonable detail prepared
      by
      the Company and in form satisfactory to the Administrative Agent (which shall
      include a summary of all assumptions made in preparing such operating
      budget);

     

    (h)  notice
      of any Change in Control;

     

    (i)  promptly
      after knowledge thereof shall have come to the attention of any responsible
      officer of any Credit Party, written notice of (i) any threatened or pending
      litigation or governmental proceeding or labor controversy against the Company
      or any Subsidiary which, if adversely determined, could reasonably be expected
      to have a Material Adverse Effect, (ii) of the occurrence of any Default or
      Event of Default hereunder, or (iii) upon the occurrence of or any condition
      exists that could reasonably be expected to have a Material Adverse Effect;
      and

     

    (j)  with
      each of the financial statements furnished to the Lenders pursuant to
      subsections (a) and (b) above, a written certificate in the form attached
      hereto as Exhibit E signed by the chief financial officer of the Company or
      another officer of the Company acceptable to the Administrative Agent to the
      effect that to the best of such officer’s knowledge and belief no Default or
      Event of Default has occurred during the period covered by such statements
      or,
      if any such Default or Event of Default has occurred during such period, setting
      forth a description of such Default or Event of Default and specifying the
      action, if any, taken by the Credit Parties or any Subsidiary to remedy the
      same.  Such certificate shall also set forth the calculations in
      respect of Section 8.9(h) hereof and supporting such statements in respect
      of
      Section 8.21 hereof.

     

    Section 8.6.  Inspection.  The
      Credit Parties shall, and shall cause each Subsidiary to, permit the
      Administrative Agent, each Lender, the L/C Issuer and each of their duly
      authorized representatives and agents to visit and inspect any of its Property,
      corporate books, and financial records, to examine and make copies of its books
      of accounts and other financial records, and to discuss its affairs, finances,
      and accounts with, and to be advised as to the same by, its officers, employees
      and independent public accountants (and by this provision each Credit Party
      hereby authorizes such accountants to discuss with the Administrative Agent,
      such Lenders and the L/C Issuer the finances and affairs of such Credit Party
      and its Subsidiaries) at such reasonable times and intervals as the
      Administrative Agent or any such Lender or the L/C Issuer may designate and,
      so
      long as no Default or Event of Default exists, with reasonable prior notice
      to
      the Borrowers.

     

    Section 8.7.  Borrowings
      and Guaranties. The Credit Parties shall not, nor shall they permit any
      Subsidiary to, issue, incur, assume, create or have outstanding any Indebtedness
      for Borrowed Money, or be or become liable as endorser, guarantor, surety or
      otherwise for any debt, obligation or undertaking of any other Person, or
      otherwise agree to provide funds for payment of the obligations of another,
      or
      supply funds thereto or invest therein or otherwise assure a creditor of another
      against loss, or apply for or become liable to the issuer of a letter of credit
      which supports an obligation of another, or subordinate any claim or demand
      it
      may haveto the claim or demand of any other Person; provided,
      however, that the
      foregoing shall not restrict nor operate to prevent:

     

    
      
        
        

      

      
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    (a)  the
      Obligations, Hedging Liability, and Funds Transfer and Deposit Account Liability
      of the Borrowers and their Subsidiaries owing to the Administrative Agent and
      the Lenders (and their Affiliates in the case of Hedging
      Liability);

     

    (b)  The
      Guaranties;

     

    (c)  purchase
      money indebtedness and Capitalized Lease Obligations of the Borrower and its
      Subsidiaries in an amount not to exceed $500,000 in the aggregate at any one
      time outstanding;

     

    (d)  endorsement
      of items for deposit or collection of commercial paper received in the ordinary
      course of business;

     

    (e)  unsecured
      intercompany indebtedness among the Company and its Domestic Subsidiaries,
provided that any such
      indebtedness shall be fully subordinated to the Obligations on terms reasonably
      satisfactory to the Administrative Agent;

     

    (f)  unsecured
      intercompany indebtedness among the Company, the Domestic Subsidiaries and
      the
      Foreign Subsidiaries, provided that any such
      indebtedness (i) shall be fully subordinated to the Obligations on terms
      reasonably satisfactory to the Administrative Agent and (ii) is permitted by
      Section 8.9(h) hereof;

     

    (g)  the
      Company’s guarantee of the obligations of LCBI with respect to its licensing
      arrangements with Disney Enterprises, Inc.; and

     

    (h)  a
      guaranty by a Credit Party of indebtedness of another Credit Party permitted
      by
      this Section 8.7; and

     

    (i)  Indebtedness
      for Borrowed Money and other contingent obligations other than those which
      are
      permitted by the foregoing subsections (a) through (f) provided such Indebtedness
      and other contingent obligations do not exceed $10,000,000 at any time
      outstanding for the Company and its Subsidiaries in the aggregate.

     

    Section 8.8.  Liens.  The
      Credit Parties shall not, nor shall they permit any Subsidiary to, create,
      incur
      or permit to exist any Lien of any kind on any Property owned by any such
      Person; provided,
      however, that the foregoing shall not apply to nor operate to
      prevent:

     

    (a)  Liens
      arising by statute in connection with worker’s compensation, unemployment
      insurance, old age benefits, social security obligations, taxes, assessments,
      statutory obligations or other similar charges (other than Liens arising under
      ERISA), good faith cash deposits in connection with tenders, contracts or leases
      to which any Credit Party or any Subsidiary is a party or other cash deposits
      required to be made in the ordinary course of business, provided in each case
      that the obligation is not for borrowed money and that the obligation secured
      is
      not overdue or, if overdue, isbeing contested in good faith
      by appropriate proceedings which prevent enforcement of the matter under contest
      and adequate reserves have been established therefor;

     

    
      
        
        

      

      
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    (b)  mechanics’,
      workmen’s, materialmen’s, landlords’, carriers’ or other similar Liens arising
      in the ordinary course of business with respect to obligations which are not
      due
      or which are being contested in good faith by appropriate proceedings which
      prevent enforcement of the matter under contest;

     

    (c)  judgment
      liens and judicial attachment liens not constituting an Event of Default under
      Section 9.1(g) hereof and the pledge of assets for the purpose of securing
      an appeal, stay or discharge in the course of any legal proceeding, provided
      that the aggregate amount of such judgment liens and attachments and liabilities
      of the Credit Parties and their Subsidiaries secured by a pledge of assets
      permitted under this subsection, including interest and penalties thereon,
      if
      any, shall not be in excess of $1,000,000 at any one time
      outstanding;

     

    (d)  Liens
      on Property of any Credit Party or any Subsidiary created solely for the purpose
      of securing indebtedness permitted by Section 8.7(c) hereof, representing
      or incurred to finance the purchase price of Property, provided that no such Lien
      shall extend to or cover other Property of such Credit Party or such Subsidiary
      other than the respective Property so acquired, and the principal amount of
      indebtedness secured by any such Lien shall at no time exceed the purchase
      price
      of such Property, as reduced by repayments of principal thereon;

     

    (e)  any
      interest or title of a lessor under any operating lease;

     

    (f)  easements,
      rights-of-way, restrictions, and other similar encumbrances against real
      property incurred in the ordinary course of business which, in the aggregate,
      are not substantial in amount and which do not materially detract from the
      value
      of the Property subject thereto or materially interfere with the ordinary
      conduct of the business of the Borrower or any Subsidiary; and

     

    (g)  the
      Liens granted in favor of the Administrative Agent pursuant to the Collateral
      Documents; and

     

    (h)  Liens
      other than those permitted by any of the foregoing subsections (a) through
      (g) provided such Liens
      do not extend to any Collateral and provided further that such
      Liens secure obligations not exceeding $10,000,000 in the aggregate for the
      Company and its Subsidiaries.

     

    Section 8.9.  Investments,
      Acquisitions, Loans and Advances.  The Credit Parties shall
      not, nor shall they permit any Subsidiary to, directly or indirectly, make,
      retain or have outstanding any investments (whether through purchase of stock
      or
      obligations or otherwise) in, or loans or advances to, any other Person, or
      acquire all or any substantial part of the assets or business of any other
      Person or division thereof; provided, however, that the
      foregoing shall not apply to nor operate to prevent:

     

    
      
        
        

      

      
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    (a)  investments
      in direct obligations of the United States of America or of any agency or
      instrumentality thereof whose obligations constitute full faith and credit
      obligations of the United States of America, provided that any such obligations
      shall mature within one year of the date of issuance thereof;

     

    (b)  investments
      in commercial paper rated at least P-1 by Moody’s and at least A-1 by S&P
      maturing within one year of the date of issuance thereof;

     

    (c)  investments
      in certificates of deposit issued by any Lender or by any United States
      commercial bank having capital and surplus of not less than $100,000,000 which
      have a maturity of one year or less;

     

    (d)  investments
      in repurchase obligations with a term of not more than seven days for underlying
      securities of the types described in subsection (a) above entered into with
      any bank meeting the qualifications specified in subsection (c) above,
      provided all such agreements require physical delivery of the securities
      securing such repurchase agreement, except those delivered through the Federal
      Reserve Book Entry System;

     

    (e)  investments
      in money market funds that invest solely, and which are restricted by their
      respective charters to invest solely, in investments of the type described
      in
      the immediately preceding subsections (a), (b), (c), and (d)
      above;

     

    (f)  the
      Company’s investments from time to time in its Domestic Subsidiaries, and
      investments made from time to time by any such Domestic Subsidiary in one or
      more of its Domestic Subsidiaries;

     

    (g)  intercompany
      advances made from time to time from the Company or any Domestic Subsidiary
      to
      any one or more Domestic Subsidiaries in the ordinary course of business to
      finance working capital needs;

     

    (h)  intercompany
      advances and loans made from time to time by the Company and its Domestic
      Subsidiaries to any one or more Foreign Subsidiaries (net of intercompany
      advances and loans made from time to time by any one or more Foreign
      Subsidiaries to the Company and its Domestic Subsidiaries) in an aggregate
      net
      amount not to exceed $53,000,000 as of the last day of each fiscal quarter
      of
      the Company (it being acknowledged that the net amount of such advances and
      loans was $42,737,304 as of September 30, 2008), as such limitation shall be
      reduced dollar-for-dollar by the amount of any investment made after the Closing
      Date by the Company or any Domestic Subsidiary in the common stock or
      paid-in-capital of any Foreign Subsidiary;

     

    (i)   investments
      made from time to time by any Foreign Subsidiary in one or more of its Foreign
      Subsidiaries;

     

    (j)  intercompany
      advances and loans made from time to time from any Foreign Subsidiary to any
      one
      or more Foreign Subsidiaries in the ordinary course of business to finance
      working capital needs;

     

    (k)  Permitted
      Acquisitions; and

     

    
      
        
        

      

      
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    (l)  other
      investments, loans, and advances in addition to those otherwise permitted by
      this Section provided
      that such investments, loans and advances do not exceed $7,500,000 individually
      or $15,000,000 in the aggregate at any one time outstanding.

     

    In
      determining the amount of investments, acquisitions, loans, and advances
      permitted under this Section, investments and acquisitions shall always be
      taken
      at the original cost thereof (regardless of any subsequent appreciation or
      depreciation therein), and loans and advances shall be taken at the principal
      amount thereof then remaining unpaid.

     

    Section 8.10. 
      Mergers, Consolidations
      and Sales.  The Credit Parties shall not, nor shall they permit
      any Subsidiary to, be a party to any merger or consolidation, or sell, transfer,
      lease or otherwise dispose of all or any part of its Property, including any
      disposition of Property as part of a sale and leaseback transaction, or in
      any
      event sell or discount (with or without recourse) any of its notes or accounts
      receivable; provided,
      however, that this Section shall not apply to nor operate to
      prevent:

     

    (a)  the
      sale or lease of inventory in the ordinary course of business;

     

    (b)  the
      sale, transfer, lease or other disposition of Property of any Credit Party
      and
      its Subsidiaries to one another in the ordinary course of its business; provided that any sale,
      transfer, lease or other disposition of Property to a Foreign Subsidiary for
      less than fair market value shall be deemed an investment in such Foreign
      Subsidiary to the extent of such deficiency and shall utilize the basket set
      forth in Section 8.9(h) hereof;

     

    (c)  the
      merger of a Credit Party or any Subsidiary of a Credit Party with and into
      any
      Credit Party or any other Subsidiary of a Credit Party, provided that, in the case
      of
      any merger involving a Credit Party, such Credit Party is the corporation
      surviving the merger and, in the case of any merger of a Borrower and a
      Guarantor, such Borrower is the corporation surviving the merger;

     

    (d)  the
      sale of delinquent notes or accounts receivable in the ordinary course of
      business for purposes of collection only (and not for the purpose of any bulk
      sale or securitization transaction);

     

    (e)  the
      sale, transfer or other disposition of any tangible personal property that,
      in
      the reasonable business judgment of the relevant Credit Party or its Subsidiary,
      has become obsolete or worn out, and which is disposed of in the ordinary course
      of business; and

     

    (f)  the
      sale, transfer, lease or other disposition of Property of any Credit Party
      or
      any Subsidiary (including any disposition of Property as part of a sale and
      leaseback transaction) aggregating for the Credit Parties and their Subsidiaries
      not more than $10,000,000 during any fiscal year of the Credit
      Parties.

     

    Section 8.11.  Maintenance
      of Subsidiaries.  The Credit Parties shall not assign, sell or
      transfer, nor shall it permit any Subsidiary to issue, assign, sell or transfer,
      any shares of capital stock or other equity interests of a Subsidiary; provided, however, that the
      foregoing shall notoperate to prevent (a) the issuance,
      sale, and transfer to any person of any shares of capital stock of a Subsidiary
      solely for the purpose of qualifying, and to the extent legally necessary to
      qualify, such person as a director of such Subsidiary, and (b) any
      transaction permitted by Section 8.10(c) above.

     

    
      
        
        

      

      
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    Section 8.12.  Dividends
      and Certain Other Restricted Payments.  The Credit Parties
      shall not, nor shall they permit any Subsidiary to, (a) declare or pay any
      dividends on or make any other distributions in respect of any class or series
      of its capital stock or other equity interests or (b) directly or
      indirectly purchase, redeem, or otherwise acquire or retire any of its capital
      stock or other equity interests or any warrants, options, or similar instruments
      to acquire the same; provided,
      however, that the foregoing shall not operate to prevent the following
      (all of which are referred to collectively as “Restricted Payments”):
      (i) the making of dividends or distributions by any Wholly-owned Subsidiary
      of any Credit Party to its parent corporation, (ii) dividends payable
      solely in the same class of capital stock of such Person, (iii) the making
      of
      regularly scheduled dividends to the Company’s shareholders, provided that (A) no Default
      or Event of Default has occurred and is continuing at such time or would be
      directly or indirectly caused as a result thereof and (B) such dividends shall
      be paid out of Net Income, and (iv) the Company’s repurchase of shares of
      its capital stock on the open market or non-scheduled, non-recurring dividends,
      provided that (A)
      no Default or Event of Default has occurred and is continuing at such time
      or
      would be directly or indirectly caused as a result thereof on an actual or
pro forma basis, (B) after
      giving effect to such repurchase or dividend, the Borrowers would have a
      Leverage Ratio on a pro
      forma basis of at least 0.25:1.00 below the then maximum Leverage Ratio
      permitted by Section 8.21(i), (C) after giving effect to such repurchase or
      dividend, there shall be at least $35,000,000 in Unused Revolving Credit
      Commitments and (D) the aggregate amount for such share repurchase or
      non-scheduled, non-recurring dividend shall not exceed $5,000,000 for each
      fiscal year of the Company and $15,000,000 during the term of the
      facilities.

     

    Section 8.13.  ERISA.  The
      Credit Parties shall, and shall cause each Subsidiary to, promptly pay and
      discharge all obligations and liabilities arising under ERISA of a character
      which if unpaid or unperformed could reasonably be expected to result in the
      imposition of a Lien against any of its Property.  The Credit Parties
      shall, and shall cause each Subsidiary to, promptly notify the Administrative
      Agent and each Lender of:  (a) the occurrence of any reportable
      event (as defined in ERISA) with respect to a Plan, (b) receipt of any
      notice from the PBGC of its intention to seek termination of any Plan or
      appointment of a trustee therefor, (c) its intention to terminate or
      withdraw from any Plan, and (d) the occurrence of any event with respect to
      any Plan which would result in the incurrence by any Credit Party or any
      Subsidiary of any material liability, fine or penalty, or any material increase
      in the contingent liability of any Credit Party or any Subsidiary with respect
      to any post-retirement Welfare Plan benefit.

     

    Section 8.14.  Compliance
      with Laws.  Each Credit Party shall, and shall cause each
      Subsidiary to, comply in all respects with all Legal Requirements applicable
      to
      or pertaining to its Property or business operations, where any such
      non-compliance, individually or in the aggregate, could reasonably be expected
      to have a Material Adverse Effect or result in a Lien upon any of its
      Property.

     

    
      
        
        

      

      
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    Section 8.15.  Burdensome
      Contracts With Affiliates. The Credit Parties shall not, nor shall they
      permit any Subsidiary to, enter into any contract, agreement or business
      arrangement with any of its Affiliates (other than with Wholly-owned
      Subsidiaries) on terms and conditions which are less favorable to such Credit
      Party or such Subsidiary than would be usual and customary in similar contracts,
      agreements or business arrangements between Persons not affiliated with each
      other.

     

    Section 8.16.  No
      Changes in Fiscal Year.  The fiscal year of the Company and its
      Subsidiaries ends on December 31 of each year; and the Company shall not,
      nor shall it permit any Subsidiary to, change its fiscal year from its present
      basis.

     

    Section 8.17.  Formation
      of Subsidiaries.  Promptly upon the formation or acquisition of
      any Subsidiary of the Company (whether direct or indirect), the Company shall
      provide the Administrative Agent and the Lenders notice thereof (at which time
      Schedule 6.2 shall be deemed amended to include reference to such
      Subsidiary) and, in the case of the formation or acquisition of a Domestic
      Subsidiary of the Company, comply with the requirements of Section 4 hereof
      on a timely basis.

     

    Section 8.18.  Change
      in the Nature of Business.  The Credit Parties shall not, nor
      shall they permit any Subsidiary to, engage in any business or activity if
      as a
      result the general nature of the business of such Credit Party or such
      Subsidiary would be changed in any material respect from the general nature
      of
      the business engaged in by it as of the Closing Date.

     

    Section 8.19.  Use
      of
      Loan Proceeds.  The Borrowers shall use the credit extended
      under this Agreement solely for the purposes set forth in, or otherwise
      permitted by, Section 6.4 hereof.

     

    Section 8.20.  No
      Restrictions.  Except as provided herein, the Credit Parties
      shall not, nor shall they permit any Subsidiary to, directly or indirectly
      create or otherwise cause or suffer to exist or become effective any consensual
      encumbrance or restriction of any kind on the ability of such Credit Party
      or
      such Subsidiary to:  (a) pay dividends or make any other
      distribution on any Subsidiary’s capital stock or other equity interests owned
      by such Credit Party or such Subsidiary, (b) pay any indebtedness owed to
      any Borrower or any Subsidiary, (c) make loans or advances to any Borrower
      or any Subsidiary, (d) transfer any of its Property to any Borrower or any
      Subsidiary or (e) guarantee the Obligations, Hedging Liability and Funds
      Transfer and Deposit Account Liability, and/or grant Liens on its assets to
      the
      Administrative Agent as required by the Loan Documents.

     

    Section 8.21.  Financial
      Covenants.  (i) Leverage
      Ratio.  The Company shall not, as of the last day of each
      fiscal quarter of the Company, permit the Leverage Ratio to be greater than
      2.50
      to 1.0.

     

    (ii)  Fixed
      Charge Coverage
      Ratio.  The Company shall not, as of the last day of each
      fiscal quarter of the Company, permit the Fixed Charge Coverage Ratio to be
      less
      than 1.25 to 1.0.

     

    (iii)  Operating
      Leases.  The Company shall not, nor shall it permit any
      Subsidiary to, acquire the use or possession of any Property under a lease
      or
      similar arrangement, whether or not the Company or any Subsidiary has the
      express or implied right to acquire title to or purchasesuch
      Property, at any time if, after giving effect thereto, the aggregate amount
      of
      fixed rentals and other consideration payable by the Company and its
      Subsidiaries under all such leases and similar arrangements would exceed
      $10,000,000 during any fiscal year of the Company.  Capital Leases
      shall not be included in computing compliance with this Section to the
      extent the Company’s and its Subsidiaries’ liability in respect of the same is
      permitted by Section 8.7(c) hereof.

     

    
      
        
        

      

      
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    (iv)  Clean-Down.  For
      a
      period of 60 consecutive days occurring between January 1 and April 30
      of each year, the aggregate principal amount of Revolving Loans, Swing Loans
      and
      L/C Obligations shall not exceed (A) $30,000,000 for the fiscal year ending
      December 31, 2009, (B) $27,500,000 for the fiscal year ending December 31,
      2010
      and (C) $25,000,000 for the fiscal year ending December 31, 2011.

     

    Section 8.22.  Post-Closing
      Covenants.  (i)  Deposit Account Control
      Agreements.  Not later than 30 days after the Closing Date
      (as such date may be extended by the Administrative Agent in its sole
      discretion) and subject to Section 4.1 hereof, the Company shall, and shall
      cause each domestic Credit Party to, deliver to the Administrative Agent account
      control agreements with respect to each deposit account of the Company and
      domestic Credit Parties on terms reasonably acceptable to the Administrative
      Agent.

     

    (ii)  Opinions
      of
      Counsel.  Not later than 5 Business Days after the Closing Date
      (as such date may be extended by the Administrative Agent in its sole
      discretion), each Foreign Borrower shall deliver an opinion of counsel in form
      and substance satisfactory to the Administrative
      Agent.  Notwithstanding anything else contained herein to the
      contrary, the Company may not request a Borrowing on behalf of any Foreign
      Borrower that has not delivered an opinion of counsel in form and substance
      satisfactory to the Administrative Agent and the Lenders shall not be obligated
      to advance any Borrowing to such Foreign Borrower until receipt of such
      opinion.

     

    SECTION 9. 
      EVENTS OF DEFAULT AND REMEDIES.

     

    Section 9.1.  Events
      of Default.  Any one or more of the following shall constitute
      an “Event of Default”
      hereunder:

     

    (a)  default
      in the payment when due of all or any part of the principal of any Loan (whether
      at the stated maturity thereof or at any other time provided for in this
      Agreement) or of any Reimbursement Obligation, or default for a period of
      3 Business Days in the payment when due of any interest, fee or other
      Obligation payable hereunder or under any other Loan Document;

     

    (b)  default
      in the observance or performance of any covenant set forth in
      Section 8.1(a), 8.4, 8.5, 8.7, 8.8, 8.9, 8.10, 8.11, 8.12, 8.21 or 8.22
      hereof or of any provision in any Loan Document dealing with the use,
      disposition or remittance of the proceeds of Collateral or requiring the
      maintenance of insurance thereon;

     

    (c)  default
      in the observance or performance of any other provision hereof or of any other
      Loan Document which is not remedied within 30 days after the earlier of
      (i) the date on which such failure shall first become known to any officer
      of anyBorrower or (ii) written notice thereof is given
      to the Borrowers by the Administrative Agent;

     

    
      
        
        

      

      
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    (d)  any
      representation or warranty made herein or in any other Loan Document or in
      any
      certificate furnished to the Administrative Agent or the Lenders pursuant hereto
      or thereto or in connection with any transaction contemplated hereby or thereby
      proves untrue in any material respect as of the date of the issuance or making
      or deemed making thereof;

     

    (e)  any
      event occurs or condition exists (other than those described in
      subsections (a) through (d) above) which is specified as an event of
      default under any of the other Loan Documents, or any of the Loan Documents
      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 any of the Collateral Documents shall for
      any
      reason fail to create a valid and perfected first priority Lien in favor of
      the
      Administrative Agent in any Collateral purported to be covered thereby except
      as
      expressly permitted by the terms thereof, or any Credit Party takes any action
      for the purpose of terminating, repudiating or rescinding any Loan Document
      executed by it or any of its obligations thereunder;

     

    (f)  default
      shall occur under any Indebtedness for Borrowed Money issued, assumed or
      guaranteed by any Credit Party or any Subsidiary aggregating in excess of
      $1,000,000, or under any indenture, agreement or other instrument under which
      the same may be issued, and such default shall continue for a period of time
      sufficient to permit the acceleration of the maturity of any such Indebtedness
      for Borrowed Money (whether or not such maturity is in fact accelerated), or
      any
      such Indebtedness for Borrowed Money shall not be paid when due (whether by
      demand, lapse of time, acceleration or otherwise);

     

    (g)  any
      judgment or judgments, writ or writs or warrant or warrants of attachment,
      or
      any similar process or processes, shall be entered or filed against any Credit
      Party or any Subsidiary, or against any of its Property, in an aggregate amount
      in excess of $1,000,000 (except to the extent fully covered by insurance
      pursuant to which the insurer has accepted liability therefor in writing),
      and
      which remains undischarged, unvacated, unbonded or unstayed for a period of
      30 days;

     

    (h)  any
      Credit Party or any Subsidiary, or any member of its Controlled Group, shall
      fail to pay when due an amount or amounts aggregating in excess of $1,000,000
      which it shall have become liable to pay to the PBGC or to a Plan under
      Title IV of ERISA; or notice of intent to terminate a Plan or Plans having
      aggregate Unfunded Vested Liabilities in excess of $1,000,000 (collectively,
      a
“Material Plan”) shall
      be filed under Title IV of ERISA by any Credit Party or any Subsidiary, or
      any other member of its Controlled Group, any plan administrator or any
      combination of the foregoing; or the PBGC shall institute proceedings under
      Title IV of ERISA to terminate or to cause a trustee to be appointed to
      administer any Material Plan or a proceeding shall be instituted by a fiduciary
      of any Material Plan against any Credit Party Borrower or any Subsidiary, or
      any
      member of its Controlled Group, to enforce Section 515 or 4219(c)(5) of
      ERISA and such proceeding shall not have been dismissed within 30
      daysthereafter; or a condition shall exist by reason of
      which the PBGC would be entitled to obtain a decree adjudicating that any
      Material Plan must be terminated;

     

    
      
        
        

      

      
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    (i)  any
      Change of Control shall occur;

     

    (j)  any
      Credit Party or any Subsidiary shall (i) have entered involuntarily against
      it an order for relief under the United States Bankruptcy Code, as amended,
      (ii) not pay, or admit in writing its inability to pay, its debts generally
      as they become due, (iii) make an assignment for the benefit of creditors,
      (iv) apply for, seek, consent to or acquiesce in, the appointment of a
      receiver, custodian, trustee, examiner, liquidator or similar official for
      it or
      any substantial part of its Property, (v) institute any proceeding seeking
      to have entered against it an order for relief under the United States
      Bankruptcy Code, as amended, to adjudicate it insolvent, or seeking dissolution,
      winding up, liquidation, reorganization, arrangement, adjustment or composition
      of it or its debts under any law relating to bankruptcy, insolvency or
      reorganization or relief of debtors or fail to file an answer or other pleading
      denying the material allegations of any such proceeding filed against it,
      (vi) take any action in furtherance of any matter described in
      parts (i) through (v) above, or (vii) fail to contest in good faith
      any appointment or proceeding described in Section 9.1(k) hereof;
      or

     

    (k)  a
      custodian, receiver, trustee, examiner, liquidator or similar official shall
      be
      appointed for any Credit Party or any Subsidiary, or any substantial part of
      any
      of its Property, or a proceeding described in Section 9.1(j)(v) shall be
      instituted against any Credit Party or any Subsidiary, and such appointment
      continues undischarged or such proceeding continues undismissed or unstayed
      for
      a period of 60 days.

     

    Section 9.2.  Non-Bankruptcy
      Defaults.  When any Event of Default other than those described
      in subsection (j) or (k) of Section 9.1 hereof has occurred and is
      continuing, the Administrative Agent shall, by written notice to the
      Borrowers:  (i) if so directed by the Required Lenders, terminate
      the remaining Commitments and all other obligations of the Lenders hereunder
      on
      the date stated in such notice (which may be the date thereof); (ii) if so
      directed by the Required Lenders, declare the principal of and the accrued
      interest on all outstanding Loans to be forthwith due and payable and thereupon
      all outstanding Loans, including both principal and interest thereon, shall
      be
      and become immediately due and payable together with all other amounts payable
      under the Loan Documents without further demand, presentment, protest or notice
      of any kind; and (iii) if so directed by the Required Lenders, demand that
      the Borrowers immediately pay to the Administrative Agent the full amount then
      available for drawing under each or any Letter of Credit, and the Borrowers
      agree to immediately make such payment and acknowledge and agree that the
      Lenders would not have an adequate remedy at law for failure by the Borrowers
      to
      honor any such demand and that the Administrative Agent, for the benefit of
      the
      Lenders, shall have the right to require the Borrowers to specifically perform
      such undertaking whether or not any drawings or other demands for payment have
      been made under any Letter of Credit.  The Administrative Agent, after
      giving notice to the Borrowers pursuant to Section 9.1(c) or this
      Section 9.2, shall also promptly send a copy of such notice to the other
      Lenders, but the failure to do so shall not impair or annul the effect of such
      notice.

     

    
      
        
        

      

      
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    Section 9.3.  Bankruptcy
      Defaults.  When any Event of Default described in
      subsections (j) or (k) of Section 9.1 hereof has occurred and is
      continuing, then all outstanding Loans shall immediately become due and payable
      together with all other amounts payable under the Loan Documents without
      presentment, demand, protest or notice of any kind, the obligation of the
      Lenders to extend further credit pursuant to any of the terms hereof shall
      immediately terminate and the Borrowers shall immediately pay to the
      Administrative Agent the full amount then available for drawing under all
      outstanding Letters of Credit, the Borrowers acknowledging and agreeing that
      the
      Lenders would not have an adequate remedy at law for failure by the Borrowers
      to
      honor any such demand and that the Lenders, and the Administrative Agent on
      their behalf, shall have the right to require the Borrowers to specifically
      perform such undertaking whether or not any draws or other demands for payment
      have been made under any of the Letters of Credit.

     

    Section 9.4.  Collateral
      for Undrawn Letters of Credit.  (a) If the prepayment of
      the amount available for drawing under any or all outstanding Letters of Credit
      is required under Section 1.8(b), Section 1.18, Section 9.2 or
      9.3 above, the Borrowers shall forthwith pay the amount required to be so
      prepaid, to be held by the Administrative Agent as provided in
      subsection (b) below.

     

    (b)  All
      amounts prepaid pursuant to subsection (a) above shall be held by the
      Administrative Agent in one or more separate collateral accounts (each such
      account, and the credit balances, properties, and any investments from time
      to
      time held therein, and any substitutions for such account, any certificate
      of
      deposit or other instrument evidencing any of the foregoing and all proceeds
      of
      and earnings on any of the foregoing being collectively called the “Collateral Account”) as
      security for, and for application by the L/C Issuer (to the extent available)
      to, the reimbursement of any payment under any Letter of Credit then or
      thereafter made by the Administrative Agent, and to the payment of the unpaid
      balance of all other Obligations (and to all Hedging Liability and Funds
      Transfer and Deposit Account Liability).  The Collateral Account shall
      be held in the name of and subject to the exclusive dominion and control of
      the
      Administrative Agent for the benefit of the Administrative Agent, the Lenders,
      and the L/C Issuer.  If and when requested by the Company, on behalf
      of the Borrowers, the Administrative Agent shall invest funds held in the
      Collateral Account from time to time in direct obligations of, or obligations
      the principal of and interest on which are unconditionally guaranteed by, the
      United States of America with a remaining maturity of one year or less, provided that the
      Administrative Agent is irrevocably authorized to sell investments held in
      the
      Collateral Account when and as required to make payments out of the Collateral
      Account for application to amounts due and owing from the Borrowers to the
      L/C
      Issuer, the Administrative Agent or the Lenders; provided, however, that if
      (i) the Borrowers shall have made payment of all such obligations referred
      to in subsection (a) above, (ii) all relevant preference or other
      disgorgement periods relating to the receipt of such payments have passed,
      and
      (iii) no Letters of Credit, Commitments, Loans or other Obligations,
      Hedging Liability or Funds Transfer and Deposit Account Liability remain
      outstanding hereunder, then the Administrative Agent shall release to the
      Company, on behalf of the Borrowers, any remaining amounts held in the
      Collateral Account.

     

    
      
        
        

      

      
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    Section 9.5.  Notice
      of Default.  The Administrative Agent shall give notice to the
      Borrowers under Section 9.1(c) hereof promptly upon being requested to do
      so by any Lender and shall thereupon notify all the Lenders
      thereof.

     

    Section 9.6.  Expenses.  The
      Borrowers jointly and severally agree to pay to the Administrative Agent and
      each Lender, and any other holder of any Note outstanding hereunder, all costs
      and expenses incurred or paid by the Administrative Agent and such Lender or
      any
      such holder, including reasonable attorneys’ fees and court costs, in connection
      with any Default or Event of Default hereunder or in connection with the
      enforcement of any of the Loan Documents (including all such costs and expenses
      incurred in connection with any proceeding under the United States Bankruptcy
      Code involving any Borrower or any Subsidiary as a debtor
      thereunder).

     

    SECTION 10. 
      CHANGE IN CIRCUMSTANCES.

     

    Section 10.1.  Change
      of Law.  Notwithstanding any other provisions of this Agreement
      or any other Loan Document, if at any time any change in applicable law or
      regulation or in the interpretation thereof makes it unlawful for any Lender
      to
      make or continue to maintain any Eurocurrency Loans or to perform its
      obligations as contemplated hereby, such Lender shall promptly give notice
      thereof to the Borrowers and such Lender’s obligations to make or maintain
      Eurocurrency Loans under this Agreement shall be suspended until it is no longer
      unlawful for such Lender to make or maintain Eurocurrency Loans.  The
      applicable Borrower shall prepay on demand the outstanding principal amount
      of
      any such affected Eurocurrency Loans, together with all interest accrued thereon
      and all other amounts then due and payable to such Lender under this Agreement;
      provided, however,
      subject to all of the terms and conditions of this Agreement, the Company,
      on
      behalf of the applicable Borrower, may then elect to borrow the principal amount
      of the affected Eurocurrency Loans from such Lender by means of Base Rate Loans
      from such Lender, which Base Rate Loans shall not be made ratably by the Lenders
      but only from such affected Lender.

     

    Section 10.2.  Unavailability
      of Deposits or Inability to Ascertain, or Inadequacy of,
      LIBOR.  If on or prior to the first day of any Interest Period
      for any Borrowing of Eurocurrency Loans:

     

    (a)  the
      Administrative Agent determines that deposits in U.S. Dollars (in the applicable
      amounts) are not being offered to it in the interbank Eurocurrency market for
      such Interest Period, or that by reason of circumstances affecting the interbank
      Eurocurrency market adequate and reasonable means do not exist for ascertaining
      the applicable LIBOR, or

     

    (b)  the
      Required Lenders advise the Administrative Agent that (i) LIBOR as determined
      by
      the Administrative Agent will not adequately and fairly reflect the cost to
      such
      Lenders of funding their Eurocurrency Loans for such Interest Period or (ii)
      that the making or funding of Eurocurrency Loans become
      impracticable,

     

    then
      the
      Administrative Agent shall forthwith give notice thereof to the Borrowers and
      the Lenders, whereupon until the Administrative Agent notifies the Borrowers
      that the circumstancesgiving rise to such suspension no
      longer exist, the obligations of the Lenders to make Eurocurrency Loans shall
      be
      suspended.

     

    
      
        
        

      

      
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    Section 10.3.  Increased
      Cost and Reduced Return.  (a) If, on or after the date
      hereof, the adoption of any applicable law, rule or regulation, or any change
      therein, or any change in the interpretation or administration thereof by any
      governmental authority, central bank or comparable agency charged with the
      interpretation or administration thereof, or compliance by any Lender (or its
      Lending Office) or the L/C Issuer with any request or directive (whether or
      not having the force of law) of any such authority, central bank or comparable
      agency:

     

    (i)  shall
      subject any Lender (or its Lending Office) or the L/C Issuer to any tax,
      duty or other charge with respect to its Eurodollar Loans, its Notes, its
      Letter(s) of Credit, or its participation in any thereof, any Reimbursement
      Obligations owed to it or its obligation to make Eurodollar Loans, issue a
      Letter of Credit, or to participate therein, or shall change the basis of
      taxation of payments to any Lender (or its Lending Office) or the
      L/C Issuer of the principal of or interest on its Eurodollar Loans,
      Letter(s) of Credit, or participations therein or any other amounts due under
      this Agreement or any other Loan Document in respect of its Eurodollar Loans,
      Letter(s) of Credit, any participation therein, any Reimbursement Obligations
      owed to it, or its obligation to make Eurodollar Loans, or issue a Letter of
      Credit, or acquire participations therein (except for changes in the rate of
      tax
      on the overall net income of such Lender or its Lending Office or the
      L/C Issuer imposed by the jurisdiction in which such Lender’s or the
      L/C Issuer’s principal executive office or Lending Office is located);
      or

     

    (ii)  shall
      impose, modify or deem applicable any reserve, special deposit or similar
      requirement (including, without limitation, any such requirement imposed by
      the
      Board of Governors of the Federal Reserve System, but excluding with respect
      to
      any Eurodollar Loans any such requirement included in an applicable Eurodollar
      Reserve Percentage) against assets of, deposits with or for the account of,
      or
      credit extended by, any Lender (or its Lending Office) or the L/C Issuer or
      shall impose on any Lender (or its Lending Office) or the L/C Issuer or on
      the interbank market any other condition affecting its Eurodollar Loans, its
      Notes, its Letter(s) of Credit, or its participation in any thereof, any
      Reimbursement Obligation owed to it, or its obligation to make Eurodollar Loans,
      or to issue a Letter of Credit, or to participate therein;

     

    and
      the
      result of any of the foregoing is to increase the cost to such Lender (or its
      Lending Office) or the L/C Issuer of making or maintaining any Eurodollar
      Loan, issuing or maintaining a Letter of Credit, or participating therein,
      or to
      reduce the amount of any sum received or receivable by such Lender (or its
      Lending Office) or the L/C Issuer under this Agreement or under any other
      Loan Document with respect thereto, by an amount deemed by such Lender or
      L/C Issuer to be material, then, within 15 days after demand by such
      Lender or L/C Issuer (with a copy to the Administrative Agent), the
      Borrowers shall be obligated to pay to such Lender or L/C Issuer such
      additional amount or amounts as will compensate such Lender or L/C Issuer
      for such increased cost or reduction.  Any demand on the Borrowers by
      a Lender under this Section shall be accompanied by a certificate setting forth
      the amount of such increased cost or reduced sum in reasonable detail (including
      an explanation of the basis for and computation of such increased cost or
      reduced return).

     

    
      
        
        

      

      
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    (b)  If,
      after the date hereof, any Lender, the L/ C Issuer, or the Administrative Agent
      shall have determined that the adoption of any applicable law, rule or
      regulation regarding capital adequacy, or any change therein, or any change
      in
      the interpretation or administration thereof by any governmental authority,
      central bank or comparable agency charged with the interpretation or
      administration thereof, or compliance by any Lender (or its Lending Office)
      or
      the L/C Issuer or any corporation controlling such Lender or
      L/C Issuer with any request or directive regarding capital adequacy
      (whether or not having the force of law) of any such authority, central bank
      or
      comparable agency, has had the effect of reducing the rate of return on such
      Lender’s or L/C Issuer ’s or such corporation’s capital as a consequence of
      its obligations hereunder to a level below that which such Lender or
      L/C Issuer or such corporation could have achieved but for such adoption,
      change or compliance (taking into consideration such Lender’s or L/C Issuer
’s or such corporation’s policies with respect to capital adequacy) by an amount
      deemed by such Lender or L/C Issuer to be material, then from time to time,
      within 15 days after demand by such Lender or L/C Issuer (with a copy
      to the Administrative Agent), the Borrower shall pay to such Lender or
      L/C Issuer, as applicable, such additional amount or amounts as will
      compensate such Lender or L/C Issuer for such reduction.  Any
      demand on the Borrowers by a Lender under this Section shall be accompanied
      by a
      certificate setting forth the amount of such reduced return in reasonable detail
      (including an explanation of the basis for and the computation of such reduced
      return).

     

    (c)  A
      certificate of a Lender or L/C Issuer claiming compensation under this
      Section 10.3 and setting forth the additional amount or amounts to be paid
      to it hereunder shall be conclusive, absent manifest error, if reasonably
      determined.  In determining such amount, such Lender or
      L/C Issuer may use any reasonable averaging and attribution
      methods.

     

    Section 10.4.  Lending
      Offices.  Each Lender may, at its option, elect to make its
      Loans hereunder at the branch, office or affiliate specified on the appropriate
      signature page hereof (each a “Lending Office”) for each
      type of Loan available hereunder or at such other of its branches, offices
      or
      affiliates as it may from time to time elect and designate in a written notice
      to the Borrower and the Administrative Agent.  To the extent
      reasonably possible, a Lender shall designate an alternative branch or funding
      office with respect to its Eurocurrency Loans to reduce any liability of the
      Borrowers to such Lender under Section 10.3 hereof or to avoid the
      unavailability of Eurocurrency Loans under Section 10.2 hereof, so long as
      such designation is not otherwise disadvantageous to the Lender.

     

    Section 10.5.  Discretion
      of Lender as to Manner of Funding.  Notwithstanding any other
      provision of this Agreement, each Lender shall be entitled to fund and maintain
      its funding of all or any part of its Loans in any manner it sees fit, it being
      understood, however, that for the purposes of this Agreement all determinations
      hereunder with respect to Eurocurrency Loans shall be made as if each Lender
      had
      actually funded and maintained each Eurocurrency Loan through the purchase
      of
      deposits in the interbank Eurocurrency market having a maturity corresponding
      to
      such Loan’s Interest Period, and bearing an interest rate equal to LIBOR for
      such Interest Period.

     

    
      
        
        

      

      
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    SECTION 11. 
      THE ADMINISTRATIVE AGENT.

                   
      Section 11.1.  Appointment and Authorization of Administrative
      Agent.    Each Lender and the L/C Issuer hereby
      appoints Bank of Montreal as the Administrative Agent under the Loan Documents
      and hereby authorizes the Administrative Agent to take such action as
      Administrative Agent on its behalf and to exercise such powers under the Loan
      Documents as are delegated to the Administrative Agent by the terms thereof,
      together with such powers as are reasonably incidental thereto.  The
      Lenders and L/C Issuer expressly agree that the Administrative Agent is not
      acting as a fiduciary of the Lenders or the L/C Issuer in respect of the
      Loan Documents, the Borrower or otherwise, and nothing herein or in any of
      the
      other Loan Documents shall result in any duties or obligations on the
      Administrative Agent or any of the Lenders or L/C Issuer except as
      expressly set forth herein.

     

    Section 11.2.  Administrative
      Agent and its Affiliates.  The Administrative Agent shall have
      the same rights and powers under this Agreement and the other Loan Documents
      as
      any other Lender and may exercise or refrain from exercising such rights and
      power as though it were not the Administrative Agent, and the Administrative
      Agent and its Affiliates may accept deposits from, lend money to, and generally
      engage in any kind of business with any Borrower or any Affiliate of such
      Borrower as if it were not the Administrative Agent under the Loan
      Documents.  The term “Lender” as used herein and
      in all other Loan Documents, unless the context otherwise clearly requires,
      includes the Administrative Agent in its individual capacity as a Lender (if
      applicable).

     

    Section 11.3.  Action
      by Administrative Agent.  If the Administrative Agent receives
      from any Borrower a written notice of an Event of Default pursuant to
      Section 8.5 hereof, the Administrative Agent shall promptly give each of
      the Lenders and L/C Issuer written notice thereof.  The
      obligations of the Administrative Agent under the Loan Documents are only those
      expressly set forth therein.  Without limiting the generality of the
      foregoing, the Administrative Agent shall not be required to take any action
      hereunder with respect to any Default or Event of Default, except as expressly
      provided in Sections 9.2 and 9.5.  Upon the occurrence of an
      Event of Default, the Administrative Agent shall take such action to enforce
      its
      Lien on the Collateral and to preserve and protect the Collateral as may be
      directed by the Required Lenders.  Unless and until the Required
      Lenders give such direction, the Administrative Agent may (but shall not be
      obligated to) take or refrain from taking such actions as it deems appropriate
      and in the best interest of all the Lenders and L/C Issuer.  In
      no event, however, shall the Administrative Agent be required to take any action
      in violation of applicable law or of any provision of any Loan Document, and
      the
      Administrative Agent shall in all cases be fully justified in failing or
      refusing to act hereunder or under any other Loan Document unless it first
      receives any further assurances of its indemnification from the Lenders that
      it
      may require, including prepayment of any related expenses and any other
      protection it requires against any and all costs, expense, and liability which
      may be incurred by it by reason of taking or continuing to take any such
      action.  The Administrative Agent shall be entitled to assume that no
      Default or Event of Default exists unless notified in writing to the contrary
      by
      a Lender, the L/C Issuer, or the Company or a Borrower.  In all
      cases in which the Loan Documents do not require the Administrative Agent to
      take specific action, the Administrative Agent shall be fully justified in
      using
      its discretion in failing to take or in taking any action
      thereunder.  Any instructions of the Required Lenders, or of any other
      group of Lenders called for under the specific provisions of the Loan Documents,
      shall be binding upon all the Lenders and the holders of the
      Obligations.

     

    
      
        
        

      

      
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    Section 11.4.  Consultation
      with Experts.  The Administrative Agent may consult with legal
      counsel, independent public accountants, and other experts selected by it in
      good faith and shall not be liable for any action taken or omitted to be taken
      by it in good faith in accordance with the advice of such counsel, accountants
      or experts.

     

    Section 11.5.  Liability
      of Administrative Agent; Credit Decision.  Neither the
      Administrative Agent nor any of its directors, officers, agents or employees
      shall be liable for any action taken or not taken by it in connection with
      the
      Loan Documents:  (i) with the consent or at the request of the
      Required Lenders or (ii) in the absence of its own gross negligence or
      willful misconduct.  Neither the Administrative Agent nor any of its
      directors, officers, agents or employees shall be responsible for or have any
      duty to ascertain, inquire into or verify:  (i) any statement,
      warranty or representation made in connection with this Agreement, any other
      Loan Document or any Credit Event; (ii) the performance or observance of
      any of the covenants or agreements of the Credit Parties or any Subsidiary
      contained herein or in any other Loan Document; (iii) the satisfaction of
      any condition specified in Section 7 hereof, except receipt of items
      required to be delivered to the Administrative Agent; or (iv) the validity,
      effectiveness, genuineness, enforceability, perfection, value, worth or
      collectibility hereof or of any other Loan Document or of any other documents
      or
      writing furnished in connection with any Loan Document or of any Collateral;
      and
      the Administrative Agent makes no representation of any kind or character with
      respect to any such matter mentioned in this sentence.  The
      Administrative Agent may execute any of its duties under any of the Loan
      Documents by or through employees, agents, and attorneys-in-fact and shall
      not
      be answerable to the Lenders, the L/C Issuer, the Credit Parties, or any
      other Person for the default or misconduct of any such agents or
      attorneys-in-fact selected with reasonable care.  The Administrative
      Agent shall not incur any liability by acting in reliance upon any notice,
      consent, certificate, other document or statement (whether written or oral)
      reasonably believed by it to be genuine or to be sent by the proper party or
      parties.  In particular and without limiting any of the foregoing, the
      Administrative Agent shall have no responsibility for confirming the accuracy
      of
      any compliance certificate or other document or instrument received by it under
      the Loan Documents.  The Administrative Agent may treat the payee of
      any Obligation as the holder thereof until written notice of transfer shall
      have
      been filed with the Administrative Agent signed by such payee in form
      satisfactory to the Administrative Agent.  Each Lender and
      L/C Issuer acknowledges that it has independently and without reliance on
      the Administrative Agent or any other Lender or L/C Issuer, and based upon
      such information, investigations and inquiries as it deems appropriate, made
      its
      own credit analysis and decision to extend credit to the Borrowers in the manner
      set forth in the Loan Documents.  It shall be the responsibility of
      each Lender and L/C Issuer to keep itself informed as to the
      creditworthiness of the Borrowers and their Subsidiaries, and the Administrative
      Agent shall have no liability to any Lender or L/C Issuer with respect
      thereto.

     

    Section 11.6.  Indemnity.  The
      Lenders shall ratably, in accordance with their respective Percentages,
      indemnify and hold the Administrative Agent, and its directors, officers,
      employees, agents, and representatives harmless from and against any
      liabilities, losses, costs or expenses suffered or incurred by it under any
      Loan
      Document or in connection with the transactions contemplated thereby, regardless
      of when asserted or arising, except to the extent they are promptly reimbursed
      for the same by the Borrowers and except to the extent that any event giving
      rise to a claim was caused by the gross negligence or willful misconduct of
      the
      party seeking to be indemnified.  The obligations of the Lenders under
      this Section shall survivetermination of this
      Agreement.  The Administrative Agent shall be entitled to offset
      amounts received for the account of a Lender under this Agreement against unpaid
      amounts due from such Lender to the Administrative Agent hereunder (whether
      as
      fundings of participations, indemnities or otherwise), but shall not be entitled
      to offset against amounts owed to the Administrative Agent by any Lender arising
      outside of this Agreement and the other Loan Documents.

     

    
      
        
        

      

      
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    Section 11.7.  Resignation
      of Administrative Agent and Successor Administrative
      Agent.  The Administrative Agent may resign at any time by
      giving written notice thereof to the Lenders, the L/C Issuer, and the
      Borrowers and may be removed by the Required Lenders upon twenty (20) days
      prior
      written notice to the Borrowers, the Administrative Agent, the L/C Issuers
      and
      the Lenders.  Upon any such resignation or removal of the
      Administrative Agent, the Required Lenders shall have the right to appoint
      a
      successor Administrative Agent, which appointment shall be with the Borrowers’
consent if no Event of Default exists.  If no successor Administrative
      Agent shall have been so appointed by the Required Lenders, and shall have
      accepted such appointment after the Administrative Agent has delivered its
      notice of resignation, within 30 days after the retiring Administrative
      Agent’s giving of notice of resignation then the retiring Administrative Agent
      may, on behalf of the Lenders, appoint a successor Administrative Agent, which
      may be any Lender hereunder or any commercial bank, or an Affiliate of a
      commercial bank, having an office in the United States of America and having
      a
      combined capital and surplus of at least $200,000,000, which appointment shall
      be with the Borrowers’ consent if no Event of Default exists.  Upon
      the acceptance of its appointment as the Administrative Agent hereunder, such
      successor Administrative Agent shall thereupon succeed to and become vested
      with
      all the rights and duties of the retiring Administrative Agent under the Loan
      Documents, and the retiring Administrative Agent shall be discharged from its
      duties and obligations thereunder.  The removal of the Administrative
      Agent hereunder shall become effective 20 days after receipt of such notice
      of
      removal, and upon the effectiveness of such removal, the removed Administrative
      Agent shall be discharged from its duties and obligations under the Loan
      Documents.  After any retiring or removed Administrative Agent’s
      resignation or removal (as the case may be) hereunder as Administrative Agent,
      the provisions of this Section 11 and all protective provisions of the
      other Loan Documents shall inure to its benefit as to any actions taken or
      omitted to be taken by it while it was Administrative Agent, but no successor
      Administrative Agent shall in any event be liable or responsible for any actions
      of its predecessor.  If the Administrative Agent resigns or is removed
      and no successor is appointed, the rights and obligations of such Administrative
      Agent shall be automatically assumed by the Required Lenders and (i) the
      Borrowers shall be directed to make all payments due each Lender and
      L/C Issuer hereunder directly to such Lender or L/C Issuer and
      (ii) the Administrative Agent’s rights in the Collateral Documents shall be
      assigned without representation, recourse or warranty to the Lenders and
      L/C Issuer as their interests may appear.

     

    Section 11.8.  L/C
      Issuer and Swing Line Lender.  The L/C Issuer shall act on
      behalf of the Lenders with respect to any Letters of Credit issued by it and
      the
      documents associated therewith, and the Swing Line Lender shall act on behalf
      of
      the Lenders with respect to the Swing Loans made hereunder.  The
      L/C Issuer and the Swing Line Lender shall each have all of the benefits
      and immunities (i) provided to the Administrative Agent in this
      Section 11 with respect to any acts taken or omissions suffered by the
      L/C Issuer in connection with Letters of Credit issued by it or proposed to
      be issued by it and the Applications pertaining to such Lettersof
      Credit
      or by the Swing Line Lender in connection with Swing Loans made or to be made
      hereunder as fully as if the term “Administrative Agent”, as used in this
      Section 11, included the L/C Issuer and the Swing Line Lender with
      respect to such acts or omissions and (ii) as additionally provided in this
      Agreement with respect to such L/C Issuer or Swing Line Lender, as
      applicable.

     

    
      
        
        

      

      
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    Section 11.9.  Hedging
      Liability and Funds Transfer and Deposit Account Liability
      Arrangements.  By virtue of a Lender’s execution of this
      Agreement or an assignment agreement pursuant to Section 13.12 hereof, as
      the case may be, any Affiliate of such Lender with whom any Borrower or any
      Subsidiary has entered into an agreement creating Hedging Liability or Funds
      Transfer and Deposit Account Liability shall be deemed a Lender party hereto
      for
      purposes of any reference in a Loan Document to the parties for whom the
      Administrative Agent is acting, it being understood and agreed that the rights
      and benefits of such Affiliate under the Loan Documents consist exclusively
      of
      such Affiliate’s right to share in payments and collections out of the
      Collateral and the Guaranties as more fully set forth in Section 3.1
      hereof.  In connection with any such distribution of payments and
      collections, or any request for the release of the Guaranties and the
      Administrative Agent’s Liens in connection with the termination of the
      Commitments and the payment in full of the Obligations, the Administrative
      Agent
      shall be entitled to assume no amounts are due to any Lender or its Affiliate
      with respect to Hedging Liability or Funds Transfer and Deposit Account
      Liability unless such Lender has notified the Administrative Agent in writing
      of
      the amount of any such liability owed to it or its Affiliate prior to such
      distribution or payment or release of Guaranties and Liens.

     

    Section 11.10.  Designation
      of Additional Agents.  The Administrative Agent shall have the
      continuing right, for purposes hereof, at any time and from time to time to
      designate one or more of the Lenders (and/or its or their Affiliates) as
“syndication agents,” “documentation agents,” “arrangers,” or other designations
      for purposes hereto, but such designation shall have no substantive effect,
      and
      such Lenders and their Affiliates shall have no additional powers, duties or
      responsibilities as a result thereof.

     

    Section 11.11.  Authorization
      to Release or Subordinate or Limit Liens.   The Administrative
      Agent
      is hereby irrevocably authorized by each of the Lenders and the L/C Issuer
      to (a) release any Lien covering any Collateral that is sold, transferred,
      or otherwise disposed of in accordance with the terms and conditions of this
      Agreement and the relevant Collateral Documents (including a sale, transfer,
      or
      disposition permitted by the terms of Section 8.10 hereof or which has
      otherwise been consented to in accordance with Section 13.13 hereof),
      (b) release or subordinate any Lien on Collateral consisting of goods
      financed with purchase money indebtedness or under a Capital Lease to the extent
      such purchase money indebtedness or Capitalized Lease Obligation, and the Lien
      securing the same, are permitted by Sections 8.7(c) and 8.8(d) hereof,
      (c) reduce or limit the amount of the indebtedness secured by any
      particular item of Collateral to an amount not less than the estimated value
      thereof to the extent necessary to reduce mortgage registry, filing and similar
      tax, and (d) release Liens on the Collateral following termination or
      expiration of the Commitments and payment in full in cash of the Obligations
      and, if then due, Hedging Liability and Funds Transfer and Deposit Account
      Liability.

     

    
      
        
        

      

      
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    Section 11.12.   Authorization
      to Enter into, and Enforcement of, the Collateral
      Documents.  The Administrative Agent is hereby irrevocably
      authorized by each of the Lenders and the L/C Issuer to execute and deliver
      the Collateral Documents on behalf of each of the Lenders and their Affiliates
      and the L/C Issuer and to take such action and exercise such powers under
      the Collateral Documents as the Administrative Agent considers appropriate,
      provided the
      Administrative Agent shall not amend the Collateral Documents unless such
      amendment is agreed to in writing by the Required Lenders.  Each
      Lender and L/C Issuer acknowledges and agrees that it will be bound by the
      terms and conditions of the Collateral Documents upon the execution and delivery
      thereof by the Administrative Agent.  Except as otherwise specifically
      provided for herein, no Lender (or its Affiliates) or L/C Issuer, other
      than the Administrative Agent, shall have the right to institute any suit,
      action or proceeding in equity or at law for the foreclosure or other
      realization upon any Collateral or for the execution of any trust or power
      in
      respect of the Collateral or for the appointment of a receiver or for the
      enforcement of any other remedy under the Collateral Documents; it being
      understood and intended that no one or more of the Lenders (or their Affiliates)
      or L/C Issuer shall have any right in any manner whatsoever to affect,
      disturb or prejudice the Lien of the Administrative Agent (or any security
      trustee therefor) under the Collateral Documents by its or their action or
      to
      enforce any right thereunder, and that all proceedings at law or in equity
      shall
      be instituted, had, and maintained by the Administrative Agent (or its security
      trustee) in the manner provided for in the relevant Collateral Documents for
      the
      benefit of the Lenders, the L/C Issuer, and their Affiliates.

     

    SECTION 12. 
      THE GUARANTEES; JOINT AND SEVERAL OBLIGATIONS.

     

    Section 12.1.  The
      Guarantees.  To induce the Lenders and L/C Issuer to
      provide the credits described herein and in consideration of benefits expected
      to accrue to the Borrowers by reason of the Commitments and for other good
      and
      valuable consideration, receipt of which is hereby acknowledged, the Company
      and
      each Domestic Subsidiary party hereto (including any Subsidiary executing an
      Additional Guarantor Supplement in the form attached hereto as Exhibit F or
      such other form acceptable to the Administrative Agent) hereby unconditionally
      and irrevocably guarantees jointly and severally to the Administrative Agent,
      the Lenders, and the L/C Issuer and their Affiliates, the due and punctual
      payment of all present and future Obligations, Hedging Liability, and Funds
      Transfer and Deposit Account Liability, including, but not limited to, the
      due
      and punctual payment of principal of and interest on the Loans, the
      Reimbursement Obligations, and the due and punctual payment of all other
      Obligations now or hereafter owed by the Borrowers, or any of them, under the
      Loan Documents and the due and punctual payment of all Hedging Liability and
      Funds Transfer and Deposit Account Liability, in each case as and when the
      same
      shall become due and payable, whether at stated maturity, by acceleration,
      or
      otherwise, according to the terms hereof and thereof (including all interest,
      costs, fees, and charges after the entry of an order for relief against any
      Borrower or such other obligor in a case under the United States Bankruptcy
      Code
      or any similar proceeding, whether or not such interest, costs, fees and charges
      would be an allowed claim against any Borrower or any such obligor in any such
      proceeding).  In case of failure by a Borrower or other obligor
      punctually to pay any Obligations, Hedging Liability, or Funds Transfer and
      Deposit Account Liability guaranteed hereby, each Guarantor hereby
      unconditionally agrees to make such payment or to cause such payment to be
      made
      punctually as and when the same shall become due and payable, whether at stated
      maturity, by acceleration, or otherwise, and as if such payment were made by
      such Borrower.

     

    
      
        
        

      

      
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    Section 12.2.  Guarantee
      Unconditional.  The obligations of each Guarantor under this
      Section 12 shall be unconditional and absolute and, without limiting the
      generality of the foregoing, shall not be released, discharged, or otherwise
      affected by:

     

    (a)  any
      extension, renewal, settlement, compromise, waiver, or release in respect of
      any
      obligation of any Borrower or of any other Guarantor under this Agreement or
      any
      other Loan Document or by operation of law or otherwise;

     

    (b)  any
      modification or amendment of or supplement to this Agreement or any other Loan
      Document or any agreement relating to Hedging Liability or Funds Transfer and
      Deposit Account Liability;

     

    (c)  any
      change in the corporate existence, structure, or ownership of, or any
      insolvency, bankruptcy, reorganization, or other similar proceeding affecting,
      any Borrower, any other Guarantor, or any of their respective assets, or any
      resulting release or discharge of any obligation of any Borrower or of any
      other
      Guarantor contained in any Loan Document;

     

    (d)  the
      existence of any claim, set-off, or other rights which any Borrower or any
      other
      Guarantor may have at any time against the Administrative Agent, any Lender,
      the
      L/C Issuer or any other Person, whether or not arising in connection
      herewith;

     

    (e)  any
      failure to assert, or any assertion of, any claim or demand or any exercise
      of,
      or failure to exercise, any rights or remedies against any Borrower, any other
      Guarantor, or any other Person or Property;

     

    (f)  any
      application of any sums by whomsoever paid or howsoever realized to any
      obligation of any Borrower, regardless of what obligations of the Borrowers
      remain unpaid;

     

    (g)  any
      invalidity or unenforceability relating to or against any Borrower or any other
      Guarantor for any reason of this Agreement or of any other Loan Document or
      any
      agreement relating to Hedging Liability or Funds Transfer and Deposit Account
      Liability or any provision of applicable law or regulation purporting to
      prohibit the payment by any Borrower or any other Guarantor of the principal
      of
      or interest on any Loan or any Reimbursement Obligation or any other amount
      payable under the Loan Documents or any agreement relating to Hedging Liability
      or Funds Transfer and Deposit Account Liability; or

     

    (h)  any
      other act or omission to act or delay of any kind by the Administrative Agent,
      any Lender, the L/C Issuer or any other Person or any other circumstance
      whatsoever that might, but for the provisions of this paragraph, constitute
      a
      legal or equitable discharge of the obligations of the Borrowers under this
      Section 12.

     

    Section 12.3.  Discharge
      Only upon Payment in Full; Reinstatement in Certain
      Circumstances.  Each Guarantor’s obligations under this
      Section 12 shall remain in full force and effect until the Commitments are
      terminated, all Letters of Credit have expired, and the principal of and
      interest on the Loans and all other amounts payable by the Borrowers and the
      Guarantorsunder this Agreement and all other Loan Documents
      and, if then outstanding and unpaid, all Hedging Liability and Funds Transfer
      and Deposit Account Liability, shall have been paid in full.  If at
      any time any payment of the principal of or interest on any Loan or any
      Reimbursement Obligation or any other amount payable by any Borrower or any
      Guarantor under the Loan Documents or any agreement relating to Hedging
      Liability or Funds Transfer and Deposit Account Liability is rescinded or must
      be otherwise restored or returned upon the insolvency, bankruptcy, or
      reorganization of any Borrower or of any Guarantor, or otherwise, each
      Guarantor’s obligations under this Section 12 with respect to such payment
      shall be reinstated at such time as though such payment had become due but
      had
      not been made at such time.

     

    
      
        
        

      

      
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    Section 12.4.  Subrogation.  Each
      Guarantor agrees it will not exercise any rights which it may acquire by way
      of
      subrogation by any payment made hereunder, or otherwise, until all the
      Obligations, Hedging Liability, and Funds Transfer and Deposit Account Liability
      shall have been paid in full subsequent to the termination of the Commitments
      and expiration of all Letters of Credit.  If any amount shall be paid
      to a Guarantor on account of such subrogation rights at any time prior to the
      later of (x) the payment in full of the Obligations, Hedging Liability, and
      Funds Transfer and Deposit Account Liability and all other amounts payable
      by
      the Borrowers hereunder and the other Loan Documents and (y) the
      termination of the Commitments and expiration of all Letters of Credit, such
      amount shall be held in trust for the benefit of the Administrative Agent,
      the
      Lenders, and the L/C Issuers (and their Affiliates) and shall forthwith be
      paid
      to the Administrative Agent for the benefit of the Lenders the L/C Issuers
      (and
      their Affiliates) or be credited and applied upon the Obligations, Hedging
      Liability, and Funds Transfer and Deposit Account Liability, whether matured
      or
      unmatured, in accordance with the terms of this Agreement.

     

    Section 12.5.  Waivers.  Each
      Guarantor irrevocably waives acceptance hereof, presentment, demand, protest,
      and any notice not provided for herein, as well as any requirement that at
      any
      time any action be taken by the Administrative Agent, any Lender, the L/C Issuer
      or any other Person against any Borrower, another Guarantor, or any other
      Person.

     

    Section 12.6.  Limit
      on Recovery.  Notwithstanding any other provision hereof, the
      right of recovery against each Guarantor under this Section 12 shall not
      exceed $1.00 less than the lowest amount which would render such Guarantor’s
      obligations under this Section 12 void or voidable under applicable law,
      including, without limitation, fraudulent conveyance law.

     

    Section 12.7.  Stay
      of Acceleration.  If acceleration of the time for payment of
      any amount payable by any Borrower under this Agreement or any other Loan
      Document, or under any agreement establishing Hedging Liability or Funds
      Transfer and Deposit Account Liability, is stayed upon the insolvency,
      bankruptcy or reorganization of any Borrower, all such amounts otherwise subject
      to acceleration under the terms of this Agreement or the other Loan Documents,
      or under any agreement establishing Hedging Liability or Funds Transfer and
      Deposit Account Liability, shall nonetheless be payable by the Guarantors
      hereunder forthwith on demand by the Administrative Agent made at the request
      of
      the Required Lenders.

     

    Section 12.8.  Benefit
      to Guarantors.  Each Guarantor will derive substantial direct
      and indirect benefit from the extensions of credit hereunder.

     

    
      
        
        

      

      
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    Section
      12.9.  Guarantor
      Covenants.  Each Guarantor shall take such action as the
      Borrowers are required by this Agreement to cause such Guarantor to take, and
      shall refrain from taking such action as the Borrowers are required by this
      Agreement to prohibit such Guarantor from taking.

     

    Section
      12.10.  Joint and
      Several Obligors.  (a) Each Borrower agrees that it is jointly
      and severally liable for all the Obligations, Hedging Liability and Funds
      Transfer and Deposit Account Liability of each other Borrower; provided, however, no Foreign
      Borrower shall be liable (whether as a joint and several obligor or as a
      guarantor) for the Obligations, Hedging Liability and Funds Transfer and Deposit
      Account Liability of any Domestic Borrower.  Each Borrower further
      acknowledges and agrees that its joint and several liability on the Loans and
      on
      all other Obligations, Hedging Liability and Funds Transfer and Deposit Account
      Liability owed by any Borrower or Borrowers is absolute and unconditional and
      shall not in any manner be affected or impaired by any acts or omissions
      whatsoever by the Lenders or the Administrative Agent, and without limiting
      the
      generality of the foregoing, each Borrower’s joint and several liability on the
      Obligations, Hedging Liability and Funds Transfer and Deposit Account Liability
      of the Borrowers shall not be impaired by any acceptance by the Administrative
      Agent or the Lenders of any other security for or guarantors upon the
      Obligations, Hedging Liability and Funds Transfer and Deposit Account Liability
      or by any failure, neglect or omission on the Lenders’ or the Administrative
      Agent’s part to resort to any one or all of the Borrowers for payment of the
      Obligations, Hedging Liability and Funds Transfer and Deposit Account Liability
      or to realize upon or protect any collateral security therefor.  Each
      Borrower’s joint and several liability on the Obligations, Hedging Liability and
      Funds Transfer and Deposit Account Liability of each Borrower shall not in
      any
      manner be impaired or affected by who receives or uses the proceeds of the
      Loans
      or for what purposes such proceeds are used, and each Borrower waives notice
      of
      borrowing requests issued by, and loans made to, other
      Borrowers.  Such joint and several liability of each Borrower shall
      also not be impaired or affected by any sale, pledge, surrender, compromise,
      settlement, release, renewal, extension, indulgence, alteration, substitution,
      exchange, change in, modification or disposition of any collateral security
      for
      the Obligations, Hedging Liability and Funds Transfer and Deposit Account
      Liability or of any guaranty thereof.  In order to enforce payment of
      the Obligations, Hedging Liability and Funds Transfer and Deposit Account
      Liability, foreclose or otherwise realize on any collateral security therefor,
      and to exercise the rights granted to the Administrative Agent hereunder and
      thereunder and under applicable law, the Administrative Agent shall be under
      no
      obligation at any time to first resort to any collateral security, property,
      liens or any other rights or remedies whatsoever, and the Lenders shall have
      the
      right to enforce the Obligations, Hedging Liability and Funds Transfer and
      Deposit Account Liability irrespective of whether or not other proceedings
      or
      steps are pending seeking resort to or realization upon or from any of the
      foregoing.  By its acceptance below, each Borrower hereby expressly
      waives and surrenders any defense to its joint and several liability on the
      Obligations, Hedging Liability and Funds Transfer and Deposit Account Liability
      of each Borrower based upon any of the foregoing.  In furtherance
      thereof, each Borrower agrees that wherever in this Agreement it is provided
      that a Borrower is liable for a payment such obligation is the joint and several
      obligation of each Borrower; provided, however, no Foreign
      Borrower shall be liable (whether as a joint and several obligor or as a
      guarantor) for the Obligations, Hedging Liability and Funds Transfer and Deposit
      Account Liability of any Domestic Borrower.

     

    
      
        
        

      

      
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    SECTION 13. 
      MISCELLANEOUS.

     

    Section 13.1.  Withholding
      Taxes.  (a) Payments Free of
      Withholding.  Except as otherwise required by law and subject
      to Section 13.1(b) hereof, each payment by any Borrower and the Guarantors
      under this Agreement or the other Loan Documents shall be made without
      withholding for or on account of any present or future taxes (other than overall
      net income taxes on the recipient) imposed by or within the jurisdiction in
      which such Borrower or such Guarantor is domiciled, any jurisdiction from which
      such Borrower or such Guarantor makes any payment, or (in each case) any
      political subdivision or taxing authority thereof or therein.  If any
      such withholding is so required, the relevant Borrower or such Guarantor shall
      make the withholding, pay the amount withheld to the appropriate governmental
      authority before penalties attach thereto or interest accrues thereon and
      forthwith pay such additional amount as may be necessary to ensure that the
      net
      amount actually received by each Lender, the L/C Issuer and the Administrative
      Agent free and clear of such taxes (including such taxes on such additional
      amount) is equal to the amount which that Lender, L/C Issuer or the
      Administrative Agent (as the case may be) would have received had such
      withholding not been made.  If the Administrative Agent, the L/C
      Issuer, or any Lender pays any amount in respect of any such taxes, penalties
      or
      interest, the Borrowers or such Guarantor shall reimburse the Administrative
      Agent, or L/C Issuer or such Lender for that payment on demand in the currency
      in which such payment was made.  If any Borrower or such Guarantor
      pays any such taxes, penalties or interest, it shall deliver official tax
      receipts evidencing that payment or certified copies thereof to the Lender,
      the
      L/C Issuer or Administrative Agent on whose account such withholding was made
      (with a copy to the Administrative Agent if not the recipient of the original)
      on or before the thirtieth day after payment.

     

    (b)  U.S.
      Withholding Tax
      Exemptions.  Each Lender or L/C Issuer that is not a
      United States person (as such term is defined in Section 7701(a)(30) of the
      Code) shall submit to the Borrower and the Administrative Agent on or before
      the
      date the initial Credit Event is made hereunder or, if later, the date such
      financial institution becomes a Lender or L/C Issuer hereunder, two duly
      completed and signed copies of (i) either Form W-8 BEN (relating to
      such Lender or L/C Issuer and entitling it to a complete exemption from
      withholding under the Code on all amounts to be received by such Lender or
      L/C Issuer, including fees, pursuant to the Loan Documents and the
      Obligations) or Form W-8 ECI (relating to all amounts to be received by
      such Lender or L/C Issuer, including fees, pursuant to the Loan Documents
      and the Obligations) of the United States Internal Revenue Service or (ii)
      solely if such Lender is claiming exemption from United States withholding
      tax
      under Section 871(h) or 881(c) of the Code with respect to payments of
“portfolio interest”, a Form W-8 BEN, or any successor form prescribed by
      the Internal Revenue Service, and a certificate representing that such Lender
      is
      not a bank for purposes of Section 881(c) of the Code, is not a 10-percent
      shareholder (within the meaning of Section 871(h)(3)(B) of the Code) of any
      Borrower and is not a controlled foreign corporation related to any Borrower
      (within the meaning of Section 864(d)(4) of the
      Code).  Thereafter and from time to time, each Lender and
      L/C Issuer shall submit to the Borrowers and the Administrative Agent such
      additional duly completed and signed copies of one or the other of such Forms
      (or such successor forms as shall be adopted from time to time by the relevant
      United States taxing authorities) and such other certificates as may be
      (i) requested by the Company, on behalf of Borrowers, in a written notice,
      directly or through the Administrative Agent, to such Lender or L/C Issuer
      and (ii) required under then-current United States law orregulations to avoid or reduce United States withholding
      taxes on
      payments in respect of all amounts to be received by such Lender or
      L/C Issuer, including fees, pursuant to the Loan Documents or the
      Obligations.  Upon the request of the Company, on behalf of the
      Borrowers, or the Administrative Agent, each Lender and L/C Issuer that is
      a United States person (as such term is defined in Section 7701(a)(30) of
      the Code) shall submit to the Company and the Administrative Agent a certificate
      to the effect that it is such a United States person.

     

    
      
        
        

      

      
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    (c)  Inability
      of Lender to Submit
      Forms.  If any Lender or L/C Issuer determines, as a
      result of any change in applicable law, regulation or treaty, or in any official
      application or interpretation thereof, that it is unable to submit to the
      Borrowers or the Administrative Agent any form or certificate that such Lender
      or L/C Issuer is obligated to submit pursuant to subsection (b) of
      this Section 13.1 or that such Lender or L/C Issuer is required to
      withdraw or cancel any such form or certificate previously submitted or any
      such
      form or certificate otherwise becomes ineffective or inaccurate, such Lender
      or
      L/C Issuer shall promptly notify the Borrowers and Administrative Agent of
      such fact and the Lender or L/C Issuer shall to that extent not be
      obligated to provide any such form or certificate and will be entitled to
      withdraw or cancel any affected form or certificate, as applicable.

     

    Section 13.2.  No
      Waiver, Cumulative Remedies.  No delay or failure on the part
      of the Administrative Agent, the L/C Issuer or any Lender or on the part of
      the
      holder or holders of any of the Obligations in the exercise of any power or
      right under any Loan Document shall operate as a waiver thereof or as an
      acquiescence in any default, nor shall any single or partial exercise of any
      power or right preclude any other or further exercise thereof or the exercise
      of
      any other power or right.  The rights and remedies hereunder of the
      Administrative Agent, the Lenders and of the holder or holders of any of the
      Obligations are cumulative to, and not exclusive of, any rights or remedies
      which any of them would otherwise have.

     

    Section 13.3.  Non-Business
      Days.  If any payment hereunder becomes due and payable on a
      day which is not a Business Day, the due date of such payment shall be extended
      to the next succeeding Business Day on which date such payment shall be due
      and
      payable.  In the case of any payment of principal falling due on a day
      which is not a Business Day, interest on such principal amount shall continue
      to
      accrue during such extension at the rate per annum then in effect, which accrued
      amount shall be due and payable on the next scheduled date for the payment
      of
      interest.

     

    Section 13.4.  Documentary
      Taxes.  The Borrowers jointly and severally agree to pay on
      demand any documentary, stamp or similar taxes payable in respect of this
      Agreement or any other Loan Document, including interest and penalties, in
      the
      event any such taxes are assessed, irrespective of when such assessment is
      made
      and whether or not any is then in use or available hereunder.

     

    Section 13.5.  Survival
      of Representations.  All representations and warranties made
      herein or in any other Loan Document or in certificates given pursuant hereto
      or
      thereto shall survive the execution and delivery of this Agreement and the
      other
      Loan Documents, and shall continue in full force and effect with respect to
      the
      date as of which they were made as long as any credit is in use or available
      hereunder.

     

    
      
        
        

      

      
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    Section 13.6.  Survival
      of Indemnities.  All indemnities and other provisions relative
      to reimbursement to the Lenders and L/C Issuer of amounts sufficient to
      protect the yield of the Lenders and L/C Issuer with respect to the Loans
      and Letters of Credit, including, but not limited to, Sections 1.12, 10.3,
      and 13.15 hereof, shall survive the termination of this Agreement and the other
      Loan Documents and the payment of the Obligations.

     

    Section 13.7.  Sharing
      of Set-Off.  Each Lender agrees with each other Lender a party
      hereto that if such Lender shall receive and retain any payment, whether by
      set-off or application of deposit balances or otherwise, on any of the Loans
      or
      Reimbursement Obligations in excess of its ratable share of payments on all
      such
      Obligations then outstanding to the Lenders, then such Lender shall purchase
      for
      cash at face value, but without recourse, ratably from each of the other Lenders
      such amount of the Loans or Reimbursement Obligations, or participations
      therein, held by each such other Lenders (or interest therein) as shall be
      necessary to cause such Lender to share such excess payment ratably with all
      the
      other Lenders; provided,
      however, that if any such purchase is made by any Lender, and if such
      excess payment or part thereof is thereafter recovered from such purchasing
      Lender, the related purchases from the other Lenders shall be rescinded ratably
      and the purchase price restored as to the portion of such excess payment so
      recovered, but without interest.  For purposes of this Section,
      amounts owed to or recovered by the L/C Issuer in connection with Reimbursement
      Obligations in which Lenders have been required to fund their participation
      shall be treated as amounts owed to or recovered by the L/C Issuer as a Lender
      hereunder.

     

    Section 13.8.  Notices.  Except
      as otherwise specified herein, all notices hereunder and under the other Loan
      Documents shall be in writing (including, without limitation, notice by
      telecopy) and shall be given to the relevant party at its address or telecopier
      number set forth below, or such other address or telecopier number as such
      party
      may hereafter specify by notice to the Administrative Agent and the Borrowers
      given by courier, by United States certified or registered mail, by telecopy
      or
      by other telecommunication device capable of creating a written record of such
      notice and its receipt.  Notices under the Loan Documents to any
      Lender shall be addressed to its address or telecopier number set forth on
      its
      Administrative Questionnaire; and notices under the Loans Documents to the
      Borrowers, any Guarantor, the Administrative Agent or L/C Issuer shall be
      addressed to its respective address or telecopier number set forth
      below:

     

    
      	
              to
                any Borrower or any Guarantor: 

               

              RC2
                Corporation

              1111
                West 22nd Street, Suite 320

              Oak
                Brook, Illinois  60523

              Attention:        Mr.
                Curt Stoelting

              Telephone:      (630)
                573-7200,

                                       
                ext. 7326

              Telecopy:        (630)
                573-7578

            	
              to
                the Administrative Agent and L/C Issuer :

               

              
              

              Bank
                of Montreal

              115
                South LaSalle Street

              Chicago,
                Illinois  60603

              Attention:        Mr.
                Paul R. Feaser III

              Telephone:       (312)
                461-4170

              Telecopy:         (312)
                765-1624

            

    

     

    

    
      
        
          
          

        

        
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    with a copy
      to:

     

    James
      M.
      Bedore, Esq.

    Reinhart
      Boerner Van Deuren, S.C.

    1000
      North Water Street

    Milwaukee,
      Wisconsin  53202

    Telephone:   (414)
      298-8196

    Facsimile:   (414)
      298-8097

    

    Each
      such
      notice, request or other communication shall be effective (i) if given by
      telecopier, when such telecopy is transmitted to the telecopier number specified
      in this Section or in the relevant Administrative Questionnaire and a
      confirmation of such telecopy has been received by the sender, (ii) if
      given by mail, 5 days after such communication is deposited in the mail,
      certified or registered with return receipt requested, addressed as aforesaid
      or
      (iii) if given by any other means, when delivered at the addresses
      specified in this Section or in the relevant Administrative Questionnaire;
provided that any
      notice given
      pursuant to Section 1 hereof shall be effective only upon
      receipt.

     

    Section 13.9.  Counterparts.  This
      Agreement may be executed in any number of counterparts, and by the different
      parties hereto on separate counterpart signature pages, and all such
      counterparts taken together shall be deemed to constitute one and the same
      instrument.

     

    Section 13.10.   Successors
      and Assigns.  This Agreement shall be binding upon the
      Borrowers and the Guarantors and their successors and assigns, and shall inure
      to the benefit of the Administrative Agent, the L/C Issuer, and each of the
      Lenders, and the benefit of their respective successors and assigns, including
      any subsequent holder of any of the Obligations.  The Borrowers and
      the Guarantors may not assign any of their rights or obligations under any
      Loan
      Document without the written consent of all of the Lenders and, with respect
      to
      any Letter of Credit or the Application therefor, the
      L/C Issuer.

     

    Section 13.11.  Participants.  Each
      Lender shall have the right at its own cost to grant participations (to be
      evidenced by one or more agreements or certificates of participation) in the
      Loans made and Reimbursement Obligations and/or Commitment held by such Lender
      at any time and from time to time to one or more other Persons; provided that
      no
      such participation shall relieve any Lender of any of its obligations under
      this
      Agreement, and, provided, further that no such participant shall have any rights
      under this Agreement except as provided in this Section, and the Administrative
      Agent shall have no obligation or responsibility to such
      participant.  Any agreement pursuant to which such
      participation  is granted shall provide that the granting Lender shall
      retain the sole right and responsibility to enforce the obligations of the
      Borrowers under this Agreement and the other Loan Documents including, without
      limitation, the right to approve any amendment, modification or waiver of any
      provision of the Loan Documents, except that such agreement may provide that
      such Lender will not agree to any modification, amendment or waiver of the
      Loan
      Documents that would reduce the amount of or postpone any fixed date for payment
      of any Obligation in which such participant has an interest.  Any
      party to which such a participation has been granted shall have the benefits
      of
      Section 1.12 and Section 10.3 hereof.  The Borrowers
      authorize each Lender to disclose to any participant or prospective participant
      under this Section any financial or other information pertaining to any Borrower
      or any Subsidiary.

     

    
      
        
        

      

      
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    Section 13.12.  Assignments.  (a) Any
      Lender may at any time assign to one or more Eligible Assignees 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 at the time owing to it); provided
      that
      any such assignment shall be subject to the following conditions:

     

    (i)  Minimum
      Amounts.  (A) In the case of an assignment of the entire
      remaining amount of the assigning Lender’s Commitment and the Loans and
      participation interest in L/C Obligations at the time owing to it or in the
      case
      of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund,
      no
      minimum amount need be assigned; and (B) in any case not described in subsection
      (a)(i)(A) of this Section, the aggregate amount of the Commitment (which for
      this purpose includes Loans and participation interest in L/C Obligations
      outstanding thereunder) or, if the applicable Commitment is not then in effect,
      the principal outstanding balance of the Loans and participation interest in
      L/C
      Obligations of the assigning Lender subject to each such assignment (determined
      as of the date the Assignment and Acceptance with respect to such assignment
      is
      delivered to the Administrative Agent or, if “Effective Date” is specified in
      the Assignment and Acceptance, as of the Effective Date) shall not be less
      than
      $5,000,000, in the case of any assignment in respect of the Revolving Credit,
      or
      $5,000,000, in the case of any assignment in respect of any Term Loan, unless
      each of the Administrative Agent and, so long as no Event of Default has
      occurred and is continuing, the Borrowers otherwise consent (each such consent
      not to be unreasonably withheld or delayed);

     

    (ii)  Proportionate
      Amounts.  Each partial assignment shall be made as an
      assignment of a proportionate part of all the assigning Lender’s rights and
      obligations under this Agreement with respect to the Loan or the Commitment
      assigned, except that this clause (ii) shall not prohibit any Lender from
      assigning all or a portion of its rights and obligations among separate Credits
      on a non-pro rata
      basis.

     

    (iii)  Required
      Consents.  No consent shall be required for any assignment
      except to the extent required by Section 13.12(a)(i)(B) and, in
      addition:

     

    (a)  the
      consent of the Borrowers (such consent not to be unreasonably withheld or
      delayed) shall be required unless (x) an Event of Default has occurred and
      is
      continuing at the time of such assignment or (y) such assignment is to a Lender,
      an Affiliate of a Lender or an Approved Fund;

     

    (b)  the
      consent of the Administrative Agent (such consent not to be unreasonably
      withheld or delayed) shall be required for assignments in respect of
      (i) the Revolving Credit if such assignment is to a Person that is not a
      Lender with a Commitment in respect of such facility, an Affiliate of such
      Lender or an Approved Fund with respect to such Lender or (ii) the Term
      Loans to a Person who is not a Lender, an Affiliate of a Lender or an Approved
      Fund;

     

    (c)  the
      consent of the L/C Issuer (such consent not to be unreasonably withheld or
      delayed) shall be required for any assignment that increases the obligation
      of
      the assignee to participate in exposure under one or more Letters of Credit
      (whether or not then outstanding); and

     

    
      
        
        

      

      
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    (d)  the
      consent of the Swing Line Lender (such consent not to be unreasonably withheld
      or delayed) shall be required for any assignment that increases the obligation
      of the assignee to participate in exposure under one or more Swing Loans
      (whether or not then outstanding).

     

    (iv)  Assignment
      and
      Acceptance.  The parties to each assignment shall execute and
      deliver to the Administrative Agent an Assignment and Acceptance, together
      with
      a processing and recordation fee of $3,500, and the assignee, if it is not
      a
      Lender, shall deliver to the Administrative Agent an Administrative
      Questionnaire.

     

    (v)  No
      Assignment to any
      Borrower.  No such assignment shall be made to any Borrower or
      any of its Affiliates or Subsidiaries.

     

    (vi)  No
      Assignment to Natural
      Persons.  No such assignment shall be made to a natural
      person.

     

    Subject
      to acceptance and recording thereof by the Administrative Agent pursuant to
      Section 13.12(b) hereof, from and after the effective date specified in
      each Assignment and Acceptance, the assignee thereunder shall be a party to
      this
      Agreement and, to the extent of the interest assigned by such Assignment and
      Acceptance, have the rights and obligations of a Lender under this Agreement,
      and the assigning Lender thereunder shall, to the extent of the interest
      assigned by such Assignment and Acceptance, be released from its obligations
      under this Agreement (and, in the case of an Assignment and Acceptance covering
      all of the assigning Lender’s rights and obligations under this Agreement, such
      Lender shall cease to be a party hereto) but shall continue to be entitled
      to
      the benefits of Sections 13.6 and 13.15 with respect to facts and
      circumstances occurring prior to the effective date of such
      assignment.  Any assignment or transfer by a Lender of rights or
      obligations under this Agreement that does not comply with this Section shall
      be
      treated for purposes of this Agreement as a sale by such Lender of a
      participation in such rights and obligations in accordance with Section 13.11
      hereof.

     

    (b)  Register.  The
      Administrative Agent, acting solely for this purpose as an agent of the
      Borrowers, shall maintain at one of its offices in Chicago, Illinois, a copy
      of
      each Assignment and Acceptance delivered to it and a register for the
      recordation of the names and addresses of the Lenders, and the Commitments
      of,
      and principal amounts of the Loans owing to, each Lender pursuant to the terms
      hereof from time to time (the “Register”).  The
      entries in the Register shall be conclusive, and the Borrowers, the
      Administrative Agent, and the Lenders may treat each Person whose name is
      recorded in the Register pursuant to the terms hereof as a Lender hereunder
      for
      all purposes of this Agreement, notwithstanding notice to the
      contrary.  The Register shall be available for inspection by any
      Borrower and any Lender, at any reasonable time and from time to time upon
      reasonable prior notice.

     

    (c)  Any
      Lender may at any time pledge or grant a security interest in all or any portion
      of its rights under this Agreement to secure obligations of such Lender,
      including any such pledge or grant to a Federal Reserve Bank, and this Section
      shall not apply to any such pledge or grant of a security interest; provided that no such pledge
      or grant of a security interest shall release a Lender from any of its
      obligations hereunder or substitute any such pledgee or secured party for such
      Lender as a party hereto; provided further, however,
      the right of any suchpledgee or grantee (other than any
      Federal Reserve Bank) to further transfer all or any portion of the rights
      pledged or granted to it, whether by means of foreclosure or otherwise, shall
      be
      at all times subject to the terms of this Agreement.

     

    
      
        
        

      

      
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    (d)  Notwithstanding
      anything to the contrary herein, if at any time the Swing Line Lender assigns
      all of its Revolving Credit Commitments and Revolving Loans pursuant to
      subsection (a) above, the Swing Line Lender may terminate the Swing
      Line.  In the event of such termination of the Swing Line, the
      Borrowers shall be entitled to appoint another Lender to act as the successor
      Swing Line Lender hereunder (with such Lender’s consent); provided, however, that the
      failure of the Company to appoint a successor shall not affect the resignation
      of the Swing Line Lender.  If the Swing Line Lender terminates the
      Swing Line, it shall retain all of the rights of the Swing Line Lender provided
      hereunder with respect to Swing Loans made by it and outstanding as of the
      effective date of such termination, including the right to require Lenders
      to
      make Revolving Loans or fund participations in outstanding Swing Loans pursuant
      to Section 1.16 hereof.

     

    Section 13.13.  Amendments.  Any
      provision of this Agreement or the other Loan Documents may be amended or waived
      if, but only if, such amendment or waiver is in writing and is signed by (a)
      the
      Borrowers, (b) the Required Lenders, and (c) if the rights or duties of the
      Administrative Agent, the L/C Issuer, or the Swing Line Lender are affected
      thereby, the Administrative Agent, the L/C Issuer, or the Swing Line
      Lender, as applicable; provided that:

     

    (i)  no
      amendment or waiver pursuant to this Section 13.13 shall (A) increase
      any Commitment of any Lender without the consent of such Lender, (B) reduce
      the amount of or postpone the date for any scheduled payment of any principal
      of
      or interest on any Loan or of any Reimbursement Obligation or of any fee payable
      hereunder or of any indemnity or other provision relative to reimbursement
      to
      the Lenders of amounts sufficient to protect the yield of the Lenders with
      respect to Loans and Letters of Credit (including, but not limited to
      Sections 1.12, 10.3 and 13.5 hereof), in each case, without the consent of
      the Lender to which such payment is owing or which has committed to make such
      Loan or Letter of Credit (or participate therein) hereunder, (C) amend,
      modify or waive the application of proceeds set forth in Section 3.1
      without the consent of each Lender affected thereby, or (D) amend or
      modify, the pro rata application of prepayments set forth in Section 1.9
      without the consent of each Lender affected thereby;

     

    (ii)  no
      amendment or waiver pursuant to this Section 13.13 shall, unless signed by
      each Lender, extend the Revolving Credit Termination Date, change the definition
      of Required Lenders, increase the amount of Total Consideration set forth in
      clause (a) of the defined term Permitted Acquisition, increase the
      limitations set forth in Section 8.12(iv), increase the amount of the
      Clean-Down set forth in Section 8.21(iv), amend Section 13.11 or
      Section 13.12 to impose additional restrictions or requirements, change the
      provisions of this Section 13.13, release all or substantially all of the
      Guarantors or all
      or substantial all of the Collateral (except as otherwise provided for in the
      Loan Documents), or affect the number of Lenders required to take any action
      hereunder or under any other Loan Document; and

     

    
      
        
        

      

      
        76

        
          

        

      

      
        
        

      

    

    (iii)  no
      amendment to Section 12 hereof shall be made without the consent of the
      Borrowers or the Guarantors affected thereby.

     

    Section 13.14.  Headings.
      Section headings used in this Agreement are for reference only and shall
      not affect the construction of this Agreement.

     

    Section 13.15.  Costs
      and Expenses; Indemnification.   (a) The Borrowers
      jointly and severally agree to pay all costs and expenses of the Administrative
      Agent in connection with the preparation, negotiation, syndication, and
      administration of the Loan Documents, including, without limitation, the
      reasonable fees and disbursements of counsel to the Administrative Agent, in
      connection with the preparation and execution of the Loan Documents, and any
      amendment, waiver or consent related thereto, whether or not the transactions
      contemplated herein are consummated, together with any fees and charges suffered
      or incurred by the Administrative Agent in connection with periodic
      environmental audits, fixed asset appraisals, title insurance policies,
      collateral filing fees and lien searches.  The Borrowers jointly and
      severally agree to pay to the Administrative Agent, the L/C Issuer and each
      Lender, and any other holder of any Obligations outstanding hereunder, all
      costs
      and expenses reasonably incurred or paid by the Administrative Agent, the
      L/C Issuer, such Lender, or any such holder, including reasonable
      attorneys’ fees and disbursements and court costs, in connection with any
      Default or Event of Default hereunder or in connection with the enforcement
      of
      any of the Loan Documents (including all such costs and expenses incurred in
      connection with any proceeding under the United States Bankruptcy Code involving
      any Borrower or any Guarantor as a debtor thereunder).  The Borrowers
      further jointly and severally agree to indemnify the Administrative Agent,
      the
      L/C Issuer, each Lender, and any security trustee therefor, and their
      respective directors, officers, employees, agents, financial advisors, and
      consultants (each such Person being called an “Indemnitee”) against all losses,
      claims, damages, penalties, judgments, liabilities and expenses (including,
      without limitation, all reasonable fees and disbursements of counsel for any
      such Indemnitee and all reasonable expenses of litigation or preparation
      therefor, whether or not the Indemnitee is a party thereto, or any settlement
      arrangement arising from or relating to any such litigation) which any of them
      may pay or incur arising out of or relating to any Loan Document or any of
      the
      transactions contemplated thereby or the direct or indirect application or
      proposed application of the proceeds of any Loan or Letter of Credit, other
      than
      those which arise from the gross negligence or willful misconduct of the party
      claiming indemnification.  The Borrowers, upon demand by the
      Administrative Agent, the L/C Issuer or a Lender at any time, shall
      reimburse the Administrative Agent, the L/C Issuer or such Lender for any
      reasonable legal or other expenses (including, without limitation, all
      reasonable fees and disbursements of counsel for any such Indemnitee) incurred
      in connection with investigating or defending against any of the foregoing
      (including any settlement costs relating to the foregoing) except if the same
      is
      directly due to the gross negligence or willful misconduct of the party to
      be
      indemnified.  To the extent permitted by applicable law, no Borrower
      nor any Guarantor shall assert, and each such Person 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 the
      other Loan Documents or any agreement or instrument contemplated hereby or
      thereby, the transactions contemplated hereby or thereby, any Loan or Letter
      of
      Credit or the use of the proceeds thereof.  The obligations of the
      Borrowers under this Section shall survive the termination of this
      Agreement.

     

    
      
        
        

      

      
        77

        
          

        

      

      
        
        

      

    

    (b)  Each
      Borrower unconditionally agrees to forever indemnify, defend and hold harmless,
      and covenants not to sue for any claim for contribution against, each Indemnitee
      for any damages, costs, loss or expense, including without limitation, response,
      remedial or removal costs and all fees and disbursements of counsel for any
      such
      Indemnitee, arising out of any of the following:  (i) any presence,
      release, threatened release or disposal of any hazardous or toxic substance
      or
      petroleum by any Borrower or any Subsidiary or otherwise occurring on or with
      respect to its Property (whether owned or leased), (ii) the operation or
      violation of any Environmental Law by any Borrower or any Subsidiary or
      otherwise occurring on or with respect to its Property (whether owned or
      leased), (iii) any claim for personal injury or property damage in connection
      with any Borrower or any Subsidiary or otherwise occurring on or with respect
      to
      its Property (whether owned or leased), and (iv) the inaccuracy or breach of
      any
      environmental representation, warranty or covenant by any Borrower or any
      Subsidiary made herein or in any other Loan Document evidencing or securing
      any
      Obligations or setting forth terms and conditions applicable thereto or
      otherwise relating thereto, except for damages arising from the willful
      misconduct or gross negligence of the relevant Indemnitee.  This
      indemnification shall survive the payment and satisfaction of all Obligations
      and the termination of this Agreement, and shall remain in force beyond the
      expiration of any applicable statute of limitations and payment or satisfaction
      in full of any single claim under this indemnification.  This
      indemnification shall be binding upon the successors and assigns of the
      Borrowers and shall inure to the benefit of each Indemnitee and its successors
      and assigns.

     

    Section 13.16.  Set-off.  In
      addition to any rights now or hereafter granted under the Loan Documents or
      applicable law and not by way of limitation of any such rights, upon the
      occurrence of any Event of Default, each Lender, the L/C Issuer, each
      subsequent holder of any Obligation, and each of their respective affiliates,
      is
      hereby authorized by each Borrower and each Guarantor at any time or from time
      to time, without notice to any Borrower, any Guarantor or to any other Person,
      any such notice being hereby expressly waived, to set-off and to appropriate
      and
      to apply any and all deposits (general or special, including, but not limited
      to, indebtedness evidenced by certificates of deposit, whether matured or
      unmatured, and in whatever currency denominated, but not including trust
      accounts) and any other indebtedness at any time held or owing by that Lender,
      L/C Issuer, subsequent holder, or affiliate, to or for the credit or the
      account of such Borrower or such Guarantor, whether or not matured, against
      and
      on account of the Obligations of such Borrower or such Guarantor to that Lender,
      L/C Issuer, or subsequent holder under the Loan Documents, including, but
      not limited to, all claims of any nature or description arising out of or
      connected with the Loan Documents, irrespective of whether or not (a) that
      Lender, L/C Issuer, or subsequent holder shall have made any demand
      hereunder or (b) the principal of or the interest on the Loans and other
      amounts due hereunder shall have become due and payable pursuant to
      Section 9 and although said obligations and liabilities, or any of them,
      may be contingent or unmatured.

     

    Section 13.17.  Entire
      Agreement.  The Loan Documents constitute the entire
      understanding of the parties thereto with respect to the subject matter thereof
      and any prior agreements, whether written or oral, with respect thereto are
      superseded hereby.

     

    Section 13.18.  Governing
      Law.  This Agreement and the other Loan Documents, and the
      rights and duties of the parties hereto, shall be construed and determined
      in
      accordance with the internal laws of the State of Illinois; provided, however, that
      nothing herein or in any other LoanDocument shall prevent
      any Credit Party from contesting or raising defenses to any confession of
      judgment obtained pursuant to 735 ILCS 5/2-1301(c).

     

    
      
        
        

      

      
        78

        
          

        

      

      
        
        

      

    

    Section 13.19.  Severability
      of Provisions.  Any provision of any Loan Document which is
      unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
      to the extent of such unenforceability without invalidating the remaining
      provisions hereof or affecting the validity or enforceability of such provision
      in any other jurisdiction.  All rights, remedies and powers provided
      in this Agreement and the other Loan Documents may be exercised only to the
      extent that the exercise thereof does not violate any applicable mandatory
      provisions of law, and all the provisions of this Agreement and other Loan
      Documents are intended to be subject to all applicable mandatory provisions
      of
      law which may be controlling and to be limited to the extent necessary so that
      they will not render this Agreement or the other Loan Documents invalid or
      unenforceable.

     

    Section 13.20.  Excess
      Interest.  Notwithstanding any provision to the contrary
      contained herein or in any other Loan Document, no such provision shall require
      the payment or permit the collection of any amount of interest in excess of
      the
      maximum amount of interest permitted by applicable law to be charged for the
      use
      or detention, or the forbearance in the collection, of all or any portion of
      the
      Loans or other obligations outstanding under this Agreement or any other Loan
      Document (“Excess
      Interest”).  If any Excess Interest is provided for, or is
      adjudicated to be provided for, herein or in any other Loan Document, then
      in
      such event (a) the provisions of this Section shall govern and control,
      (b) neither any Borrower nor any Guarantor or endorser shall be obligated
      to pay any Excess Interest, (c) any Excess Interest that the Administrative
      Agent or any Lender may have received hereunder shall, at the option of the
      Administrative Agent, be (i) applied as a credit against the then
      outstanding principal amount of Obligations hereunder and accrued and unpaid
      interest thereon (not to exceed the maximum amount permitted by applicable
      law),
      (ii) refunded to the Company, on behalf of the Borrowers, or (iii) any
      combination of the foregoing, (d) the interest rate payable hereunder or
      under any other Loan Document shall be automatically subject to reduction to
      the
      maximum lawful contract rate allowed under applicable usury laws (the “Maximum Rate”), and this
      Agreement and the other Loan Documents shall be deemed to have been, and shall
      be, reformed and modified to reflect such reduction in the relevant interest
      rate, and (e) neither any Borrower nor any Guarantor or endorser shall have
      any action against the Administrative Agent or any Lender for any damages
      whatsoever arising out of the payment or collection of any Excess
      Interest.  Notwithstanding the foregoing, if for any period of time
      interest on any of Borrowers’ Obligations is calculated at the Maximum Rate
      rather than the applicable rate under this Agreement, and thereafter such
      applicable rate becomes less than the Maximum Rate, the rate of interest payable
      on the Borrowers’ Obligations shall remain at the Maximum Rate until the Lenders
      have received the amount of interest which such Lenders would have received
      during such period on the Borrowers’ Obligations had the rate of interest not
      been limited to the Maximum Rate during such period.

     

    Section 13.21.  Construction.  The
      parties acknowledge and agree that the Loan Documents shall not be construed
      more favorably in favor of any party hereto based upon which party drafted
      the
      same, it being acknowledged that all parties hereto contributed substantially
      to
      the negotiation of the Loan Documents.  Nothing contained herein shall be deemed
      or
      construed to permit any act or omission which is prohibited by the terms of
      any
Collateral
      Document, the covenants and agreements contained herein being in addition to
      and
      not in substitution for the covenants and agreements contained in the Collateral
      Documents.

     

    
      
        
        

      

      
        79

        
          

        

      

      
        
        

      

    

    Section 13.22.  Lender’s
      and L/C Issuer’s Obligations Several; Lenders and their
      Affiliates.  The obligations of the Lenders and L/C Issuer
      hereunder are several and not joint.  Nothing contained in this
      Agreement and no action taken by the Lenders or L/C Issuer pursuant hereto
      shall
      be deemed to constitute the Lenders and L/C Issuer a partnership, association,
      joint venture or other entity.  Each Lender, L/C Issuer and its
      Affiliates may accept deposits from, lend money to, and generally engage in
      any
      kind of business with any Borrower or any Affiliate of any Borrower as if it
      were not a Lender hereunder; provided, however, that the
      foregoing shall not be deemed to permit any Credit Party to do that which is
      otherwise prohibited by the Loan Documents.

     

    Section 13.23. Intentionally
      Omitted.  Intentionally
      Omitted.

     

    Section 13.24.  Submission
      to Jurisdiction; Waiver of Jury Trial.  The Borrowers and the
      Guarantors hereby submit to the nonexclusive jurisdiction of the United States
      District Court for the Northern District of Illinois and of any Illinois State
      court sitting in the City of Chicago for purposes of all legal proceedings
      arising out of or relating to this Agreement, the other Loan Documents or the
      transactions contemplated hereby or thereby.  The Borrowers and the
      Guarantors irrevocably waive, to the fullest extent permitted by law, any
      objection which they may now or hereafter have to the laying of the venue of
      any
      such proceeding brought in such a court and any claim that any such proceeding
      brought in such a court has been brought in an inconvenient
      forum.  The Borrowers, the Guarantors, the Administrative Agent, the
      L/C Issuer and the Lenders hereby irrevocably waive any and all right to trial
      by jury in any legal proceeding arising out of or relating to any Loan Document
      or the transactions contemplated thereby.

     

    Section 13.25.  USA
      Patriot Act.  Each Lender and L/C Issuer 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
      Borrowers that pursuant to the requirements of the Act, it is required to
      obtain, verify, and record information that identifies the Borrowers, which
      information includes the name and address of the Borrowers and other information
      that will allow such Lender or L/C Issuer to identify the Borrowers in
      accordance with the Act.

     

    Section
      13.26.   Confidentiality.  Each of the
      Administrative Agent, the Lenders, and the L/C Issuer severally 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 to the extent any such Person has a need to know such Information
      (it
      being understood that the Persons to whom such disclosure is made will first
      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 (including any self-regulatory authority, such as the
      National Association of Insurance Commissioners), (c) to the extent
      required by applicable laws or regulations or by any subpoena or similar legal
      process, (d) to any other party hereto, (e) in connection with the
      exercise of any remedies hereunder or under any other Loan Document or any
      suit,
      action or proceeding relatingto this Agreement or any other
      Loan Document or the enforcement of rights hereunder or thereunder,
      (f) subject to an agreement containing provisions substantially the same as
      those of this Section, to (A) any assignee of or participant in, or any
      prospective assignee of or participant in, any of its rights or obligations
      under this Agreement or (B) any actual or prospective counterparty (or its
      advisors) to any swap or derivative transaction relating to any Borrower or
      any
      Subsidiary and its obligations, (g) with the prior written consent of the
      Company, on behalf of the Borrowers, (h) to the extent such Information
      (A) becomes publicly available other than as a result of a breach of this
      Section or (B) becomes available to the Administrative Agent, any Lender or
      the L/C Issuer on a non-confidential basis from a source other than any
      Borrower or any Subsidiary or any of their directors, officers, employees or
      agents, including accountants, legal counsel and other advisors, (i) to rating
      agencies if requested or required by such agencies in connection with a rating
      relating to the Loans or Commitments hereunder, or (j) to entities which compile
      and publish information about the syndicated loan market, provided that only basic
      information about the pricing and structure of the transaction evidenced hereby
      may be disclosed pursuant to this subsection (j). For purposes of this
      Section, “Information”
      means all information received from any Borrower or any of the Subsidiaries
      or
      from any other Person on behalf of any Borrower or any Subsidiary relating
      to
      any Borrower or any Subsidiary or any of their respective businesses, other
      than
      any such information that is available to the Administrative Agent, any Lender
      or the L/C Issuer on a non-confidential basis prior to disclosure by any
      Borrower or any of the Subsidiaries or from any other Person on behalf of any
      Borrower or any of the Subsidiaries.

     

    [Signature
      Pages to Follow]

    
 

    
      
        
          
          

        

        
          80

          
            

          

        

        
          
          

        

      

    

    This
      Agreement is entered into between us for the uses and purposes hereinabove
      set
      forth as of the date first above written.

    “Borrowers”

    

    RC2
      Corporation

    Learning
      Curve Brands, Inc.

    Learning
      Curve Canada Limited

    RC2
      (Australia) Pty., Ltd.

    RC2
      Deutschland GmbH

    Racing
      Champions International Limited

    Racing
      Champions Worldwide Limited

    

    By  /s/
      Curt Stoelting                                      

    Name  Curt
      Stoelting                                         
 

    Title  CEO                                               

    

    RC2
      (Asia) Limited

    

    By  /s/
      Lo Siu Fun Helena                               
 

    Name  Lo
      Siu Fun
      Helena                              
 

    Title  Director                                       
      

    

    “Guarantors”

    RCE
      Holdings, LLC

    Learning
      Curve International, Inc.

    Learningcurveshop.com,
      Inc.

    Learning
      Curve Canada Holdco, Inc.

    

    By  /s/
      Curt
      Stoelting                                                
 

    Name  Curt
      Stoelting                                

    Title  CEO                                                               

    
      
        
        

      

      
        S-1

        
          

        

      

      
        
        

      

    

    “Lenders”

    

    
      	
               

            	
              Bank
                of Montreal, in its individual capacity 

                
                as an L/C Issuer and as Administrative Agent
                

            

    

    

    By  /s/
      Paul R. Feaser III                                  

    Name  Paul
      R. Feaser III                         

    Title  Vice
      President                              

    

    Harris
      N.A., as an L/C Issuer

    

    By  /s/
      Paul R. Feaser III                                            
       

    Name  Paul
      R. Feaser
      III                                 
 

    Title  Vice
      President                                        
 

    

    
      
        
        

      

      
        S-2

        
          

        

      

      
        
        

      

    

     

    BMO
      Capital Markets Financing, Inc., as a 

       
      Lender and Swing Line Lender

    

    By  /s/
      Paul R. Feaser III                                  

    Name  Paul
      R. Feaser
      III                                 
 

    Title  Vice
      President                              

     

     

    
      
        
        

      

      
        S-3

        
          

        

      

      
        
        

      

    

     

    National
      City Bank, as a Lender

    

    By  /s/
      Stephanie Kline                                 

    Name  Stephanie
      Kline                              

    Title  Senior
      Vice President                         

     

     

    
      
        
        

      

      
        S-4

        
          

        

      

      
        
        

      

    

     

    U.S.
      Bank
      National Association, as a Lender

    

    By  /s/
      Barry Litwin                                        

    Name  Barry
      Litwin                                

    Title  Senior
      Vice President                     

     

    

    
      
        
        

      

      
        S-5

        
          

        

      

      
        
        

      

    

     

    Fifth
      Third Bank (Chicago), A MICHIGAN

     
BANKING
      CORPORATION, as a Lender

    

    By  /s/
      Kim Puszczewicz                                  

    Name  Kim
      Puszczewicz                         

    Title  Vice
      President                              

     

    
      
        
        

      

      
        S-6

        
          

        

      

      
        
        

      

    

    The
      Northern Trust Company, as a Lender

    

    By  /s/
      Jeffrey Clark                                        

    Name  Jeffrey
      Clark                                  

    Title  Senior
      Vice President                        

     

    

    
      
        
        

      

      
        S-7

        
          

        

      

      
        
        

      

    

     

    The
      PrivateBank and Trust Company, as a Lender

    

    By  /s/
      Michael F. Perry                                   

    Name  Michael
      F.
      Perry                                  
 

    Title  Associate
      Managing
      Director          

     

     

     

    S-8

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