Document:

exv10w1

 

EXHIBIT 10.1

McAFEE, INC.

STEPHEN C. RICHARDS TRANSITION AGREEMENT

     This Transition Agreement (“Agreement”) is made by and between McAfee,
Inc. (the “Company”), and Stephen Richards (“Executive”).

     WHEREAS, Executive is employed by the Company as its Chief Financial
Officer and Chief Operating Officer;

     WHEREAS, Executive is resigning from his positions with the Company
effective December 31, 2004, and

     NOW THEREFORE, in consideration of the mutual promises made herein, the
Company and Executive (collectively referred to as “the Parties”) hereby agree
as follows:

     1. Termination of Employment. Executive hereby resigns his employment
effective upon December 31, 2004 (the “Termination Date”). Except as required
by COBRA and similar laws, Executive shall not be eligible to participate in
the Company’s employee and fringe benefit plans once his employment terminates.

     2. Transition Period. Executive agrees that, during the period commencing
with the signing of this Agreement by the Parties and ending on the Termination
Date (the “Transition Period”), he will use his best efforts to fulfill his
duties and responsibilities as Chief Financial Officer. During the Transition
Period, Executive’s duties shall include: (i) training a replacement Company
Chief Financial Officer on and after the date such individual is hired by the
Company, (ii) assisting in the implementation of the decisions under the
Company’s ongoing operational initiatives, (iii) assisting the Company in
resolving its ongoing litigation and investigations, (iv) providing and
assisting in providing SEC public filing certifications, and (v) such other
assignments and responsibilities as are reasonably assigned to him by the
Company’s Board of Directors or Chief Executive Officer.

     3. Consulting Duties. Following the Termination Date, Executive agrees to
provide ongoing consulting advice as needed by the Company and as is mutually
agreed upon by Executive and the Company, in their sole discretion. Such
consulting advice shall be provided during normal business hours. Executive’s
consulting duties shall include: (i) assisting the Company’s new Chief
Financial Officer with issues relating to certifying the Company’s filings with
the SEC that relate to matters within the reasonable knowledge of Executive
(including delivery of sub-certifications), and (ii) if it is not yet resolved,
assisting the Company in resolving its ongoing litigation and investigations.
Moreover, Executive agrees to provide consulting advice, assistance and
information as may reasonably be deemed necessary by the Company relating to
its position in any legal or regulatory proceedings. Executive shall be paid
at the rate of $3,000.00 per day (including any partial day’s consulting work of at least
one hour) for performing his consulting services hereunder,

 

 

plus reasonable
documented out-of-pocket expenses. Executive agrees to use his commercially
reasonable best efforts in discharging his consulting duties hereunder. The
Company agrees to indemnify and hold Executive harmless with respect to his
consulting work product hereunder, except to the extent such work product is
grossly negligent or done in bad faith.

     4. Severance/Retention Benefits. If (i) prior to the Termination Date,
Executive’s employment with the Company is subject to a “Constructive
Termination” or is involuntarily terminated by the Company other than for
“Cause,” as such terms are defined in Executive’s employment agreement with the
Company dated April 4, 2001 and as amended January 20, 2004, and as such terms
are modified in Section 6 hereof (the “Employment Agreement”), or (ii)
Executive remains employed by the Company through the Termination Date, then,
in either case and subject to Executive executing and not revoking a mutual
release of claims with the Company substantially in the form attached hereto as
Exhibit A (the “Release”) and not materially breaching the provisions of
Section 13 of the Employment Agreement or Section 2 hereof, (A) all of
Executive’s outstanding stock options covering Company common stock and all
shares of restricted stock granted to Executive (together “Equity
Compensation”) shall immediately vest 100%, and, if applicable, the Company’s
right to repurchase any of such shares immediately shall lapse, and (B)
Executive shall receive continued payments of one year’s “Base Salary” plus
100% of his “Target Bonus” (as such terms are defined in the Employment
Agreement), less applicable withholding, in accordance with the Company’s
standard payroll practice. In addition, if Executive elects COBRA, the Company
will make his COBRA payments, to cover his current level of benefits, on his
behalf to pay for coverage during the period beginning January 1, 2005 and
ending December 31, 2005. Moreover, if Executive remains employed with the
Company through September 30, 2004, he shall receive 100% of his Target Bonus
for the third quarter of the Company’s 2004 fiscal year and if Executive
remains employed with the Company through December 31, 2004, he shall receive
100% of his Target Bonus for the fourth quarter of the Company’s 2004 fiscal
year (the “2004 Third and Fourth Quarter Bonuses”). Executive shall also
receive the 2004 Third and Fourth Quarter Bonuses to the extent he does not
receive them due to his “Constructive Termination” or involuntarily
termination by the Company other than for “Cause,” as such terms are defined in
the Employment Agreement.

     5. Other Terminations of Employment. In the event Executive terminates
his employment voluntarily other than pursuant to a Constructive Termination,
Executive’s employment is involuntarily terminated by the Company for Cause, or
his employment terminates due to his death or Disability, then all vesting of
the Equity Compensation shall terminate immediately and all payments of
compensation by the Company to Executive shall immediately terminate (except as
to amounts already earned).

     6. Effect on Employment Agreement. Executive agrees that the provisions
of section 4 of this Agreement supersede and replace in their entirety the
provisions of section 4(e)(i) of the Employment Agreement. Executive further
agrees that his and the Company’s agreements hereunder and the Company’s
reduction or restructuring of Executive’s authority and duties during the
Transition Period shall not constitute grounds for either a Constructive
Termination or an involuntary termination other than for Cause
under the Employment Agreement. Otherwise, the provisions of the
Employment Agreement remain in full force and effect.

-2-

 

     7. Mutual Non-Disparagement. Executive agrees to refrain from
disparagement, criticism, defamation or slander of the Company or of the
Company’s employees, officers, directors, agents, products or services to
anyone, including, but not limited to, other employees and past, present or
prospective customers and/or employees of the Company and to refrain from
tortious interference with the contracts and relationships of the Company. The
Company agrees to refrain from disparagement, criticism, defamation or slander
of Executive to anyone, including, but not limited to, other employees and
past, present or prospective customers and/or employees of the Company and to
refrain from tortious interference with the contracts and relationships of
Executive.

     8. Costs. The Parties shall each bear their own costs, expert fees,
attorneys’ fees and other fees incurred in connection with this Agreement.

     9. At-Will Employment. Executive and the Company understand and
acknowledge that Executive’s employment with the Company constitutes “at-will”
employment. Subject to the Company’s obligation to provide severance benefits
as specified herein, Executive and the Company acknowledge that this employment
relationship may be terminated at any time, upon written notice to the other
party, with or without good cause or for any or no cause, at the option either
of the Company or Executive.

     10. Arbitration. The Parties agree that any and all disputes arising out
of the terms of this Agreement, their interpretation, and any of the matters
herein released, including any potential claims of harassment, discrimination
or wrongful termination shall be subject to binding arbitration, to the extent
permitted by law, as specified in the Employment Agreement.

     11. No Representations. Executive represents that he has had the
opportunity to consult with an attorney, and has carefully read and understands
the scope and effect of the provisions of this Agreement. Neither party has
relied upon any representations or statements made by the other party hereto
which are not specifically set forth in this Agreement.

     12. Severability. In the event that any provision hereof becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision.

     13. Entire Agreement. This Agreement, along with the Employment Agreement
(as amended hereby), the Proprietary Information Agreement, the Indemnification
Agreement by and between the Company and Executive, and the agreements relating
to Executive’s Equity Compensation (as modified hereby) represent the entire
agreement and understanding between the Company and Executive concerning
Executive’s transition, termination and consulting arrangements with the
Company. Notwithstanding anything to the contrary in the Release or otherwise,
nothing in the Release shall release the Company or Executive from their
obligations under this Agreement.

     14. No Oral Modification. This Agreement may only be amended in writing
signed by Executive and the Chairman of the Board and Chief Executive Officer
of the Company.

-3-

 

     15. Governing Law. This Agreement shall be governed by the internal
substantive laws, but not the choice of law rules, of the State of California.

     16. Effective Date. This Agreement is effective immediately after it has
been signed by both Parties.

     17. Counterparts. This Agreement may be executed in counterparts, and
each counterpart shall have the same force and effect as an original and shall
constitute an effective, binding agreement on the part of each of the
undersigned.

     18. Voluntary Execution of Agreement. This Agreement is executed
voluntarily and without any duress or undue influence on the part or behalf of
the Parties, with the full intent of releasing all claims. The Parties
acknowledge that:

         (a) They have read this Agreement;

         (b) They have been represented in the preparation, negotiation, and
execution of this Agreement by legal counsel of their own choice or that they
have voluntarily declined to seek such counsel;

         (c) They understand the terms and consequences of this Agreement and of
the releases it contains;

         (d) They are fully aware of the legal and binding effect of this
Agreement.

     IN WITNESS WHEREOF, the Parties have executed this Agreement on the
respective dates set forth below.

	 	 	 	 	 
	 	McAFEE, INC.

 	 
	Dated:  September 3, 2004 	By:  	/s/ George Samenuk
 	 
	 	 	 	 
	 	Title:  	Chairman and Chief Executive Officer 	 
	 	 	 	 
	 
	 	EXECUTIVE

 	 
	Dated: September 3, 2004 	          /s/ Stephen C. Richards
 	 
	 	Stephen C. Richards 	 
	 	 	 	 
	 

-4-exv10w9

 

Exhibit 10.9

AMENDED AND RESTATED CREDIT AGREEMENT

dated as of

June 21, 2004

among

GAMESTOP CORP.,

as Lead Borrower for:

GAMESTOP CORP.

GAMESTOP, INC.

GAMESTOP.COM, INC.

BABBAGES ETC. LLC

SUNRISE PUBLICATIONS, INC.

MARKETING CONTROL SERVICES, INC.

GAMESTOP BRANDS, INC.

GAMESTOP OF TEXAS (GP), LLC

GAMESTOP (LP), LLC

and

GAMESTOP TEXAS LP

The LENDERS Party Hereto,

FLEET NATIONAL BANK

as Issuing Bank

and

FLEET RETAIL GROUP, INC.

as Administrative Agent and Collateral Agent,

 

 

TABLE OF CONTENTS

	 	 	 
	1. DEFINITIONS
	 	3
	1.1 Defined Terms
	 	3
	1.2 Terms Generally
	 	29
	1.3 Accounting Terms
	 	29
	2. AMOUNT AND TERMS OF CREDIT
	 	30
	2.1 Commitment of the Lenders
	 	30
	2.2 Increase in Total Commitments
	 	30
	2.3 Reserves; Changes to Reserves
	 	32
	2.4 Making of Loans
	 	33
	2.5 Overadvances
	 	35
	2.6 Swingline Loans
	 	35
	2.7 Letters of Credit
	 	36
	2.8 Settlements Amongst Lenders
	 	40
	2.9 Notes; Repayment of Loans
	 	42
	2.10 Interest on Loans
	 	42
	2.11 Default Interest
	 	43
	2.12 Certain Fees
	 	43
	2.13 Unused Commitment Fee
	 	43
	2.14 Letter of Credit Fees
	 	44
	2.15 Nature of Fees
	 	44
	2.16 Termination or Reduction of Commitments
	 	44
	2.17 Alternate Rate of Interest
	 	45
	2.18 Conversion and Continuation of Loans
	 	45
	2.19 Mandatory Prepayment; Cash Collateral; Commitment Termination
	 	47
	2.20 Optional Prepayment of Loans; Reimbursement of Lenders
	 	48
	2.21 Maintenance of Loan Account; Statements of Account
	 	49
	2.22 Cash Receipts
	 	50
	2.23 Application of Payments
	 	52
	2.24 Increased Costs
	 	53
	2.25 Change in Legality
	 	54
	2.26 Payments; Sharing of Setoff
	 	54
	2.27 Taxes
	 	56
	2.28 Security Interests in Collateral
	 	58
	2.29 Mitigation Obligations; Replacement of Lenders
	 	58
	3. REPRESENTATIONS AND WARRANTIES
	 	59
	3.1 Organization; Powers
	 	59
	3.2 Authorization; Enforceability
	 	59
	3.3 Governmental Approvals; No Conflicts
	 	60
	3.4 Financial Condition
	 	60
	3.5 Properties
	 	60
	3.6 Litigation and Environmental Matters
	 	60

(ii)

 

	 	 	 
	3.7 Compliance with Laws and Agreements
	 	61
	3.8 Investment and Holding Company Status
	 	61
	3.9 Taxes
	 	61
	3.10 ERISA
	 	61
	3.11 Interdependence of Borrower Affiliated Group
	 	62
	3.12 Disclosure
	 	62
	3.13 Subsidiaries
	 	63
	3.14 Insurance
	 	63
	3.15 Labor Matters
	 	63
	3.16 Certain Transactions
	 	63
	3.17 Restrictions on the Borrower Affiliated Group
	 	64
	3.18 Security Documents
	 	64
	3.19 Federal Reserve Regulations
	 	64
	3.20 Solvency
	 	65
	3.21 Franchises, Patents, Copyrights, Etc.
	 	65
	4. CONDITIONS
	 	65
	4.1 Closing Date
	 	65
	4.2 Conditions Precedent to Each Loan and Each Letter of Credit
	 	68
	5. AFFIRMATIVE COVENANTS
	 	69
	5.1 Financial Statements and Other Information
	 	69
	5.2 Notices of Material Events
	 	71
	5.3 Information Regarding Collateral
	 	72
	5.4 Existence; Conduct of Business
	 	72
	5.5 Payment of Obligations
	 	72
	5.6 Maintenance of Properties
	 	72
	5.7 Insurance
	 	73
	5.8 Casualty and Condemnation
	 	74
	5.9 Books and Records; Inspection and Audit Rights
	 	74
	5.10 Fiscal Year
	 	75
	5.11 Physical Inventories
	 	75
	5.12 Compliance with Laws
	 	76
	5.13 Use of Proceeds and Letters of Credit
	 	76
	5.14 Additional Subsidiaries
	 	76
	5.15 Further Assurances
	 	76
	6. NEGATIVE COVENANTS
	 	77
	6.1 Indebtedness and Other Obligations
	 	77
	6.2 Liens
	 	78
	6.3 Fundamental Changes
	 	79
	6.4 Investments, Loans, Advances, Guarantees and Acquisitions
	 	80
	6.5 Asset Sales
	 	81
	6.6 Restrictive Agreements
	 	82
	6.7 Restricted Payments; Certain Payments of Indebtedness
	 	82

(iii)

 

	 	 	 
	6.8 Transactions with Affiliates
	 	83
	6.9 Additional Subsidiaries
	 	83
	6.10 Amendment of Material Documents
	 	83
	6.11 Environmental Laws
	 	83
	6.12 Fiscal Year
	 	83
	7. EVENTS OF DEFAULT
	 	83
	7.1 Events of Default
	 	83
	7.2 When Continuing
	 	88
	7.3 Remedies on Default
	 	88
	7.4 Application of Proceeds
	 	88
	8. THE AGENTS
	 	88
	8.1 Administration by Administrative Agent
	 	88
	8.2 The Collateral Agent
	 	88
	8.3 Sharing of Excess Payments
	 	89
	8.4 Agreement of Required Lenders
	 	89
	8.5 Liability of Agents
	 	90
	8.6 Notice of Default
	 	91
	8.7 Lenders’ Credit Decisions
	 	91
	8.8 Reimbursement and Indemnification
	 	92
	8.9 Rights of Agents
	 	92
	8.10 Notice of Transfer
	 	92
	8.11 Successor Agent
	 	92
	8.12 Reports and Financial Statements
	 	93
	8.13 Delinquent Lender
	 	93
	9. MISCELLANEOUS
	 	94
	9.1 Notices
	 	94
	9.2 Waivers; Amendments
	 	95
	9.3 Expenses; Indemnity; Damage Waiver
	 	97
	9.4 Designation of Lead Borrower as Borrowers’ Agent
	 	98
	9.5 Successors and Assigns
	 	99
	9.6 Survival
	 	102
	9.7 Counterparts; Integration; Effectiveness
	 	102
	9.8 Severability
	 	102
	9.9 Right of Setoff
	 	103
	9.10 Governing Law; Jurisdiction; Consent to Service of Process
	 	103
	9.11 WAIVER OF JURY TRIAL
	 	103
	9.12 Headings
	 	104
	9.13 Interest Rate Limitation
	 	104
	9.14 Additional Waivers
	 	104
	9.15 Confidentiality
	 	106
	9.16 Existing Credit Agreement Amended and Restated
	 	106

(iv)

 

EXHIBITS

	A	 	Assignment and Acceptance
	 
	B-1	 	Revolving Note
	 
	B-2	 	Swingline Note
	 
	C	 	Opinion of Counsel to Borrowers
	 
	D	 	Borrowing Base Certificate
	 
	E	 	Compliance Certificate

(v)

 

SCHEDULES

	1.1	 	Lenders and Commitments
	 
	2.7(k)	 	Existing Letters of Credit
	 
	2.22(b)	 	Credit Card Arrangements
	 
	3.5(b)(i)	 	Title to Properties; Real Estate Owned
	 
	3.5(b)(ii)	 	Leased Properties
	 
	3.6	 	Disclosed Matters
	 
	3.10	 	ERISA Plans
	 
	3.13	 	Subsidiaries
	 
	3.14	 	Insurance
	 
	3.16	 	Borrower Affiliated Group Transactions
	 
	3.21	 	Intellectual Property
	 
	5.1(g)	 	Financial Reporting Requirements
	 
	6.1	 	Indebtedness
	 
	6.2	 	Liens
	 
	6.4	 	Investments

(vi)

 

     AMENDED AND RESTATED CREDIT AGREEMENT dated as of June 21, 2004 (this
“Agreement”) among

     GAMESTOP CORP., a corporation organized under the laws of the State of
Delaware having a place of business at 2250 William D. Tate Avenue, Grapevine,
Texas, as Lead Borrower for the Borrowers, being

     said GAMESTOP CORP.,

     GAMESTOP, INC., a corporation organized under the laws of the State of
Minnesota having a place of business at 2250 William D. Tate Avenue, Grapevine,
Texas,

     GAMESTOP.COM, INC., a corporation organized under the laws of the State of
Delaware having a place of business at 2250 William D. Tate Avenue, Grapevine,
Texas,

     BABBAGE’S ETC. LLC, a limited liability company organized under the laws
of the State of Delaware having a place of business at 2250 William D. Tate
Avenue, Grapevine, Texas,

     SUNRISE PUBLICATIONS, INC., a corporation organized under the laws of the
State of Minnesota having a place of business at 2250 William D. Tate Avenue,
Grapevine, Texas,

     MARKETING CONTROL SERVICES, INC., a corporation organized under the laws
of the Commonwealth of Virginia having a place of business at 2250 William D.
Tate Avenue, Grapevine, Texas,

     GAMESTOP BRANDS, INC., a corporation organized under the laws of the State
of Delaware having a place of business at 724 1st Street N., 4th Floor,
Minneapolis, Minnesota 55401,

     GAMESTOP OF TEXAS (GP), LLC, a limited liability company organized under
the laws of the State of Delaware having a place of business at 2250 William D.
Tate Avenue, Grapevine, Texas,

     GAMESTOP (LP), LLC, a limited liability company organized under the laws
of the State of Delaware having a place of business at 724 1st Street N., 4th
Floor, Minneapolis, Minnesota 55401, and

     GAMESTOP TEXAS LP, a limited partnership organized under the laws of the
State of Texas having a place of business at 2250 William D. Tate Avenue,
Grapevine, Texas,

     the LENDERS party hereto; and

1

 

     FLEET NATIONAL BANK, as Issuing Bank, a national banking association
having a place of business at 100 Federal Street, Boston, Massachusetts 02110;
and

     FLEET RETAIL GROUP, INC., as Administrative Agent and Collateral Agent for
the Secured Parties, a Delaware corporation, having its principal place of
business at 40 Broad Street, Boston, Massachusetts 02109,

in consideration of the mutual covenants herein contained and benefits to be
derived herefrom.

W I T N E S S E T H:

     WHEREAS, the Lead Borrower has entered into a Credit Agreement dated as of
February 19, 2002 among the Lead Borrower, the “Banks” as defined therein,
Fleet National Bank, as “Administrative Agent” as defined therein, UBS Warburg
LLC, as Documentation Agent, Fleet National Bank as “Issuing Bank” as defined
therein, and Fleet Securities, Inc., as Arranger (as amended and in effect, the
“Existing Credit Agreement”); and

     WHEREAS, Fleet National Bank is contemporaneously herewith resigning as
Agent and Fleet Retail Group, Inc. is hereby being appointed as successor
Agent; and

     WHEREAS, certain of the Subsidiary Borrowers have entered into a Guaranty
dated as of February 19, 2002 (as amended and in effect, the “Existing
Guaranty”) in favor of Fleet Retail Group, Inc. (f/k/a Fleet Retail Finance
Inc.) to secure the obligations of the Lead Borrower under the Existing Credit
Agreement; and

     WHEREAS, certain of the Banks under the Existing Credit Agreement have
assigned their rights and obligations thereunder to Persons who are, or shall
become, Lenders under this Agreement; and

     WHEREAS, the Commitments of certain Persons who are Banks under the
Existing Credit Agreement and are continuing as Lenders under this Agreement
are being modified as provided herein; and

     WHEREAS, the Borrowers and the Lenders hereunder desire to otherwise amend
the Existing Credit Agreement to include the Subsidiary Borrowers as Borrowers
thereunder; and

     WHEREAS, the Borrowers and the Lenders hereunder desire to amend and
restate the Existing Credit Agreement as provided herein.

     NOW, THEREFORE, in consideration of the mutual conditions and agreements
set forth in this Agreement, and for good and valuable consideration, the
receipt of which is hereby acknowledged, the Lenders, the Agents, and the
Borrowers hereby agree that the Existing Credit Agreement shall be amended and
restated in its entirety to read as follows:

2

 

     1. DEFINITIONS.

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

     “ACH” shall mean automated clearing house transfers.

     “Account” shall mean “accounts” as defined in the UCC, and also all
accounts, accounts receivable, and rights to payment (whether or not earned by
performance) for: (i) property that has been or is to be sold, leased,
licensed, assigned, or otherwise disposed of; (ii) services rendered or to be
rendered; (iii) a policy of insurance issued or to be issued; (iv) a secondary
obligation incurred or to be incurred; or (v) arising out of the use of a
credit or charge card or information contained on or used with that card.

     “Additional Commitment Lender” as defined in Section 2.2(a).

     “Adjusted LIBO Rate” means, with respect to any LIBO Borrowing for any
Interest Period, an interest rate per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period
divided by (b) a percentage equal to 100% minus the Statutory Reserve Rate.

     “Administrative Agent” means FRG, in its capacity as administrative agent
for the Secured Parties hereunder.

     “Affiliate” means, with respect to a specified Person, (i) any director or
officer of that Person, (ii) any other Person Controlling, Controlled by or
under direct or indirect common Control with that Person (and if that Person is
an individual, any member of the immediate family (including parents, siblings,
spouse, children, stepchildren, nephews, nieces and grandchildren) of such
individual and any trust whose principal beneficiary is such individual or one
or more members of such immediate family and any Person who is Controlled by
any such member or trust), (iii) any other Person directly or indirectly
holding 10% or more of any class of the capital stock or other equity interests
(including options, warrants, convertible securities and similar rights) of
that Person, (iv) any other Person 10% or more of any class of whose capital
stock or other equity interests (including options, warrants, convertible
securities and similar rights) is held directly or indirectly by that Person,
and (v) any other Person that possesses, directly or indirectly, power to
direct or cause the direction of management or policies (whether through
ownership of securities or partnership or other ownership interests, by
contract or otherwise) of that Person.

     “Agents” shall mean collectively, the Administrative Agent and the
Collateral Agent.

     “Agreement” means this Amended and Restated Credit Agreement, as modified,
amended, supplemented or restated, and in effect from time to time.

3

 

     “Applicable Law” means as to any Person: (i) all statutes, rules,
regulations, orders, or other requirements having the force of law and (ii) all
court orders and injunctions, and/or similar rulings, in each instance ((i) and
(ii)) of or by any Governmental Authority, or court, or tribunal which are
applicable to such Person, or any property of such Person.

     “Applicable Margin” means initially, the rates for Prime Rate Loans and
LIBO Loans set forth in Level II, below:

	 	 	 	 	 	 	 	 	 	 	 
	 	 	Fixed Charge	 	 	 	 
	Level
	 	Coverage Ratio
	 	Prime Rate Loans
	 	LIBO Loans

	I
	 	Fixed Charge Coverage Ratio	 	 	0.25	%	 	 	1.75	%
	 
	 	less than 1.50 to 1.00	 	 	 	 	 	 	 	 
	II
	 	Fixed Charge Coverage Ratio	 	 	0	%	 	 	1.50	%
	 
	 	equal to or greater than 1.50	 	 	 	 	 	 	 	 
	 
	 	to 1.00 and less than 3.00 to	 	 	 	 	 	 	 	 
	 
	 	1.00	 	 	 	 	 	 	 	 
	III
	 	Fixed Charge Coverage Ratio	 	 	0	%	 	 	1.25	%
	 
	 	equal to or greater than 3.00	 	 	 	 	 	 	 	 
	 
	 	to 1.00	 	 	 	 	 	 	 	 

     The Applicable Margin shall be adjusted quarterly commencing with the
fiscal quarter ending July 31, 2004, based on the financial statements and
compliance certificate required to be delivered pursuant to Sections 5.1(b) and
5.1(c) below. Any interest rate change shall be effective two (2) Business
Days after the date of the Administrative Agent’s receipt of the financial
statements and compliance certificate required to be delivered pursuant to
Sections 5.1(b) and 5.1(c) below. Upon the occurrence of an Event of Default,
at the option of the Administrative Agent or at the direction of the Required
Lenders, interest shall be determined in the manner set forth in Section 2.11.

     “Appraisal Percentage” shall mean 80%.

     “Appraised Value” means the net appraised liquidation value of the
Borrowers’ Inventory as set forth in the Borrowers’ inventory stock ledger
(expressed as a percentage of the Cost of such Inventory) as determined from
time to time by the Administrative Agent with the assistance of an independent
appraiser satisfactory to the Administrative Agent.

4

 

     “Assignment and Acceptance” means an assignment and acceptance entered
into by a Lender and an assignee (with the consent of any party whose consent
is required by Section 9.5), and accepted by the Administrative Agent, in the
form of Exhibit A or any other form approved by the Administrative Agent.

     “Availability Reserves” means such reserves as the Administrative Agent
from time to time determines in the Administrative Agent’s Permitted Discretion
(after consultation with the Lead Borrower (whose consent to any Availability
Reserve shall not be required)) as being appropriate to reflect the impediments
to the Agents’ ability to realize upon the Collateral. Without limiting the
generality of the foregoing, Availability Reserves may include (but are not
limited to) reserves based on (i) rent; (ii) Customer Credit Liabilities;
(iii) customs, duties, and other costs to release Inventory which is being
imported into the United States; (iv) outstanding taxes and other governmental
charges, including, ad valorem, real estate, personal property, and other taxes
which might have priority over the interests of the Collateral Agent in the
Collateral; and (v) salaries, wages and benefits due to employees of any
Borrower which might have priority over the interests of the Collateral Agent
in the Collateral. Availability Reserves shall be established and calculated
in a manner and methodology consistent with the Administrative Agent’s
practices as of the Closing Date with other similarly situated borrowers.

     “Barnes & Noble” shall mean Barnes & Noble, Inc., a Delaware corporation.

     “Blocked Account Agreements” shall mean agency agreements with the banks
maintaining a checking or other demand deposit account of any Borrower into
which the proceeds of any other DDA are regularly swept on a daily basis, which
agreements shall be in form and substance reasonably satisfactory to the
Administrative Agent.

     “Blocked Account Banks” shall mean the banks with whom the Borrowers have
entered into Blocked Account Agreements.

     “Blocked Accounts” shall mean each deposit account of the Borrowers which
is the subject of a Blocked Account Agreement.

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

     “Borrowers” means, individually and collectively, GameStop Corp.,
GameStop, Inc., GameStop.com, Inc., Babbage’s Etc. LLC, Sunrise Publications,
Inc., Marketing Control
Services, Inc., GameStop Brands, Inc., GameStop of Texas (GP), LLC,
GameStop (LP), LLC, GameStop Texas LP, and any other Person who becomes a
Borrower hereunder.

     “Borrower Affiliated Group” shall mean, collectively, (i) the Borrowers
and (ii) each of the Domestic Subsidiaries of the Borrowers in existence from
time to time.

5

 

     “Borrowing” shall mean (a) the incurrence of Loans of a single Type, on a
single date and having, in the case of LIBO Loans, a single Interest Period, or
(b) a Swingline Loan.

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

     (a) the lesser of (i) (A) the Appraisal Percentage multiplied by (B)(1)
the Appraised Value of Eligible Inventory, minus (2) Inventory Reserves, or
(ii) (A) the Inventory Advance Rate multiplied by (B)(1) the Cost of Eligible
Inventory, minus (2) Inventory Reserves; minus

     (b) the then amount of all Availability Reserves.

     “Borrowing Base Certificate” has the meaning assigned to such term in
Section 5.1(e).

     “Borrowing Request” means a request by the Lead Borrower on behalf of the
Borrowers for a Borrowing in accordance with Section 2.4.

     “Breakage Costs” shall have the meaning set forth in Section 2.20(b).

     “Business Day” means any day that is not a Saturday, Sunday or other day
on which commercial banks in Boston, Massachusetts are authorized or required
by law to remain closed, provided that, when used in connection with a LIBO
Loan, the term “Business Day” shall also exclude any day on which banks are not
open for dealings in dollar deposits in the London interbank market.

     “Capital Expenditures” of any Person means, for any period, to the extent
capitalized in accordance with GAAP, any expenditure for fixed assets (both
tangible and intangible), including assets being constructed (whether or not
completed), leasehold improvements, capital leases under GAAP, installment
purchases of machinery and equipment, acquisitions of real estate and other
similar expenditures including (i) in the case of a purchase, the entire
purchase price, whether or not paid during the fiscal period in question, (ii)
in the case of any Capitalized Lease Obligation, the capitalized amount thereof
(determined in accordance with GAAP) and (iii) without duplication,
expenditures in or from any construction-in-progress account of any member of
the Borrower Affiliated Group, provided, however, that expenditures for a
Permitted Acquisition shall not constitute Capital Expenditures.

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

6

 

     “Cash Collateral Account” shall mean an interest-bearing account
established by the Borrowers with the Collateral Agent at Fleet under the sole
and exclusive dominion and control of the Collateral Agent designated as the
“GameStop Corp. Cash Collateral Account”.

     “Cash Dominion Event” means either (i) the occurrence and continuance of
any Event of Default, or (ii) the failure of the Borrowers to maintain Excess
Availability of at least $20,000,000 for five (5) consecutive Business Days.
For purposes of this Agreement, the occurrence of a Cash Dominion Event shall
be deemed continuing at the Administrative Agent’s option (i) so long as such
Event of Default has not been waived, and/or (ii) if the Cash Dominion Event
arises as a result of the Borrowers’ failure to achieve Excess Availability as
required hereunder, until Excess Availability has exceeded $20,000,000.00 for
fifteen (15) consecutive Business Days, in which case a Cash Dominion Event
shall no longer be deemed to be continuing for purposes of this Agreement.
Notwithstanding the foregoing, in the event that there are no Obligations
outstanding, a Cash Dominion Event shall not be deemed to have occurred and be
continuing for purposes of this Agreement and the other Loan Documents.

     “Cash Receipts” has the meaning provided therefor in Section 2.22(d).

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

     “Change in Control” means, at any time, (a) occupation of a majority of
the seats (other than vacant seats) on the board of directors of the Lead
Borrower by Persons who were neither (i) nominated by the board of directors of
the Lead Borrower nor (ii) appointed by directors so nominated; or (b) any
person (within the meaning of the Securities and Exchange Act of 1934, as
amended), other than Barnes & Noble or any of its Affiliates, is or becomes the
beneficial owner (within the meaning of Rule 13d-3 and 13d-5 of the Securities
and Exchange Act of 1934, as amended) directly or indirectly of fifty percent
(50%) or more of the total voting power of the Voting Stock of the Lead
Borrower on a fully diluted basis, whether as a result of the issuance of
securities of the Lead Borrower, any merger, consolidation, sale, or
distribution, or otherwise, or (c) except as otherwise permitted pursuant to
this Agreement, the failure of the Lead Borrower to own, directly or
indirectly, 100% (or such other percentage as may be owned directly or
indirectly but in no event less than that percentage so owned as of the date of
acquisition or creation thereof) of the capital stock or ownership interest, as
applicable, of all members of the Borrower Affiliated Group. For purposes of
this Agreement, any sale or distribution by Barnes & Noble of the Lead
Borrower’s Class B common stock shall not be deemed to be a Change in Control
hereunder, provided that no transferee becomes the beneficial owner (within the
meaning of Rule 13d-3 and 13d-5 of the Securities and Exchange Act of 1934, as
amended)
directly or indirectly of fifty percent (50%) or more of the outstanding
capital stock of the Lead Borrower on a fully diluted basis as a result of such
sale or distribution.

     “Change in Law” means (a) the adoption of any law, rule or regulation
after the date of this Agreement (or, in the case of any Person which becomes a
Lender or Participant thereafter,

7

 

the date on which such Person becomes a
Lender or Participant), (b) any change in any law, rule or regulation or in the
interpretation or application thereof by any Governmental Authority after the
date of this Agreement (or, in the case of any Person which becomes a Lender or
Participant thereafter, the date on which such Person becomes a Lender or
Participant) or (c) compliance by any Lender or the Issuing Bank (or, for
purposes of Section 2.24, by any lending office of such Lender or by such
Lender’s or the Issuing Bank’s holding company, if any) with any request,
guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement (or, in
the case of any Person which becomes a Lender or Participant thereafter, the
date on which such Person becomes a Lender or Participant).

     “Charges” has the meaning provided therefor in Section 9.13.

     “Closing Date” means the date on which the conditions specified in Section
4.1 are satisfied (or waived by the Agents).

     “Code” means the Internal Revenue Code of 1986 and the rules and
regulations promulgated thereunder, as amended from time to time.

     “Collateral” means any and all “Collateral” as defined in any applicable
Security Document.

     “Collateral Agent” means FRG, in its capacity as collateral agent under
the Security Documents.

     “Commercial Letter of Credit” means any Letter of Credit issued for the
purpose of providing the primary payment mechanism in connection with the
purchase of any materials, goods or services by a Borrower in the ordinary
course of business of such Borrower.

     “Commitment” shall mean, with respect to each Lender, the commitment of
such Lender hereunder in the amount set forth opposite its name on Schedule 1.1
hereto or as may subsequently be set forth in the Register from time to time,
as the same may be either (i) reduced from time to time pursuant to Section
2.16 hereof, or (ii) increased from time to time pursuant to Section 2.2
hereof.

     “Commitment Fee” has the meaning provided therefor in Section 0.

     “Commitment Increase” has the meaning provided therefor in Section 2.2(a).

     “Commitment Percentage” shall mean, with respect to each Lender, that
percentage of the Commitments of all Lenders hereunder in the amount set forth
opposite its name on Schedule 1.1 hereto or as may subsequently be set forth in
the Register from time to time, as the same may be either (i) reduced from time
to time pursuant to Section 2.16 hereof, or (ii) increased or reduced from time
to time pursuant to Section 2.2 hereof.

8

 

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

     “Consolidated EBITDA” of any Person means, for any twelve month period,
the result for such period of (i) Consolidated Net Income, plus (ii)
depreciation, amortization and all other non-cash charges that were deducted in
the calculation of Consolidated Net Income for such period plus (iii)
provisions for income taxes that were deducted in the calculation of
Consolidated Net Income for such period, plus (iv) Consolidated Interest
Expense, plus (v) extraordinary non-cash losses to the extent such losses have
not been and will not become cash losses in a later fiscal period. Each
calculation of Consolidated EBITDA under this Agreement shall be made for the
twelve month period ending on the date of such calculation.

     “Consolidated EBITDAR” of any Person means, for any period, an amount
equal to Consolidated EBITDA for such period, plus Consolidated Rent Expense
for such period.

     “Consolidated Interest Expense” means, for any period for any Person,
total interest and all amortization of debt discount and expense (including
that attributable to Capital Lease Obligations in accordance with GAAP) of such
Person on a Consolidated basis with respect to all outstanding Indebtedness of
such Person, including, without limitation, all commitment fees, fees and
charges owed with respect to letters of credit, balance deficiency fees and
similar expenses, and bankers’ acceptance financing and net costs under Hedging
Agreements, but excluding any non-cash or deferred interest financing costs.

     “Consolidated Net Income” means, for any period with respect to any
Person, the net income (or loss) of such Person on a Consolidated basis for
such period taken as a single accounting period determined in conformity with
GAAP, provided that there shall be excluded (i) the income (or loss) of any
Person in which any other Person (other than the Lead Borrower or any of its
Domestic Subsidiaries) has a joint interest, except to the extent of the amount
of dividends or other distributions actually paid to the Lead Borrower or any
of its Domestic Subsidiaries by such Person during such period, and (ii) the
income (or loss) of any Person accrued prior to the date it becomes a
Subsidiary of the Lead Borrower or any of its Domestic Subsidiaries or is
merged into or consolidated with the Lead Borrower or any of its Domestic
Subsidiaries or that Person’s assets are acquired by the Lead Borrower or any
of its Domestic Subsidiaries.

     “Consolidated Rent Expense” of any Person means, for any period, the
aggregate rental expenses of such Person on a Consolidated basis for such
period (including percentage rent) under any operating lease classified as such
under GAAP but not including any amount included in the definition of
“Consolidated Interest Expense.”

9

 

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

     “Cost” means the cost value of Inventory as reported on the Borrowers’
inventory stock ledger using the average cost method of accounting based on
practices which are in effect on the date of this Agreement. “Cost” does not
include inventory capitalization costs or other non-purchase price charges
(other than in-bound freight) used in the Borrowers’ calculation of cost of
goods sold.

     “Credit Card Notifications” has the meaning provided therefor in Section
2.22(c).

     “Credit Extensions” as of any day, shall be equal to the sum of (a) the
principal balance of all Loans then outstanding, and (b) the then amount of the
Letter of Credit Outstandings.

     “Customer Credit Liabilities” means, at any time, the aggregate face value
at such time of (a) outstanding gift certificates and gift cards of the
Borrowers entitling the holder thereof to use all or a portion of the
certificate to pay all or a portion of the purchase price for any Inventory,
including, without limitation, “GameStop Loyalty Cards” or other discount
cards, and (b) outstanding merchandise credits and customer deposits of the
Borrowers.

     “DDA” means any checking or other demand deposit account maintained by any
Borrower.

     “DDA List” has the meaning provided therefor in Section 2.22(c)

     “DDA Notification” has the meaning provided therefor in Section 2.22(c).

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

     “Delinquent Lender” has the meaning given that term in Section 8.13.

     “Delinquent Lender’s Future Commitment” has the meaning given that term in
Section 8.13.

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

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

     “Eligible In-Transit Inventory” shall mean, as of the date of
determination thereof, without duplication of other Eligible Inventory,
Inventory (a) which has been shipped from a

10

 

foreign location for receipt by a
Borrower within sixty (60) days of the date of determination, but which has not
yet delivered to such Borrower, (b) for which payment has been made by a
Borrower and title has passed to such Borrower, (c) for which the document of
title reflects a Borrower as consignee (along with delivery to such Borrower of
the documents of title with respect thereto), (d) as to which the Collateral
Agent has control over the documents of title which evidence ownership of the
subject Inventory (such as, if requested by the Collateral Agent, by the
delivery of a customs broker agency agreement, reasonably satisfactory to the
Collateral Agent), and (e) which otherwise would constitute Eligible Inventory.

     “Eligible Inventory” shall mean, as of the date of determination thereof,
(a) Eligible In-Transit Inventory, (b) Eligible L/C Inventory, and (c) items of
Inventory of the Borrowers that are finished goods, merchantable and readily
saleable to the public in the ordinary course deemed by the Administrative
Agent in its reasonable discretion to be eligible for inclusion in the
calculation of the Borrowing Base. Without limiting the foregoing, unless
otherwise approved in writing by the Administrative Agent, none of the
following shall be deemed to be Eligible Inventory:

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

     (b) Inventory (including any portion thereof in transit from vendors,
other than Eligible In-Transit Inventory and Eligible L/C Inventory) that is
not located at a warehouse facility or store that is owned or leased by
Borrower;

     (c) Inventory that represents (i) goods damaged, defective or otherwise
unmerchantable, or (ii) goods returned to the vendor;

     (d) Inventory that is not located in the United States of America
(excluding territories and possessions thereof) other than Eligible In-Transit
Inventory and Eligible L/C Inventory;

     (e) Inventory that is not subject to a perfected first-priority security
interest in favor of the Collateral Agent for the benefit of the Secured
Parties;

     (f) Inventory which consists of samples, labels, bags, packaging, and
other similar non-merchandise categories;

     (g) Inventory as to which insurance in compliance with the provisions of
Section 5.7 hereof is not in effect;

     (h) Inventory which has been sold but not yet delivered; or

     (i) Inventory which is acquired in a Permitted Acquisition or which is
owned by a Subsidiary created after the Closing Date (except to the extent that
such Inventory has been acquired by such Subsidiary from another Borrower and
otherwise constitutes Eligible

11

 

Inventory) unless and until the Collateral Agent
has completed an appraisal of such Inventory, establishes an Inventory Advance
Rate and Inventory Reserves (if applicable) therefor.

     “Eligible L/C Inventory” shall mean, as of the date of determination
thereof, without duplication of other Eligible Inventory, Inventory (a) not yet
delivered to the Borrowers, (b) the purchase of which is supported by a
Commercial Letter of Credit having an expiry within sixty (60) days of such
date of determination, (c) which has been consigned to a Borrower as consignee
(along with delivery to a Borrower of the documents of title with respect
thereto), (d) as to which the Collateral Agent has control over the documents
of title which evidence ownership of the subject Inventory (such as, if
requested by the Collateral Agent, by the delivery of a customs broker agency
agreement, reasonably satisfactory to the Collateral Agent), and (e) which
otherwise would constitute Eligible Inventory.

     “Environmental Laws” means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by or with any Governmental
Authority, relating in any way to the environment, preservation or reclamation
of natural resources, or handling, treatment, storage, disposal, Release or
threatened Release of any Hazardous Material.

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

     “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder.

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

     “ERISA Event” means (a) any “reportable event”, as defined in Section 4043
of ERISA or the regulations issued thereunder with respect to a Plan (other
than an event for which the 30-day notice period is waived); (b) the existence
with respect to any Plan of an “accumulated funding deficiency” (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c)
the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of
an application for a waiver of the minimum funding standard with respect to any
Plan; (d) the

12

 

incurrence by a Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by a Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by a
Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g)
the receipt by a Borrower or any ERISA Affiliate of any notice, or the receipt
by any Multiemployer Plan from a Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.

     “Event of Default” has the meaning assigned to such term in Section 7.1.
An “Event of Default” shall be deemed to have occurred and to be continuing
unless and until that Event of Default has been duly waived by the
Administrative Agent in writing or cured to the reasonable satisfaction of the
Administrative Agent.

     “Excess Availability” means, as of any date of determination, the excess,
if any, of (a) the Borrowing Base, over (b) the outstanding Credit Extensions.

     “Excluded Taxes” means, with respect to the Agents, any Lender, the
Issuing Bank or any other recipient of any payment to be made by or on account
of any obligation of the Borrowers hereunder, (a) income or franchise taxes
imposed on (or measured by) its gross or net income by the United States of
America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax
imposed by any other jurisdiction in which any Borrower is located and (c) in
the case of a Foreign Lender (other than an assignee pursuant to a request by a
Borrower under Section 2.27(b)), any withholding tax that is imposed on amounts
payable to such Foreign Lender at the time such Foreign Lender becomes a party
to this Agreement (or designates a new lending office) or is attributable to
such Foreign Lender’s failure to comply with Section 2.25, except to the extent
that such Foreign Lender (or its assignor, if any) was entitled, at the time of
designation of a new lending office (or assignment), to receive additional
amounts from the Borrowers with respect to such withholding tax pursuant to
Section 2.25.

     “Existing Credit Agreement” shall have the meaning set forth in the
Preamble to the Agreement.

     “Existing Letters of Credit” means each of the letters of credit listed on
Schedule 2.7(k) hereto.

     “Facility Guaranty” means the Amended and Restated Guaranty executed by
the Facility Guarantors in favor of the Agents, the Issuing Bank and the
Lenders.

13

 

     “Facility Guarantors” means the Borrowers and each direct or indirect
Domestic Subsidiary of the Borrowers.

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

     “Fee Letter” means the letter entitled “Fee Letter” among the Borrowers
and the Administrative Agent dated as of June 21, 2004, as such letter may from
time to time be amended.

     “Financial Officer” means, with respect to any Borrower, the chief
financial officer, controller, assistant controller, treasurer, or assistant
treasurer of such Borrower.

     “Fixed Charge Coverage Ratio” means, as of the last day of any month, for
the twelve-month period then ended, the ratio of (a) an amount equal to
Consolidated EBITDAR less Capital Expenditures for such period, to (b) the sum
of Consolidated Interest Expense plus Consolidated Rent Expense for such
period. Consolidated EBITDAR, Capital Expenditures and Consolidated Rent
Expense shall be calculated without regard to (i) those items attributable to
any Person prior to the date it becomes a Domestic Subsidiary of the Lead
Borrower or any of its other Domestic Subsidiaries or is merged into or
consolidated with the Lead Borrower or any of its Domestic Subsidiaries or that
Person’s assets are acquired by the Lead Borrower or any of its Domestic
Subsidiaries and (ii) any Subsidiaries other than Domestic Subsidiaries
Controlled by the Borrowers.

     “Fleet” means Fleet National Bank, a national banking association.

     “Foreign Lender” means any Lender that is organized under the laws of a
jurisdiction other than the United States of America or any State thereof or
the District of Columbia.

     “Foreign Subsidiary” means any Subsidiary that is organized under the laws
of a jurisdiction other than the United States of America or any State thereof
or the District of Columbia.

     “Fronting Fee” has the meaning provided therefor in Section 2.14(d).

     “FRG” means Fleet Retail Group, Inc., a Delaware corporation.

     “FRG Concentration Account” has the meaning provided therefor in Section
2.22(d).

14

 

     “GAAP” means accounting principles which are (a) consistent with those
promulgated or adopted by the Financial Accounting Standards Board and its
predecessors (or successors) in effect and applicable to that accounting period
in respect of which reference to GAAP is being made, and (b) consistently
applied with past financial statements of the Borrower Affiliated Group
adopting the same principles.

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

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

     “Hazardous Materials” means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes,
mold and other fungi, bacteria, and all other substances or wastes of any
nature regulated pursuant to any Environmental Law, including any material
listed as a hazardous substance under Section 101(14) of CERCLA.

     “Hedging Agreement” means any interest rate protection agreement, interest
rate swap agreement, interest rate cap agreement, interest rate collar
agreement, foreign currency exchange agreement, commodity price protection
agreement, or other interest or currency exchange rate or
commodity price hedging arrangement designed to hedge against fluctuations
in interest rates or foreign exchange rates.

     “Indebtedness” of any Person means, without duplication, (a) all
obligations of such Person for borrowed money (including any obligations which
are without recourse to the credit of such Person), (b) all obligations of such
Person evidenced by bonds, debentures, notes or

15

 

similar instruments, (c) all
obligations of such Person upon which interest charges are customarily paid
under conditional sale or other title retention agreements relating to property
acquired by such Person, (d) all obligations of such Person in respect of the
deferred purchase price of property or services (excluding current accounts
payable incurred in the ordinary course of business), (e) all Indebtedness of
others secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien on property owned or
acquired by such Person, whether or not the Indebtedness secured thereby has
been assumed, (f) all Guarantees by such Person of Indebtedness of others, (g)
all Capital Lease Obligations of such Person, (h) all obligations, contingent
or otherwise, of such Person as an account party in respect of letters of
credit and letters of guaranty, (i) all obligations, contingent or otherwise,
of such Person in respect of bankers’ acceptances, (j) to the extent not
otherwise included, all net obligations of such Person under Hedging
Agreements, and (k) the principal and interest portions of all rental
obligations of such Person under any Synthetic Lease, tax retention operating
lease, off-balance sheet loan or similar off-balance sheet financing where such
transaction is considered borrowed money indebtedness for tax purposes but is
classified as an operating lease in accordance with GAAP. The Indebtedness of
any Person shall include the Indebtedness of any other entity (including any
partnership in which such Person is a general partner) to the extent such
Person is liable therefor as a result of such Person’s ownership interest in or
other relationship with such entity, except to the extent the terms of such
Indebtedness provide that such Person is not liable therefor.

     “Indemnified Taxes” means Taxes other than Excluded Taxes.

     “Indemnitee” has the meaning provided therefor in Section 9.3(b).

     “Intellectual Property Security Agreement” shall mean the Amended and
Restated Patent and Trademark Security Agreement dated as of the date hereof
and executed and delivered by the Borrowers to the Collateral Agent for the
ratable benefit of the Secured Parties.

     “Interest Payment Date” means (a) with respect to any Prime Rate Loan
(including a Swingline Loan), the first day of each calendar quarter, and (b)
with respect to any LIBO Loan, on the last day of the Interest Period
applicable to the Borrowing of which such Loan is a part, and, in addition, if
such LIBO Loan has an Interest Period of greater than 90 days, on the last day
of the third month of such Interest Period.

     “Interest Period” means, with respect to any LIBO Borrowing, the period
commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar
month that is one, two, three or six months thereafter, as the Lead
Borrower may elect by notice to the Administrative Agent in accordance with the
provisions of this Agreement, provided that (a) if any Interest Period would
end on a day other than a Business Day, such Interest Period shall be extended
to the next succeeding Business Day unless such next succeeding Business Day
would fall in the next calendar month, in which case such Interest Period shall
end on the next preceding Business Day, and (b) any Interest Period that
commences on the last Business

16

 

Day of a calendar month (or on a day for which
there is no numerically corresponding day in the last calendar month during
which such Interest Period ends) shall end on the last Business Day of the
calendar month of such Interest Period, (c) any Interest Period which would
otherwise end after the Termination Date shall end on the Termination Date, and
(d) notwithstanding the provisions of clause (c), no Interest Period shall have
a duration of less than one month, and if any Interest Period applicable to a
LIBO Borrowing would be for a shorter period, such Interest Period shall not be
available hereunder. For purposes hereof, the date of a Borrowing initially
shall be the date on which such Borrowing is made and thereafter shall be the
effective date of the most recent conversion or continuation of such Borrowing.

     “Inventory” has the meaning assigned to such term in the Security
Agreement.

     “Inventory Advance Rate” means 55%.

     “Inventory Reserves” means such reserves as may be established from time
to time by the Administrative Agent in the Administrative Agent’s Permitted
Discretion (after consultation with the Lead Borrower (whose consent to any
Inventory Reserve shall not be required)) with respect to the determination of
the saleability, at retail, of the Eligible Inventory or which reflect such
other factors as affect the appraised value of the Eligible Inventory. Without
limiting the generality of the foregoing, Inventory Reserves may include (but
are not limited to) reserves based on (i) obsolescence; (ii) seasonality; (iii)
Shrink; (iv) imbalance; (v) change in Inventory character; (vi) change in
Inventory composition; (vii) change in Inventory mix; (viii) markdowns (both
permanent and point of sale); and (ix) retail markons and markups inconsistent
with prior period practice and performance; industry standards; current
business plans; or advertising calendar and planned advertising events.
Inventory Reserves shall be established and calculated in a manner and
methodology consistent with the Administrative Agent’s practices as of the
Closing Date with other similarly situated borrowers.

     “Investment” has the meaning provided therefore in Section 6.4.

     “Issuing Bank” means Fleet, in its capacity as the issuer of Letters of
Credit hereunder, and any successor to Fleet in such capacity. The Issuing Bank
may, in its discretion, arrange for one or more Letters of Credit to be issued
by Affiliates of the Issuing Bank, in which case the term “Issuing Bank” shall
include any such Affiliate with respect to Letters of Credit issued by such
Affiliate.

     “L/C Disbursement” means a payment made by the Issuing Bank pursuant to a
Letter of Credit.

     “Lead Borrower” means GameStop Corp.

17

 

     “Lenders” shall mean the Persons identified on Schedule 1.1 and each
assignee that becomes a party to this Agreement as set forth in Section 9.5(b),
or each Person that becomes an Additional Commitment Lender as set forth in
Section 2.2(a).

     “Letter of Credit” shall mean a letter of credit that is (i) issued
pursuant to this Agreement for the account of any Borrower or any Facility
Guarantor, (ii) a Standby Letter of Credit or Commercial Letter of Credit,
(iii) issued in connection with the purchase of Inventory by any Borrower or
any Facility Guarantor or for any other purpose that is reasonably acceptable
to the Administrative Agent, and (iv) in form and substance reasonably
satisfactory to the Issuing Bank.

     “Letter of Credit Fees” shall mean the fees payable in respect of Letters
of Credit pursuant to Section 2.14.

     “Letter of Credit Outstandings” shall mean, at any time, the sum of (a)
with respect to Letters of Credit outstanding at such time, the aggregate
maximum amount that then is or at any time thereafter may become available for
drawing or payment thereunder plus (b) all amounts theretofore drawn or paid
under Letters of Credit for which the Issuing Bank has not then been
reimbursed.

     “LIBO Borrowing” shall mean a Borrowing comprised of LIBO Loans.

     “LIBO Loan” shall mean any Loan bearing interest at a rate determined by
reference to the Adjusted LIBO Rate in accordance with the provisions of
Section 0.

     “LIBO Rate” means, with respect to any LIBO Borrowing for any Interest
Period, a rate per annum as determined on the basis of the offered rates for
deposits in Dollars, for a period of time comparable to such Interest Period
which appears on the Telerate page 3750 as of 11:00 a.m. (London time) on the
day that is two Business Days preceding the first day of such Interest Period;
provided, however, if the rate described above does not appear on the Telerate
System on any applicable interest determination date, LIBOR shall be the rate
(rounded upwards, if necessary, to the nearest one hundred thousandth of a
percentage point) determined on the basis of the offered rates for deposits in
Dollars for a period of time comparable to such Interest Period which are
offered to the Administrative Agent by four major banks in the London interbank
market at approximately 11:00 a.m. (London time), on the day that is two
Business Days preceding the first day of such Interest Period as selected by
the Administrative Agent. The principal London office of each of the four
major London banks will be requested to provide a quotation of its Dollar
deposit offered rate to the Administrative Agent. If at least two such
quotations are provided, the rate for that date will be the arithmetic
mean of the quotations. If fewer than two quotations are provided as
requested, the rate for that date will be determined on the basis of the rates
quoted for loans in Dollars to leading European banks for a period of time
comparable to such Interest Period offered by major banks in Boston,
Massachusetts at

18

 

approximately 11:00 a.m. (Boston time), on the day that is two
Business Days preceding the first day of such Interest Period..

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

     “Loan Account” has the meaning assigned to such term in Section 2.21(a).

     “Loan Documents” means this Agreement, the Notes, the Letters of Credit,
the Fee Letter, all Borrowing Base Certificates, the Blocked Account
Agreements, the DDA Notifications, the Credit Card Notifications, the Security
Documents, the Facility Guaranty, and any other instrument or agreement now or
hereafter executed and delivered in connection herewith or therewith, including
(i) any transaction arising out of any cash management, depository, or letter
of credit provided by the Administrative Agent, the Collateral Agent or any of
their respective Affiliates, and (ii) at the Borrowers’ option, any investment,
Hedging Agreement, equipment leasing or other banking or financial services
provided by the Administrative Agent, the Collateral Agent or any of their
respective Affiliates, each as amended and in effect from time to time.

     “Loans” shall mean all loans (including, without limitation, Revolving
Loans and Swingline Loans) at any time made to the Borrowers or for account of
the Borrowers pursuant to this Agreement.

     “Margin Stock” has the meaning assigned to such term in Regulation U.

     “Material Adverse Effect” means a material adverse effect on (a) the
business, operations, property, assets, or condition, financial or otherwise,
of the Borrower Affiliated Group, taken as a whole, (b) the ability of the
Borrower Affiliated Group, taken as a whole, to perform any material obligation
or to pay any Obligations under this Agreement or any of the other Loan
Documents, or (c) the validity or enforceability of this Agreement or any of
the other Loan Documents or any of the material rights or remedies of the
Administrative Agent, the Collateral Agent or the Lenders hereunder or
thereunder.

     “Material Indebtedness” means Indebtedness (other than the Loans and
Letters of Credit) of any one or more of the Borrowers in an aggregate
principal amount exceeding $20,000,000.

     “Material Foreign Subsidiary” means each Foreign Subsidiary which is a
direct Subsidiary of a Borrower which, as of the last day of any fiscal
quarter, satisfied any one or more of the following tests:

19

 

          (a) such Foreign Subsidiary’s total tangible assets (after intercompany
eliminations), as determined in accordance with GAAP, exceeds 10% of
consolidated total tangible assets of the Borrower Affiliated Group); or

          (b) such Foreign Subsidiary’s Consolidated Net Income for the previous
twelve months ending as of the last day of such fiscal quarter exceeds 10% of
the Consolidated Net Income for the previous twelve months ending as of the
last day of such fiscal quarter of the Borrower Affiliated Group.

     “Maturity Date” means June 21, 2009.

     “Maximum Rate” has the meaning provided therefor in Section 9.13.

     “Minority Lenders” has the meaning provided therefor in Section 9.2(c).

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

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

     “Noncompliance Notice” has the meaning provided therefor in Section
2.6(b).

     “Notes” shall mean (i) the promissory notes of the Borrowers substantially
in the form of Exhibit B-1, each payable to the order of a Lender, evidencing
the Revolving Loans, and (ii) the promissory note of the Borrowers
substantially in the form of Exhibit B-2, payable to the Swingline Lender,
evidencing the Swingline Loans.

     “Obligations” means (a) the due and punctual payment by the Borrowers of
(i) the principal of, and interest (including all interest that accrues after
the commencement of any case or proceeding by or against any Borrower under any
federal or state bankruptcy, insolvency, receivership or similar law, whether
or not allowed in such case or proceeding) on the Loans, when and as due,
whether at maturity, by acceleration, upon one or more dates set for prepayment
or otherwise, (ii) each payment required to be made by the Borrowers under the
Credit Agreement in respect of any Letter of Credit, when and as due, including
payments in respect of reimbursement of disbursements, interest thereon and
obligations to provide cash collateral and (iii) all other monetary
obligations, including fees, costs, expenses and indemnities, whether primary,
secondary, direct, contingent, fixed or otherwise, of the Borrowers to the
Secured Parties under the Credit Agreement and the other Loan Documents, (b)
the due and punctual payment and performance of all covenants, agreements,
obligations and liabilities of the Borrowers under or pursuant to this
Agreement and the other Loan Documents, and (c) the
payment and performance under any transaction with FRG or Fleet, or any of
their respective Affiliates, which arises out of (i) any cash management,
depository or letter of credit, or (ii), at the Borrowers’ option, any
investment, Hedging Agreement or other banking or financial services provided
by any such Person.

20

 

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

     “Overadvance” means, at any time of calculation, a circumstance in which
the Credit Extensions exceed the lesser of (a) the Total Commitments or (b) the
Borrowing Base.

     “Participant” has the meaning provided therefore in Section 9.5(e).

     “Payment Conditions” means, at the time of determination, that (a) no
Default or Event of Default then exists or would arise as a result of the
making such payment, (b) the Borrowers have maintained Excess Availability
equal to or greater than $20,000,000 for each day of the thirty (30) days prior
to making such payment, (c) after giving effect to such payment, Excess
Availability will be equal to or greater than $20,000,000, and (d)
Administrative Agent has determined that Excess Availability, as projected on a
pro-forma basis for each day of the thirty (30) days following such payment,
will be equal to or greater than $20,000,000.

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

     “Perfection Certificate” means a certificate in the form of Annex 1 to the
Security Agreement or any other form approved by the Collateral Agent.

     “Permitted Acquisition” means an Investment in, a purchase of the capital
stock in, or the acquisition of all or a substantial portion of the assets or
properties of, any Person, the entering into any exchange of securities with
any Person, or the entering into any transaction, merger or consolidation of
any Person, or any acquisition of any retail store locations of any Person
(each of the foregoing an “Acquisition”) in each case which satisfies each of
the following conditions:

	 	(i)	 	The Acquisition is of a business permitted to be conducted by
the Borrowers pursuant to Section 6.3(b) hereof; and
	 
	 	(ii)	 	Prior to and after giving effect to the Acquisition, no
Default or Event of Default will exist or will arise therefrom; and
	 
	 	(iii)	 	The Person making the Acquisition must be a Borrower or a
Subsidiary which will become a Borrower or Facility Guarantor in
accordance with Section 5.14 hereof and the Borrowers (including
such Person) shall take such steps as are
necessary to grant to the Collateral Agent, for the benefit of the
Secured Parties, a legal, valid and enforceable first priority
security interest (except as provided in Section 6.2 hereof) in all
of the assets and capital stock acquired in connection with such
acquisition;

21

 

	 	(iv)	 	If a Borrower shall merge with such other Person, such
Borrower shall be the surviving party of such merger; and
	 
	 	(v)	 	Each of the Payment Conditions shall have been satisfied.

     “Permitted Discretion” means the Administrative Agent’s good faith credit
judgment based upon any factor or circumstance which it reasonably believes in
good faith: (i) will or could reasonably be expected to adversely affect the
value of the Collateral, the enforceability or priority of the Collateral
Agent’s Liens thereon in favor of the Secured Parties or the amount which the
Collateral Agent and the Secured Parties would likely receive (after giving
consideration to delays in payment and costs of enforcement) in the liquidation
of such Collateral; (ii) suggests that any collateral report or financial
information delivered to the Administrative Agent by or on behalf of the
Borrower Affiliated Group is incomplete, inaccurate or misleading in any
material respect; (iii) could reasonably be expected to materially increase the
likelihood of a bankruptcy, reorganization or other insolvency proceeding
involving any member of the Borrower Affiliated Group; or (iv) creates or
reasonably could be expected to create a Default or Event of Default. In
exercising such judgment, the Administrative Agent may consider such factors or
circumstances already included in or tested by the definition of Eligible
in-Transit Inventory, Eligible Inventory, or Eligible L/C Inventory, as well as
any of the following: (A) the financial and business climate and prospects of
any member of the Borrower Affiliated Group’s industry and general
macroeconomic conditions; (B) changes in demand for and pricing of Inventory;
(C) changes in any concentration of risk with respect to Inventory; (D) any
other factors or circumstances that will or could reasonably be expected to
have a Material Adverse Effect; (E) audits of books and records by third
parties, history of chargebacks or other credit adjustments; and (F) any other
factors that change or could reasonably be expected to change the credit risk
of lending to the Borrowers on the security of the Inventory. Notwithstanding
the foregoing, it shall not be within Permitted Discretion for the
Administrative Agent to establish Reserves which are duplicative of each other
whether or not such reserves fall under more than one reserve category.

     “Permitted Encumbrances” means:

     (i) Liens imposed by law for taxes that are not yet due or are being
contested in compliance with Section 5.5;

     (ii) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and
other like Liens imposed by law, arising in the ordinary course of business and
securing obligations that are not overdue by more than 60 days or are being
contested in compliance with Section 5.5;

     (iii) pledges and deposits made in the ordinary course of business in
compliance with workers’ compensation, unemployment insurance, old-age pension
and other social security laws or regulations;

22

 

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

     (v) judgment liens in respect of judgments that do not constitute an Event
of Default under Section 7.1(m);

     (vi) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary course
of business that do not secure any monetary obligations and do not materially
detract from the value of the affected property or materially interfere with
the ordinary conduct of business of the Borrowers or any other member of the
Borrower Affiliated Group;

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

     (viii) Liens in favor of a financial institution encumbering deposits
(including the right of setoff) held by such financial institution in the
ordinary course of its business and which are within the general parameters
customary in the banking industry; and

     (ix) Landlords’ and lessors’ liens in respect of rent that is not overdue
by more than thirty (30) days or which is being contested in compliance with
Section 5.5;

     provided that, except as provided in any one or more of clauses (i)
through (vi) above, the term “Permitted Encumbrances” shall not include any
Lien securing Indebtedness.

     “Permitted Investments” means each of the following:

     (i) direct obligations of, or obligations the principal of and interest on
which are unconditionally guaranteed by, the United States of America (or by
any agency thereof to the extent such obligations are backed by the full faith
and credit of the United States of America), in each case maturing within one
year from the date of acquisition thereof;

     (ii) Investments in commercial paper maturing within 270 days from the
date of acquisition thereof and having, at such date of acquisition, a credit
rating of at least A-1 or P-1 from S&P or from Moody’s;

     (iii) Investments in certificates of deposit, banker’s acceptances and
time deposits maturing within 180 days from the date of acquisition thereof
issued or guaranteed by or placed with, and demand deposit and money market
deposit accounts issued or offered by, any domestic

23

 

office of any commercial
bank organized under the laws of the United States of America or any State
thereof that has a combined capital and surplus and undivided profits of not
less than $100,000,000;

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

     (v) money market mutual funds, 90% of the investments of which are in cash
or investments contemplated by clauses (i) through (iv) of this definition; and

     (vi) Investments by the Lead Borrower consistent with the Lead Borrower’s
current investment policy, which Investments are approved by the Administrative
Agent from time to time;

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

     “Permitted Overadvance” means an Overadvance determined by the
Administrative Agent, in its reasonable discretion, (a) which is made to
maintain, protect or preserve the Collateral and/or the Lenders’ rights under
the Loan Documents, or (b) which is otherwise in the Lenders’ interests;
provided that Permitted Overadvances shall not (i) exceed ten percent of the
then Borrowing Base in the aggregate outstanding at any time or (ii) remain
outstanding for more than thirty consecutive Business Days, unless in case of
clause (ii) the Required Lenders otherwise agree; and provided further that the
foregoing shall not (1) modify or abrogate any of the provisions of Section
2.7(g) regarding the Lenders’ obligations with respect to L/C Disbursements, or
(2) result in any claim or liability against the Administrative Agent
(regardless of the amount of any Overadvance) for “inadvertent Overadvances”
(i.e. where an Overadvance results from changed circumstances beyond the
control of the Administrative Agent (such as a reduction in the collateral
value)), and further provided that in no event shall the Administrative Agent
make an Overadvance, if after giving effect thereto, the principal amount of
the Credit
Extensions (including any Overadvance or proposed Overadvance) would
exceed the Total Commitments.

24

 

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

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

     “Pledge Agreements” means the Amended and Restated Securities Collateral
Pledge Agreements dated as of the date hereof and executed and delivered by one
or more of the Borrowers to the Collateral Agent, for the benefit of the
Secured Parties, as the same may be amended and in effect from time to time,
pursuant to which, without limitation, (i) all of the issued and outstanding
capital stock of all Domestic Subsidiaries owned by a Borrower and (ii)
sixty-five percent (or such lesser amount owned by such Borrower) of all of the
issued and outstanding capital stock of all Foreign Subsidiaries is pledged to
the Collateral Agent (in each case, other than Subsidiaries that are not
directly or indirectly wholly owned by such Borrower).

     “Prime Rate” shall mean, for any day, the higher of (a) the annual rate of
interest then most recently announced by Fleet at its head office in Boston,
Massachusetts as its “Prime Rate” and (b) the Federal Funds Effective Rate in
effect on such day plus 1/2 of 1% (0.50%) per annum. The Prime Rate is a
reference rate and does not necessarily represent the lowest or best rate being
charged to any customer. If for any reason the Administrative Agent shall have
determined (which determination shall be conclusive absent manifest error) that
it is unable to ascertain the Federal Funds Effective Rate for any reason,
including the inability or failure of the Administrative Agent to obtain
sufficient quotations thereof in accordance with the terms hereof, the Prime
Rate shall be determined without regard to clause (b) of the first sentence of
this definition, until the circumstances giving rise to such inability no
longer exist. Any change in the Prime Rate due to a change in Fleet’s Prime
Rate or the Federal Funds Effective Rate shall be effective on the effective
date of such change in Fleet’s Prime Rate or the Federal Funds Effective Rate,
respectively.

     “Prime Rate Loan” shall mean any Loan bearing interest at a rate
determined by reference to the Prime Rate in accordance with the provisions of
Section 0.

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

     “Register” has the meaning set forth in Section 9.5(c).

25

 

     “Regulation U” means Regulation U of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.

     “Regulation X” means Regulation X of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.

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

     “Release” has the meaning set forth in Section 101(22) of CERCLA.

     “Required Lenders” shall mean, at any time, Lenders having Commitments
greater than 50% of the Total Commitments, or if the Commitments have been
terminated, Lenders whose percentage of the outstanding Loans and Letters of
Credit aggregate greater than 50% of all such Loans and Letters of Credit
Outstanding; provided that if at any time there are not more than two (2)
Lenders, then “Required Lenders” shall mean each Lender having a Commitment of
$20,000,000 or more, or if the Commitments have been terminated, each Lender
whose percentage of the outstanding Loans and Letters of Credit is 20% or more
of all such Loans and Letters of Credit Outstanding.

     “Reserves” means the Inventory Reserves and Availability Reserves.

     “Restricted Payment” means any dividend or other distribution (whether in
cash, securities or other property) with respect to any shares of any class of
capital stock of Borrower, or any payment (whether in cash, securities or other
property), including any sinking fund or similar deposit, on account of the
purchase, redemption, retirement, acquisition, cancellation or termination of
any such shares of capital stock of any Borrower or any option, warrant or
other right to acquire any such shares of capital stock of any Borrower.

     “Revolving Loans” means all Loans at any time made by a Lender pursuant to
Section 2.

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

     “Secured Parties” has the meaning assigned to such term in the Security
Agreement.

     “Security Agreement” means the Amended and Restated Security Agreement
dated as of the date hereof and executed and delivered by the Borrowers to the
Collateral Agent for the benefit of the Secured Parties, as amended and in
effect from time to time.

     “Security Documents” means the Security Agreement, the Intellectual
Property Security Agreement, the Pledge Agreements, the Facility Guaranty and
each other security agreement,

26

 

guaranty or other instrument or document
executed and delivered pursuant to Section 5.15 or any other provision hereof
or any other Loan Document, to secure any of the Obligations.

     “Settlement Date” has the meaning provided in Section 2.8(b) .

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

     “Solvent” means, with respect to any Person on a particular date, that on
such date (a) at fair valuations, all of the properties and assets of such
Person are greater than the sum of the debts, including contingent liabilities,
of such Person, (b) the present fair saleable value of the properties and
assets of such Person is not less than the amount that would be required to pay
the probable liability of such Person on its debts as they become absolute and
matured, (c) such Person is able to realize upon its properties and assets and
pay its debts and other liabilities, contingent obligations and other
commitments as they mature in the normal course of business, (d) such Person
does not intend to, and does not believe that it will, incur debts beyond such
Person’s ability to pay as such debts mature, and (e) such Person is not
engaged in a business or a transaction, and is not about to engage in a
business or transaction, for which such Person’s properties and assets would
constitute unreasonably small capital after giving due consideration to the
prevailing practices in the industry in which such Person is engaged.

     “Standby Letter of Credit” means any Letter of Credit other than a
Commercial Letter of Credit.

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

     “Subsidiary” means, with respect to any Person (the “parent”) at any date,
any corporation, limited liability company, partnership, association or other
entity the accounts of which would be consolidated with those of the parent in
the parent’s consolidated financial statements if such financial statements
were prepared in accordance with GAAP as of such date,
as well as any other corporation, limited liability company, partnership,
association or other entity (a) of which securities or other ownership
interests representing more than 50% of the

27

 

equity or more than 50% of the
ordinary voting power or, in the case of a partnership, more than 50% of the
general partnership interests are, as of such date, owned, controlled or held,
or (b) that is, as of such date, otherwise Controlled, by the parent and/or one
or more subsidiaries of the parent.

     “Subsidiary Borrowers” means, individually and collectively, GameStop,
Inc., GameStop.com, Inc., Babbage’s Etc. LLC, Sunrise Publications, Inc.,
Marketing Control Services, Inc., GameStop Brands, Inc., GameStop of Texas
(GP), LLC, GameStop (LP), LLC, GameStop Texas LP, and any other Subsidiary
which becomes a Borrower.

     “Swingline Lender” means FRG, in its capacity as lender of Swingline Loans
hereunder.

     “Swingline Loan” shall mean a Loan made by the Swingline Lender to the
Borrowers pursuant to Section 2.6 hereof.

     “Synthetic Lease” means any lease or other agreement for the use or
possession of property creating obligations which does not appear as
Indebtedness on the balance sheet of the lessee thereunder but which, upon the
insolvency or bankruptcy of such Person, would be characterized as Indebtedness
of such lessee without regard to the accounting treatment.

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

     “Termination Date” shall mean the earliest to occur of (i) the Maturity
Date, (ii) the date on which the maturity of the Loans are accelerated and the
Commitments are terminated in accordance with Section 7.1, or (iii) the date of
the occurrence of any Event of Default pursuant to Section 7.1(j) or 7.1(k).

     “Total Commitments” shall mean, at any time, the sum of the Commitments at
such time.

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

     “UCC” shall mean the Uniform Commercial Code as in effect from time to
time in the Commonwealth of Massachusetts.

     “Unused Commitment” shall mean, on any day, (a) the then Total Commitments
minus (b) the sum of (i) the principal amount of Loans then outstanding
(including the principal amount of Swingline Loans then outstanding), and (ii)
the then Letter of Credit Outstandings.

     “Voting Stock” means, with respect to any corporation, the outstanding
stock of all classes (or equivalent interests) which ordinarily, in the absence
of contingencies, entitles holders thereof to vote for the election of
directors (or Persons performing similar functions) of such

28

 

corporation, even
though the right so to vote has been suspended by the happening of such
contingency.

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

     1.2 Terms Generally. The definitions of terms herein shall apply equally
to the singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words “include”, “includes” and “including” shall be deemed
to be followed by the phrase “without limitation”. The word “will” shall be
construed to have the same meaning and effect as the word “shall”. Unless the
context requires otherwise (a) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person’s successors and
assigns or, for natural persons, such Person’s successors, heirs, executors,
administrators and other legal representatives, (c) the words “herein”,
“hereof” and “hereunder”, and words of similar import, shall be construed to
refer to this Agreement in its entirety and not to any particular provision
hereof, (d) all references herein to Sections, Exhibits and Schedules shall be
construed to refer to Sections of, and Exhibits and Schedules to, this
Agreement, (e) the words “asset” and “property” shall be construed to have the
same meaning and effect and to refer to any and all tangible and intangible
assets and properties, including cash, securities, accounts and contract
rights, (f) all financial statements and other financial information provided
by the Borrowers and each other member of the Borrower Affiliated Group to the
Administrative Agent or any Lender shall be provided with reference to Dollars,
and (g) this Agreement and the other Loan Documents are the result of
negotiation among, and have been reviewed by counsel to, among others, the
Borrower Affiliated Group and the Administrative Agent and are the product of
discussions and negotiations among all parties. Accordingly, this Agreement
and the other Loan Documents are not intended to be construed against the
Administrative Agent or any of the Lenders merely on account of the
Administrative Agent’s or any Lender’s involvement in the preparation of such
documents.

     1.3 Accounting Terms. Except as otherwise expressly provided herein, all
terms of an accounting or financial nature shall be construed in accordance
with GAAP, as in effect on the Closing Date, on a basis
consistent with the financial statements referred to in Section 4.1(g) of
this Agreement, provided that, if the Borrowers request an amendment to any
provision hereof to reflect the effect of any change occurring after the date
hereof in GAAP or in the application thereof on the operation of such provision
(or if the Administrative Agent notifies the Borrowers that the Required
Lenders request an amendment to any provision hereof for such purpose),
regardless of whether any such notice is given before or after such change in
GAAP or in the application thereof, then such provision shall be interpreted on
the basis of GAAP as in effect

29

 

and applied immediately before such change shall
have become effective until such provision shall have been amended in
accordance herewith.

     2. AMOUNT AND TERMS OF CREDIT

     2.1 Commitment of the Lenders.

     (a) Each Lender severally and not jointly with any other Lender,
agrees, upon the terms and subject to the conditions herein set forth, to
extend credit to the Borrowers on a revolving basis, in the form of
Revolving Loans and Letters of Credit and in an amount not to exceed the
lesser of such Lender’s Commitment or such Lender’s Commitment Percentage
of the lesser of (x) the Borrowing Base or (y) the Total Commitments,
subject to the following limitations:

     (i) The aggregate outstanding amount of the Credit Extensions
shall not at any time exceed the lower of (i) (x) $75,000,000, or
(y) such greater amount or lesser amount to which the Total
Commitments have then been increased or decreased by the Borrowers
pursuant to Sections 2.2 and/ or 2.16 hereof, or (ii) the then
amount of the Borrowing Base.

     (ii) No Lender shall be obligated to issue any Letter of
Credit, and Letters of Credit shall be available from the Issuing
Bank, subject to the ratable participation of all Lenders, as set
forth in Section 2.7. The aggregate Letter of Credit Outstandings
shall not at any time exceed $10,000,000.

     (iii) Subject to all of the other provisions of this
Agreement, Revolving Loans that are repaid may be reborrowed prior
to the Termination Date. No new Credit Extension, however, shall be
made to the Borrowers after the Termination Date.

     (b) Each Borrowing of Revolving Loans (other than Swingline Loans)
shall be made by the Lenders pro rata in accordance with their respective
Commitments. The failure of any Lender to make any Loan shall neither
relieve any other Lender of its obligation to fund its Loan in accordance
with the provisions of this Agreement nor increase the obligation of any
such other Lender.

     2.2 Increase in Total Commitments.

     (a) So long as no Default or Event of Default exists or would arise
therefrom, the Lead Borrower shall have the right at any time, and from
time to time, to request an increase of the Total Commitments to an
amount not to exceed $100,000,000. Any such requested increase shall be
first made to all existing Lenders on a pro rata basis. To the extent
that the existing Lenders decline to increase their Commitments, or
decline to increase their Commitments to the amount requested by the Lead
Borrower, the

30

 

Administrative Agent, in consultation with the Lead
Borrower, will use its reasonable efforts to arrange for other Persons to
become a Lender hereunder (and the Lead Borrower may suggest such other
Persons to become Lenders hereunder) and to issue commitments in an
amount equal to the amount of the increase in the Total Commitments
requested by the Lead Borrower and not accepted by the existing Lenders
(each such increase by either means, a “Commitment Increase,” and each
Person issuing, or Lender increasing, its Commitment, an “Additional
Commitment Lender”), provided, however, that (i) no Lender shall be
obligated to provide a Commitment Increase as a result of any such
request by the Borrowers, (ii) any Additional Commitment Lender which is
not an existing Lender shall be subject to the approval of the
Administrative Agent, the Issuing Bank and the Lead Borrower (which
approval shall not be unreasonably withheld), and (iii) without the
consent of the Administrative Agent, at no time shall the Commitment of
any Additional Commitment Lender be less than $10,000,000. Each
Commitment Increase shall be in a minimum aggregate amount of at least
$10,000,000 and in integral multiples of $5,000,000 in excess thereof.

     (b) No Commitment Increase shall become effective unless and until
each of the following conditions have been satisfied:

     (i) The Borrowers, the Administrative Agent, and any
Additional Commitment Lender shall have executed and delivered a
joinder to the Loan Documents in such form as the Administrative
Agent shall reasonably require;

     (ii) The Borrowers shall have paid such fees and other
compensation to the Additional Commitment Lenders as the Lead
Borrower and such Additional Commitment Lenders shall agree;

     (iii) The Borrowers shall have paid such arrangement fees to
the Administrative Agent as the Lead Borrower and the
Administrative Agent may agree;

     (iv) The Borrowers shall deliver to the Administrative Agent
and the Lenders an opinion or opinions, in form and substance
reasonably satisfactory to the Administrative Agent, from counsel
to the Borrowers reasonably satisfactory to the Administrative
Agent and dated such date;

     (v) A Note will be issued at the Borrowers’ expense, to each
such Additional Commitment Lender, to be in conformity with
requirements of Section 2.9 hereof (with appropriate modification)
to the extent necessary to reflect the new Commitment of such
Additional Commitment Lender; and

     (vi) The Borrowers and the Additional Commitment Lender shall
have delivered such other instruments, documents and agreements as
the

31

 

Administrative Agent may reasonably have requested, including,
without limitation, in the case of an Additional Commitment Lender
which is a Foreign Lender, such documents as are set forth in
Section 2.27 to evidence an exemption from withholding tax with
respect to payments made to such Additional Commitment Lender.

     (c) The Administrative Agent shall promptly notify each Lender as to
the effectiveness of each Commitment Increase (with each date of such
effectiveness being referred to herein as a “Commitment Increase Date”),
and at such time (i) the Total Commitments under, and for all purposes
of, this Agreement shall be increased by the aggregate amount of such
Commitment Increases, (ii) Schedule 1.1 shall be deemed modified, without
further action, to reflect the revised Commitments and Commitment
Percentages of the Lenders, and (iii) this Agreement shall be deemed
amended, without further action, to the extent necessary to reflect such
increased Total Commitments (including, without limitation, Section
2.1(a)(i)).

     (d) In connection with Commitment Increases hereunder, the Lenders
and the Borrowers agree that, notwithstanding anything to the contrary in
this Agreement, (i) the Borrowers shall, in coordination with the
Administrative Agent, (x) repay outstanding Loans of certain Lenders, and
obtain Loans from certain other Lenders (including the Additional
Commitment Lenders), or (y) take such other actions as reasonably may be
required by the Administrative Agent, in each case to the extent
necessary so that all of the Lenders effectively participate in each of
the outstanding Loans pro rata on the basis of their Commitment
Percentages (determined after giving effect to any increase in the Total
Commitments pursuant to this Section 2.2), and (ii) the Borrowers shall
pay to the Lenders any costs of the type referred to in Section 2.20 in
connection with any repayment and/or Loans required pursuant to preceding
clause (i). Without limiting the Obligations of the Borrowers provided
for in this Section 2.2, the Administrative Agent and the Lenders agree
that they will use their best efforts to attempt to minimize the costs of
the type referred to in Section 2.20 which the Borrowers would otherwise
occur in connection with the implementation of an increase in the Total
Commitments.

     2.3 Reserves; Changes to Reserves.

     (a) The initial Inventory Reserves and Availability Reserves as of
the date of this Agreement are the following:

     (i) Return to Vendor (an Inventory Reserve): An amount equal
to the Cost of Inventory for which vendors are to furnish credit to
the Loan Parties as reflected in the Loan Parties’ books and
records from time to time.

32

 

     (ii) Shrink (an Inventory Reserve): An amount equal to the
one month accrual for Shrink reflected in the Loan Parties’ books
and records from time to time.

     (iii) Defective and Refurbishment Parts (an Inventory
Reserve): An amount equal to the amount of defective goods and
goods at the refurbishment center for repair reflected in the Loan
Parties’ books and records from time to time.

     (iv) Internal Warranties (an Inventory Reserve): An amount
equal to the amount of internal warranties reflected in the cost of
the Loan Parties’ Inventory from time to time.

     (v) Customer Credit Liabilities (an Availability Reserve): An
amount equal to 30% of the amount of gift certificates and
merchandise credits reflected in the Loan Parties’ books and
records from time to time.

     (vi) Rent (an Availability Reserve): An amount equal to one
months rent for each location in the States of Pennsylvania,
Virginia, Washington and any other state which provides a lien for
landlords which may have priority over the Collateral Agent’s Lien
(except for those locations for which the Agents have received a
landlord’s waiver satisfactory in form to the Agents).

     (b) The Administrative Agent may hereafter, on five (5) Business
Days written notice to the Lead Borrower, establish additional Reserves
or change any of the foregoing Reserves, in the exercise of the Permitted
Discretion of the Administrative Agent; provided, however, that in no
event shall the Administrative Agent establish new Reserves in any thirty
day period in an aggregate amount in excess of ten percent (10%) of the
Borrowing Base (as set forth in the most recent Borrowing Base
Certificate delivered to the Administrative Agent under Section 5.1(e) of
this Agreement); and provided further that the Administrative Agent shall
not modify the methodology in which Reserves described in Section 2.3(a)
hereof are determined from time to time.

     2.4 Making of Loans.

     (a) Except as set forth in Sections 2.17 and 2.25, Loans (other than
Swingline Loans) by the Lenders shall be either Prime Rate Loans or LIBO
Loans as the Lead Borrower on behalf of the Borrowers may request subject
to and in accordance with this Section 2.4, provided that all Swingline
Loans shall be only Prime Rate Loans. All Loans
made pursuant to the same Borrowing shall, unless otherwise
specifically provided herein, be Loans of the same Type. Each Lender may
fulfill its Commitment with respect to any Loan by causing any lending
office of such Lender to make such Loan; but any such use of a lending
office shall not affect the obligation of the Borrowers to repay such

33

 

Loan in accordance with the terms of the applicable Note. Each Lender
shall, subject to its overall policy considerations, use reasonable
efforts (but shall not be obligated) to select a lending office which
will not result in the payment of increased costs by the Borrowers
pursuant to Section 2.24. Subject to the other provisions of this
Section 2.4 and the provisions of Section 2.25, Borrowings of Loans of
more than one Type may be incurred at the same time, but no more than ten
(10) Borrowings of LIBO Loans may be outstanding at any time.

     (b) The Lead Borrower shall give the Administrative Agent three (3)
Business Days’ prior telephonic notice (thereafter confirmed in writing)
of each LIBO Borrowing and one (1) Business Day’s prior notice of each
Borrowing of Prime Rate Loans. Any such notice, to be effective, must be
received by the Administrative Agent not later than 11:00 a.m., Boston
time, on the third Business Day in the case of LIBO Loans prior to, and
on the first Business Day in the case of Prime Rate Loans prior to, the
date on which such Borrowing is to be made. Such notice shall be
irrevocable and shall specify the amount of the proposed Borrowing (which
shall be in an integral multiple of $100,000, but not less than
$1,000,000 in the case of LIBO Loans) and the date thereof (which shall
be a Business Day) and shall contain disbursement instructions. Such
notice shall specify whether the Borrowing then being requested is to be
a Borrowing of Prime Rate Loans or LIBO Loans and, if LIBO Loans, the
Interest Period with respect thereto. If no election of Interest Period
is specified in any such notice for a Borrowing of LIBO Loans, such
notice shall be deemed a request for an Interest Period of one month. If
no election is made as to the Type of Loan, such notice shall be deemed a
request for a Borrowing of Prime Rate Loans. The Administrative Agent
shall promptly notify each Lender of its proportionate share of such
Borrowing, the date of such Borrowing, the Type of Borrowing being
requested and the Interest Period or Interest Periods applicable thereto,
as appropriate. On the borrowing date specified in such notice, each
Lender shall make its share of the Borrowing available at the office of
the Administrative Agent at 40 Broad Street, Boston, Massachusetts 02109,
no later than 12:00 noon, Boston time, in immediately available funds.
Unless the Administrative Agent shall have received notice from a Lender
prior to the proposed date of any Borrowing that such Lender will not
make available to the Administrative Agent such Lender’s share of such
Borrowing, the Administrative Agent may assume that such Lender has made
such share available on such date in accordance with this Section and
may, in reliance upon such assumption, make available to the Borrowers a
corresponding amount. In such event, if a Lender has not in fact made its
share of the applicable Borrowing available to the Administrative Agent,
then the applicable Lender and the Borrowers severally agree to pay to
the Administrative Agent forthwith on demand such corresponding amount
with interest thereon, for each day from and including the date such
amount is made available to the
Borrowers to but excluding the date of payment to the Administrative
Agent, at (i) in the case of such Lender, the Federal Funds Effective
Rate or (ii) in the case of the Borrowers, the interest rate applicable
to Prime Rate Loans. If such Lender pays such amount to the
Administrative Agent, then such amount shall constitute such Lender’s
Loan included in

34

 

such Borrowing. Upon receipt of the funds made available
by the Lenders to fund any Borrowing hereunder, the Administrative Agent
shall disburse such funds in the manner specified in the notice of
borrowing delivered by the Lead Borrower and shall use reasonable efforts
to make the funds so received from the Lenders available to the Borrowers
no later than 3:00 p.m., Boston time.

     (c) The Administrative Agent, without the request of the Lead
Borrower, may advance any interest, fee, service charge, or other payment
to which any Agent or their Affiliates or any Lender is entitled from any
Borrower pursuant hereto or any other Loan Document and may charge the
same to the Loan Account notwithstanding that an Overadvance may result
thereby. The Administrative Agent shall notify the Lead Borrower of any
such advance or charge no later than one Business Day prior to the making
thereof. Such action on the part of the Administrative Agent shall not
constitute a waiver of the Administrative Agent’s rights and each
Borrower’s obligations under Section 2.4(a). Any amount which is added to
the principal balance of the Loan Account as provided in this Section
2.4(c) shall bear interest at the interest rate then and thereafter
applicable to Prime Rate Loans.

     2.5 Overadvances. The Agents and the Lenders have no obligation to make
any Loan or to provide any Letter of Credit if an Overadvance would result. The
Administrative Agent may, in its discretion, make Permitted Overadvances
without the consent of the Lenders and each Lender shall be bound thereby. Any
Permitted Overadvances may constitute Swingline Loans. The making of any
Permitted Overadvance is for the benefit of the Borrowers; such Permitted
Overadvances constitute Revolving Loans and Obligations. The making of any such
Permitted Overadvances on any one occasion shall not obligate the
Administrative Agent or any Lender to make or permit any Permitted Overadvances
on any other occasion or to permit such Permitted Overadvances to remain
outstanding.

     2.6 Swingline Loans.

     (a) The Swingline Lender is authorized by the Lenders and shall,
subject to the provisions of this Section, make Swingline Loans up to
$15,000,000 in the aggregate outstanding at any time consisting only of
Prime Rate Loans, upon a notice of Borrowing received by the
Administrative Agent and the Swingline Lender (which notice, at the
Swingline Lender’s discretion, may be submitted prior to 1:00 p.m.,
Boston time, on the Business Day on which such Swingline Loan is
requested). Swingline Loans shall be subject to periodic settlement with
the Lenders under Section 2.8 below.

     (b) Swingline Loans may be made only in the following circumstances:
(A) for administrative convenience, the Swingline Lender shall, at the
Lead Borrower’s request, make Swingline Loans in reliance upon the
Borrowers’ actual or deemed representations under Section 4.2, that the
applicable conditions for borrowing are satisfied or (B) for Permitted
Overadvances. If the conditions for borrowing under

35

 

Section 4.2 cannot
be fulfilled, the Lead Borrower shall give immediate notice thereof to
the Administrative Agent and the Swingline Lender (a “Noncompliance
Notice”), and the Administrative Agent shall promptly provide each Lender
with a copy of the Noncompliance Notice. If the conditions for borrowing
under Section 4.2 cannot be fulfilled, the Required Lenders may direct
the Swingline Lender to, and the Swingline Lender thereupon shall, cease
making Swingline Loans (other than Permitted Overadvances) until such
conditions can be satisfied or are waived in accordance with Section 9.2.
Unless the Required Lenders so direct the Swingline Lender, the Swingline
Lender may, but is not obligated to, continue to make Swingline Loans
beginning one Business Day after the Non-Compliance Notice is furnished
to the Lenders. Notwithstanding the foregoing, no Swingline Loans shall
be made pursuant to this subsection (b) (other than Permitted
Overadvances) if the aggregate outstanding amount of the Credit
Extensions would exceed the lower of (i)(x) $75,000,000, or (y) such
greater amount or lesser amount to which the Total Commitments have then
been increased or decreased by the Borrowers pursuant to Sections 2.2
and/or 2.16 hereof, or (ii) the then amount of the Borrowing Base.

     2.7 Letters of Credit.

     (a) Upon the terms and subject to the conditions herein set forth,
the Lead Borrower on behalf of the Borrowers, may request the Issuing
Bank, at any time and from time to time after the date hereof and prior
to the Termination Date, to issue, and subject to the terms and
conditions contained herein, the Issuing Bank shall issue, for the
account of the relevant Borrower, one or more Letters of Credit; provided
that no Letter of Credit shall be issued if after giving effect to such
issuance (i) the aggregate Letter of Credit Outstandings shall exceed
$10,000,000, or (ii) the aggregate Credit Extensions would exceed the
limitation set forth in Section 2.1(a)(i); and provided, further, that no
Letter of Credit shall be issued if the Issuing Bank shall have received
notice from the Administrative Agent or the Required Lenders that the
conditions to such issuance have not been met.

     (b) Each Standby Letter of Credit shall expire at or prior to the
close of business on the earlier of (i) the date one year after the date
of the issuance of such Letter of Credit (or, in the case of any renewal
or extension thereof, one year after such renewal or extension) and (ii)
the date that is five (5) Business Days prior to the Maturity Date,
provided that each Letter of Credit may, upon the request of the Lead
Borrower, include a provision whereby such Letter of Credit shall be
renewed automatically for additional consecutive periods of twelve (12)
months or less (but not beyond the date that is five (5)
Business Days prior to the Maturity Date) unless the Issuing Bank
notifies the beneficiary thereof at least thirty (30) days prior to the
then-applicable expiration date that such Letter of Credit will not be
renewed.

36

 

     (c) Each Commercial Letter of Credit shall expire at or prior to the
close of business on the earlier of (i) the date 180 days after the date
of the issuance of such Commercial Letter of Credit and (ii) the date
that is five Business Days prior to the Maturity Date.

     (d) Drafts drawn under any Letter of Credit shall be reimbursed by
the Borrowers in dollars on the same Business Day of any such payment
thereof by the Issuing Bank by paying to the Administrative Agent an
amount equal to such drawing (together with interest as provided in
Section 2.7(f)) not later than 12:00 noon, Boston time, on (i) the date
that the Lead Borrower shall have received notice of such drawing, if
such notice is received prior to 10:00 a.m., Boston time, on such date,
or (ii) the Business Day immediately following the day that the Lead
Borrower receives such notice, if such notice is received after 10:00
a.m., Boston time on the day of drawing, provided that the Lead Borrower
may, subject to the conditions to borrowing set forth herein, request in
accordance with Section 2.4 that such payment be financed with a
Revolving Loan consisting of a Prime Rate Loan, or a Swingline Loan in an
equivalent amount and, to the extent so financed, the Borrowers’
obligation to make such payment shall be discharged and replaced by the
resulting Prime Rate Loan or Swingline Loan. The Issuing Bank shall,
promptly following its receipt thereof, examine all documents purporting
to represent a demand for payment under a Letter of Credit. The Issuing
Bank shall promptly notify the Administrative Agent and the Borrower by
telephone (confirmed by telecopy) of such demand for payment and whether
the Issuing Bank has made or will make payment thereunder (which payment
shall not be made until two (2) Business Days after such notice from the
Issuing Bank to the Borrower), provided that any failure to give or delay
in giving such notice shall not relieve the Borrowers of their obligation
to reimburse the Issuing Bank and the Lenders with respect to any such
payment.

     (e) If the Issuing Bank shall make any L/C Disbursement, then,
unless the Borrowers shall reimburse the Issuing Bank in full on the date
such payment is made, the unpaid amount thereof shall bear interest, for
each day from and including the date such payment is made to but
excluding the date that the Borrowers reimburse the Issuing Bank
therefor, at the rate per annum then applicable to Prime Rate Loans,
provided that if the Borrowers fail to reimburse the Issuing Bank when
due pursuant to paragraph (d) of this Section, then Section 2.11 shall
apply. Interest accrued pursuant to this paragraph shall be for the
account of the Issuing Bank, except that interest accrued on and after
the date of payment by any Lender pursuant to paragraph (g) of this
Section to reimburse the Issuing Bank shall be for the account of such
Lender to the extent of such payment.

     (f) Immediately upon the issuance of any Letter of Credit by the
Issuing Bank (or the amendment of a Letter of Credit increasing the
amount thereof), and without any further action on the part of the
Issuing Bank, the Issuing Bank shall be deemed to have sold to each
Lender, and each such Lender shall be deemed unconditionally and
irrevocably to have purchased from the Issuing Bank, without recourse or
warranty, an

37

 

undivided interest and participation, to the extent of such
Lender’s Commitment Percentage, in such Letter of Credit, each drawing
thereunder and the obligations of the Borrowers under this Agreement and
the other Loan Documents with respect thereto. Upon any change in the
Commitments pursuant to Section 2.2, 2.16, and/or 9.5, it is hereby
agreed that with respect to all Letter of Credit Outstandings, there
shall be an automatic adjustment to the participations hereby created to
reflect the new Commitment Percentages of the assigning and assignee
Lenders and any Additional Commitment Lender. Any action taken or
omitted by the Issuing Bank under or in connection with a Letter of
Credit, if taken or omitted in the absence of gross negligence, bad faith
or willful misconduct, shall not create for the Issuing Bank any
resulting liability to any Lender.

     (g) In the event that the Issuing Bank makes any L/C Disbursement
and the Borrowers shall not have reimbursed such amount in full to the
Issuing Bank pursuant to Section 2.7(d), the Issuing Bank shall promptly
notify the Administrative Agent, which shall promptly notify each Lender
of such failure, and each Lender shall promptly and unconditionally pay
to the Administrative Agent for the account of the Issuing Bank the
amount of such Lender’s Commitment Percentage of such unreimbursed
payment in dollars and in same day funds. If the Issuing Bank so notifies
the Administrative Agent, and the Administrative Agent so notifies the
Lenders prior to 11:00 a.m., Boston time, on any Business Day, each such
Lender shall make available to the Issuing Bank such Lender’s Commitment
Percentage of the amount of such payment on such Business Day in same day
funds (or if such notice is received by the Lenders after 11:00 a.m.,
Boston time on the day of receipt, payment shall be made on the
immediately following Business Day). If and to the extent such Lender
shall not have so made its Commitment Percentage of the amount of such
payment available to the Issuing Bank, such Lender agrees to pay to the
Issuing Bank, forthwith on demand such amount, together with interest
thereon, for each day from such date until the date such amount is paid
to the Administrative Agent for the account of the Issuing Bank at the
Federal Funds Effective Rate. Each Lender agrees to fund its Commitment
Percentage of such unreimbursed payment notwithstanding a failure to
satisfy any applicable lending conditions or the provisions of Sections 2
or 2.7, or the occurrence of the Termination Date. The failure of any
Lender to make available to the Issuing Bank its Commitment Percentage of
any payment under any Letter of Credit shall neither relieve any Lender
of its obligation hereunder to make available to the Issuing Bank its
Commitment Percentage of any payment under any Letter of Credit on the
date required, as specified above, nor increase the obligation of such
other Lender. Whenever any Lender has made payments to the Issuing Bank
in respect of any reimbursement obligation for any Letter of Credit, such
Lender shall be entitled to share ratably, based on its Commitment
Percentage, in all payments and collections thereafter received on
account of such reimbursement obligation.

38

 

     (h) Whenever any Borrower desires that the Issuing Bank issue a
Letter of Credit (or the amendment, renewal or extension of an
outstanding Letter of Credit), the Lead Borrower shall give to the
Issuing Bank and the Administrative Agent at least two (2) Business Days’
prior written (including telegraphic, telex, facsimile or cable
communication) notice (or such shorter period as may be agreed upon in
writing by the Issuing Bank and Borrower) specifying the date on which
the proposed Letter of Credit is to be issued, amended, renewed or
extended (which shall be a Business Day), the stated amount of the Letter
of Credit so requested, the expiration date of such Letter of Credit, the
name and address of the beneficiary thereof, and the provisions thereof.
If requested by the Issuing Bank, the applicable Borrower shall also
submit a letter of credit application on the Issuing Bank’s standard form
in connection with any request for the issuance, amendment, renewal or
extension of a Letter of Credit.

     (i) The obligations of the Borrowers to reimburse the Issuing Bank
for any L/C Disbursement shall be unconditional and irrevocable and shall
be paid strictly in accordance with the terms of this Agreement under all
circumstances, including, without limitation: (i) any lack of validity or
enforceability of any Letter of Credit; (ii) the existence of any claim,
setoff, defense or other right which the Borrowers may have at any time
against a beneficiary of any Letter of Credit or against the Issuing Bank
or any of the Lenders, whether in connection with this Agreement, the
transactions contemplated herein or any unrelated transaction; (iii) any
draft, demand, certificate or other document presented under any Letter
of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any
respect; (iv) payment by the Issuing Bank of any Letter of Credit against
presentation of a demand, draft or certificate or other document which
does not comply with the terms of such Letter of Credit; (v) any other
circumstance or happening 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; or (vi) the fact
that any Event of Default shall have occurred and be continuing. None of
the Administrative Agent, the Lenders, the Issuing Bank or any of their
Affiliates 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 technical terms or any consequence arising
from causes beyond the control of the Issuing Bank, provided that the
foregoing shall not be construed to excuse the Issuing Bank 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 the Borrowers that are caused by the Issuing Bank’s failure
to exercise care when determining whether drafts and other documents
presented under a Letter of Credit comply with the terms thereof.

39

 

The
parties hereto expressly agree that, in the absence of gross negligence,
bad faith or willful misconduct on the part of the Issuing Bank (as
finally determined by a court of competent jurisdiction), the Issuing
Bank shall be deemed to have exercised care in each such determination.
In furtherance of the foregoing and without limiting the generality
thereof, the parties agree that, with respect to documents presented that
appear on their face to be in compliance with the terms of a Letter of
Credit, the Issuing Bank may, in its sole discretion, either accept and
make payment upon such documents without responsibility for further
investigation, 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.

     (j) If any Event of Default shall occur and be continuing, on the
Business Day that the Lead Borrower receives notice from the
Administrative Agent or the Required Lenders demanding the deposit of
cash collateral pursuant to this paragraph, the Borrowers shall deposit
in the Cash Collateral Account an amount in cash equal to 105% of the
Letter of Credit Outstandings as of such date plus any accrued and unpaid
interest thereon. Each such deposit shall be held by the Collateral Agent
as collateral for the payment and performance of the Obligations of the
Borrowers under this Agreement. The Collateral Agent shall have exclusive
dominion and control, including the exclusive right of withdrawal, over
such Cash Collateral Account. Other than any interest earned on the
investment of such deposits, which investments shall be made at the
option and sole discretion of the Collateral Agent at the request of the
Lead Borrower and at the Borrowers’ risk and expense, such deposits shall
not bear interest. Interest or profits, if any, on such investments shall
accumulate in such account. Moneys in such Cash Collateral Account shall
be applied by the Collateral Agent to reimburse the Issuing Bank for
payments on account of drawings under Letters of Credit for which it has
not been reimbursed and, to the extent not so applied, shall be held for
the satisfaction of the reimbursement obligations of the Borrowers for
the Letter of Credit Outstandings at such time or, if the Loans have
matured or the maturity of the Loans has been accelerated, be applied to
satisfy other Obligations of the Borrowers under this Agreement.

     (k) The Borrowers, the Administrative Agent and the Lenders agree
that the Existing Letters of Credit shall be deemed Letters of Credit
hereunder as if issued by the Issuing Bank.

     2.8 Settlements Amongst Lenders.

     (a) The Swingline Lender may (but shall not be obligated to), at any
time, on behalf of the Borrowers (which hereby authorize the Swingline
Lender to act in their
behalf in that regard) request the Administrative Agent to cause the
Lenders to make a Revolving Loan (which shall be a Prime Rate Loan) in an
amount equal to such Lender’s Commitment Percentage of the outstanding
amount of Swingline Loans made in accordance with Section 2.6, which
request may be made regardless of whether the

40

 

conditions set forth in
Section 4 have been satisfied. Upon such request, each Lender shall make
available to the Administrative Agent the proceeds of such Revolving Loan
for the account of the Swingline Lender. If the Swingline Lender requires
a Revolving Loan to be made by the Lenders and the request therefor is
received prior to 12:00 Noon, Boston time, on a Business Day, such
transfers shall be made in immediately available funds no later than 3:00
p.m., Boston time, that day; and, if the request therefor is received
after 12:00 Noon, Boston time, then no later than 3:00 p.m., Boston time,
on the next Business Day. The obligation of each Lender to transfer such
funds is irrevocable, unconditional and without recourse to or warranty
by the Administrative Agent or the Swingline Lender. If and to the extent
any Lender shall not have so made its transfer to the Administrative
Agent, such Lender agrees to pay to the Administrative Agent, forthwith
on demand such amount, together with interest thereon, for each day from
such date until the date such amount is paid to the Administrative Agent
at the Federal Funds Effective Rate.

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

     (c) The Administrative Agent shall deliver to each of the Lenders
promptly after the Settlement Date a summary statement of the amount of
outstanding Revolving Loans for the period and the amount of repayments
received for the period. As reflected on the summary statement: each
Lender shall transfer to the Administrative Agent (as provided below), or
the Administrative Agent shall transfer to each Lender, such amounts as
are necessary to insure that, after giving effect to all such transfers,
the amount of Revolving Loans made by each Lender shall be equal to such
Lender’s applicable Commitment Percentage of Revolving Loans outstanding
as of such Settlement Date. If the summary statement requires transfers
to be made to the Administrative Agent by the Lenders and is received
prior to 12:00 Noon, Boston time, on a Business Day, such transfers shall
be made in immediately available funds no later than 3:00 p.m., Boston
time, that day; and, if received after 12:00 Noon, Boston time, then no
later than 3:00 p.m., Boston time, on the next Business Day. The
obligation of each Lender to transfer such funds is irrevocable,
unconditional and without recourse to or warranty by the Administrative
Agent. If and to the extent any Lender shall not have so made its
transfer to the Administrative Agent, such Lender agrees to pay to the
Administrative Agent, forthwith on demand such amount, together with
interest thereon, for each day from such
date until the date such amount is paid to the Administrative Agent
at the Federal Funds Effective Rate.

41

 

     2.9 Notes; Repayment of Loans.

     (a) The Loans made by each Lender (and to the Swingline Lender, with
respect to Swingline Loans) shall be evidenced by a Note duly executed on
behalf of the Borrowers, dated the Closing Date, in substantially the
form attached hereto as Exhibit B-1 or Exhibit B-2, as applicable,
payable to the order of each such Lender (or the Swingline Lender, as
applicable) in an aggregate principal amount equal to such Lender’s
Commitment (or, in the case of the Note evidencing the Swingline Loans,
$15,000,000).

     (b) Each Lender is hereby authorized by the Borrower to endorse on a
schedule attached to each Note delivered to such Lender (or on a
continuation of such schedule attached to such Note and made a part
thereof), or otherwise to record in such Lender’s internal records, an
appropriate notation evidencing the date and amount of each Loan from
such Lender, each payment and prepayment of principal of any such Loan,
each payment of interest on any such Loan and the other information
provided for on such schedule; provided, however, that the failure of any
Lender to make such a notation or any error therein shall not affect the
obligation of the Borrowers to repay the Loans made by such Lender in
accordance with the terms of this Agreement and the applicable Notes.

     (c) Upon receipt of an affidavit of a Lender as to the loss, theft,
destruction or mutilation of such Lender’s Note and an indemnity in form
and substance reasonably satisfactory to the Lead Borrower, and upon
cancellation of such Note, the Borrowers will issue, in lieu thereof, a
replacement Note in favor of such Lender, in the same principal amount
thereof and otherwise of like tenor.

     2.10 Interest on Loans.

     (a) Subject to Section 2.11, each Prime Rate Loan shall bear
interest (computed on the basis of the actual number of days elapsed over
a year of 365 or 366 days, as applicable) at a rate per annum that shall
be equal to the then Prime Rate, plus the Applicable Margin for Prime
Rate Loans.

     (b) Subject to Section 2.11, each LIBO Loan shall bear interest
(computed on the basis of the actual number of days elapsed over a year
of 360 days) at a rate per annum equal, during each Interest Period
applicable thereto, to the Adjusted LIBO Rate for such Interest Period,
plus the Applicable Margin for LIBO Loans.

     (c) Accrued interest on all Loans shall be payable in arrears on
each Interest Payment Date applicable thereto, on the Termination Date,
after the Termination Date on
demand and (with respect to LIBO Loans) upon any repayment or
prepayment thereof (on the amount prepaid).

42

 

     2.11 Default Interest. Effective upon the occurrence of any Event of
Default and at all times thereafter while such Event of Default is continuing,
at the option of the Administrative Agent or upon the direction of the Required
Lenders, interest shall accrue on all outstanding Loans (including Swingline
Loans) (after as well as before judgment, as and to the extent permitted by
law) at a rate per annum (computed on the basis of the actual number of days
elapsed over a year of 360 days) equal to the rate (including the Applicable
Margin) in effect from time to time plus 2.00% per annum, and such interest
shall be payable on demand.

     2.12 Certain Fees. The Borrowers shall pay to the Administrative Agent,
for the account of the Administrative Agent, the fees set forth in the Fee
Letter as and when payment of such fees is due as therein set forth.

     2.13 Unused Commitment Fee. The Borrowers shall pay to the Administrative
Agent for the account of the Lenders, a commitment fee (the “Commitment Fee”)
computed at a rate per annum, in accordance with the table set forth below (on
the basis of actual days elapsed in a year of 360 days), of the average daily
balance of the Unused Commitment for each day commencing on and including the
Closing Date and ending on but excluding the Termination Date:

	 	 	 	 	 	 	 	 	 
	 	 	Fixed Charge	 	 
	Level
	 	Coverage Ratio
	 	Commitment Fee

	I
	 	Fixed Charge Coverage Ratio less than 1.50 to	 	 	0.50	%
	 
	 	 	1.00	 	 	 	 	 
	II
	 	Fixed Charge Coverage Ratio equal to or greater	 	 	.0.375	%
	 
	 	than 1.50 to 1.00 and less than 3.00 to 1.00	 	 	 	 
	III
	 	Fixed Charge Coverage Ratio equal to or greater	 	 	0.30	%
	 
	 	than 3.00 to 1.00	 	 	 	 

     The Commitment Fee so accrued in any calendar quarter shall be payable on
the last day of each calendar quarter, in arrears, commencing June 30, 2004,
except that all Commitment Fees so accrued as of the Termination Date shall be
payable on the Termination Date. The

43

 

Administrative Agent shall pay the
Commitment Fee to the Lenders based upon their Commitment Percentage.

     2.14 Letter of Credit Fees. The Borrowers shall pay the Administrative
Agent, for the account of the Lenders, on the last day of each calendar
quarter, in arrears, a fee (each, a “Letter of Credit Fee”) equal to the
following per annum percentages of the face amount of the following categories
of Letters of Credit outstanding during the subject quarter:

     (a) Each Standby Letter of Credit: At the then Applicable Margin
per annum for LIBO Loans.

     (b) Each Commercial Letter of Credit: Fifty percent (50%) of the
Applicable Margin per annum for LIBO Loans.

     (c) After the occurrence and during the continuance of an Event of
Default, at the option of the Administrative Agent or upon the direction
of the Required Lenders, the Letter of Credit Fee set forth in clauses
(i) and (ii) above, shall be increased by an amount equal to two percent
(2%) per annum.

     (d) The Borrowers shall pay to the Issuing Bank, in addition to all
Letter of Credit Fees otherwise provided for hereunder, a fronting fee
(each a “Fronting Fee”) in an amount equal to 0.125% of the face amount
of each Letter of Credit payable on the issuance of such Letter of
Credit.

     (e) The Borrowers shall pay to the Issuing Bank, in addition to the
Letter of Credit Fees and Fronting Fees otherwise provided for hereunder,
fees and charges in connection with the issuance, negotiation,
settlement, amendment and processing of each Letter of Credit issued by
the Issuing Bank as are customarily imposed by the Issuing Bank from time
to time in connection with letter of credit transactions.

     (f) All Letter of Credit Fees shall be calculated on the basis of a
360-day year and actual days elapsed.

     2.15 Nature of Fees. All fees shall be paid on the dates due, in
immediately available funds, to the Administrative Agent, for the respective
accounts of the Administrative Agent, the Issuing Bank, and the Lenders, as
provided herein. All fees shall be fully earned on the date when due and shall
not be refundable under any circumstances.

     2.16 Termination or Reduction of Commitments.

     (a) Upon at least three (3) Business Days’ prior written notice to
the Administrative Agent, the Lead Borrower may at any time or from time
to time in part permanently reduce the Commitments. Each such reduction
shall be in the principal amount of $2,500,000 or any integral multiple
of $1,000,000 in excess thereof. Each such

44

 

reduction shall (i) be applied
ratably to the Commitments of each Lender and (ii) be irrevocable when
given. At the effective time of each such reduction, the Borrowers shall
pay to the Administrative Agent for application as provided herein (i)
all Commitment Fees accrued on the amount of the Commitments so reduced
through the date thereof, (ii) any amount by which the Credit Extensions
outstanding on such date exceed the amount to which the Commitments are
to be reduced effective on such date, in each case pro rata based on the
amount prepaid, and (iii) any Breakage Costs, if applicable.

     (b) Upon at least three (3) Business Days’ prior written notice to
the Administrative Agent, the Lead Borrower may at any time terminate the
Commitments. At the effective time of each such termination specified in
such notice, the Borrowers shall repay to the Administrative Agent for
application as provided herein all Obligations.

     2.17 Alternate Rate of Interest. If prior to the commencement of any
Interest Period for a LIBO Borrowing:

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

     (b) the Administrative Agent is advised by the Required Lenders that
the Adjusted LIBO Rate for such Interest Period will not adequately and
fairly reflect the cost to such Lenders of making or maintaining their
Loans included in such Borrowing for such Interest Period;

     then the Administrative Agent shall give notice thereof to the Lead
Borrower and the Lenders by telephone or telecopy as promptly as practicable
thereafter (but in any event, within two (2) Business Days) and, until the
Administrative Agent notifies the Lead Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Borrowing
Request that requests the conversion of any Borrowing to, or continuation of
any Borrowing as, a
LIBO Borrowing shall be ineffective and (ii) if any Borrowing Request
requests a LIBO Borrowing, such Borrowing shall be made as a Borrowing of Prime
Rate Loans.

     2.18 Conversion and Continuation of Loans. The Lead Borrower on behalf of
the Borrowers shall have the right at any time,

     (a) on three (3) Business Days’ prior irrevocable notice to the
Administrative Agent (which notice, to be effective, must be received by
the Administrative Agent not later than 11:00 a.m., Boston time, on the
third Business Day preceding the date of any conversion), (x) to convert
any outstanding Borrowings of Prime Rate Loans (but in no event
Swingline Loans) to Borrowings of LIBO Loans, or (y) to continue an
outstanding Borrowing of LIBO Loans for an additional Interest Period,

45

 

     (b) on one Business Day’s irrevocable notice to the Administrative
Agent (which notice, to be effective, must be received by the
Administrative Agent not later than 11:00 a.m., Boston time, on the date
of any conversion), to convert any outstanding Borrowings of LIBO Loans
to a Borrowing of Prime Rate Loans,

subject to the following:

     (i) no Borrowing of Loans may be converted into, or continued
as, LIBO Loans at any time when an Event of Default has occurred
and is continuing;

     (ii) if less than a full Borrowing of Loans is converted, such
conversion shall be made pro rata among the Lenders, as applicable,
in accordance with the respective principal amounts of the Loans
comprising such Borrowing held by such Lenders immediately prior to
such conversion;

     (iii) the aggregate principal amount of Loans being converted
into or continued as LIBO Loans shall be in an integral of $100,000
and at least $1,000,000;

     (iv) each Lender shall effect each conversion by applying the
proceeds of its new LIBO Loan or Prime Rate Loan, as the case may
be, to its Loan being so converted;

     (v) the Interest Period with respect to a Borrowing of LIBO
Loans effected by a conversion or in respect to the Borrowing of
LIBO Loans being continued as LIBO Loans shall commence on the date
of conversion or the expiration of the current Interest Period
applicable to such continued Borrowing, as the case may be;

     (vi) a Borrowing of LIBO Loans may be converted only on the
last day of an Interest Period applicable thereto;

     (vii) each request for a conversion or continuation of a
Borrowing of LIBO Loans which fails to state an applicable Interest
Period shall be deemed to be a request for an Interest Period of
one month; and

     (viii) no more than ten (10) Borrowings of LIBO Loans may be
outstanding at any time.

     If the Lead Borrower does not give notice to convert any Borrowing of
Prime Rate Loans, or does not give notice to continue, or does not have the
right to continue, any Borrowing as LIBO Loans, in each case as provided above,
such Borrowing shall automatically be converted to, or continued as, as
applicable, a Borrowing of Prime Rate Loans at the expiration of the then
current Interest Period. The Administrative Agent shall, after it receives
notice from

46

 

the Borrower, promptly give each Lender notice of any conversion,
in whole or part, of any Loan made by such Lender.

     2.19 Mandatory Prepayment; Cash Collateral; Commitment Termination. The
outstanding Obligations shall be subject to mandatory prepayment as follows:

     (a) If at any time the amount of the Credit Extensions exceeds the
lower of (i) the then amount of the Total Commitments, and (ii) the then
amount of the Borrowing Base, the Borrowers will immediately upon notice
from the Administrative Agent (A) prepay the Loans in an amount necessary
to eliminate such excess, and (B) if, after giving effect to the
prepayment in full of all outstanding Loans such excess has not been
eliminated, deposit cash into the Cash Collateral Account in an amount
equal to 105% of the Letters of Credit Outstanding.

     (b) To the extent required pursuant to Section 2.22, the Revolving
Loans shall be repaid daily in accordance with the provisions of said
Section 2.22.

     (c) Subject to the foregoing, outstanding Prime Rate Loans shall be
prepaid before outstanding LIBO Loans are prepaid. Each partial
prepayment of LIBO Loans shall be in an integral multiple of $1,000,000.
No prepayment of LIBO Loans shall be permitted pursuant to this Section
2.19 other than on the last day of an Interest Period applicable thereto,
unless the Borrowers simultaneously reimburse the Lenders for all
“Breakage Costs” (as defined below) associated therewith. In order to
avoid such Breakage Costs, as long as no Event of Default has occurred
and is continuing, at the request of the Lead Borrower, the
Administrative Agent shall hold all amounts required to be applied to
LIBO Loans in the Cash Collateral Account and will apply such funds to
the applicable LIBO Loans at the end of the then pending Interest Period
therefor and
such LIBO Loans shall continue to bear interest at the rate set
forth in Section 2.10 until the amounts in the Cash Collateral Account
have been so applied (provided that the foregoing shall in no way limit
or restrict the Agents’ rights upon the subsequent occurrence of an Event
of Default). No partial prepayment of a Borrowing of LIBO Loans shall
result in the aggregate principal amount of the LIBO Loans remaining
outstanding pursuant to such Borrowing being less than $1,000,000 (unless
all such outstanding LIBO Loans are being prepaid in full). Any
prepayment of the Revolving Loans shall not permanently reduce the
Commitments.

     (d) All amounts required to be applied to all Loans hereunder (other
than Swingline Loans) shall be applied ratably in accordance with each
Lender’s Commitment Percentage.

     (e) Upon the Termination Date, the Commitments and the credit
facility provided hereunder shall be terminated in full and the Borrowers
shall pay, in full and in cash, all outstanding Loans and all other
outstanding Obligations.

47

 

     2.20 Optional Prepayment of Loans; Reimbursement of Lenders.

     (a) The Borrowers shall have the right at any time and from time to
time to prepay outstanding Loans in whole or in part, (x) with respect to
LIBO Loans, upon at least two Business Days’ prior written, telex or
facsimile notice to the Administrative Agent prior to 11:00 a.m., Boston
time, and (y) with respect to Prime Rate Loans, upon at least one
Business Day prior written, telex or facsimile notice to the
Administrative Agent prior to 11:00 p.m., Boston time, subject to the
following limitations:

     (i) All prepayments under this Section 2.20 shall be paid to
the Administrative Agent for application, first, to the prepayment
of outstanding Swingline Loans, second, to the prepayment of other
outstanding Loans ratably in accordance with each Lender’s
Commitment Percentage, and third, to the funding of a cash
collateral deposit in the Cash Collateral Account in an amount
equal to 105% of all Letter of Credit Outstandings.

     (ii) Subject to the foregoing, outstanding Prime Rate Loans
shall be prepaid before outstanding LIBO Loans are prepaid. Each
partial prepayment of LIBO Loans shall be in an integral multiple
of $1,000,000. No prepayment of LIBO Loans shall be permitted
pursuant to this Section 2.20 other than on the last day of an
Interest Period applicable thereto, unless the Borrowers
simultaneously reimburse the Lenders for all “Breakage Costs” (as
defined below) associated therewith. No partial prepayment of a
Borrowing of LIBO Loans shall result in the aggregate principal
amount of the LIBO Loans remaining outstanding pursuant to such
Borrowing being less than $1,000,000 (unless all such outstanding
LIBO Loans are being prepaid in full).

     (iii) Each notice of prepayment shall specify the prepayment
date, the principal amount and Type of the Loans to be prepaid and,
in the case of LIBO Loans, the Borrowing or Borrowings pursuant to
which such Loans were made. Each notice of prepayment shall be
irrevocable and shall commit the Borrowers to prepay such Loan by
the amount and on the date stated therein. The Administrative Agent
shall, promptly after receiving notice from the Lead Borrower
hereunder, notify each Lender of the principal amount and Type of
the Loans held by such Lender which are to be prepaid, the
prepayment date and the manner of application of the prepayment.

     (b) The Borrowers shall reimburse each Lender on demand for any loss
incurred or to be incurred by it in the reemployment of the funds
released (i) resulting from any prepayment (for any reason whatsoever,
including, without limitation, conversion to Prime Rate Loans or
acceleration by virtue of, and after, the occurrence of an Event of
Default) of any LIBO Loan required or permitted under this Agreement, if
such Loan is prepaid other than on the last day of the Interest Period
for such Loan or (ii)

48

 

in the event that after the Lead Borrower delivers
a notice of borrowing under Section 2.4 in respect of LIBO Loans, such
Loans are not borrowed on the first day of the Interest Period specified
in such notice of borrowing for any reason. Such loss shall be the amount
as reasonably determined by such Lender as the excess, if any, of (A) the
amount of interest which would have accrued to such Lender on the amount
so paid or not borrowed at a rate of interest equal to the Adjusted LIBO
Rate for such Loan, for the period from the date of such payment or
failure to borrow to the last day (x) in the case of a payment or
refinancing of a LIBO Loan other than on the last day of the Interest
Period for such Loan, of the then current Interest Period for such Loan
or (y) in the case of such failure to borrow, of the Interest Period for
such LIBO Loan which would have commenced on the date of such failure to
borrow, over (B) the amount of interest which would have accrued to such
Lender on such amount by placing such amount on deposit for a comparable
period with leading banks in the London interbank market (collectively,
“Breakage Costs”). Any Lender demanding reimbursement for such loss shall
deliver to the Lead Borrower from time to time one or more certificates
setting forth the amount of such loss as determined by such Lender and
setting forth in reasonable detail the manner in which such amount was
determined.

     (c) In the event the Borrowers fail to prepay any Loan on the date
specified in any prepayment notice delivered pursuant to Section 2.20(a),
the Borrowers on demand by any Lender shall pay to the Administrative
Agent for the account of such Lender any amounts required to compensate
such Lender for any actual loss incurred by such Lender as a result of
such failure to prepay, including, without limitation, any loss, cost or
expenses incurred by reason of the acquisition of deposits or other funds
by such Lender to fulfill deposit obligations incurred in anticipation of
such prepayment. Any Lender demanding such payment shall deliver to the
Lead Borrower from time to time one or
more certificates setting forth the amount of such loss as
determined by such Lender and setting forth in reasonable detail the
manner in which such amount was determined.

     (d) Whenever any partial prepayment of Loans are to be applied to
LIBO Loans, such LIBO Loans shall be prepaid in the chronological order
of their Interest Payment Dates.

     2.21 Maintenance of Loan Account; Statements of Account.

     (a) The Administrative Agent shall maintain an account on its books
in the name of the Borrowers (the “Loan Account”) which will reflect (i)
all Loans and other advances made by the Lenders to the Borrowers or for
the Borrowers’ account, (ii) all L/C Disbursements, fees and interest
that have become payable as herein set forth, and (iii) any and all other
monetary Obligations that have become payable.

     (b) The Loan Account will be credited with all amounts received by
the Administrative Agent from the Borrowers or otherwise for the
Borrowers’ account,

49

 

including all amounts received in the FRG
Concentration Account from the Blocked Account Banks, and the amounts so
credited shall be applied as set forth in Sections 2.23(a) and (b) After
the end of each month, the Administrative Agent shall send to the Lead
Borrower a statement accounting for the charges, loans, advances and
other transactions occurring among and between the Administrative Agent,
the Lenders and the Borrowers during that month. The monthly statements
shall, absent manifest error, be an account stated, which is final,
conclusive and binding on the Borrowers.

     2.22 Cash Receipts.

     (a) At the request of Administrative Agent, at any time after Excess
Availability falls below $30,000,000 or upon the occurrence and
continuance of an Event of Default, the Borrowers shall deliver to the
Administrative Agent (i) a list of all present DDAs maintained by the
Borrowers, which list includes, with respect to each depository (A) the
name and address of that depository; (B) the account number(s) maintained
with such depository; and (C) to the extent known, a contact person at
such depository (the “DDA List”), (ii) notifications executed on behalf
of the Borrowers to each depository institution identified on the DDA
List in form and substance reasonably satisfactory to the Administrative
Agent, of the Administrative Agent’s interest in such DDA (each, a “DDA
Notification”), and (iii) notifications (the “Credit Card Notifications”)
executed on behalf of the Borrowers with each of the Borrowers’ major
credit card processors in form and substance reasonably satisfactory to
the Administrative Agent.

     (b) Annexed hereto as Schedule 2.22(b) is a list describing all
arrangements to which any Borrower is a party with respect to the payment
to any Borrower of the proceeds of all credit card charges for sales by
such Borrower.

     (c) On or prior to the Closing Date the Borrowers shall have entered
into a Blocked Account Agreement with the Blocked Account Banks in form
and substance reasonably satisfactory to the Administrative Agent.

     (d) The DDA Notifications and Credit Card Notifications shall
require, after the occurrence and during the continuance of a Cash
Dominion Event, the sweep on each Business Day of all available cash
receipts and other proceeds from the sale or disposition of any
Collateral, including, without limitation, the proceeds of all credit
card charges (all such cash receipts and proceeds, “Cash Receipts”), to
(x) a concentration account maintained by the Collateral Agent at Fleet
(the “FRG Concentration Account”), or (z) a Blocked Account, as the
Administrative Agent may direct.

     (e) The Blocked Account Agreements shall require, after the
occurrence and during the continuance of a Cash Dominion Event, the sweep
on each Business Day of all Cash Receipts to the FRG Concentration
Account or to such other account as the Administrative Agent may direct.

50

 

     (f) If at any time after the occurrence and during the continuance
of a Cash Dominion Event, any cash or cash equivalents owned by the
Borrowers are deposited to any account (other than a DDA for which a DDA
Notification has been delivered), or held or invested in any manner,
otherwise than in a Blocked Account that is subject to a Blocked Account
Agreement as required herein, the Administrative Agent shall require the
Borrowers to have all funds held in such account transferred to the FRG
Concentration Account or such other Blocked Account as the Administrative
Agent may direct.

     (g) The Borrowers may close DDAs or Blocked Accounts and/or open new
DDAs or Blocked Accounts, subject to the execution and delivery to the
Administrative Agent of appropriate DDA Notifications or Blocked Account
Agreements consistent with the provisions of this Section 2.22. Unless
consented to in writing by the Administrative Agent, the Borrowers may
not enter into any agreements with additional credit card processors
unless contemporaneously therewith, a Credit Card Agreement is executed
and delivered to the Administrative Agent.

     (h) The FRG Concentration Account is and shall remain, under the
sole dominion and control of the Collateral Agent. Each Borrower
acknowledges and agrees that, subject to the provisions of subparagraph
(i) below, (i) such Borrower has no right of withdrawal from the FRG
Concentration Account, (ii) the funds on deposit in the FRG Concentration
Account shall continue to be collateral security for all of the
Obligations and (iii) the funds on deposit in the FRG Concentration
Account shall be applied as provided in Section 2.23(a).

     (i) So long as no Cash Dominion Event has occurred and is
continuing, the Borrowers may direct, and shall have sole control over,
the manner of disposition of its funds in the DDA Accounts and the
Blocked Accounts.

     (j) After the occurrence and during the continuation of a Cash
Dominion Event, the Borrowers shall cause the ACH or wire transfer to,
upon the Administrative Agent’s instruction, any Blocked Account, no less
frequently than daily (unless the Commitments have been terminated
hereunder and the Obligations have been paid in full) of the then
contents of each DDA, each such transfer to be net of any minimum
balance, not to exceed $10,000, as may be required to be maintained in
the subject DDA by the bank at which such DDA is maintained, and, in
connection with each such transfer, the Borrowers shall also provide the
Administrative Agent with an accounting of the contents of each DDA.

     (k) After the occurrence and during the continuation of a Cash
Dominion Event, whether or not any Obligations are then outstanding, the
Borrowers shall cause the ACH or wire transfer, upon the Administrative
Agent’s instruction, to the FRG Concentration Account of the then entire
ledger balance of each Blocked Account, net of

51

 

such minimum balance, not
to exceed $10,000, as may be required to be maintained in the subject
Blocked Account by the bank at which such Blocked Account is maintained.

     (l) In the event that, notwithstanding the provisions of this
Section 2.22, after the occurrence of a Cash Dominion Event, the
Borrowers receive or otherwise have dominion and control of any such
proceeds or collections, such proceeds and collections shall be held in
trust by the Borrowers for the Administrative Agent and shall not be
commingled with any of the Borrowers’ other funds or deposited in any
account of Borrower other than as instructed by the Administrative Agent.

     2.23 Application of Payments.

     (a) As long as the time for payment of the Obligations has not been
accelerated, all amounts received in the FRG Concentration Account from
any source, including the Blocked Account Banks, and other amounts
received by the Administrative Agent, shall be applied, on the day of
receipt, in the following order: first, to pay any fees and expense
reimbursements and indemnification then due and payable to the
Administrative Agent, the Issuing Bank, and the Collateral Agent; second,
to pay interest then due and payable on Credit Extensions; third, to
repay any outstanding Swingline Loans; fourth, to repay any outstanding
Revolving Loans that are Prime Rate Loans and any outstanding
reimbursement obligations under Letters of Credit; fifth, to repay any
outstanding Revolving Loans that are LIBO Loans and all Breakage Costs
due in respect of such repayment pursuant to Section 2.20(b) or, at the
Lead Borrower’s option, to fund a cash collateral deposit to the Cash
Collateral Account sufficient to pay, and with direction to pay, all such
outstanding LIBO Loans on the last day of the then-pending
Interest Period therefor from such Cash Collateral Account; sixth,
if an Event of Default exists, to fund a cash collateral deposit in the
Cash Collateral Account in an amount equal to 105% of all Letter of
Credit Outstandings; seventh, to pay all other Obligations that are then
outstanding and then due and payable. If all amounts set forth in
clauses first through and including seventh above are paid, any excess
amounts shall be deposited in a separate cash collateral account, and
shall be released to the Lead Borrower on the day of receipt. So long as
no Event of Default has occurred and is continuing, the Administrative
Agent shall release the funds held in the Cash Collateral Account
pursuant to clause fifth above to the Borrowers upon the Lead Borrower’s
request.

     (b) All credits against the Obligations shall be effective on the
day of receipt thereof, and shall be conditioned upon final payment to
the Administrative Agent of the items giving rise to such credits. If any
item deposited to the FRG Concentration Account and credited to the Loan
Account is dishonored or returned unpaid for any reason, whether or not
such return is rightful or timely, the Administrative Agent shall have
the right to reverse such credit and charge the amount of such item to
the Loan Account and the Borrowers shall indemnify the Administrative
Agent, the Collateral Agent, the

52

 

Issuing Bank and the Lenders against all
claims and losses resulting from such dishonor or return.

     2.24 Increased Costs.

     (a) If any Change in Law shall:

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

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

     and the result of any of the foregoing shall be to increase the cost to
such Lender of making or maintaining any LIBO Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to such Lender or the
Issuing Bank of participating in, issuing or maintaining any Letter of Credit
or to reduce the amount of any sum received or receivable by such Lender or the
Issuing Bank hereunder (whether of principal, interest or otherwise) other than
Taxes, which shall be governed by Section 2.27 hereof , then the Borrowers will
pay to such Lender or the Issuing Bank, as the case may be, such additional
amount or amounts as will compensate such Lender or the Issuing Bank, as the
case may be, for such additional costs incurred or reduction suffered.

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

     (c) A certificate of a Lender or the Issuing Bank setting forth the
amount or amounts necessary to compensate such Lender or the Issuing Bank
or its holding company, as the case may be, as specified in paragraph (a)
or (b) of this Section and

53

 

setting forth in reasonable detail the manner
in which such amount or amounts were determined shall be delivered to the
Lead Borrower and shall be conclusive absent manifest error. The
Borrowers shall pay such Lender or the Issuing Bank, as the case may be,
the amount shown as due on any such certificate within ten (10) Business
Days after receipt thereof.

     (d) Failure or delay on the part of any Lender or the Issuing Bank
to demand compensation pursuant to this Section within ninety (90) days
of the effective date of the relevant Change in Law shall constitute a
waiver of such Lender’s or the Issuing Bank’s right to demand such
compensation.

     2.25 Change in Legality.

     (a) Notwithstanding anything to the contrary contained elsewhere in
this Agreement, if (x) any Change in Law shall make it unlawful for a
Lender to make or maintain a LIBO Loan or to give effect to its
obligations as contemplated hereby with respect to a LIBO Loan or (y) at
any time any Lender determines that the making or continuance of any of
its LIBO Loans has become impracticable as a result of a contingency
occurring after the date hereof which adversely affects the London
interbank market or the position of such Lender in the London interbank
market, then, by written notice to the Lead Borrower, such Lender may (i)
declare that LIBO Loans will not thereafter be made by such Lender
hereunder, whereupon any request by the Borrowers for a LIBO Borrowing
shall, as to such Lender only, be deemed a request for a Prime Rate Loan
unless such declaration shall be subsequently withdrawn; and (ii) require
that all outstanding LIBO Loans made by it be converted to Prime Rate
Loans, in which event all such LIBO Loans shall be automatically
converted to Prime Rate Loans as of the
effective date of such notice as provided in paragraph (b) below. In
the event any Lender shall exercise its rights under clause (i) or (ii)
of this paragraph (a), all payments and prepayments of principal which
would otherwise have been applied to repay the LIBO Loans that would have
been made by such Lender or the converted LIBO Loans of such Lender shall
instead be applied to repay the Prime Rate Loans made by such Lender in
lieu of, or resulting from the conversion of, such LIBO Loans.

     (b) For purposes of this Section 2.25, a notice to the Lead Borrower
by any Lender pursuant to paragraph (a) above shall be effective, and if
any LIBO Loans shall then be outstanding, on the last day of the
then-current Interest Period; and otherwise such notice shall be
effective on the date of receipt by the Lead Borrower.

     2.26 Payments; Sharing of Setoff.

     (a) The Borrowers shall make each payment required to be made by it
hereunder or under any other Loan Document (whether of principal,
interest, fees or reimbursement of drawings under Letters of Credit, or
of amounts payable under Sections

54

 

2.20(b), 2.24 or 2.27, or otherwise)
prior to 2:00 p.m., Boston time, on the date when due, in immediately
available funds, without setoff or counterclaim. Any amounts received
after such time on any date may, in the discretion of the Administrative
Agent, be deemed to have been received on the next succeeding Business
Day for purposes of calculating interest thereon. All such payments shall
be made to the Administrative Agent at its offices at 40 Broad Street,
Boston, Massachusetts, except payments to be made directly to the Issuing
Bank or Swingline Lender as expressly provided herein and except that
payments pursuant to Sections 2.20(b), 2.24, 2.27 or 9.3 shall be made
directly to the Persons entitled thereto and payments pursuant to other
Loan Documents shall be made to the Persons specified therein. The
Administrative Agent shall distribute any such payments received by it
for the account of any other Person to the appropriate recipient promptly
following receipt thereof. If any payment under any Loan Document (other
than payments with respect to LIBO Borrowings) shall be due on a day that
is not a Business Day, the date for payment shall be extended to the next
succeeding Business Day, and, if any payment due with respect to LIBO
Borrowings shall be due on a day that is not a Business Day, the date for
payment shall be extended to the next succeeding Business Day, unless
that succeeding Business Day is in the next calendar month, in which
event, the date of such payment shall be on the last Business Day of
subject calendar month, and, in the case of any payment accruing
interest, interest thereon shall be payable for the period of such
extension. All payments under each Loan Document shall be made in
dollars.

     (b) If at any time insufficient funds are received by and available
to the Administrative Agent to pay fully all amounts of principal,
unreimbursed drawings under Letters of Credit, interest and fees then due
hereunder, such funds shall be applied ratably
among the parties entitled thereto in accordance with the provisions
of Section 2.23(a) hereof or Section 6.2 of the Security Agreement, as
applicable.

     (c) If any Lender shall, by exercising any right of setoff or
counterclaim or otherwise, obtain payment in respect of any principal of
or interest on any of its Loans or participations in drawings under
Letters of Credit or Swingline Loans resulting in such Lender’s receiving
payment of a greater proportion of the aggregate amount of its Loans and
participations in drawings under Letters of Credit and Swingline Loans
and accrued interest thereon than the proportion received by any other
Lender, then the Lender receiving such greater proportion shall purchase
(for cash at face value) participations in the Loans and participations
in drawings under Letters of Credit and Swingline Loans of other Lenders
to the extent necessary so that the benefit of all such payments shall be
shared by the Lenders ratably in accordance with the aggregate amount of
principal of and accrued interest on their respective Loans and
participations in drawings under Letters of Credit and Swingline Loans,
provided that (i) if any such participations are purchased and all or any
portion of the payment giving rise thereto is recovered, such
participations shall be rescinded and the purchase price restored to the
extent of such recovery, without interest, and (ii) the provisions of
this paragraph shall not be construed

55

 

to apply to any payment made by the
Borrowers pursuant to and in accordance with the express terms of this
Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans or
participations in drawings under Letters of Credit to any assignee or
participant, other than to the Borrowers or any Affiliate thereof (as to
which the provisions of this paragraph shall apply). The Borrowers
consent to the foregoing and agree, to the extent they may effectively do
so under Applicable Law, that any Lender acquiring a participation
pursuant to the foregoing arrangements may exercise against the Borrowers
rights of setoff and counterclaim with respect to such participation as
fully as if such Lender were a direct creditor of the Borrowers in the
amount of such participation.

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

     (e) If any Lender shall fail to make any payment required to be made
by it pursuant to this Agreement, then the Administrative Agent may, in
its discretion (notwithstanding any contrary provision hereof), apply any
amounts thereafter received by the Administrative Agent for the account
of such Lender to satisfy such Lender’s obligations under this Agreement
until all such unsatisfied obligations are fully paid.

     2.27 Taxes.

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

56

 

     (b) In addition, the Borrowers shall pay any Other Taxes to the
relevant Governmental Authority in accordance with Applicable Law.

     (c) The Borrowers shall indemnify the Agents, each Lender and the
Issuing Bank, within ten (10) Business Days after written demand
therefor, for the full amount of any Indemnified Taxes or Other Taxes
paid by such Agent, such Lender or the Issuing Bank, as the case may be,
on or with respect to any payment by or on account of any obligation of
the Borrowers hereunder or under any other Loan Document (including
Indemnified Taxes or Other Taxes imposed or asserted on or attributable
to amounts payable under this Section) and any penalties, interest and
reasonable expenses arising therefrom or with respect thereto, whether or
not such Indemnified Taxes or Other Taxes were correctly or legally
imposed or asserted by the relevant Governmental Authority. A certificate
as to the amount of such payment or liability delivered to the Borrowers
by a Lender or the Issuing Bank, or by any Agent on its own behalf or on
behalf of a Lender or the Issuing Bank setting forth in reasonable detail
the manner in which such amount was determined, shall be conclusive
absent manifest error.

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

     (e) Any Foreign Lender that is entitled to an exemption from or
reduction in withholding tax shall deliver to the Lead Borrower and the
Administrative Agent two copies of either United States Internal Revenue
Service Form W-8BEN or Form W-8ECI, or any subsequent versions thereof or
successors thereto, or, in the case of a Foreign Lender’s claiming
exemption from or reduction in U.S. Federal withholding tax under Section
871(h) or 881(c) of the Code with respect to payments of “portfolio
interest”, a Form W-8BEN, or any subsequent versions thereof or
successors thereto (and, if such Foreign Lender delivers a Form W-8BEN, a
certificate representing that such Foreign 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 the Borrowers
and is not a controlled foreign corporation related to the Borrowers
(within the meaning of Section 864(d)(4) of the Code)), properly
completed and duly executed by such Foreign Lender claiming complete
exemption from or reduced rate of, United States federal withholding tax
on payments by the Borrowers under this Agreement and the other Loan
Documents, or in the case of a Foreign Lender claiming exemption for
“portfolio interest” certifying that it is not a foreign corporation,
partnership, estate or trust. Such forms shall be delivered by each
Foreign Lender on or before the date it becomes a party to this Agreement
(or, in the case of a transferee that is a participation holder, on or
before the date such participation holder becomes a transferee hereunder)

57

 

and on or before the date, if any, such Foreign Lender changes its
applicable lending office by designating a different lending office (a
“New Lending Office”). In addition, each Foreign Lender shall deliver
such forms promptly upon the obsolescence or invalidity of any form
previously delivered by such Foreign Lender. Notwithstanding any other
provision of this Section 2.27(e), a Foreign Lender shall not be required
to deliver any form pursuant to this 2.27(e) that such Foreign Lender is
not legally able to deliver.

     (f) The Borrowers shall not be required to indemnify any Foreign
Lender or to pay any additional amounts to any Foreign Lender in respect
of United States federal withholding tax pursuant to paragraph (a) or (c)
above to the extent that the obligation to pay such additional amounts
would not have arisen but for a failure by such Foreign Lender to comply
with the provisions of paragraph (e) above. Should a Lender become
subject to Taxes because of its failure to deliver a form required
hereunder, the Borrowers shall, at such Lender’s expense, take such steps
as such Lender shall reasonably request to assist such Lender to recover
such Taxes.

     2.28 Security Interests in Collateral. To secure their Obligations under
this Agreement and the other Loan Documents, the Borrowers shall grant, and
shall cause each Facility Guarantor to grant to the Collateral Agent, for its
benefit and the ratable benefit of the other Secured Parties, a first-priority
security interest in all of the Collateral pursuant hereto and to the Security
Documents.

     2.29 Mitigation Obligations; Replacement of Lenders.

     (a) If any Lender requests compensation under Section 2.24, or if
the Borrowers are required to pay any additional amount to any Lender or
any Governmental Authority for the account of any Lender pursuant to
Section 2.27, then such Lender shall use reasonable efforts to designate
a different lending office for funding or booking its Loans hereunder or
to assign its rights and obligations hereunder to another of its offices,
branches or affiliates, if, in the reasonable judgment of such Lender,
such designation or assignment (i) would eliminate or reduce amounts
payable pursuant to Sections 2.24 or 2.27, as the case may be, in the
future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender. The
Borrowers hereby agree to pay all reasonable costs and expenses incurred
by any Lender in connection with any such designation or assignment;
provided, however, that the Borrowers shall not be liable for such costs
and expenses of a Lender requesting compensation if (i) such Lender
becomes a party to this Agreement on a date after the Closing Date and
(ii) the relevant Change in Law occurs on a date prior to the date such
Lender becomes a party hereto.

     (b) If any Lender requests compensation under Section 2.24, or if
the Borrowers are required to pay any additional amount to any Lender or
any Governmental Authority for the account of any Lender pursuant to
Section 2.27, or if any Lender

58

 

defaults in its obligation to fund Loans
hereunder, then the Borrowers may, at their sole expense and effort, upon
notice to such Lender and the Administrative Agent, require such Lender
to assign and delegate, without recourse (in accordance with and subject
to the restrictions contained in Section 9.5), all its interests, rights
and obligations under this Agreement to an assignee that shall assume
such obligations (which assignee may be another Lender, if a Lender
accepts such assignment), provided that (i) except in the case of an
assignment to another Lender, the Borrowers shall have received the prior
written consent of the Administrative Agent, the Issuing Bank and the
Swingline Lender, which consent shall not unreasonably be withheld, (ii)
such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans and participations in unreimbursed
drawings under Letters of Credit and Swingline Loans, accrued interest
thereon, accrued fees and all other amounts payable to it hereunder, from
the assignee (to the extent of such outstanding principal and accrued
interest and fees) or the Borrowers (in the case of all other amounts)
and (iii) in the case of any such assignment resulting from a claim for
compensation under Section 2.24 or payments required to be made pursuant
to Section 2.27, such assignment will result in a reduction in such
compensation or payments. A Lender shall not be required to make any such
assignment and delegation if, prior thereto, as a result of a waiver by
such Lender or otherwise, the circumstances entitling the Borrowers to
require such assignment and delegation cease to apply.

     3. REPRESENTATIONS AND WARRANTIES Each Borrower, for itself and on behalf
of each other member of the Borrower Affiliated Group, represents and warrants
to the Agents and the Lenders that:

     3.1 Organization; Powers. Each member of the Borrower Affiliated Group
is, duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, and each such Person has all requisite power
and authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business
in, and is in good standing in, every jurisdiction where such qualification is
required.

     3.2 Authorization; Enforceability. The transactions contemplated hereby
and by the other Loan Documents to be entered into by each Borrower are within
such Borrower’s corporate powers and have been duly authorized by all necessary
corporate, and, if required, stockholder action. This Agreement has been duly
executed and delivered by each Borrower and constitutes, and each other Loan
Document to which any Borrower is a party, when executed and delivered by such
Borrower will constitute, a legal, valid and binding obligation of such
Borrower (as the case may be), enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors’ rights generally and subject to general
principles of equity, regardless of whether considered in a proceeding in
equity or at law.

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     3.3 Governmental Approvals; No Conflicts. The transactions to be entered
into contemplated by the Loan Documents (a) do not require any consent or
approval of, registration or filing with, or any other action by, any
Governmental Authority, except (i) for such as have been obtained or made and
are in full force and effect, (ii) for those which could not be reasonably be
expected to have a Material Adverse Effect, and (iii) for filings and
recordings necessary to perfect Liens created under the Loan Documents, (b)
will not violate any Applicable Law or regulation or the charter, by-laws or
other organizational documents of any Borrower or any other member of the
Borrower Affiliated Group or any order of any Governmental Authority, except
for such violation which could not reasonably be expected to have a Material
Adverse Effect, (c) will not violate or result in a default under any
indenture, agreement or other instrument binding upon any Borrower or any other
member of the Borrower Affiliated Group or their respective assets, except for
such violation or default which could not reasonably be expected to have a
Material Adverse Effect, or give rise to a right thereunder to require any
material payment to be made by any Borrower or any other member of the Borrower
Affiliated Group, and (d) will not result in the creation or imposition of any
Lien on any material asset of any Borrower or any other member of the
Borrower Affiliated Group, except Liens created under the Loan Documents
or otherwise permitted hereby or thereby.

     3.4 Financial Condition. The Lead Borrower has heretofore furnished to
the Lenders the consolidated balance sheet, and statements of income,
stockholders’ equity, and cash flows for the Borrower Affiliated Group as of
and for the fiscal year ending January 31, 2004. Such financial statements
present fairly, in all material respects, the financial position, results of
operations and cash flows of the Borrower Affiliated Group, in each case, as of
such dates and for such periods in accordance with GAAP.

     3.5 Properties.

     (a) Each member of the Borrower Affiliated Group has good title to,
or valid leasehold interests in, all of such Person’s real and personal
property material to its business, except for defects which could not
reasonably be expected to have a Material Adverse Effect.

     (b) Schedule 3.5(b)(i) sets forth the address (including county) of
all Real Estate that is owned by each member of the Borrower Affiliated
Group as of the Closing Date, together with a list of the holders of any
mortgage or other Lien thereon. Schedule 3.5(b)(ii) sets forth the
address of all Real Estate that is leased by each member of the Borrower
Affiliated Group as of the Closing Date. Each of such leases is in full
force and effect and no Borrower is in default of the terms thereof.

     3.6 Litigation and Environmental Matters.

     (a) There are no actions, suits or proceedings by or before any
arbitrator or Governmental Authority pending against or, to the knowledge
of any member of the

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Borrower Affiliated Group, threatened against or
affecting any such Person (i) as to which there is a reasonable
possibility of an adverse determination and that, if adversely
determined, could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect (other than those set
forth on Schedule 3.6) or (ii) that involve any of the Loan Documents.

     (b) Except for the matters set forth on Schedule 3.6, and except as
could not reasonably be expected to have a Material Adverse Effect, no
member of the Borrower Affiliated Group (i) has failed to comply with any
Environmental Law or to obtain, maintain or comply with any permit,
license or other approval required under any Environmental Law, (ii) has
become subject to any Environmental Liability, (iii) has received notice
of any claim with respect to any Environmental Liability or (iv) knows of
any basis for any Environmental Liability.

     (c) Since the date of this Agreement, there has been no change in
the status of the matters set forth on Schedule 3.6 that, individually or
in the aggregate, has resulted in, or could reasonably be expected to
result in, a Material Adverse Effect.

     3.7 Compliance with Laws and Agreements. Each member of the Borrower
Affiliated Group is in compliance with all laws, regulations and orders of any
Governmental Authority applicable to such Person or its property and all
indentures, material agreements and other instruments binding upon it or its
property, except where the failure to do so, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect. No
Default has occurred and is continuing.

     3.8 Investment and Holding Company Status. No member of the Borrower
Affiliated Group is (a) an “investment company” as defined in, or subject to
regulation under, the Investment Company Act of 1940 or (b) a “holding company”
as defined in, or subject to regulation under, the Public Utility Holding
Company Act of 1935.

     3.9 Taxes. Each member of the Borrower Affiliated Group has timely filed
or caused to be filed all tax returns and reports required to have been filed
and has paid or caused to be paid all taxes required to have been paid by it,
except (a) taxes that are being contested in good faith by appropriate
proceedings, for which such Person has set aside on its books adequate
reserves, and as to which no Lien has arisen, or (b) to the extent that the
failure to do so could not reasonably be expected to result in a Material
Adverse Effect.

     3.10 ERISA. Except as set forth in Schedule 3.10, no member of the
Borrower Affiliated Group is party to a Plan. No ERISA Event has occurred or
is reasonably expected to occur that, when taken together with all other such
ERISA Events for which liability is reasonably expected to occur, could
reasonably be expected to result in a Material Adverse Effect. The present
value of all accumulated benefit obligations under each Plan (based on the
assumptions used for purposes of Statement of Financial Accounting Standards
No. 87) did not,

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

     3.11 Interdependence of Borrower Affiliated Group.(a) The business
of each member of the Borrower Affiliated Group shall benefit from the
successful performance of the business of each other member of the
Borrower Affiliated Group, and the Borrower Affiliated Group as a whole.

     (b) Each member of the Borrower Affiliated Group has cooperated to
the extent necessary and shall continue to cooperate with each other
member of the Borrower Affiliated Group to the extent necessary in the
development and conduct of each other member of the Borrower Affiliated
Group’s business, and shall to the extent necessary share and participate
in the formulation of methods of operation, distribution, leasing,
inventory control, and other similar business matters essential to each
member of the Borrower Affiliated Group’s business.

     (c) The failure of any member of the Borrower Affiliated Group to
cooperate with all other members of the Borrower Affiliated Group in the
conduct of their respective businesses shall have an adverse impact on
the business of each other member of the Borrower Affiliated Group, and
the failure of any member of the Borrower Affiliated Group to associate
or cooperate with all other members of the Borrower Affiliated Group is
reasonably likely to impair the goodwill of such other members of
Borrower Affiliated Group and the Borrower Affiliated Group as a whole.

     (d) Each member of the Borrower Affiliated Group is accepting joint
and several liability for the Obligations on the terms and conditions set
forth in the Facility Guaranty and represents and warrants that the
financial accommodations being provided hereby are for the mutual
benefit, directly and indirectly, of each member of the Borrower
Affiliated Group.

     3.12 Disclosure. The Borrowers have disclosed to the Lenders all
agreements, instruments and corporate or other restrictions to which any member
of the Borrower Affiliated Group is subject, and all other matters known to any
such Person, that, individually or in the aggregate, in each case, could
reasonably be expected to result in a Material Adverse Effect. None of the
reports, financial statements, certificates or other information furnished by
or on behalf of any member of the Borrower Affiliated Group to the
Administrative Agent or any Lender in connection with the negotiation of this
Agreement or any other Loan Document or delivered hereunder or thereunder (as
modified or supplemented by other information so furnished) contains any
material misstatement of fact or omits to state any material fact

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necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.

     3.13 Subsidiaries. On and as of the Closing Date, the authorized capital
stock or other equity, and the number of issued and outstanding shares of
capital stock or other equity, of the Borrowers and each other member of the
Borrower Affiliated Group is as described in Schedule 3.13. All such
outstanding shares of capital stock or other equity of the Borrowers and each
other member of the Borrower Affiliated Group have been duly and validly
issued, in compliance with all legal requirements relating to the authorization
and issuance of shares of capital stock or other equity, and are fully paid and
non-assessable. There is no other capital stock or ownership interest of any
class outstanding. Except as set forth on Schedule 3.13, no member of the
Borrower Affiliated Group is party to any joint venture, general or limited
partnership, or limited liability company, agreements or any other business
ventures or entities.

     3.14 Insurance. Schedule 3.14 sets forth a description of all insurance
maintained by or on behalf of the Borrower Affiliated Group as of the Closing
Date. Each of such policies is in full force and effect. As of the Closing
Date, all premiums in respect of such insurance that are due and payable have
been paid.

     3.15 Labor Matters. There are no strikes, lockouts or slowdowns against
any member of the Borrower Affiliated Group pending or, to the knowledge of the
Borrowers, threatened. The hours worked by and payments made to employees of
the members of the Borrower Affiliated Group have not been in violation of the
Fair Labor Standards Act or any other applicable federal, state, local or
foreign law dealing with such matters to the extent that any such violation
could reasonably be expected to have a Material Adverse Effect. All payments
due from any member of the Borrower Affiliated Group, or for which any claim
may be made against any such Person, on account of wages and employee health
and welfare insurance and other benefits, have been paid or accrued as a
liability on the books of such member. The consummation of the transactions
contemplated by the Loan Documents will not give rise to any right of
termination or right of renegotiation on the part of any union under any
collective bargaining agreement to which any member of the Borrower Affiliated
Group is bound.

     3.16 Certain Transactions. Except as set forth on Schedule 3.16, none of
the officers, partners, or directors of any member of the Borrower Affiliated
Group is presently a party to any transaction, and, to the knowledge of the
executive officers of the Borrowers, none of the employees of any member of the
Borrower Affiliated Group is presently a party to any material transaction,
with any other member of the Borrower Affiliated Group or any Affiliate (other
than for services as employees, officers and directors), including any
contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
partner, director or such employee or, to the knowledge of the executive
officers of the Borrowers, any corporation, partnership, trust or other entity
in which any officer, partner, director, or any such employee or natural person
related to such officer, partner, director or employee or other Person

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in which
such officer, partner, director or employee has a direct or indirect beneficial
interest, has a substantial direct or indirect beneficial interest or is an
officer, director, trustee or partner.

     3.17 Restrictions on the Borrower Affiliated Group. No member of the
Borrower Affiliated Group is a party to or bound by any contract, agreement or
instrument, or subject to any charter or other corporate restriction, that has
or could reasonably be expected to have a Material Adverse Effect.

     3.18 Security Documents. The Security Documents create in favor of the
Collateral Agent, for the ratable benefit of the Secured Parties, a legal,
valid and enforceable security interest in the Collateral, and the Security
Documents constitute, or will upon the filing of financing statements and the
obtaining of “control”, in each case with respect to the relevant Collateral as
required under the applicable Uniform Commercial Code, the creation of a fully
perfected first priority Lien on, and security interest in, all right, title
and interest of the Borrowers and each Facility Guarantor thereunder in such
Collateral, in each case prior and superior in right to any other Person (other
than Permitted Encumbrances having priority under Applicable Law), except as
permitted hereunder or under any other Loan Document.

     3.19 Federal Reserve Regulations.

     (a) No member of the Borrower Affiliated Group is engaged
principally, or as one of its important activities, in the business of
extending credit for the purpose of buying or carrying Margin Stock.

     (b) No part of the proceeds of any Loan or any Letter of Credit will
be used, whether directly or indirectly, and whether immediately,
incidentally or ultimately, (i) to buy or carry Margin Stock or to extend
credit to others for the purpose of buying or carrying Margin Stock or to
refund indebtedness originally incurred for such purpose or (ii) for any
purpose that entails a violation of, or that is inconsistent with, the
provisions of the Regulations of the Board, including Regulation U or X.

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     3.20 Solvency. The Borrower Affiliated Group, taken as a whole, is
Solvent. No transfer of property is being made by any Borrower and no
obligation is being incurred by any Borrower in connection
with the transactions contemplated by this Agreement or the other Loan
Documents with the intent to hinder, delay, or defraud either present or future
creditors of any Borrower.

     3.21 Franchises, Patents, Copyrights, Etc. Except as otherwise set forth
on Schedule 3.21 hereto, each member of the Borrower Affiliated Group owns, or
is licensed to use, all franchises, patents, copyrights, trademarks,
tradenames, service marks, licenses and permits, and rights in respect of the
foregoing, adequate for the conduct of its business as substantially now
conducted without known conflict with any rights of any other Person and, in
each case, free of any Lien that is not a Permitted Encumbrance.

     4. CONDITIONS.

     4.1 Closing Date. The obligation of the Lenders to make the initial
Loans and of the Issuing Bank to issue the initial Letters of Credit is subject
to the following conditions precedent:

     (a) The Agents (or their counsel) shall have received from each
party hereto either (i) a counterpart of this Agreement and all other
Loan Documents (including, without limitation, the Security Documents)
signed on behalf of such party or (ii) written evidence satisfactory to
the Agents (which may include telecopy transmission of a signed signature
page of this Agreement) that such party has signed a counterpart of this
Agreement and all other Loan Documents.

     (b) The Agents shall have received a favorable written opinion
(addressed to each Agent and the Lenders on the Closing Date and dated
the Closing Date) of Bryan Cave LLP, counsel for the Borrowers,
substantially in the form of Exhibit C, covering such matters relating to
the Borrowers, the Loan Documents or the transactions contemplated
thereby as the Required Lenders shall reasonably request. The Borrowers
hereby request such counsel to deliver such opinion.

     (c) The Agents shall have received such documents and certificates
as the Agents or their counsel may reasonably request relating to the
organization, existence and good standing of each member of the Borrower
Affiliated Group, the authorization of the transactions contemplated by
the Loan Documents and any other legal matters relating to the Borrower
Affiliated Group, the Loan Documents or the transactions contemplated
thereby, all in form and substance reasonably satisfactory to the Agents
and their counsel.

     (d) The Agents shall have received a Borrowing Base Certificate
dated the Closing Date, relating to the month ended on April 30, 2004,
and executed by a Financial Officer of the Lead Borrower.

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     (e) The Agents shall have received a certificate, reasonably
satisfactory in form and substance to the Agents, (i) with respect to the
solvency of the Borrower Affiliated Group on a consolidated basis, as of
the Closing Date, and (ii) certifying that, as of the Closing Date, the
representations and warranties made by the Borrowers in the Loan
Documents are true and complete in all material respects and that no
event has occurred (or failed to occur) which is or which, solely with
the giving of notice or passage of time(or both) would be a Default or an
Event of Default.

     (f) All necessary consents and approvals to the transactions
contemplated hereby shall have been obtained and shall be reasonably
satisfactory to the Agents.

     (g) The Agents shall be reasonably satisfied that any financial
statements delivered to them fairly present the business and financial
condition of the Borrower Affiliated Group, and that there has been no
material adverse change in the assets, business, operation, financial
condition or income of the Borrower Affiliated Group, taken as a whole,
since the date of the most recent financial information delivered to the
Agents.

     (h) The Administrative Agent shall have received and be satisfied
with (a) a quarterly balance sheet budget for the Borrower Affiliated
Group, (b) an income statement budget for the current fiscal year for the
Borrower Affiliated Group, and (c) such other information (financial or
otherwise) reasonably requested by the Administrative Agent in form and
substance reasonably satisfactory to the Administrative Agent.

     (i) Except as set forth on Schedule 3.6, there shall not be pending
any litigation or other proceeding, the result of which could reasonably
be expected to have a Material Adverse Effect on the Borrower Affiliated
Group, taken as a whole.

     (j) There shall not have occurred any default, nor shall any event
exist which is, or solely with the passage of time, the giving of notice
or both, would be a default under any Material Indebtedness of any member
of the Borrower Affiliated Group.

     (k) The Collateral Agent shall have received results of searches
from such jurisdictions as may be reasonably required by the Collateral
Agent or other evidence reasonably satisfactory to the Collateral Agent
(in each case dated as of a date reasonably satisfactory to the
Collateral Agent) indicating the absence of Liens on the Collateral,
including, without limitation, receivables from credit card processors,
except for Permitted Encumbrances and Liens for which termination
statements and releases reasonably satisfactory to the Collateral Agent
are being tendered concurrently with such extension of credit.

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     (l) The Collateral Agent shall have received all documents and
instruments, including Uniform Commercial Code financing statements,
required by law or reasonably requested by the Collateral Agent to be
filed, registered or recorded to create or perfect the first priority
Liens intended to be created under the Loan Documents and all such
documents and instruments shall have been so filed, registered or
recorded to the satisfaction of the Collateral Agent.

     (m) The Collateral Agent shall have received the DDA Notifications,
the Blocked Account Agreements and the Credit Card Notifications required
to be delivered hereunder on or before the Closing Date.

     (n) All fees due at or immediately after the Closing Date and all
reasonable costs and expenses incurred by the Agents in connection with
the establishment of the credit facility contemplated hereby (including
the reasonable fees and expenses of counsel to the Agents) shall have
been paid in full.

     (o) The consummation of the transactions contemplated hereby shall
not (a) violate any Applicable Law, or (b) conflict with, or result in a
default or event of default under, any material agreement of Borrowers or
any other member of the Borrower Affiliated Group, taken as a whole (and
the Agents and the Lenders shall receive a satisfactory opinion of
Borrowers’ counsel to that effect). No event shall exist which is, or
solely with the passage of time, the giving of notice or both, would be a
default under any material agreement of any member of the Borrower
Affiliated Group.

     (p) No material changes in governmental regulations or policies
affecting the Borrowers, the Agents, or any Lender involved in this
transaction shall have occurred prior to the Closing Date which could,
individually or in the aggregate, materially adversely effect the
transaction contemplated by this Agreement.

     (q) There shall be no Default or Event of Default on the Closing
Date.

     (r) The Collateral Agent shall have received, and be satisfied with,
evidence of the Borrowers’ insurance, together with such endorsements as
are required by the Loan Documents.

     (s) The Borrowers shall have paid all accrued and unpaid interest,
fees, and expenses due under the Existing Credit Agreement to the Persons
entitled thereto.

     (t) Assignments amongst the Lenders party to the Existing Credit
Agreement and the Lenders party to this Agreement shall have been
executed and delivered to the Administrative Agent to the extent deemed
necessary by the Administrative Agent.

     (u) There shall not have occurred any disruption or material adverse
change in the financial or capital markets in general that would, in the
reasonable opinion of the

67

 

Agents, have a material adverse effect on the market for loan
syndications or adversely affecting the syndication of the Loans.

     (v) There shall have been delivered to the Administrative Agent such
additional instruments and documents as the Agents or counsel to the
Agents reasonably may require or request.

     The Administrative Agent shall notify the Lead Borrower and the Lenders of
the Closing Date, and such notice shall be conclusive and binding.
Notwithstanding the foregoing, the obligations of the Lenders to make Loans and
of the Issuing Bank to issue Letters of Credit hereunder shall not become
effective unless each of the foregoing conditions is satisfied (or waived
pursuant to Section 9.2) at or prior to 5:00 p.m., Boston time, on June 15,
2004 (and, in the event such conditions are not so satisfied or waived, this
Agreement shall terminate at such time).

     4.2 Conditions Precedent to Each Loan and Each Letter of Credit. In
addition to those conditions described in Section 4.1, the obligation of the
Lenders to make each Loan and of the Issuing Bank to issue each Letter of
Credit, is subject to the following conditions precedent:

     (a) Notice. The Administrative Agent shall have received a notice
with respect to such Borrowing or issuance, as the case may be, as
required by Section 0.

     (b) Representations and Warranties. All representations and
warranties contained in this Agreement and the other Loan Documents or
otherwise made in writing in connection herewith or therewith shall be
true and correct in all material respects on and as of the date of each
Borrowing or the issuance of each Letter of Credit hereunder with the
same effect as if made on and as of such date, other than representations
and warranties that relate solely to an earlier date.

     (c) No Default. On the date of each Borrowing hereunder and the
issuance of each Letter of Credit, the Borrowers shall be in compliance
with all of the terms and provisions set forth herein and in the other
Loan Documents to be observed or performed and no Default or Event of
Default shall have occurred and be continuing.

     (d) Borrowing Base Certificate. The Administrative Agent shall have
received the most recently required Borrowing Base Certificate, with
each such Borrowing Base Certificate including schedules as required by
the Administrative Agent.

     The request by the Borrowers for, and the acceptance by the Borrowers of,
each extension of credit hereunder shall be deemed to be a representation and
warranty by the Borrowers that the conditions specified in this Section 4.2
have been satisfied at that time and that after giving effect to such extension
of credit the Borrowers shall continue to be in

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compliance with the Borrowing Base. The conditions set forth in this
Section 4.2 are for the sole benefit of the Administrative Agent and each
Lender and may be waived by the Administrative Agent in whole or in part
without prejudice to the Administrative Agent or any Lender.

     5. AFFIRMATIVE COVENANTS. Until the Commitments have expired or been
terminated and the principal of and interest on each Loan and all fees payable
hereunder shall have been paid in full and all Letters of Credit shall have
expired or terminated and all L/C Disbursements shall have been reimbursed,
each Borrower covenants and agrees with the Agents and the Lenders that:

     5.1 Financial Statements and Other Information. The Borrowers will
furnish to the Agents:

     (a) within ninety (90) days after the end of each fiscal year of the
Borrower Affiliated Group, a consolidated balance sheet and related
statements of operations, stockholders’ equity and cash flows as of the
end of and for such year, setting forth in each case in comparative form
the figures for the previous fiscal year, all audited and reported on by
BDO Seidman or another independent public accountant of recognized
national standing (without a “going concern” or like qualification or
exception and without a qualification or exception as to the scope of
such audit) to the effect that such consolidated financial statements
present fairly in all material respects the financial condition and
results of operations of the Borrower Affiliated Group on a consolidated
basis in accordance with GAAP consistently applied;

     (b) within forty-five (45) days after the end of each fiscal quarter
of the Borrower Affiliated Group, a consolidated balance sheet and
related statements of operations, stockholders’ equity and cash flows, as
of the end of and for such fiscal quarter and the elapsed portion of the
fiscal year, with comparative results to the same fiscal periods of the
prior fiscal year, all certified by a Financial Officer of the Lead
Borrower as presenting in all material respects the financial condition
and results of operations of the Borrower Affiliated Group on a
consolidated basis in accordance with GAAP consistently applied, subject
to normal year end audit adjustments and the absence of footnotes,

     (c) concurrently with any delivery of financial statements under
clause (a) or (b) above, a certificate of a Financial Officer of the Lead
Borrower in the form of Exhibit E hereto (i) certifying as to whether a
Default has occurred and, if a Default has occurred, specifying the
details thereof and any action taken or proposed to be taken with respect
thereto, (ii) setting forth reasonably detailed calculations with respect
to the Fixed Charge Coverage Ratio for such period, and (iii) stating
whether any change in GAAP or in the application thereof has occurred
since the date of the Borrowers’ audited financial
statements referred to in Section 3.4 and, if any such change has
occurred, specifying the effect of such change on the financial
statements accompanying such certificate;

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     (d) within thirty (30) days after the commencement of each fiscal
year of the Borrower Affiliated Group, a detailed consolidated budget by
quarter for such fiscal year (including a projected consolidated balance
sheet and related statements of projected operations and cash flow as of
the end of and for such fiscal year);

     (e) within five (5) Business Days after the end of each month, a
certificate in the form of Exhibit D (a “Borrowing Base Certificate”)
showing the Borrowing Base as of the close of business on the last day of
the immediately preceding month, each such Certificate to be certified as
complete and correct on behalf of the Borrower Affiliated Group by a
Financial Officer of the Lead Borrower, provided, however, if and so long
as an Event of Default or a Cash Dominion Event exists, the
Administrative Agent may require that Borrowers furnish such Borrowing
Base Certificate (showing the Borrowing Base as of the close of business
on the last day of the immediately preceding week) weekly on Wednesday of
each week ;

     (f) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by
the Lead Borrower or any other member of the Borrower Affiliated Group
with the Securities and Exchange Commission, or any Governmental
Authority succeeding to any or all of the functions of said Commission,
or with any national securities exchange, as the case may be;

     (g) the financial and collateral reports described on Schedule
5.1(g) hereto, at the times set forth in such Schedule;

     (h) Fifteen (15) days’ after the consummation of a Permitted
Acquisition, (A) copies of purchase and sale agreements or other
acquisition documents to be executed in connection with the Permitted
Acquisition, and (B) with respect to any Permitted Acquisition for
aggregate consideration of equal to or greater than $25,000,000, (i)
copies of the most recent audited, and if later, unaudited financial
statements of the Person which is the subject of the Permitted
Acquisition, and (ii) an unaudited pro forma Consolidated balance sheet
and income statement of the Borrower Affiliated Group as of the end of
the most recently completed fiscal quarter but prepared as though the
Permitted Acquisition had occurred on such date and related pro forma
calculations of average Excess Availability for the subsequent four
fiscal quarters period;

     (i) notice of any (i) sale or other disposition of assets of any
Borrower permitted under Section 6.5(e) hereof promptly following the
date of consummation such sale or disposition or (ii) incurrence of any
Indebtedness permitted under Section 6.1(d) promptly following the
incurrence of such Indebtedness;

     (j) promptly upon receipt thereof, copies of all reports submitted
to the Lead Borrower or any other member of the Borrower Affiliated Group
by independent certified public accountants in connection with each
annual, interim or special audit of the books

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of the Borrower Affiliated
Group made by such accountants, including any management letter
commenting on the Borrowers’ internal controls submitted by such
accountants to management in connection with their annual audit; and

     (k) promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of the
Lead Borrower or any other member of the Borrower Affiliated Group, or
compliance with the terms of any Loan Document, as the Agents or any
Lender may reasonably request.

     5.2 Notices of Material Events. The Borrowers will, and will cause each
other member of the Borrower Affiliated Group to furnish to the Administrative
Agent, the Issuing Bank, and the Collateral Agent prompt written notice of the
following:

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

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

     (c) the occurrence of any ERISA Event that, alone or together with
any other ERISA Events that have occurred, could reasonably be expected
to result in a Material Adverse Effect;

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

     (e) any change in any Borrower’s chief executive officer or chief
financial officer;

     (f) any collective bargaining agreement or other labor contract to
which any member of the Borrower Affiliated Group becomes a party, or the
application for the certification of a collective bargaining agent;

     (g) the filing of any Lien for unpaid taxes in an aggregate amount
in excess of $500,000 against any member of the Borrower Affiliated
Group;

     (h) the discharge by any Borrower of its present independent
accountants or any withdrawal or resignation by such independent
accountants; and

     (i) any material adverse change in the business, operations, or
financial affairs of any member of the Borrower Affiliated Group taken as
a whole.

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

     5.3 Information Regarding Collateral. The Lead Borrower will furnish to
the Agents thirty (30) days’ prior written notice of any change (i) in any
member of the Borrower Affiliated Group’s corporate or legal name or in any
trade name used to identify it in the conduct of its business or in the
ownership of its properties, (ii) in the location of any member of the Borrower
Affiliated Group’s chief executive office, its principal place of business, any
office in which it maintains books or records relating to Collateral owned by
it or any office or facility at which Collateral owned by it is located
(including the establishment of any such new office or facility), (iii) in any
member of the Borrower Affiliated Group’s organizational structure or (iv) in
any member of the Borrower Affiliated Group’s jurisdiction of incorporation or
formation, Federal Taxpayer Identification Number or organizational
identification number assigned to it by its state of organization.

     5.4 Existence; Conduct of Business. Each Borrower will, and will cause
each other member of the Borrower Affiliated Group to, do or cause to be done
all things necessary to comply with its respective charter, certificate of
incorporation, articles of organization, and/or other organizational documents,
as applicable; and by-laws and/or other instruments which deal with corporate
governance, and to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges, franchises, patents,
copyrights, trademarks and trade names material to the conduct of its business,
provided that the foregoing shall not prohibit any merger, consolidation,
liquidation or dissolution permitted under Section 6.3 or any sale, lease,
transfer or other disposition permitted by Section 6.5.

     5.5 Payment of Obligations. Each Borrower will, and will cause each other
member of the Borrower Affiliated Group to, pay its Indebtedness and other
obligations, including tax liabilities, before the same shall become delinquent
or in default, except where (a) the validity or amount thereof is being
contested in good faith by appropriate proceedings, (b) such Borrower or such
other member of the Borrower Affiliated Group has set aside on its books
adequate reserves with respect thereto in accordance with GAAP, (c) such
contest effectively suspends collection of the contested obligation, (d) no
Lien secures such obligation and (e) the failure to make payment pending such
contest could not reasonably be expected to result in a Material Adverse
Effect. Nothing
contained herein shall be deemed to limit the rights of the Administrative
Agent under Section 2.3(b).

     5.6 Maintenance of Properties. Each Borrower will, and will cause each
other member of the Borrower Affiliated Group to, keep and maintain all
property material to the conduct of its business in good working order and
condition, ordinary wear and tear excepted and with the exception of asset
dispositions permitted hereunder.

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     5.7 Insurance.

     (a) Each Borrower will, and will cause each other member of the
Borrower Affiliated Group to, (i) maintain insurance with financially
sound and reputable insurers reasonably acceptable to the Administrative
Agent (or, to the extent consistent with prudent business practice, a
program of self-insurance consistent with current practices) on such of
its property and in at least such amounts and against at least such risks
as is customary with companies in the same or similar businesses
operating in the same or similar locations, including public liability
insurance against claims for personal injury or death occurring upon, in
or about or in connection with the use of any properties owned, occupied
or controlled by it (including the insurance required pursuant to the
Security Documents); (ii) maintain such other insurance as may be
required by law; and (iii) furnish to the Administrative Agent, upon
written request, full information as to the insurance carried. The
Administrative Agent shall not, by the fact of approving, disapproving,
accepting, obtaining or failing to obtain any such insurance, incur
liability for the form or legal sufficiency of insurance contracts,
solvency of insurance companies or payment of lawsuits, and each Borrower
and each other member of the Borrower Affiliated Group hereby expressly
assumes full responsibility therefor and liability, if any, thereunder.
The Borrowers shall, and shall cause each other member of the Borrower
Affiliated Group to, furnish to the Administrative Agent certificates or
other evidence satisfactory to the Administrative Agent of compliance
with the foregoing insurance provisions.

     (b) Fire and extended coverage policies maintained with respect to
any Collateral shall be endorsed or otherwise amended to include (i) a
lenders’ loss payable clause, in form and substance reasonably
satisfactory to the Collateral Agent, which endorsements or amendments
shall provide that the insurer shall pay all proceeds otherwise payable
to the Borrowers under the policies directly to the Collateral Agent,
(ii) a provision to the effect that none of the Borrowers, the
Administrative Agent, the Collateral Agent, or any other party shall be a
coinsurer and (iii) such other provisions as the Collateral Agent may
reasonably require from time to time to protect the interests of the
Lenders. Commercial general liability policies shall be endorsed to name
the Collateral Agent as an additional insured. Business interruption
policies shall name the
Collateral Agent as a loss payee and shall be endorsed or amended to
include (i) a provision that, from and after the Closing Date, the
insurer shall pay all proceeds in excess of $5,000,000 otherwise payable
to the Borrowers under the policies directly to the Administrative Agent
or the Collateral Agent, provided, however, that the Agents hereby agree
that prior to the occurrence of an Event of Default or a Cash Dominion
Event, the Agents shall remit all proceeds received by Agents under the
policies to Borrowers, provided further that after the occurrence of an
Event of Default or a Cash Dominion Event, the Agents shall apply any
proceeds received in accordance with Section 2.23 hereof or Section 6.2
of the Security Agreement, as applicable, (ii) a provision to the effect
that none of the Borrowers, the Administrative Agent, the

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Collateral
Agent or any other party shall be a co-insurer and (iii) such other
provisions as the Collateral Agent may reasonably require from time to
time to protect the interests of the Lenders. Each such policy referred
to in this paragraph also shall provide that it shall not be canceled,
modified or not renewed except upon not less than 30 days’ prior written
notice thereof by the insurer to the Collateral Agent (giving the
Collateral Agent the right to cure defaults in the payment of premiums).
The Borrowers shall deliver to the Collateral Agent, prior to the
cancellation, modification or nonrenewal of any such policy of insurance,
a copy of a renewal or replacement policy (or other evidence of renewal
of a policy previously delivered to the Collateral Agent) together with
evidence satisfactory to the Collateral Agent of payment of the premium
therefor.

     5.8 Casualty and Condemnation. Each Borrower will furnish to the Agents
and the Lenders prompt written notice of any casualty or other insured damage
to any material portion of the Collateral or the commencement of any action or
proceeding for the taking of any material portion of the Collateral or any part
thereof or interest therein under power of eminent domain or by condemnation or
similar proceeding.

     5.9 Books and Records; Inspection and Audit Rights.

          (a) Each Borrower will, and will cause each other member of the
Borrower Affiliated Group to, keep proper books of record and account in
which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities. Each Borrower
will permit any representatives designated by any Agent, upon reasonable
prior notice, to visit and inspect its properties, to examine and make
extracts from its books and records, and to discuss its affairs, finances
and condition with its officers and independent accountants, all at such
reasonable times and as often as reasonably requested.

     (b) Each Borrower will, and will cause each other member of the
Borrower Affiliated Group to, from time to time upon the reasonable
request and reasonable prior notice of the Collateral Agent or the
Required Lenders through the Administrative Agent,
permit any Agent or professionals (including consultants,
accountants, lawyers and appraisers) retained by the Agents to conduct
appraisals, commercial finance examinations and other evaluations,
including, without limitation, of (i) the Borrowers’ practices in the
computation of the Borrowing Base and (ii) the assets included in the
Borrowing Base and related financial information such as, but not limited
to, sales, gross margins, payables, accruals and reserves, and pay the
reasonable fees and expenses of the Agents or such professionals with
respect to such evaluations and appraisals, provided that there may be
only one such appraisal and one commercial finance examination in any
twelve month period following the Closing Date unless a Cash Dominion
Event shall have occurred and be continuing (in which event the
Administrative Agent may undertake such additional appraisals and
commercial finance examinations as it deems appropriate). Without
limiting the foregoing, the Agents and the Borrowers acknowledge

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and
agree that so long as Excess Availability is greater than or equal to
$50,000,000 at the time such inventory appraisal or commercial finance
examination is undertaken, the Borrowers shall not be obligated to
reimburse the Agent for the costs of such inventory appraisals and
commercial finance examinations after the Closing Date.

     (c) The Borrowers shall, at all times, retain BDO Seidman, LLP or
other independent certified public accountants who are reasonably
satisfactory to the Administrative Agent and instruct such accountants to
cooperate with, and be available to, the Administrative Agent or its
representatives to discuss the Borrowers’ financial performance,
financial condition, operating results, controls, and such other matters,
within the scope of the retention of such accountants, as may be raised
by the Administrative Agent.

     5.10 Fiscal Year. Each of the Borrowers and each other member of the
Borrower Affiliated Group shall have a fiscal year ending on the Saturday
closest to January 31 of each year and shall notify the Administrative Agent of
any change in such fiscal year.

     5.11 Physical Inventories.

     (a) The Collateral Agent, at the expense of the Borrowers, may
participate in and/or observe each physical count and/or inventory of so
much of the Collateral as consists of Inventory which is undertaken on
behalf of the Borrowers so long as such participation does not disrupt
the normal inventory schedule or process, provided that such
participation shall be limited to once in any twelve month period after
the Closing Date (unless a Cash Dominion Event shall have occurred and be
continuing).

     (b) The Borrowers, at their own expense, shall cause not less than
one physical inventory of the Borrowers’ inventory to be undertaken in
each twelve (12)
month period during which this Agreement is in effect, conducted by
the Borrowers and using practices consistent with practices in effect on
the date hereof

     (c) At the Administrative Agent’s request, the Borrowers, within
forty-five (45) days following the completion of such inventory, shall
provide the Collateral Agent with a reconciliation of the results of each
such inventory (as well as of any other physical inventory undertaken by
the Borrowers) and shall post such results to the Borrowers’ stock ledger
and general ledger, as applicable.

     (d) If and so long as there are any Loans outstanding, the
Collateral Agent, in its discretion, if any Event of Default exists, may
cause such additional inventories to be taken as the Collateral Agent
determines (each, at the expense of the Borrowers). The Collateral Agent
shall use its best efforts to schedule any such inventories so as to not
unreasonably disrupt the operation of the Borrowers’ business.

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     5.12 Compliance with Laws. Each Borrower will, and will cause each other
member of the Borrower Affiliated Group to, comply with all laws, rules,
regulations and orders of any Governmental Authority applicable to it or its
property, except where the failure to do so, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect.

     5.13 Use of Proceeds and Letters of Credit. The proceeds of Loans made
hereunder and Letters of Credit issued hereunder will be used only (a) for
Restricted Payments and Permitted Acquisitions, (b) to finance the acquisition
of working capital assets of the Borrowers, including the purchase of inventory
and equipment, in each case in the ordinary course of business, (c) to finance
Capital Expenditures of the Borrowers, and (d) for general corporate purposes,
all to the extent permitted herein. No part of the proceeds of any Loan will be
used, whether directly or indirectly, for any purpose that entails a violation
of any of the Regulations of the Board, including Regulations U and X.

     5.14 Additional Subsidiaries.

     (a) If any additional Domestic Subsidiary of any Borrower is formed
or acquired after the Closing Date, the Lead Borrower will promptly
notify the Agents and the Lenders thereof and (i) if a wholly owned
Domestic Subsidiary, the Borrowers will cause each such Domestic
Subsidiary, to become a Borrower or Facility Guarantor hereunder, as the
Administrative Agent or the Lead Borrower may request, and under each
applicable Security Document in the manner provided therein within thirty
(30) days after such Domestic Subsidiary is formed or acquired and
promptly take such actions to create and perfect Liens on such Domestic
Subsidiary’s assets to secure the Obligations
as any Agent shall reasonably request and (ii) if any shares of
capital stock or Indebtedness of such Domestic Subsidiary (whether or not
wholly owned) are owned by or on behalf of any Borrower, the Borrowers
will cause such shares and promissory notes evidencing such Indebtedness
to be pledged within thirty (30) Days after such Domestic Subsidiary is
formed or acquired.

     (b) If any additional Material Foreign Subsidiary of any Borrower is
formed or acquired after the Closing Date or if a Foreign Subsidiary
becomes a Material Foreign Subsidiary, the Lead Borrower will notify the
Agents and the Lenders thereof and the Borrowers shall cause 65% of the
outstanding shares of Voting Stock of such Material Foreign Subsidiary
(or such lesser percentage as is owned by any such Borrower) to be
pledged within sixty (60) days after such Material Foreign Subsidiary is
formed or acquired or such Subsidiary becomes a Material Foreign
Subsidiary.

     5.15 Further Assurances. Each member of the Borrower Affiliated Group
will execute any and all further documents, financing statements, agreements
and instruments, and take all such further actions (including the filing and
recording of financing statements and other documents), that may be required
under any Applicable Law, or which any Agent or the

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Required Lenders may
reasonably request, to effectuate the transactions contemplated by the Loan
Documents or to grant, preserve, protect or perfect the Liens created or
intended to be created by the Security Documents or the validity or priority of
any such Lien, all at the expense of the Borrowers. The Borrowers also agree to
provide to the Agents, from time to time upon request, evidence reasonably
satisfactory to the Agents as to the perfection and priority of the Liens
created or intended to be created by the Security Documents.

     6. NEGATIVE COVENANTS. Until the Commitments have expired or terminated
and the principal of and interest on each Loan and all fees payable hereunder
have been paid in full and all Letters of Credit have expired or terminated and
all L/C Disbursements shall have been reimbursed, each Borrower covenants and
agrees with the Agents and the Lenders that:

     6.1 Indebtedness and Other Obligations. The Borrowers will not, and will
not permit any other member of the Borrower Affiliated Group to, create, incur,
assume or permit to exist any Indebtedness, except:

     (a) Indebtedness created under the Loan Documents;

     (b) Indebtedness set forth in Schedule 6.1 and extensions, renewals
and replacements of any such Indebtedness that do not increase the
outstanding principal
amount thereof or result in an earlier maturity date or decreased
weighted average life thereof;

     (c) Indebtedness of any Borrower or Subsidiary to any other Borrower
or Subsidiary, provided, however, that the aggregate amount of
Indebtedness due to any Borrower by Foreign Subsidiaries, when combined
with the amount of Investments in Foreign Subsidiaries set forth in
Section 6.4(e), shall not at any time exceed (i) $25,000,000 per annum or
(ii) $100,000,000 in the aggregate from and after the Closing Date;

     (d) Indebtedness of the Borrower Affiliated Group to finance the
acquisition of any fixed or capital assets, including Capital Lease
Obligations and any Indebtedness assumed in connection with the
acquisition of any such assets or secured by a Lien on any such assets
prior to the acquisition thereof, and extensions, renewals and
replacements of any such Indebtedness that do not increase the
outstanding principal amount thereof or result in an earlier maturity
date or decreased weighted average life thereof, provided that the
aggregate principal amount of Indebtedness permitted by this clause (d)
shall not exceed $50,000,000 at any time outstanding;

     (e) Indebtedness incurred to finance any Real Estate owned by any
Borrower or incurred in connection with any sale-leaseback transaction;

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     (f) Indebtedness under Hedging Agreements, other than for
speculative purposes, entered into in the ordinary course of business;

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

     (h) Indebtedness of any Domestic Subsidiary to any Borrower or to
other Domestic Subsidiaries of any Borrower or of any Foreign Subsidiary
to any other Foreign Subsidiary;

     (i) Guarantees by any member of the Borrower Affiliated Group of
Indebtedness of any other member of the Borrower Affiliated Group,
provided that such Indebtedness is otherwise permitted by this Section
6.1;

     (j) Indebtedness of any Person that becomes a Subsidiary after the
Closing Date, provided that (i) such Indebtedness exists at the time such
Person becomes a Subsidiary and is not created in contemplation of or in
connection with such Person becoming a Subsidiary and (ii) the aggregate
outstanding principal amount of Indebtedness permitted by this subsection
(j) shall not, without duplication, exceed $25,000,000 at any time; and

     (k) other unsecured Indebtedness in an aggregate principal amount
not exceeding $50,000,000 at any time outstanding.

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

     (a) Liens created under the Loan Documents;

     (b) Permitted Encumbrances;

     (c) any Lien on any property or asset of any Borrower or other
member of the Borrower Affiliated Group set forth in Schedule 6.2,
provided that (i) such Lien shall not apply to any other property or
asset of such Person and (ii) such Lien shall secure only those
obligations that it secures as of the Closing Date, and extensions,
renewals and replacements thereof that do not increase the outstanding
principal amount thereof;

     (d) Liens on fixed or capital assets acquired by any Borrower or
other member of the Borrower Affiliated Group, provided that (i) such
Liens secure Indebtedness permitted by Section 6.1(d), (ii) such Liens
and the Indebtedness secured thereby are incurred on or prior to or
within 60 days after such acquisition or the completion of such

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construction or improvement, (iii) the Indebtedness secured thereby does
not exceed 100% of the cost of acquiring such fixed or capital assets
(iv) such Liens shall not apply to any other property or assets of the
Borrowers or other member of the Borrower Affiliated Group, and (v) at
the Collateral Agent’s option with respect to Liens which arise after the
Closing Date, the Collateral Agent shall have entered into an
intercreditor agreement with the holder of such Lien on terms reasonably
satisfactory to the Collateral Agent;

     (e) Liens to secure Indebtedness permitted by Section 6.1(e)
provided that such Liens shall not apply to any property or assets of the
Borrowers other than the Real Estate so financed or which is the subject
of a sale-leaseback transaction; and

     (f) Security interests existing on any property or assets (other
than Inventory, Accounts, and the Proceeds thereof) prior to the
acquisition thereof by any member of the Borrower Affiliated Group or
existing on any property or assets (other than Inventory, Accounts, and
the Proceeds thereof)of any Person that becomes a Subsidiary after the
Closing Date prior to the time such Person becomes a Subsidiary, provided
that (i) such security interests secure Indebtedness permitted by Section
6.1(j), (ii) such security interests are not created in contemplation of
or in connection with such acquisition or
such Person becoming a Subsidiary, as applicable, (iii) such
security interests shall not apply to any other property or assets of the
Borrower or any Subsidiary and (iv) such security interests shall secure
only the Indebtedness that such security interests secure on the date of
such acquisition or the date such Person becomes a Subsidiary, as
applicable, and any extensions, renewals and replacements thereof that do
not increase the outstanding principal amount thereof.

     6.3 Fundamental Changes.(a) The Borrowers shall not, and shall not
permit any other member of the Borrower Affiliated Group to, liquidate,
merge or consolidate into or with any other Person or enter into or
undertake any plan or agreement of liquidation, merger or consolidation
with any other Person, provided that (i) a Borrower may merge with
another company in connection with a Permitted Acquisition if such
Borrower is the surviving company, (ii) any wholly-owned Subsidiary of
any Borrower may merge or consolidate into or with such Borrower or any
other wholly-owned Subsidiary of such Borrower if no Default or Event of
Default has occurred and is continuing or would result from such merger
and if such Borrower or such Subsidiary is the surviving company, (iii) a
Subsidiary of any Borrower may merge into another entity in connection
with a Permitted Acquisition if, upon consummation of such merger, the
surviving entity shall be a direct or indirect wholly-owned Subsidiary of
such Borrower and, if the surviving entity is a Domestic Subsidiary, a
party to the Security Documents, (iv) any Domestic Subsidiary may merge
into any other Domestic Subsidiary, (v) any Foreign Subsidiary may merge
into any other Foreign Subsidiary and (vi) any Subsidiary (other than a
Borrower) may liquidate or dissolve if the Lead Borrower determines in
good faith that

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such liquidation is in the best interests of the
Borrowers and would not have a Material Adverse Effect.

     (b) The Borrowers shall not, and shall not permit any other member
of the Borrower Affiliated Group to, engage to any material extent in any
business other than businesses of the type conducted by the Borrower
Affiliated Group on the date of execution of this Agreement and
businesses reasonably related or complementary thereto, except that the
Borrowers or any other member of the Borrower Affiliated Group may
withdraw from any business activity which such Person’s board of
directors reasonably deems unprofitable or unsound, provided that
promptly after such withdrawal, the Lead Borrower shall provide the
Administrative Agent with written notice thereof.

     6.4 Investments, Loans, Advances, Guarantees and Acquisitions. The
Borrowers shall not, and shall not permit any other member of the Borrower
Affiliated Group to, purchase, hold or acquire (including pursuant to any
merger with any Person that was not a wholly owned Subsidiary prior to such
merger) any capital stock, evidences of indebtedness or other securities
(including any option, warrant or other right to acquire any of the
foregoing) of, make or permit to exist any loans or advances to, guarantee
any obligations of, or make or permit to exist any investment or any other
interest in, any other Person, or purchase or otherwise acquire (in one
transaction or a series of transactions) any assets of any other Person
constituting a business unit (each of the foregoing, an “Investment”), except
for:

     (a) Permitted Acquisitions;

     (b) Permitted Investments;

     (c) Investments existing on the Closing Date, and set forth on
Schedule 6.4, to the extent such investments would not be permitted under
any other clause of this Section;

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

     (e) Investments by a Borrower in such Borrower’s Subsidiaries,
provided, however, that the aggregate amount of Investments in Foreign
Subsidiaries, when combined with the amount of Indebtedness due from
Foreign Subsidiaries set forth in Section 6.1(c), may not at any time
exceed (i) $25,000,000 per annum or (ii) $100,000,000 in the aggregate
from and after the Closing Date, and further provided that any Investment
in Domestic Subsidiaries which are not wholly-owned and which are not
Borrowers or Facility Guarantors hereunder shall not exceed $25,000,000
for any Subsidiary and $100,000,000 in the aggregate; and

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     (f) loans or advances to employees for the purpose of travel,
entertainment or relocation in the ordinary course of business and
consistent with past practices, not exceeding $500,000 in the aggregate
at any time outstanding; provided, that no such advances to any single
employee shall exceed $250,000 in the aggregate.

     6.5 Asset Sales. The Borrowers will not, and will not permit any other
member of the Borrower Affiliated Group to, sell, transfer, lease or otherwise
dispose of any asset, including any capital stock, nor will any Borrower issue
any additional shares of its capital stock or other ownership interest in such
Borrower, except:

     (a) (i) sales of Inventory in the ordinary course of business, or
(ii) used or surplus equipment, or (iii) Permitted Investments, in each
case in the ordinary course of business;

     (b) sales, transfers and dispositions among the Borrower Affiliated
Group (excluding, however, any sales, transfers and dispositions of
Inventory or proceeds
thereof, from any Borrower or any Facility Guarantor except to
Borrower or another Facility Guarantor), provided that any such sales,
transfers or dispositions involving a Subsidiary that is not a Borrower
or a Facility Guarantor shall be made in compliance with Section 6.8;

     (c) sales, transfers and dispositions by the Lead Borrower of the
capital stock of any member of the Borrower Affiliated Group that does
not own Eligible Inventory or the proceeds thereof.

     (d) sales or other transfers of assets pursuant to store closures
provided that in any fiscal year, Borrowers shall not close more than ten
percent (10%) of Borrowers’ stores open at the beginning of such fiscal
year;

     (e) other sales, transfers, or dispositions of assets not in the
ordinary course of business and not pursuant to store closures provided
that (x) no Default or Event of Default then exists or would arise
therefrom and (y) the aggregate amount of such sales, transfers or
dispositions shall not exceed $25,000,000;

     (f) sales or issuances by the Lead Borrower of any of its capital
stock that does not result in a Change of Control; and

     (g) sales or issuances of capital stock to any Borrower;

     provided that all sales, transfers, leases and other dispositions of
Inventory and the proceeds thereof shall be made for cash consideration, and
further provided that that all sales, transfers, leases and other dispositions
permitted hereby (other than sales, transfers and other dispositions permitted
under clauses (a)(ii), (b) (subject to the proviso therein), (f) and (g)) shall
be made at arm’s length and for fair value; and further provided that the
authority granted

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hereunder may be terminated in whole or in part by the Agents
upon the occurrence and during the continuance of any Event of Default.

     6.6 Restrictive Agreements. The Borrowers will not, and will not permit
any other member of the Borrower Affiliated Group to, directly or indirectly,
enter into, incur or permit to exist any agreement or other arrangement that
prohibits, restricts or imposes any condition upon (a) the ability of any
member of the Borrower Affiliated Group to create, incur or permit to exist any
Lien upon any of its property or assets or (b) the ability of any member of the
Borrower Affiliated Group to pay dividends or other distributions with respect
to any shares of its capital stock or to make or repay loans or advances to the
Borrowers or any other member of the Borrower Affiliated Group or to guarantee
Indebtedness of the Borrowers or any other member of the Borrower Affiliated
Group, provided that (i) the foregoing shall not apply to restrictions and
conditions imposed by law or by any Loan Document, (ii) the foregoing
restrictions shall not apply to customary restrictions
and conditions contained in agreements relating to the sale of a
Subsidiary pending such sale, provided that such restrictions and conditions
apply only to the Subsidiary that is to be sold and such sale is permitted
hereunder, (iii) clause (a) of the foregoing shall not apply to restrictions or
conditions imposed by any agreement relating to secured Indebtedness permitted
by this Agreement if such restrictions or conditions apply only to the property
or assets securing such Indebtedness and (iv) clause (a) of the foregoing shall
not apply to customary provisions in leases restricting the assignment or
subleasing thereof.

     6.7 Restricted Payments; Certain Payments of Indebtedness.

     (a) The Borrowers will not, and will not permit any other member of
the Borrower Affiliated Group to, declare or make, or agree to pay or
make, directly or indirectly, any Restricted Payment, except as long as
no Default or Event of Default exists or would arise therefrom, and after
giving effect thereto, the Borrowers are Solvent (i) any Borrower may
declare and pay dividends with respect to its capital stock payable
solely in additional shares of their common stock, (ii) the Subsidiaries
of the Lead Borrower may declare and pay cash dividends with respect to
their capital stock, and (iii) only if the Payment Conditions are then
satisfied, the Lead Borrower may repurchase its capital stock and/or
declare and pay cash dividends to its shareholders.

     (b) The Borrowers will not at any time, and will not permit any
other member of the Borrower Affiliated Group to make or agree to pay or
make, directly or indirectly, any payment or other distribution (whether
in cash securities or other property) of or in respect of principal of or
interest on any Indebtedness, or any payment or other distribution
(whether in cash, securities or other property), including any sinking
fund or similar deposit, on account of the purchase, redemption,
retirement, acquisition, cancellation or termination of any Indebtedness,
except:

     (c) payment of regularly scheduled interest and principal payments
as and when due in respect of any Indebtedness permitted under Section
6.1; and

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     (d) refinancings of Indebtedness described in clause (i), above, to
the extent permitted by Section 6.1.

     6.8 Transactions with Affiliates. The Borrowers will not at any time
sell, lease or otherwise transfer any property or assets to, or purchase, lease
or otherwise acquire any property or assets from, or otherwise engage in any
other transactions with, any of its Affiliates, except (a) transactions in the
ordinary course of business that are at prices and on terms and conditions not
less favorable to the Borrowers than could be obtained on an arm’s-length basis
from unrelated third parties, and (b) transactions between or among the
Borrowers not involving any other Affiliate, which would not otherwise violate
the provisions of the Loan Documents.

     6.9 Additional Subsidiaries. The Borrowers will not, and will not permit
any other member of the Borrower Affiliated Group to, create any additional
Subsidiary unless no Default or Event of Default would arise therefrom and the
requirements of Section 5.14 are satisfied.

     6.10 Amendment of Material Documents. The Borrowers will not, and will
not permit any other member of the Borrower Affiliate Group to, amend, modify
or waive any of its rights under (a) its certificate of incorporation, by-laws
or other organizational documents, or (b) any other instruments, documents or
agreements, in each case to the extent that such amendment, modification or
waiver would be adverse to the interests of the Lenders.

     6.11 Environmental Laws. The Borrowers shall not (a) fail to comply with
any Environmental Law or to obtain, maintain or comply with any permit, license
or other approval required under any Environmental Law, or (b) become subject
to any Environmental Liability, in each case which is reasonably likely to have
a Material Adverse Effect.

     6.12 Fiscal Year. The Borrowers shall not change their fiscal year
without the prior written consent of the Administrative Agent, which consent
shall not be unreasonably withheld.

     7. EVENTS OF DEFAULT.7.1 Events of Default. If any of the following
events (“Events of Default”) shall occur:

     (a) the Borrowers shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any L/C Disbursement when and as
the same shall become due and payable, whether at the due date thereof or
at a date fixed for prepayment thereof or otherwise;

     (b) the Borrowers shall fail to pay any interest on any Loan or any
fee or any other amount (other than an amount referred to in clause (a)
of this Section) payable under this Agreement or any other Loan Document,
within three (3) Business Days when the same shall become due and
payable;

     (c) any representation or warranty made or deemed made by or on
behalf of any Borrower or any other member of the Borrower Affiliated
Group in or in connection

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with any Loan Document or any amendment or modification thereof or
waiver thereunder, or in any report, certificate, financial statement or
other document furnished pursuant to or in connection with any Loan
Document or any amendment or modification thereof or waiver thereunder,
shall prove to have been incorrect in any material respect when made or
deemed made;

     (d) the Borrowers shall fail to observe or perform any covenant,
condition or agreement contained in Sections 2.22, 5.1(e), 5.4, 5.7,
5.13, or in Section 6;

     (e) the Borrowers shall fail to observe or perform any covenant,
condition or agreement contained in Sections 5.1(a), 5.1(b), 5.1(c),
5.1(d), 5.2, 5.9, or 5.14 within three (3) Business Days after notice
from the Administrative Agent to the Lead Borrower that the Borrowers
have failed to observe or perform such covenant, condition or agreement;

     (f) any Borrower or any other member of the Borrower Affiliated
Group shall fail to observe or perform any covenant, condition or
agreement contained in any Loan Document (other than those specified in
clause (a), (b), (c), or (d) of this Section), and such failure shall
continue unremedied for a period of 30 days after notice thereof from the
Administrative Agent to the Lead Borrower;

     (g) any Borrower shall fail to make any payment (whether of
principal or interest and regardless of amount) in respect of any
Material Indebtedness when and as the same shall become due and payable
(after giving effect to the expiration of any grace or cure period set
forth therein);

     (h) (i) any Borrower or any other member of the Borrower Affiliated
Group shall fail to perform any material covenant or condition contained
in any material contract or agreement to which it is party as and when
such performance is required (after giving effect to the expiration of
any grace or cure period set forth therein); or (ii) any Borrower or any
other member of the Borrower Affiliated Group shall fail to perform any
material covenant or condition contained in any contract or other
agreement between any member of the Borrower Affiliated Group and Barnes
& Noble, which failure has a Material Adverse Effect;

     (i) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables
or permits the holder or holders of any such Material Indebtedness or any
trustee or agent on its or their behalf to cause any such Material
Indebtedness to become due, or to require the prepayment, repurchase,
redemption or defeasance thereof, prior to its scheduled maturity;

     (j) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other
relief in respect of any

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Borrower or any other member of the Borrower Affiliated Group or its
debts, or of a substantial part of its assets, under any federal or state
bankruptcy, insolvency, receivership or similar law now or hereafter in
effect or (ii) the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for any Borrower or any
other member of the Borrower Affiliated Group or for a substantial part
of its assets, and, in any such case, such proceeding or petition shall
continue undismissed for 60 days or an order or decree approving or
ordering any of the foregoing shall be entered and continue unstayed and
in effect for 60 days;

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

     (l) any Borrower or any other member of the Borrower Affiliated
Group shall become unable, admit in writing its inability or fail
generally to pay its debts as they become due;

     (m) one or more uninsured judgments for the payment of money in an
aggregate amount in excess of $20,000,000 shall be rendered against any
Borrower or any other member of the Borrower Affiliated Group or any
combination thereof and the same shall remain undischarged for a period
of 45 consecutive days during which execution shall not be effectively
stayed, or any action shall be successfully legally taken by a judgment
creditor to attach or levy upon any material assets of any Borrower or
any other member of the Borrower Affiliated Group to enforce any such
judgment;

     (i) any challenge by or on behalf of any Borrower to the
validity of any Loan Document or the applicability or
enforceability of any Loan Document strictly in accordance with the
subject Loan Document’s terms or which seeks to void, avoid, limit,
or otherwise adversely affect any security interest created by or
in any Loan Document or any payment made pursuant thereto;

     (ii) any challenge by or on behalf of any other Person to the
validity of any Loan Document or the applicability or
enforceability of any Loan Document strictly in accordance with the
subject Loan Document’s terms or which seeks to void, avoid, limit,
or otherwise adversely affect any security interest created by or

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in any Loan Document or any payment made pursuant thereto, in
each case, as to which an order or judgment has been entered
adverse to the Agents and the Lenders.

     (iii) any Lien purported to be created under any Security
Document shall be asserted by any Borrower or any other member of
the Borrower Affiliated Group not to be a valid and perfected Lien
on any Collateral, with the priority required by the applicable
Security Document, except as a result of the sale or other
disposition of the applicable Collateral in a transaction permitted
under the Loan Documents;

     (n) a Change in Control shall occur;

     (o) an ERISA Event shall have occurred that, in the opinion of the
Required Lenders, when taken together with all other ERISA Events that
have occurred, could reasonably be expected to result in liability of the
Borrowers in an aggregate amount exceeding $20,000,000;

     (p) the occurrence of any uninsured loss to any material portion of
the Collateral;

     (q) the indictment of any Borrower or any other member of the
Borrower Affiliated Group, under any federal, state, municipal, and other
civil or criminal statute, rule, regulation, order, or other requirement
having the force of law where the relief, penalties, or remedies sought
or available include the forfeiture of any assets of any Borrower or any
other member of the Borrower Affiliated Group having a fair market value
in excess of $20,000,000;

     (r) the imposition of any stay or other order against any Borrower
or any other member of the Borrower Affiliated Group, the effect of which
(i) is to restrain in any material way the conduct by the Borrower
Affiliated Group, taken as a whole, of their business in the ordinary
course and (ii) would have a Material Adverse Effect; or

     (s) except as otherwise permitted hereunder, the determination by
any Borrower or any other member of the Borrower Affiliated Group,
whether by vote of such Person’s board of directors or otherwise to:
suspend the operation of such Person’s business in the ordinary course,
liquidate all or a material portion of such Person’s assets or store
locations, or employ an agent or other third party to conduct any
so-called store closing, store liquidation or “Going-Out-Of-Business”
sales.

     then, and in every such event (other than an event with respect to each
Borrower or any other member of the Borrower Affiliated Group described in
clause (h) or (i) of this Section), and at any time thereafter during the
continuance of such event, the Administrative Agent may,

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and at the request of the Required Lenders shall, by notice to the Lead
Borrower, take either or both of the following actions, at the same or
different times: (i) terminate the Commitments, and thereupon the Commitments
shall terminate immediately, and (ii) declare the Loans then outstanding to be
due and payable in whole (or in part, in which case any principal not so
declared to be due and payable may thereafter be declared to be due and
payable), and thereupon the principal of the Loans so declared to be due and
payable, together with accrued interest thereon and all fees and other
obligations of the Borrowers accrued hereunder, shall become due and payable
immediately, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrowers; and (iii) require the
Borrowers to furnish cash collateral in an amount equal to 105% of the Letter
of Credit Outstandings, and in case of any event with respect to any Borrower
described in clause (h) or (i) of this Section, the Commitments shall
automatically terminate and the principal of the Loans then outstanding,
together with accrued interest thereon and all fees and other obligations of
the Borrowers accrued hereunder, shall automatically become due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by the Borrowers.

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     7.2 When Continuing. For all purposes under this Agreement, each Default
and Event of Default that has occurred shall be deemed to be continuing at all
times thereafter unless it either (a) is cured or corrected to the reasonable
written satisfaction of the Lenders in accordance with Section 9.2, or (b) is
waived in writing by the Lenders in accordance with Section 9.2.

     7.3 Remedies on Default. In case any one or more of the Events of Default
shall have occurred and be continuing, and whether or not the maturity of the
Loans shall have been accelerated pursuant hereto, the Administrative Agent may
proceed to protect and enforce its rights and remedies under this Agreement,
the Notes or any of the other Loan Documents by suit in equity, action at law
or other appropriate proceeding, whether for the specific performance of any
covenant or agreement contained in this Agreement and the other Loan Documents
or any instrument pursuant to which the Obligations are evidenced, and, if such
amount shall have become due, by declaration or otherwise, proceed to enforce
the payment thereof or any other legal or equitable right of the Agents or the
Lenders. No remedy herein is intended to be exclusive of any other remedy and
each and every remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law or in equity
or by statute or any other provision of law.

     7.4 Application of Proceeds. After the occurrence of an Event of Default
and acceleration of the Obligations, all proceeds realized from any Borrower or
on account of any Collateral shall be applied in the manner set forth in
Section 6.2 of the Security Agreement. All amounts required to be applied to
Loans hereunder (other than Swingline Loans) shall be applied ratably in
accordance with each Lender’s Commitment Percentage.

     8. THE AGENTS.

     8.1 Administration by Administrative Agent. Each Lender, the Collateral
Agent and the Issuing Bank hereby irrevocably designate FRG as Administrative
Agent under this Agreement and the other Loan Documents. The general
administration of the Loan Documents shall be by the Administrative Agent. The
Lenders, the Collateral Agent and the Issuing Bank each hereby irrevocably
authorizes the Administrative Agent (i) to enter into the Loan Documents to
which it is a party and (ii) at its discretion, to take or refrain from taking
such actions as agent on its behalf and to exercise or refrain from exercising
such powers under the Loan Documents and the Notes as are delegated by the
terms hereof or thereof, as appropriate, together with all powers reasonably
incidental thereto. The Administrative Agent shall have no duties or
responsibilities except as set forth in this Agreement and the remaining Loan
Documents, nor shall it have any fiduciary relationship with any Lender, and no
implied covenants, responsibilities, duties, obligations, or liabilities shall
be read into the Loan Documents or otherwise exist against the Administrative
Agent.

     8.2 The Collateral Agent. Each Lender, the Administrative Agent and the
Issuing Bank hereby irrevocably (i) designate FRG as Collateral Agent under
this Agreement and the

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other Loan Documents, (ii) authorize the Collateral
Agent to enter into the Security Documents and the other Loan Documents to
which it is a party and to perform its duties and obligations thereunder,
together with all powers reasonably incidental thereto, and (iii) agree and
consent to all of the provisions of the Security Documents. All Collateral
shall be held or administered by the Collateral Agent (or its duly-appointed
agent) for its benefit and for the ratable benefit of the other Secured
Parties. Any proceeds received by the Collateral Agent from the foreclosure,
sale, lease or other disposition of any of the Collateral and any other
proceeds received pursuant to the terms of the Security Documents or the other
Loan Documents shall be paid over to the Administrative Agent for application
as provided in Sections 2.19, 2.23, or 7.4, as applicable. The Collateral Agent
shall have no duties or responsibilities except as set forth in this Agreement
and the remaining Loan Documents, nor shall it have any fiduciary relationship
with any Lender, and no implied covenants, responsibilities, duties,
obligations, or liabilities shall be read into the Loan Documents or otherwise
exist against the Collateral Agent.

     8.3 Sharing of Excess Payments. Each of the Lenders, the Agents and the
Issuing Bank agrees that if it shall, through the exercise of a right of
banker’s lien, setoff or counterclaim against the Borrowers, including, but not
limited to, a secured claim under Section 506 of the Bankruptcy Code or other
security or
interest arising from, or in lieu of, such secured claim and received by
such Lender, any Agent or the Issuing Bank under any applicable bankruptcy,
insolvency or other similar law, or otherwise, obtain payment in respect of the
Obligations owed it (an “excess payment”) as a result of which such Lender,
such Agent or the Issuing Bank has received payment of any Loans or other
Obligations outstanding to it in excess of the amount that it would have
received if all payments at any time applied to the Loans and other Obligations
had been applied in the order of priority set forth in Section 7.4, then such
Lender, Agent or the Issuing Bank shall promptly purchase at par (and shall be
deemed to have thereupon purchased) from the other Lenders, such Agent and the
Issuing Bank, as applicable, a participation in the Loans and Obligations
outstanding to such other Persons, in an amount determined by the
Administrative Agent in good faith as the amount necessary to ensure that the
economic benefit of such excess payment is reallocated in such manner as to
cause such excess payment and all other payments at any time applied to the
Loans and other Obligations to be effectively applied in the order of priority
set forth in Section 7.4 pro rata in proportion to its Commitment Percentage;
provided, that if any such excess payment is thereafter recovered or otherwise
set aside such purchase of participations shall be correspondingly rescinded
(without interest). The Borrowers expressly consent to the foregoing
arrangements and agree that any Lender, any Agent or the Issuing Bank holding
(or deemed to be holding) a participation in any Loan or other Obligation may
exercise any and all rights of banker’s lien, setoff or counterclaim with
respect to any and all moneys owing by such Borrower to such Lender, such Agent
or the Issuing Bank as fully as if such Lender, Agent or the Issuing Bank held
a Note and was the original obligee thereon, in the amount of such
participation.

     8.4 Agreement of Required Lenders. Upon any occasion requiring or
permitting an approval, consent, waiver, election or other action on the part
of only the Required Lenders, action shall be taken by the Agents for and on
behalf or for the benefit of all Lenders upon the

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direction of the Required
Lenders, and any such action shall be binding on all Lenders. No amendment,
modification, consent, or waiver shall be effective except in accordance with
the provisions of Section 9.2.

     Upon the occurrence of an Event of Default, the Agents shall (subject to
the provisions of Section 9.2) take such action with respect thereto as may be
reasonably directed by the Required Lenders; provided that unless and until the
Agents shall have received such directions, the Agents may (but shall not be
obligated to) take such action as they shall deem advisable in the best
interests of the Lenders. In no event shall the Agents be required to comply
with any such directions to the extent that the Agents believe that the Agents’
compliance with such directions would be unlawful.

     8.5 Liability of Agents.

     (a) Each of the Agents, when acting on behalf of the Lenders and the
Issuing Bank, may execute any of its respective duties under this
Agreement by or through any of its respective officers, agents and
employees, and none of the Agents nor their respective
directors, officers, agents or employees shall be liable to the
Lenders or the Issuing Bank or any of them for any action taken or
omitted to be taken in good faith, or be responsible to the Lenders or
the Issuing Bank or to any of them for the consequences of any oversight
or error of judgment, or for any loss, except to the extent of any
liability imposed by law by reason of such Agent’s own gross negligence
or willful misconduct. The Agents and their respective directors,
officers, agents and employees shall in no event be liable to the Lenders
or the Issuing Bank or to any of them for any action taken or omitted to
be taken by them pursuant to instructions received by them from the
Required Lenders or in reliance upon the advice of counsel selected by
it. Without limiting the foregoing, none of the Agents, nor any of their
respective directors, officers, employees, or agents (A) shall be
responsible to any Lender or the Issuing Bank for the due execution,
validity, genuineness, effectiveness, sufficiency, or enforceability of,
or for any recital, statement, warranty or representation in, this
Agreement, any Loan Document or any related agreement, document or order,
or (B) shall be required to ascertain or to make any inquiry concerning
the performance or observance by any Borrower of any of the terms,
conditions, covenants, or agreements of this Agreement or any of the Loan
Documents, or (C) shall be responsible to any Lender or the Issuing Bank
for the state or condition of any properties of the Borrowers or any
other obligor hereunder constituting Collateral for the Obligations of
the Borrowers hereunder, or any information contained in the books or
records of the Borrowers; or (D) shall be responsible to any Lender or
the Issuing Bank for the validity, enforceability, collectibility,
effectiveness or genuineness of this Agreement or any other Loan Document
or any other certificate, document or instrument furnished in connection
therewith; or (E) shall be responsible to any Lender or the Issuing Bank
for the validity, priority or perfection of any lien securing or
purporting to secure the Obligations or the value or sufficiency of any
of the Collateral.

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     (b) The Agents may execute any of their duties under this Agreement
or any other Loan Document by or through their agents or
attorneys-in-fact, and shall be entitled to the advice of counsel
concerning all matters pertaining to their rights and duties hereunder or
under the Loan Documents. The Agents shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by
them with reasonable care.

     (c) None of the Agents nor any of their respective directors,
officers, employees, or agents shall have any responsibility to the
Borrowers on account of the failure or delay in performance or breach by
any Lender (other than by any Agent in its capacity as a Lender) or the
Issuing Bank of any of their respective obligations under this Agreement
or the Notes or any of the Loan Documents or in connection herewith or
therewith.

     (d) The Agents shall be entitled to rely, and shall be fully
protected in relying, upon any notice, consent, certificate, affidavit,
or other document or writing believed by
them to be genuine and correct and to have been signed, sent or made
by the proper person or persons, and upon the advice and statements of
legal counsel (including, without, limitation, counsel to the Borrowers),
independent accountants and other experts selected by the Agents. The
Agents shall be fully justified in failing or refusing to take any action
under this Agreement or any other Loan Document unless they shall first
receive such advice or concurrence of the Required Lenders as they deem
appropriate or they shall first be indemnified to their satisfaction by
the Lenders against any and all liability and expense which may be
incurred by them by reason of the taking or failing to take any such
action.

     8.6 Notice of Default. The Agents shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default unless the
Agents have actual knowledge of the same or has received notice from a Lender
or the Lead Borrower referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a “notice of default”. In the
event that the Agents obtain such actual knowledge or receives such a notice,
the Agents shall give prompt notice thereof to each of the Lenders. The Agents
shall take such action with respect to such Default or Event of Default as
shall be reasonably directed by the Required Lenders. Unless and until the
Agents shall have received such direction, the Agents may (but shall not be
obligated to) take such action, or refrain from taking such action, with
respect to any such Default or Event of Default as they shall deem advisable in
the best interest of the Lenders.

     8.7 Lenders’ Credit Decisions. Each Lender acknowledges that it has,
independently and without reliance upon the Agents or any other Lender, and
based on the financial statements prepared by the Borrowers and such other
documents and information as it has deemed appropriate, made its own credit
analysis and investigation into the business, assets, operations, property, and
financial and other condition of the Borrowers and has made its own decision to
enter into this Agreement and the other Loan Documents. Each Lender also
acknowledges that it

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will, independently and without reliance upon the Agents
or any other Lender, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
determining whether or not conditions precedent to closing any Loan hereunder
have been satisfied and in taking or not taking any action under this Agreement
and the other Loan Documents.

     8.8 Reimbursement and Indemnification. Each Lender agrees (i) to
reimburse (x) each Agent for such Lender’s Commitment Percentage of any
expenses and fees incurred by such Agent for the benefit of the Lenders or the
Issuing Bank under this Agreement, the Notes and any of the Loan Documents,
including, without limitation, counsel fees and compensation of agents and
employees paid for services rendered on behalf of the Lenders or the Issuing
Bank, and any other expense incurred in
connection with the operations or enforcement thereof not reimbursed by
the Borrowers and (y) each Agent for such Lender’s Commitment Percentage of any
expenses of such Agent incurred for the benefit of the Lenders or the Issuing
Bank that the Borrowers have agreed to reimburse pursuant to Section 9.3 and
has failed to so reimburse and (ii) to indemnify and hold harmless the Agents
and any of their directors, officers, employees, or agents, on demand, in the
amount of such Lender’s Commitment Percentage, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses, or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by, or asserted against it or any of them in any
way relating to or arising out of this Agreement, the Notes or any of the Loan
Documents or any action taken or omitted by it or any of them under this
Agreement, the Notes or any of the Loan Documents to the extent not reimbursed
by the Borrowers (except such as shall result from their respective gross
negligence or willful misconduct). The provisions of this Section 8.8 shall
survive the repayment of the Obligations and the termination of the
Commitments.

     8.9 Rights of Agents. It is understood and agreed that FRG shall have
the same rights and powers hereunder (including the right to give such
instructions) as the other Lenders and may exercise such rights and powers, as
well as its rights and powers under other agreements and instruments to which
it is or may be party, and engage in other transactions with the Borrowers, as
though it were not the Administrative Agent or the Collateral Agent,
respectively, of the Lenders under this Agreement. Without limiting the
foregoing, the Agents and their Affiliates may accept deposits from, lend money
to, and generally engage in any kind of commercial or investment banking,
trust, advisory or other business with the Borrowers and their Subsidiaries and
Affiliates as if it were not the Agent hereunder.

     8.10 Notice of Transfer. The Agents may deem and treat a Lender party to
this Agreement as the owner of such Lender’s portion of the Loans for all
purposes, unless and until, and except to the extent, an Assignment and
Acceptance shall have become effective as set forth in Section 9.5(b).

     8.11 Successor Agent. Any Agent may resign at any time by giving five (5)
Business Days’ written notice thereof to the Lenders, the Issuing Bank, the
other Agents and the Lead

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Borrower. Upon any such resignation of any Agent, the
Required Lenders shall have the right to appoint a successor Agent, which so
long as there is no Default or Event of Default shall be reasonably
satisfactory to the Lead Borrower (whose consent shall not be unreasonably
withheld or delayed). If no successor Agent shall have been so appointed by the
Required Lenders and shall have accepted such appointment, within 30 days after
the retiring Agent’s giving of notice of resignation, the retiring Agent may,
on behalf of the Lenders, the other Agents and the Issuing Bank, appoint a
successor Agent which shall be a commercial bank (or affiliate thereof)
organized under the laws of the United States of America or of any State
thereof and having a combined capital and surplus of a least $500,000,000
which, so long as there is no Default or Event of Default, shall be reasonably
satisfactory to the Lead Borrower (whose consent shall not be unreasonably
withheld or delayed). Upon the acceptance of any appointment as Agent by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent
and the retiring Agent shall be discharged from its duties and obligations
under this Agreement. After any retiring Agent’s resignation hereunder as such
Agent, the provisions of this Section 8 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was such Agent under this
Agreement.

     8.12 Reports and Financial Statements. Promptly after receipt thereof
from the Borrowers, the Administrative Agent shall remit to each Lender and the
Collateral Agent copies of all financial statements required to be delivered by
the Borrowers hereunder and all commercial finance examinations and appraisals
of the Collateral received by the Administrative Agent.

     8.13 Delinquent Lender. If for any reason any Lender shall fail or refuse
to abide by its obligations under this Agreement, including without limitation
its obligation to make available to Administrative Agent its Commitment
Percentage of any Revolving Loans, expenses or setoff or purchase its pro rata
share of a participation interest in the Swingline Loans (a “Delinquent
Lender”) and such failure is not cured within ten (10) days of receipt from the
Administrative Agent of written notice thereof, then, in addition to the rights
and remedies that may be available to Agents, other Lenders, the Borrowers or
any other party at law or in equity, and not in limitation thereof, (i) such
Delinquent Lender’s right to participate in the administration of, or
decision-making rights related to, the Loans, this Agreement or the other Loan
Documents shall be suspended during the pendency of such failure or refusal,
and (ii) a Delinquent Lender shall be deemed to have assigned any and all
payments due to it from the Borrowers, whether on account of outstanding Loans,
interest, fees or otherwise, to the remaining non-delinquent Lenders for
application to, and reduction of, their proportionate shares of all outstanding
Loans until, as a result of application of such assigned payments the Lenders’
respective Commitment Percentages of all outstanding Loans shall have returned
to those in effect immediately prior to such delinquency and without giving
effect to the nonpayment causing such delinquency. The Delinquent Lender’s
decision-making and participation rights and rights to payments as set forth in
clauses (i) and (ii) hereinabove shall be restored only upon the payment by the
Delinquent Lender of its Commitment Percentage of any Loans, any participation
obligation, or expenses as to which it is delinquent, together with interest
thereon at

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the rate set forth in Section 2.11 hereof from the date when
originally due until the date upon which any such amounts are actually paid.

The non-delinquent Lenders shall also have the right, but not the
obligation, in their respective, sole and absolute discretion, to acquire for
no cash consideration, (pro rata, based on the respective Commitments of those
Lenders electing to exercise such right) the Delinquent Lender’s Commitment to
fund future Loans (the “Delinquent Lender’s Future Commitment”). Upon any such
purchase of the Commitment Percentage of any Delinquent Lender’s Future
Commitment, the Delinquent Lender’s share in future Loans and its rights under
the Loan Documents with respect thereto shall terminate on the date of
purchase, and the Delinquent Lender shall promptly execute all documents
reasonably requested to surrender and transfer such interest, including, if so
requested, an Assignment and Acceptance. Each Delinquent Lender shall
indemnify the Agents and each non-delinquent Lender from and against any and
all loss, damage or expenses, including but not limited to reasonable
attorneys’ fees and funds advanced by any Agent or by any non-delinquent
Lender, on account of a Delinquent Lender’s failure to timely fund its pro rata
share of a Loan or to otherwise perform its obligations under the Loan
Documents.

     9. MISCELLANEOUS.

     9.1 Notices. Except in the case of notices and other communications
expressly permitted to be given by telephone, all notices and other
communications provided for herein shall be in writing and shall be delivered
by hand or overnight courier service, mailed by certified or registered mail or
sent by telecopy, as follows:

     (a) if to any Borrower, to it at GameStop Corp., 2250 William D.
Tate Avenue, Grapevine, Texas 76051, Attention: David Carlson, Chief
Financial Officer (Telecopy No. (817) 424-2820), with a copy to Bryan
Cave LLP, 1290 Avenue of the Americas, New York, New York 10104,
Attention: Jay Dorman, Esquire (Telecopy No. (212) 541-1418;

     (b) if to the Administrative Agent or the Collateral Agent, to Fleet
Retail Group Inc., 40 Broad Street, Boston, Massachusetts 02109,
Attention of Keith Vercauteren (Telecopy No. (617) 434-4339), with a copy
to Riemer & Braunstein LLP, Three Center Plaza, Boston, Massachusetts
02108, Attention: David S. Berman, Esquire (Telecopy No. (617) 880-3456);

     (c) if to any other Lender, to it at its address (or telecopy
number) set forth on the signature pages hereto or on any Assignment and
Acceptance for such Lender.

     Any party hereto may change its address or telecopy number for notices and
other communications hereunder by notice to the other parties hereto. All
notices and other

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communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the date
of receipt.

     9.2 Waivers; Amendments.

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

     (b) Neither this Agreement nor any other Loan Document nor any
provision hereof or thereof may be waived, amended or modified except, in
the case of this Agreement, pursuant to an agreement or agreements in
writing entered into by the Borrowers and the Required Lenders or, in the
case of any other Loan Document, pursuant to an agreement or agreements
in writing entered into by the Agents and the Borrowers that are parties
thereto, in each case with the consent of the Required Lenders, provided
that no such agreement shall (i) increase the Commitment of any Lender or
the Total Commitments without the written consent of all of the Lenders
(except as provided in Section 2.2), (ii) reduce the principal amount of
any Loan or L/C Disbursement or reduce the rate of interest thereon, or
reduce any fees payable hereunder, without the written consent of each
Lender affected thereby, (iii) postpone the scheduled date of payment of
the principal amount of any Loan or L/C Disbursement, or any interest
thereon, or any fees payable hereunder, or reduce the amount of, waive or
excuse any such payment, or postpone the scheduled date of expiration of
the Commitments or the Maturity Date, without the written consent of each
Lender affected thereby, (iv) change Sections 2.19, 2.22, or 2.23 or
Section 6.2 of the Security Agreement, without the written consent of
each Lender, (v) change any of the provisions of this Section 9.2 or the
definition of the term “Required Lenders” or any other provision of any
Loan Document specifying the number or percentage of Lenders required to
waive, amend or modify any rights thereunder or make any determination or
grant any consent thereunder, without the written consent of each Lender,
(vi) release any Borrower owning Inventory or the proceeds thereof from
its obligations under any Loan Document, or limit its liability in

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respect of such Loan Document, without the written consent of each
Lender, (vii) except for sales described in Section 6.5 or as permitted
in the Security Documents, release any material portion of the Collateral
from the Liens of the Security Documents, without the
written consent of each Lender, (viii) change the definition of the
term “Borrowing Base” or any component definition thereof if as a result
thereof the amounts available to be borrowed by the Borrowers would be
increased, without the written consent of each Lender, provided that the
foregoing shall not limit the discretion of the Administrative Agent to
change, establish or eliminate any Reserves, (ix) increase the Permitted
Overadvance, without the written consent of each Lender, (x) subordinate
the Obligations hereunder, or the Liens granted hereunder or under the
other Loan Documents, to any other Indebtedness or Lien, as the case may
be without the prior written consent of each Lender, and provided further
that no such agreement shall amend, modify or otherwise affect the rights
or duties of the Agents or the Issuing Bank without the prior written
consent of the Agents or the Issuing Bank, as the case may be.

     (c) Notwithstanding anything to the contrary contained in this
Section 9.2, in the event that the Borrowers request that this Agreement
or any other Loan Document be modified, amended or waived in a manner
which would require the consent of the Lenders pursuant to Section 9.2(b)
and such amendment is approved by the Required Lenders, but not by the
requisite percentage of the Lenders, the Borrowers, and the Required
Lenders shall be permitted to amend this Agreement without the consent of
the Lender or Lenders which did not agree to the modification or
amendment requested by the Borrowers (such Lender or Lenders,
collectively the “Minority Lenders”) to provide for (w) the termination
of the Commitment of each of the Minority Lenders, (x) the addition to
this Agreement of one or more other financial institutions, or an
increase in the Commitment of one or more of the Required Lenders, so
that the aggregate Commitments after giving effect to such amendment
shall be in the same amount as the aggregate Commitments immediately
before giving effect to such amendment, (y) if any Loans are outstanding
at the time of such amendment, the making of such additional Loans by
such new or increasing Lender or Lenders, as the case may be, as may be
necessary to repay in full the outstanding Loans (including principal,
interest, and fees) of the Minority Lenders immediately before giving
effect to such amendment and (z) such other modifications to this
Agreement or the Loan Documents as may be appropriate and incidental to
the foregoing.

     (d) No notice to or demand on any Borrower shall entitle any
Borrower to any other or further notice or demand in the same, similar or
other circumstances. Each holder of a Note shall be bound by any
amendment, modification, waiver or consent authorized as provided herein,
whether or not a Note shall have been marked to indicate such amendment,
modification, waiver or consent and any consent by a Lender, or any
holder of a Note, shall bind any Person subsequently acquiring a Note,
whether or not a Note is so marked. No amendment to this Agreement shall
be effective against the Borrowers unless signed by the Borrowers.

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     9.3 Expenses; Indemnity; Damage Waiver.

     (a) Except as otherwise limited herein, the Borrowers shall jointly
and severally pay (i) all reasonable out-of-pocket expenses incurred by
the Agents and their Affiliates, including the reasonable fees, charges
and disbursements of counsel for the Agents, outside consultants for the
Agents, appraisers, and for commercial finance examinations, in
connection with the arrangement of the credit facilities provided for
herein, the preparation and administration of the Loan Documents or any
amendments, modifications or waivers of the provisions thereof (whether
or not the transactions contemplated hereby or thereby shall be
consummated), (ii) all reasonable out-of-pocket expenses incurred by the
Issuing Bank in connection with the issuance, amendment, renewal or
extension of any Letter of Credit or any demand for payment thereunder,
and (iii) all reasonable out-of-pocket expenses incurred by the Agents,
the Issuing Bank or any Lender, including the reasonable fees, charges
and disbursements of any counsel and any outside consultants for the
Agents, the Issuing Bank or any Lender, for appraisers, commercial
finance examinations, and environmental site assessments, in connection
with the enforcement or protection of its rights in connection with the
Loan Documents, including its rights under this Section, or in connection
with the Loans made or Letters of Credit issued hereunder, including all
such out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit; provided that
the Lenders who are not the Agents or the Issuing Bank shall be entitled
to reimbursement for no more than one counsel representing all such
Lenders (absent a conflict of interest in which case the Lenders may
engage and be reimbursed for additional counsel).

     (b) The Borrowers shall jointly and severally indemnify the Agents,
the Issuing Bank and each Lender, and each Related Party of any of the
foregoing Persons (each such Person being called an “Indemnitee”)
against, and hold each Indemnitee harmless from, any and all losses,
claims, damages, liabilities and related expenses, including the
reasonable fees, charges and disbursements of any counsel for any
Indemnitee, incurred by or asserted against any Indemnitee arising out
of, in connection with, or as a result of (i) the execution or delivery
of any Loan Document or any other agreement or instrument contemplated
hereby, the performance by the parties to the Loan Documents of their
respective obligations thereunder or the consummation of the transactions
contemplated by the Loan Documents or any other transactions contemplated
hereby, (ii) any Loan or Letter of Credit or the use of the proceeds
therefrom (including any refusal by the Issuing Bank to honor a demand
for payment under a Letter of Credit if the documents presented in
connection with such demand do not strictly comply with the terms of such
Letter of Credit), (iii) any actual or alleged presence or release of
Hazardous Materials on or from any property currently or formerly owned
or operated by any Borrower or any other member of the Borrower
Affiliated Group, or any Environmental Liability related in any way to
Borrower or any other member of the Borrower Affiliated Group, or (iv)
any actual or prospective claim, litigation,

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investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of
whether any Indemnitee is a party thereto, provided that such indemnity
shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses resulted from
the gross negligence, bad faith or willful misconduct of such Indemnitee
or any Affiliate of such Indemnitee (or of any officer, director,
employee, advisor or agent of such Indemnitee or any such Indemnitee’s
Affiliates). In connection with any indemnified claim hereunder, the
Indemnitee shall be entitled to select its own counsel and the Borrowers
shall promptly pay the reasonable fees and expenses of such counsel.

     (c) To the extent that any Borrower fails to pay any amount required
to be paid by it to the Agents or the Issuing Bank under paragraph (a) or
(b) of this Section, each Lender severally agrees to pay to the Agents or
the Issuing Bank, as the case may be, such Lender’s Commitment Percentage
of such unpaid amount, provided that the unreimbursed expense or
indemnified loss, claim, damage, liability or related expense, as the
case may be, was incurred by or asserted against the Agents or the
Issuing Bank.

     (d) To the extent permitted by Applicable Law, no party hereto shall
assert, and each party hereby waives, any claim against any Borrower or
Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual
damages) arising out of, in connection with, or as a result of, this
Agreement or any agreement or instrument contemplated hereby, the
transactions contemplated by the Loan Documents, any Loan or Letter of
Credit or the use of the proceeds thereof.

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

     9.4 Designation of Lead Borrower as Borrowers’ Agent.

     (a) Each Borrower hereby irrevocably designates and appoints the
Lead Borrower as that Borrower’s agent to obtain Loans and Letters of
Credit hereunder, the proceeds of which shall be available to each
Borrower for those uses as those set forth herein. As the disclosed
principal for its agent, each Borrower shall be obligated to the Agents
and each Lender on account of Loans so made and Letters of Credit so
issued hereunder as if made directly by the Lenders to that Borrower,
notwithstanding the manner by which such Loans and Letters of Credit are
recorded on the books and records of the Lead Borrower and of any
Borrower.

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

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to discharge all Obligations of all other Borrowers as if the
Borrower so assuming and guarantying were each other Borrower.

     (c) The Lead Borrower shall act as a conduit for each Borrower
(including itself, as a “Borrower”) on whose behalf the Lead Borrower has
requested a Loan. The Lead Borrower shall cause the transfer of the
proceeds of each Loan to the (those) Borrower(s) on whose behalf such
Loan was obtained. Neither the Agents nor any Lender shall have any
obligation to see to the application of such proceeds.

     (d) Each of the Borrowers shall remain jointly and severally liable
to the Agents and the Lenders for the payment and performance of all
Obligations (which payment and performance shall continue to be secured
by all Collateral granted by each of the Borrowers) notwithstanding any
determination by the Administrative Agent to cease making Loans or
causing Letters of Credit to be issued to or for the benefit of any
Borrower.

     (e) The authority of the Lead Borrower to request Loans on behalf
of, and to bind, the Borrowers, shall continue unless and until the
Administrative Agent acts as provided in subparagraph (c), above, or the
Administrative Agent actually receives

     (i) written notice of: (i) the termination of such authority,
and (ii) the subsequent appointment of a successor Lead Borrower,
which notice is signed by the respective Presidents of each
Borrower (other than the President of the Lead Borrower being
replaced) then eligible for borrowing under this Agreement; and

     (ii) written notice from such successive Lead Borrower (i)
accepting such appointment; (ii) acknowledging that such removal
and appointment has been effected by the respective Presidents of
such Borrowers eligible for borrowing under this Agreement; and
(iii) acknowledging that from and after the date of such
appointment, the newly appointed Lead Borrower shall be bound by
the terms hereof, and that as used herein, the term “Lead Borrower”
shall mean and include the newly appointed Lead Borrower.

     9.5 Successors and Assigns.

     (a) The provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns permitted hereby (including any Affiliate of the Issuing Bank
that issues any Letter of Credit), except that no Borrower may assign or
otherwise transfer any of its rights or obligations hereunder without the
prior written consent of each Lender (and any such attempted assignment
or transfer without such consent shall be null and void). Nothing in this
Agreement, expressed or implied, shall be construed to confer upon any
Person (other than the parties hereto, their respective successors and
assigns permitted hereby (including any Affiliate

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of the Issuing Bank that issues any Letter of Credit) and, to the
extent expressly contemplated hereby, the Related Parties of each of the
Agents, the Issuing Bank and the Lenders) any legal or equitable right,
remedy or claim under or by reason of this Agreement.

     (b) Any Lender may assign to one or more assignees all or a portion
of its rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans at the time owing to it),
provided that (i) except in the case of an assignment to a Lender or an
Affiliate of a Lender, each of the Lead Borrower (but only if no Event of
Default then exists), the Agents and the Issuing Bank must give their
prior written consent to such assignment (which consent shall not be
unreasonably withheld or delayed), (ii) except in the case of an
assignment to a Lender or an Affiliate of a Lender or an assignment of
the entire remaining amount of the assigning Lender’s Commitment or
Loans, the amount of the Commitment or Loans 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) shall not be less than $5,000,000 unless the
Administrative Agent otherwise consents, (iii) each partial assignment
shall be made as an assignment of a proportionate part of all the
assigning Lender’s rights and obligations, (iv) 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. Subject to acceptance and recording thereof pursuant to
paragraph (d) of this Section, from and after the effective date
specified in each Assignment and Acceptance the assignee thereunder shall
be a party hereto 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
Section 9.3). Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this paragraph
shall be treated for purposes of this Agreement as a sale by such Lender
of a participation in such rights and obligations in accordance with
paragraph (e) of this Section.

     (c) The Administrative Agent, acting for this purpose as an agent of
the Borrowers, shall maintain at one of its offices in Boston,
Massachusetts 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 Commitment of, and principal amount of the Loans and L/C
Disbursements owing to, each Lender pursuant to the terms hereof from
time to time (the “Register”). The entries in the Register shall be
conclusive absent manifest error and the Borrowers, the Administrative
Agent, the Issuing Bank 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

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contrary. The Register shall be available for inspection by the Lead
Borrower, the Issuing Bank and any Lender, at any reasonable time and
from time to time upon reasonable prior notice.

     (d) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, the processing and
recordation fee referred to in paragraph (b) of this Section and any
written consent to such assignment required by paragraph (b) of this
Section, the Administrative Agent shall accept such Assignment and
Acceptance and record the information contained therein in the Register.
No assignment shall be effective for purposes of this Agreement unless it
has been recorded in the Register as provided in this paragraph.

     (e) Any Lender may, without the consent of the Borrowers, the
Agents, and the Issuing Bank, sell participations to one or more banks or
other entities (a “Participant”) in all or a portion of such Lender’s
rights and obligations under this Agreement (including all or a portion
of its Commitment and the Loans owing to it), provided that (i) such
Lender’s obligations under this Agreement shall remain unchanged, (ii)
such Lender shall remain solely responsible to the other parties hereto
for the performance of such obligations and (iii) the Borrowers, the
Agents, the Issuing Bank and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender’s
rights and obligations under this Agreement. Any agreement or instrument
pursuant to which a Lender sells such a participation in the Commitments,
the Loans and the Letters of Credit Outstandings shall provide that such
Lender shall retain the sole right to enforce the Loan Documents and to
approve any amendment, modification or waiver of any provision of the
Loan Documents, provided that such agreement or instrument may provide
that such Lender will not, without the consent of the Participant, agree
to any amendment, modification or waiver described in the first proviso
to Section 9.2(b) that affects such Participant. Subject to paragraph (f)
of this Section and Section 2.29, the Borrowers agree that each
Participant shall be entitled to the benefits (and subject to the
obligations) of Sections 2.24, 2.26, and 2.27 to the same extent as if it
were a Lender and had acquired its interest by assignment pursuant to
paragraph (b) of this Section. To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 9.9 as
though it were a Lender, provided such Participant agrees to be subject
to Section 2.26(c) as though it were a Lender.

     (f) A Participant shall not be entitled to receive any greater
payment under Section 2.24 or 2.27 than the applicable Lender would have
been entitled to receive with respect to the participation sold to such
Participant, unless the sale of the participation to such Participant is
made with the Lead Borrower’s prior written consent. A Participant that
would be a Foreign Lender if it were a Lender shall not be entitled to
the benefits of Section 2.27 unless (i) the Lead Borrower is notified of
the participation sold to such Participant and such Participant agrees,
for the benefit of the Borrowers, to comply with Section 2.27(e) as
though it were a Lender and (ii) such Participant is eligible for

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exemption from the withholding tax referred to therein, following
compliance with Section 2.27(e).

     (g) Any Lender may at any time pledge or assign a security interest
in all or any portion of its rights under this Agreement to secure
obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply
to any such pledge or assignment of a security interest, provided that no
such pledge or assignment of a security interest shall release a Lender
from any of its obligations hereunder or substitute any such pledgee or
assignee for such Lender as a party hereto.

     9.6 Survival. All covenants, agreements, representations and warranties
made by the Borrowers in the Loan Documents and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement or any
other Loan Document shall be considered to have been relied upon by the other
parties hereto and shall survive the execution and delivery of the Loan
Documents and the making of any Loans and issuance of any Letters of Credit,
regardless of any investigation made by any such other party or on its behalf
and notwithstanding that the Agents, the Issuing Bank or any Lender may have
had notice or knowledge of any Default or incorrect representation or warranty
at the time any credit is extended hereunder, and shall continue in full force
and effect as long as the principal of or any accrued interest on any Loan or
any fee or any other amount payable under this Agreement is outstanding and
unpaid or any Letter of Credit is outstanding and so long as the Commitments
have not expired or terminated. The provisions of Sections 2.24, 2.27, and 9.3
and Section 8 shall survive and remain in full force and effect regardless of
the consummation of the transactions contemplated hereby, the repayment of the
Loans, the expiration or termination of the Letters of Credit and the
Commitments or the termination of this Agreement or any provision hereof.

     9.7 Counterparts; Integration; Effectiveness. This Agreement may be
executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which
when taken together shall constitute a single contract. This Agreement, the
other Loan Documents and any separate letter agreements with respect to fees
payable to the Agents constitute the entire contract among the parties relating
to the subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except
as provided in Section 4.1, this Agreement shall become effective when it shall
have been executed by the Agents and the Lenders and when the Administrative
Agent shall have received counterparts hereof that, when taken together, bear
the signatures of each of the other parties hereto, and thereafter shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns. Delivery of an executed counterpart of a
signature page of this
Agreement by telecopy shall be effective as delivery of a manually
executed counterpart of this Agreement.

     9.8 Severability. Any provision of this Agreement held to be invalid,
illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such

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invalidity, illegality or unenforceability
without affecting the validity, legality and enforceability of the remaining
provisions hereof; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction.

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

     9.10 Governing Law; Jurisdiction; Consent to Service of Process.

     (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE COMMONWEALTH OF MASSACHUSETTS.

     (b) The Borrowers agree that any suit for the enforcement of this
Agreement or any other Loan Document may be brought in any Massachusetts
state or federal court sitting in Boston, Massachusetts as the
Administrative Agent may elect in its sole discretion and consent to the
non-exclusive jurisdiction of such courts. The Borrowers hereby waive
any objection which they may now or hereafter have to the venue of any
such suit or any such court or that such suit is brought in an
inconvenient forum. The Borrowers agree that any action commenced by any
Borrower asserting any claim or counterclaim arising under or in
connection with this Agreement or any other Loan Document shall be
brought solely in any Massachusetts state or federal court sitting in
Boston, Massachusetts as the Administrative Agent may elect in its sole
discretion and consent to the exclusive jurisdiction of such courts with
respect to any such action.

     (c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.1. Nothing in
this Agreement or any other Loan Document will affect the right of any
party to this Agreement to serve process in any other manner permitted by
law.

     9.11 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY (WHETHER

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BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.

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

     9.13 Interest Rate Limitation. Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan, together
with all fees, charges and other amounts that are treated as interest on such
Loan under Applicable Law (collectively the “Charges”), shall exceed the
maximum lawful rate (the “Maximum Rate”) that may be contracted for, charged,
taken, received or reserved by the Lender holding such Loan in accordance with
Applicable Law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would
have been payable in respect of such Loan but were not payable as a result of
the operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.

     9.14 Additional Waivers.

     (a) The Obligations are joint and several obligations of each
Borrower. To the fullest extent permitted by Applicable Law, the
obligations of Borrower hereunder shall not be affected by (i) the
failure of any Agent or any other Secured Party to assert any claim or
demand or to enforce or exercise any right or remedy against any other
Borrower under the provisions of this Agreement, any other Loan Document
or otherwise, (ii) any rescission, waiver, amendment or modification of,
or any release from any of the terms or provisions of, this Agreement,
any other Loan Document, or any other agreement, with respect to any
other Borrower of the Obligations under this Agreement, or (iii) the
failure to perfect any security interest in, or the release of, any of
the security held by or on behalf of the Collateral Agent or any other
Secured Party.

     (b) The obligations of each Borrower hereunder shall not be subject
to any reduction, limitation, impairment or termination for any reason
(other than the payment in full in cash of the Obligations), including
any claim of waiver, release, surrender,

104

 

alteration or compromise of any
of the Obligations, and shall not be subject to any defense or set-off,
counterclaim, recoupment or termination whatsoever by reason of the
invalidity, illegality or unenforceability of the Obligations or
otherwise. Without limiting the generality of the foregoing, the
obligations of each Borrower hereunder shall not be discharged or
impaired or otherwise affected by the failure of any Agent or any other
Secured Party to assert any claim or demand or to enforce any remedy
under this Agreement, any other Loan Document or any other agreement, by
any waiver or modification of any provision of any thereof, by any
default, failure or delay, willful or otherwise, in the performance of
the Obligations, or by any other act or omission that may or might in any
manner or to any extent vary the risk of any Borrower or that would
otherwise operate as a discharge of any Borrower as a matter of law or
equity (other than the payment in full in cash of all the Obligations).

     (c) To the fullest extent permitted by Applicable Law, each Borrower
waives any defense based on or arising out of any defense of any other
Borrower or the unenforceability of the Obligations or any part thereof
from any cause, or the cessation from any cause of the liability of any
other Borrower, other than the payment in full in cash of all the
Obligations. The Collateral Agent and the other Secured Parties may, at
their election, foreclose on any security held by one or more of them by
one or more judicial or nonjudicial sales, accept an assignment of any
such security in lieu of foreclosure, compromise or adjust any part of
the Obligations, make any other accommodation with any other Borrower, or
exercise any other right or remedy available to them against any other
Borrower, without affecting or impairing in any way the liability of any
Borrower hereunder except to the extent that all the Obligations have
been paid in full in cash. Pursuant to Applicable Law, each Borrower
waives any defense arising out of any such election even though such
election operates, pursuant to Applicable Law, to impair or to extinguish
any right of reimbursement or subrogation or
other right or remedy of such Borrower against any other Borrower,
as the case may be, or any security.

     (d) Upon payment by any Borrower of any Obligations, all rights of
such Borrower against any other Borrower arising as a result thereof by
way of right of subrogation, contribution, reimbursement, indemnity or
otherwise shall in all respects be subordinate and junior in right of
payment to the prior payment in full in cash of all the Obligations. In
addition, any indebtedness of any Borrower now or hereafter held by any
other Borrower is hereby subordinated in right of payment to the prior
payment in full of the Obligations. Until the Obligations are paid in
full, none of the Borrowers will demand, sue for, or otherwise attempt to
collect any such indebtedness. If any amount shall erroneously be paid to
any Borrower on account of (a) such subrogation, contribution,
reimbursement, indemnity or similar right or (b) any such indebtedness of
any Borrower, such amount shall be held in trust for the benefit of the
Secured Parties and shall forthwith be paid to the Collateral Agent to be
credited against the payment of

105

 

the Obligations, whether matured or
unmatured, in accordance with the terms of the Loan Documents.

     9.15 Confidentiality. Each of the Lenders agrees that it will use its
best efforts not to disclose without the prior consent of the Borrowers (other
than to its employees, auditors, counsel or other professional advisors, to
Affiliates or to another Lender if the Lender or such Lender’s holding or
parent company in its sole discretion determines that any such party should
have access to such information, which party shall be informed of the
confidential nature thereof) any information with respect to any Borrower which
is furnished pursuant to this Agreement provided that any Lender may disclose
any such information (a) as has become generally available to the public, (b)
as may be required or appropriate in any report, statement or testimony
submitted to any municipal, state or federal regulatory body having or claiming
to have jurisdiction over such Lender or to the Federal Reserve Board or the
Federal Deposit Insurance Corporation or similar organizations (whether in the
United States or elsewhere) or their successors, (c) as may be required or
appropriate in response to any summons or subpoena or in connection with any
litigation, provided that if the Lender is able to do so prior to complying
with the summons or subpoena, such Lender shall provide the Borrowers with
prompt notice of such requested disclosure so that the Borrowers may seek a
protective order or other appropriate remedy (nothing contained herein however
shall result in such Lender’s non-compliance with Applicable Law), (d) in order
to comply with any law, order, regulation or ruling applicable to such Lender,
(e) in connection with the enforcement of remedies under this Agreement and the
other Loan Documents, and (f) to any prospective transferee in connection with
any contemplated transfer of any of the Loans or Notes or any interest therein
by such Lender provided that such prospective transferee agrees to be bound by
the provisions of this Section. The Borrowers hereby agree that the failure of
a Lender to comply with the provisions of this Section 9.15 shall not relieve
the
Borrowers of any of their obligations to such Lender under this Agreement
and the other Loan Documents.

     9.16 Existing Credit Agreement Amended and Restated. This Agreement shall
amend and restate the Existing Credit Agreement in its entirety. On the
Closing Date, the rights and obligations of the parties under the Existing
Credit Agreement shall be subsumed within and be governed by this Agreement;
provided, however, that each of the “Loans” (as such term is defined in the
Existing Credit Agreement) outstanding under the Existing Credit Agreement on
the Closing Date shall, for purposes of this Agreement, be included as Loans
hereunder and each of the “Letters of Credit” (as defined in the Existing
Credit Agreement) outstanding under the Existing Credit Agreement on the
Closing Date shall be Letters of Credit hereunder.

[balance of page left intentionally blank; signature pages follow]

106

 

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

	 	 	 	 	 
	 	 	GAMESTOP CORP.
	 	 	as Borrower
	 
	 	 	 	 
	

	 	By:
	 	/s/ David W.Carlson
	

	 	 	 	

	

	 	Name:
	 	David W. Carlson
	

	 	Title:
	 	Executive Vice President and
Chief
Financial Officer
	 
	 	 	 	 
	 	 	GAMESTOP, INC.
	 	 	as Borrower
	 
	 	 	 	 
	

	 	By:
	 	/s/ David W.Carlson
	

	 	 	 	

	

	 	Name:
	 	David W. Carlson
	

	 	Title:
	 	Executive Vice President and
Chief
Financial Officer
	 
	 	 	 	 
	 	 	GAMESTOP.COM, INC.
	 	 	as Borrower
	 
	 	 	 	 
	

	 	By:
	 	/s/ Niall Lawler
	

	 	 	 	

	

	 	Name:
	 	Niall Lawler
	

	 	Title:
	 	President
	 
	 	 	 	 
	 	 	BABBAGE’S ETC. LLC
	 	 	as Borrower
	 
	 	 	 	 
	

	 	By:
	 	/s/ David W.Carlson
	

	 	 	 	

	

	 	Name:
	 	David W. Carlson
	

	 	Title:
	 	Executive Vice President and
Chief Financial Officer

1

 

	 	 	 	 	 
	 	 	SUNRISE PUBLICATIONS, INC.
	 	 	as Borrower
	 
	 	 	 	 
	

	 	By:/s/
	 	David W.Carlson
	

	 	 	 	

	

	 	Name:
	 	David W. Carlson
	

	 	Title:
	 	Executive Vice President and
Chief
Financial Officer
	 
	 	 	 	 
	 	 	MARKETING CONTROL SERVICES, INC.
	 	 	as Borrower
	 
	 	 	 	 
	

	 	By:
	 	/s/ Kevin Weimerskirch
	

	 	 	 	

	

	 	Name:
	 	Kevin Weimerskirch
	

	 	Title:
	 	President
	 
	 	 	 	 
	 	 	GAMESTOP BRANDS, INC.
	 	 	as Borrower
	 
	 	 	 	 
	

	 	By:
	 	/s/ Cathy Preston
	

	 	 	 	

	

	 	Name:
	 	Cathy Preston
	

	 	Title:
	 	President
	 
	 	 	 	 
	 	 	GAMESTOP OF TEXAS (GP), LLC
	 	 	as Borrower
	 
	 	 	 	 
	

	 	By:
	 	GameStop, Inc.
	 
	 	 	 	 
	

	 	By:
	 	/s/ David W.Carlson
	

	 	 	 	

	

	 	Name:
	 	David W. Carlson
	

	 	Title:
	 	Executive Vice President and
Chief
Financial Officer

2

 

	 	 	 	 	 
	 	 	GAMESTOP (LP), LLC
	 	 	as Borrower
	 
	 	 	 	 
	

	 	By:
	 	/s/ Cathy Preston
	

	 	 	 	

	

	 	Name:
	 	Cathy Preston
	

	 	Title:
	 	President
	 
	 	 	 	 
	 	 	GAMESTOP TEXAS LP
	 	 	as Borrower
	 
	 	 	 	 
	

	 	By:
	 	GameStop of Texas (GP), LLC, its
general partner
	 
	 	 	 	 
	

	 	By:
	 	GameStop, Inc.
	 
	 	 	 	 
	

	 	By:
	 	/s/ David W.Carlson
	

	 	 	 	

	

	 	Name:
	 	David W. Carlson
	

	 	Title:
	 	Executive Vice President and
Chief
Financial Officer

3

 

	 	 	 	 	 
	 	 	FLEET RETAIL GROUP, INC.,
	 	 	as Administrative Agent, as
Collateral Agent, and as Lender
	 
	 	 	 	 
	

	 	By:
	 	/s/ Keith Vercauteren
	

	 	 	 	

	

	 	 	 	Keith Vercauteren
	

	 	 	 	Director
	

	 	Address:
	 	40 Broad Street, 10th Floor
	

	 	 	 	Boston, Massachusetts 02109
	 	 	Attn: Mr. Keith Vercauteren
	 	 	Telephone: (617) 434-4045
	 	 	Telecopy: (617) 434-4339
	 
	 	 	 	 
	 	 	FLEET NATIONAL BANK,
	 	 	as Issuing Bank
	 
	 	 	 	 
	

	 	By:
	 	/s/ Keith Vercauteren
	

	 	 	 	

	

	 	 	 	Keith Vercauteren
	

	 	 	 	Director
	

	 	Address:
	 	100 Federal Street
	

	 	 	 	Boston, Massachusetts 02110
	 	 	Attn: Mr. Keith Vercauteren
	 	 	Telephone: (617) 434-4045
	 	 	Telecopy: (617) 434-4339

4

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